Exhibit 4.3


 


EXECUTION COPY


 


CONTINUING SECURITY AGREEMENT


 


THIS CONTINUING SECURITY AGREEMENT (this “Security Agreement”) is
entered into as of May 28, 2004, by and between Float Control, Inc., a Michigan
corporation (“Float”), and The Huntington National Bank, a national banking
association (the “Agent”), having its principal office in Columbus, Ohio, as
lender and as agent for and on behalf of the lenders (the “Lenders”) from time
to time party to the Credit Agreement described below.  Capitalized terms not otherwise defined
herein shall have the meaning set forth in the Credit Agreement referred to
herein.


 


Background Information


 


Pursuant to the Amended and Restated Credit
Agreement of even date herewith (as the same may be amended, modified,
supplemented, extended, restated or replaced from time to time, the “Credit
Agreement”) among AirNet Systems, Inc., an Ohio corporation (“AirNet”), the
Lenders and the Agent, the Agent and the Lenders have agreed to extend credit
to AirNet on certain terms and conditions, including, without limitation, that
Float enter into this Continuing Security Agreement (as it may be amended,
modified, supplemented, extended, restated or replaced from time to time, the
“Security Agreement”).


 


Provisions


 


NOW, THEREFORE, as an inducement to and in
consideration of the Agent and the Lenders entering into the Credit Agreement,
the mutual obligations contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Float and the Agent, do hereby agree as follows:


 


ARTICLE
I


 


Definitions


 


Section
1.1                                   Terms
Defined in Credit Agreement.  All
capitalized terms used herein and not otherwise defined shall have the meanings
assigned to such terms in the Credit Agreement.


 


Section
1.2                                   Terms
Defined in Ohio Uniform Commercial Code. 
Terms defined in the Ohio Uniform Commercial Code which are not
otherwise defined in this Security Agreement are used herein as defined in the
Ohio Uniform Commercial Code as in effect from time to time (the “UCC”).


 


Section
1.3                                   Definitions
of Certain Terms Used Herein.  As
used in this Security Agreement, in addition to the terms defined in the
Background Information section above, the following terms shall have the
following meanings:


 

















 


“Accounts”
means “accounts” as defined in the UCC and shall also include a right to
payment of a monetary obligation, whether or not earned by performance, (i) for
property that has been or is to be sold, leased, licensed, assigned, or
otherwise disposed of, (ii) for services rendered or to be rendered, (iii) for
a policy of insurance issued or to be issued, (iv) for a secondary obligation
incurred or to be incurred, (v) for energy provided or to be provided, (vi) for
the use or hire of a vessel under a charter or other contract, (vii) arising
out of the use of a credit or charge card or information contained on or for
use with the card, or (viii) as winnings in a lottery or other game of chance
operated or sponsored by a state, governmental unit of a state, or person licensed
or authorized to operate the game by a state or governmental unit of a state.


 


“Article”
means a numbered article of this Security Agreement, unless another document is
specifically referenced.


 


“Chattel Paper” means “chattel paper”
as defined in the UCC and shall also include any writing or group of writings
and/or a record or records that evidence both a monetary obligation and a
security interest in or a lease of specific goods or of specific goods and
software used in the goods. If a transaction is evidenced both by a security
agreement or lease and by an Instrument or series of Instruments, the group of
records taken together constitutes Chattel Paper.


 


“Collateral” means all Accounts,
Chattel Paper, Deposit Accounts, Documents, Equipment, Fixtures, General
Intangibles, Investment Property, Instruments, Inventory, Payment Intangibles,
Pledged Deposits, Stock Rights and Other Collateral, wherever located, in which
Float now has or hereafter acquires any right or interest, and the proceeds,
insurance proceeds and products thereof, together with all books and records,
customer lists, credit files, software, computer files, programs, printouts and
other computer materials and records related thereto.


 


“Control” shall have the meaning set
forth in Article 8 of the UCC.


 


“Default” means an event described in
Section 5.1.


 


“Deposit
Account” means “deposit account” as defined in the UCC and shall
also include a demand, time, savings, passbook, or similar account maintained
with a bank.


 


“Documents” means “documents” as
defined in the UCC and shall also include all documents of title and goods
evidenced thereby, including without limitation all bills of lading, dock
warrants, dock receipts, warehouse receipts and orders for the delivery of
goods, and also any other document which in the regular course of business or
financing is treated as adequately evidencing that the person in possession of
it is entitled to receive, hold and dispose of the document and the goods it
covers.


 


“Equipment” means “equipment” as defined
in the UCC and shall also include all equipment, machinery, furniture and goods
used or usable by Float in its business and all other tangible personal
property (other than Inventory), and all accessions and additions thereto,
including, without limitation, all Fixtures.


 


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“Exhibit” refers to a specific exhibit
to this Security Agreement, unless another document is specifically referenced.


 


“Fixtures” means “fixtures” as defined
in the UCC and shall also include all goods which become so related to
particular real estate that an interest in such goods arises under any real
estate law applicable thereto, including, without limitation, all trade
fixtures.


 


“General Intangibles” means “general
intangibles” as defined in the UCC and shall also include all intangible
personal property (other than Accounts) including, without limitation, Payment
Intangibles, all contract rights, rights to receive payments of money, choses
in action, causes of action, judgments, tax refunds and tax refund claims,
patents, trademarks, trade names, copyrights, licenses, franchises, computer
programs, software, goodwill, customer and supplier contracts, interests in
general or limited partnerships, joint ventures or limited liability companies,
reversionary interests in pension and profit sharing plans and reversionary,
beneficial and residual interests in trusts, leasehold interests in real or
personal property, rights to receive rentals of real or personal property and
guarantee and indemnity claims.


 


“Investment Property” means a security,
whether certificated or uncertificated; a security entitlement; a securities
account; a commodity contract; or a commodity account (all as defined in the
UCC).


 


“Instruments” means “instruments” as
defined in the UCC and shall also include all negotiable instruments
(as defined in §3-104 of the UCC), certificated and
uncertificated securities and any replacements therefor and Stock Rights
related thereto, and other writings which evidence a right to the payment of
money and which are not themselves security agreements or leases and are of a
type which in the ordinary course of business are transferred by delivery with
any necessary endorsement or assignment, including, without limitation, all
checks, drafts, notes, bonds, debentures, government securities, certificates
of deposit, letters of credit, preferred and common stocks, options and
warrants.


 


“Inventory”
means “inventory” as defined in the UCC and shall also include all goods, other
than farm products, which: (i) are leased by a Person as lessor; (ii) are held
by a Person for sale or lease or to be furnished under contracts of service;
(iii) are furnished by a Person under a contract of service; or (iv) consist of
raw materials, work in process, or materials used or consumed in a business.


 


“Lender”
and “Lenders”
shall be as defined in the preamble of this Security Agreement, provided,
however, that each such reference to Lender and Lenders shall include, to the
extent the context permits or requires, the LC Issuer and the Swingline Lender,
as each such term is defined in the Credit Agreement.


 


“Other Collateral” means any property
of Float, other than any interest in real estate, not included within the
defined terms Accounts, Chattel Paper, Deposit Accounts, Documents, Equipment,
Fixtures, General Intangibles, Instruments, Inventory, Investment Property,
Payment Intangibles, Pledged Deposits and Stock Rights, including, without
limitation, all cash on hand


 


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and all other deposits (general
or special, time or demand, provisional or final) with any bank or other
financial institution, it being intended that the Collateral include all
property of Float.


 


“Payment Intangibles” means a
General Intangible under which the account debtor’s principal obligation is a
monetary obligation.


 


“Pledged Deposits” means all time
deposits of money, whether or not evidenced by certificates, of Float, and all
rights to receive interest on said deposits.


 


“Receivables” means the Accounts,
Chattel Paper, Documents, Investment Property, Instruments or Pledged Deposits,
and any other rights or claims to receive money which are General Intangibles
or which are otherwise included as Collateral.


 


“Section” means a numbered section of
this Security Agreement, unless another document is specifically referenced.


 


“Secured Obligations” means the
Obligations.


 


“Security” has the meaning set forth in
Article 8 of the UCC.


 


“Stock Rights” means any securities,
dividends or other distributions and any other right or property which Float
shall receive or shall become entitled to receive for any reason whatsoever
with respect to, in substitution for or in exchange for any securities or other
ownership interests in a corporation, partnership, joint venture or limited
liability company constituting Collateral and any securities, any right to
receive securities and any right to receive earnings, in which Float now has or
hereafter acquires any right, issued by an issuer of such securities.


 


“UCC” has the meaning set forth in
Section 1.2.


 


The foregoing definitions shall be equally
applicable to both the singular and plural forms of the defined terms.


 


ARTICLE
II


 


Grant of Security
Interest


 


Float hereby pledges, assigns and grants to
the Agent, a security interest in all of Float’s right, title and interest in
and to the Collateral to secure the prompt and complete payment and performance
of the Secured Obligations.


 


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ARTICLE III


 


Representations and Warranties


 


Float represents and warrants to the Agent
that:


 


Section
3.1                                   Title,
Authorization, Validity and Enforceability.  Float has good and valid rights in and title to the Collateral
with respect to which it has purported to grant a security interest hereunder,
free and clear of all Liens except for Liens permitted under Section 4.1(f),
and has full power and authority to grant to the Agent the security interest in
such Collateral pursuant hereto.  The
execution and delivery by Float of this Security Agreement has been duly
authorized by proper corporate proceedings, and this Security Agreement
constitutes a legal, valid and binding obligation of Float, except as
enforceability may be limited by bankruptcy, insolvency or similar laws affecting
the enforcement of creditors’ rights generally and general principles of
equity, and creates a security interest which is enforceable against Float in
all now owned and hereafter acquired Collateral. When financing statements have
been filed in the appropriate offices against Float in the locations listed on
Exhibit “E”, the Agent will have a fully perfected first priority security
interest in that Collateral in which a security interest may be perfected by
filing of a financing statement in that office, subject only to Liens permitted
under Section 4.1(f).


 


Section
3.2                                   Conflicting
Laws and Contracts.  Neither the
execution and delivery by Float of this Security Agreement, the creation and
perfection of the security interest in the Collateral granted hereunder, nor
compliance with the terms and provisions hereof will violate any law, rule,
regulation, order, writ, judgment, injunction, decree or award binding on Float
or Float’s articles of incorporation or code of regulations, the provisions of
any indenture, instrument or agreement to which Float is a party or is subject,
or by which it, or its property, is bound, or conflict with or constitute a
default thereunder, or result in the creation or imposition of any Lien
pursuant to the terms of any such indenture, instrument or agreement (other
than any Lien of the Agent).


 


Section
3.3                                   Principal
Location.  Float’s mailing address,
and the location of its chief executive office and of the books and records
relating to the Receivables, is disclosed in Exhibit “A”; Float has no other
places of business except those set forth in Exhibit “A”.


 


Section
3.4                                   Property
Locations.  The Inventory, Equipment
and Fixtures which are at any time included by AirNet in the calculation of the
Borrowing Base are located solely at the locations described in the Exhibit “A”
originally attached to this Agreement or any updated replacement Exhibit “A”
hereinafter provided to Agent as permitted below. To the extent Float proposes
that any such items of Collateral be located at any new locations (i.e., not
shown on the Exhibit “A” originally attached hereto), Float shall provide
thirty (30) days’ prior notice thereof to Agent together with an updated
Exhibit “A”.  All of said locations are owned
by Float or AirNet except for locations (i) which are leased by Float as lessee
and designated in Part B of Exhibit “A” or (ii) at which Inventory is held in a
public warehouse or is otherwise held by a bailee or on consignment as
designated in Part C of Exhibit “A”, with respect to which Inventory Float has
used its best commercially reasonable efforts to obtain and deliver bailment
agreements,


 


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warehouse receipts, financing
statements or other documents satisfactory to the Agent to protect the Agent’s
security interest in such Inventory.


 


Section
3.5                                   No
Other Names.  Float has not
conducted business under any name except the name in which it has executed this
Security Agreement.


 


Section
3.6                                   No
Default.  No Default or Unmatured
Default exists.


 


Section
3.7                                   Accounts
and Chattel Paper.  The names of the
obligors, amounts owing, due dates and other information with respect to the
Accounts and Chattel Paper are and will be correctly stated in all material
respects in all records of Float relating thereto and in all invoices and
reports with respect thereto furnished to the Agent by Float from time to
time.  As of the time when each Account
or each item of Chattel Paper arises, Float shall be deemed to have represented
and warranted that such Account or Chattel Paper, as the case may be, and all
records relating thereto, are genuine and in all material respects what they
purport to be.


 


Section
3.8                                   Filing
Requirements.  None of the Equipment
which constitutes Collateral hereunder is covered by any certificate of title,
except as described in Part A of Exhibit “B,” which Part A of Exhibit B shall
not include specific certificate of title information with respect to each item
of Equipment referenced thereon unless such information is requested by the
Agent.  None of the Collateral is of a
type for which security interests or liens may be perfected by filing under any
federal statute except (i) as described in Part B of Exhibit “B” and (ii)
patents, trademarks and copyrights held by Float and described in Part C of
Exhibit “B”.  The legal description,
county and street address of the property on which any material Fixtures are
located is set forth in Exhibit “C” together with the name and address of the
record owner of each such property.


 


Section
3.9                                   No
Financing Statements.  No financing
statement describing all or any portion of the Collateral which has not lapsed
or been terminated naming Float as debtor has been filed in any jurisdiction
except (i) financing statements naming the Agent as the secured party, (ii) as
described in Exhibit “D” and (iii) as permitted by Section 4.1(f).


 


Section
3.10                            Federal
Employer Identification Number. 
Float’s Federal employer identification number is 31-1336874.


 


ARTICLE IV


 


Covenants


 


From the date of this Security Agreement, and
thereafter until this Security Agreement is terminated:


 


Section
4.1                                   General.


 


(a)                                  Inspection.  Float shall permit the Agent, by its
representatives and agents (i) to inspect the Collateral, provided that Agent
or such representative or agent shall provide


 


6

















 


reasonable notice to Float or
AirNet prior to any such inspection made at any time prior to the occurrence of
a Default, (ii) to examine and make copies of the records of Float relating to
the Collateral and (iii) to discuss the Collateral and the related records of
Float with, and to be advised as to the same by, Float’s officers and employees
(and, in the case of any Receivable, with any person or entity which is or may
be obligated thereon at any time after the occurrence and during the
continuance of an Event of Default), all at such reasonable times and intervals
as the Agent may determine, and all at Float’s expense.


 


(b)                                 Taxes.  Float shall pay when due all taxes,
assessments and governmental charges and levies upon the Collateral, except
those which are being contested in good faith by appropriate proceedings and
with respect to which no Lien exists.


 


(c)                                  Records and
Reports.  Float shall maintain
complete and accurate books and records with respect to the Collateral, and
furnish to the Agent such reports relating to the Collateral as the Agent shall
from time to time request.


 


(d)                                 Financing
Statements and Other Actions; Defense of Title.  Float shall execute and deliver (if necessary) to the Agent, and
authorizes the Agent to file, all financing statements and other documents and
take such other actions, all as may from time to time be reasonably requested
by the Agent in order to maintain a first perfected security interest (subject to
any prior Permitted Liens) in and, in the case of Investment Property, Control
of, the Collateral.  Float shall take
any and all actions necessary to (i) defend title to the Collateral against all
persons and (ii) defend the security interest of the Agent in the Collateral
and the priority thereof, in each case as against any Lien not expressly
permitted hereunder.


 


(e)                                  Disposition of
Collateral.  Float shall not sell,
lease or otherwise dispose of the Collateral at any time except prior to
such time as (i) a Default has occurred, dispositions specifically permitted
under the Credit Agreement or any other Loan Documents, (ii) Agent has (after
the occurrence of a Default) issued a notice to Float instructing Float to
cease such transactions, sales or leases of Inventory in the ordinary course of
business, and (iii) Agent has issued a notice to Float pursuant to Article VII,
proceeds of Inventory and Accounts collected in the ordinary course of
business.


 


(f)                                    Liens.  Float shall not create, incur, or suffer to
exist any Lien on the Collateral except (i) the security interest created by
this Security Agreement, (ii) existing Liens described in Exhibit “D” and (iii)
other Permitted Liens.


 


(g)                                 Change in Location
or Name.  Float shall not (i) have
any Inventory, Equipment or Fixtures which is at such time included by AirNet
in the calculation of the Borrowing Base, or proceeds or products thereof
(other than Inventory and proceeds thereof disposed of as permitted by Section
4.1(e)) at a location other than a location specified in Exhibit “A”, (ii)
maintain records relating to the Receivables at any time included by AirNet in
the calculation of the Borrowing Base at a location other than at the location
specified on Exhibit “A”, (iii) maintain any material place of business at a
location other than a location specified on Exhibit “A”, unless Float and/or
AirNet shall have given Agent not less than 15 days’ prior written notice
thereof, (iv) change its name or taxpayer identification number, unless Float
and/or AirNet shall have given


 


7

















 


Agent not less than 15 days’
prior written notice thereof, (v) change its mailing address, unless Float
and/or AirNet shall have given Agent not less than 15 days’ prior written
notice thereof, or (vi) change the jurisdiction of its organization, whether by
“reorganization” in another state or otherwise, unless Float and/or AirNet
shall have given the Agent not less than 30 days’ prior written notice thereof,
and the Agent shall have reasonably determined that any of the foregoing events
specified in (i) – (vi) above will not adversely affect the validity,
perfection or priority of the Agent’s security interest in the Collateral.


 


(h)                                 Other Financing
Statements.  Float shall not
authorize the filing of any financing statement naming it as debtor covering
all or any portion of the Collateral, except with respect to Liens permitted by
Section 4.1(f).


 


Section
4.2                                   Receivables.


 


(a)                                  Certain Agreements
on Receivables.  Float shall not
make or agree to make any discount, credit, rebate or other reduction in the
original amount owing on a Receivable which is at such time included by AirNet
in the calculation of the Borrowing Base or accept in satisfaction of a
Receivable less than the original amount thereof, except that, so long as no
Default has occurred and is continuing, Float may reduce the amount of Accounts
in accordance with its present policies and in the ordinary course of business.


 


(b)                                 Collection of
Receivables.  Except as otherwise provided
in this Security Agreement, Float shall collect and enforce, at Float’s sole
expense, all amounts due or hereafter due to Float under the Receivables
included at such time by AirNet in the calculation of the Borrowing Base.


 


(c)                                  Delivery of
Invoices.  Float shall deliver to
the Agent promptly upon its request made after the occurrence and during the
continuance of a Default duplicate invoices with respect to each Account
bearing such language of assignment as the Agent shall specify.


 


(d)                                 Disclosure of
Counterclaims on Receivables.  If
(i) any discount, credit or agreement to make a rebate or to otherwise reduce
the amount owing on a material Receivable exists which is not permitted
hereunder or (ii) if, to the knowledge of Float, any dispute, setoff, claim,
counterclaim or defense exists or has been asserted or threatened which might
reasonably be expected to result in a material reduction with respect to such
Receivable, Float shall disclose such fact to the Agent in writing in
connection with the inspection by the Agent of any record of Float relating to
such Receivable and in connection with any invoice or report furnished by Float
to the Agent relating to such Receivable.


 


Section
4.3                                   Inventory
and Equipment.


 


(a)                                  Maintenance of
Goods.  Float shall do all things
necessary to maintain, preserve, protect and keep the Inventory and the
Equipment in good repair and working and saleable condition.


 


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(b)                                 Insurance.


 


(i)                                     Float
shall maintain insurance on the Inventory and Equipment containing a lender’s
loss payable clause in favor of the Agent and providing that said insurance
will not be terminated except after at least 30 days’ written notice from the
insurance company to the Agent, of the type and subject to the requirements set
forth in the Credit Agreement.


 


(ii)                                  In
the event of any loss or damage to any Collateral in excess of $250,000
occasioned by fire or other hazard, Float shall give prompt written notice to
the insurance carrier and to the Agent. 
So long as no Default has occurred and is continuing, Float shall be
permitted to make proof of loss, to adjust and compromise any claim under
insurance policies, to appear in and prosecute any action arising from such
insurance policies, and to collect and receive insurance proceeds.  If a Default has occurred and is continuing,
and/or with respect to any loss or damage in excess of $250,000, Agent shall
have the right, on behalf of Float, to make proof of loss, to adjust and
compromise any claim under insurance policies, to appear in and prosecute any
action arising from such insurance policies, to collect and receive insurance
proceeds, and to deduct therefrom the Agent’s reasonable expenses incurred in
the collection of such proceeds; provided, however, that nothing contained in
this Section 4.3 shall require Agent to incur any expense or take any action
hereunder.  In the event of any such
loss or damage which occurs or for which insurance proceeds are paid at any
time after the occurrence and during the continuance of a Default, and/or with
respect to any loss or damage in excess of $250,000, Agent, at its option,
shall have the right to (x) have the balance of such insurance proceeds used
for the purpose of reimbursing Float for the cost of restoration, repair or
replacement of the Collateral, or (y) apply the balance of such proceeds to the
payment of the Obligations, whether or not then due, in such order of
application as determined by the Agent, and Float hereby assigns to the Agent
all rights of Float in and to any insurance proceeds paid or to be paid as a
result of any such loss or damage.


 


(iii)                               If
the insurance proceeds held by the Agent as provided in subpart (ii) of this
Section 4.2(b) are to be used to reimburse Float for the cost of restoration,
repair or replacement of the Collateral, Float shall, notwithstanding the
adequacy of the insurance proceeds, promptly restore, repair and/or replace the
Collateral, such that the Collateral shall be at least equal in value and
general use as it was prior to the damage or destruction and said proceeds
shall be provided to Float upon delivery to the Agent of satisfactory proof of
said restoration, repair and/or replacement.


 


(c)                                  Titled Vehicles.
Upon request, Float shall (i) deliver to the Agent the original of any title
certificate for any vehicle included at such time by AirNet in the calculation
of the Borrowing Base and do all things necessary to have the Lien of the Agent
noted on any such certificate, and (ii) give the Agent notice of its acquisition
of any vehicle covered by a certificate of title included at such time by
AirNet in the calculation of the Borrowing Base.


 


Section
4.4                                   Instruments,
Securities, Chattel Paper, Documents and Pledged Deposits.  To the extent any of the same is included at
such time by AirNet in the calculation of the Borrowing Base, Float shall, upon
the request of the Agent at any time and from time to time (i)


 


9

















 


deliver to the Agent the
originals of all Chattel Paper, Securities and Instruments, (ii) hold in trust
for the Agent upon receipt and immediately thereafter deliver to the Agent such
Chattel Paper, Securities and Instruments constituting Collateral, (iii)
deliver to the Agent such Pledged Deposits which are evidenced by certificates
included in the Collateral endorsed in blank, marked with such legends and
assigned as the Agent shall specify, and (iv) deliver to the Agent (and
thereafter hold in trust for the Agent upon receipt and immediately deliver to
the Agent) any Document evidencing or constituting such Collateral.


 


Section
4.5                                   Pledged
Deposits.  Float shall not withdraw
all or any portion of any Pledged Deposit included at such time by AirNet in
the calculation of the Borrowing Base or fail to rollover any such Pledged
Deposit without the prior written consent of the Agent.


 


Section
4.6                                   Deposit
Accounts.  Float shall (i) upon the
Agent’s request, notify each bank or other financial institution in which it
maintains a Deposit Account or other deposit (general or special, time or
demand, provisional or final) included at such time by AirNet in the
calculation of the Borrowing Base of the security interest granted to the Agent
hereunder and cause each such bank or other financial institution to
acknowledge such notification in writing and (ii) upon the Agent’s request,
deliver to each such bank or other financial institution a letter, in form and
substance acceptable to the Agent, transferring dominion and control over each
such account to the Agent.  In the case
of deposits maintained with the Agent, the terms of such letter shall be
subject to the provisions of the Credit Agreement regarding setoffs.


 


Section
4.7                                   Federal,
State or Municipal Claims.  Float
shall notify the Agent of any Collateral included at such time by AirNet in the
calculation of the Borrowing Base which constitutes a claim against the U.S.
government or any state or local government or any instrumentality or agency
thereof, the assignment of which claim is restricted by federal, state or municipal
law.


 


ARTICLE
V


 


Default


 


Section
5.1                                   The
occurrence of any Default under and as defined in the Credit Agreement shall
constitute a “Default” hereunder.


 


Section
5.2                                   Acceleration
and Remedies.  Upon the acceleration
of the Obligations under the Credit Agreement, the Obligations shall
immediately become due and payable without presentment, demand, protest or
notice of any kind, all of which are hereby expressly waived, and the Agent may
exercise any or all of the following rights and remedies:


 


(a)                                  Those rights and
remedies provided in this Security Agreement, the Credit Agreement or any other
Loan Document, provided that this Section 5.2(a) shall not be understood
to limit any rights or remedies available to the Agent prior to a Default.


 


(b)                                 Those rights and
remedies available to a secured party under the UCC (whether or not the UCC
applies to the affected Collateral) or under any other applicable law
(including,


 


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without limitation, any law
governing the exercise of a bank’s right of setoff or bankers’ lien) when a
debtor is in default under a security agreement.


 


(c)                                  Without notice except
as specifically provided in Section 8.1 or elsewhere herein, sell, lease,
assign, grant an option or options to purchase or otherwise dispose of the
Collateral or any part thereof in one or more parcels at public or private
sale, for cash, on credit or for future delivery, and upon such other terms as
the are commercially reasonable.


 


Section
5.3                                   Float’s
Obligations Upon a Default.  Upon
the request of the Agent after the occurrence and during the continuance of a
Default, Float shall:


 


(a)                                  Assembly of
Collateral.  Assemble and make
available to the Agent the Collateral and all records relating thereto at any
place or places specified by the Agent which are reasonably convenient to both
Agent and Float.


 


(b)                                 Secured Party
Access.  Permit the Agent or any
Lender, by the Agent’s or such Lender’s representatives and agents or
otherwise, to enter any premises where all or any part of the Collateral, or
the books and records relating thereto, or both, are located, to take
possession of all or any part of the Collateral and to remove all or any part
of the Collateral.


 


Section
5.4                                   License.  The Agent is hereby granted a license or
other right to use, following the occurrence and during the continuance of a
Default, without charge, Float’s labels, patents, copyrights, rights of use of
any name, trade secrets, trade names, trademarks, service marks, customer lists
and advertising matter, or any property of a similar nature, as it pertains to
the Collateral, in completing production of, advertising for sale, and selling
any Collateral, and, following the occurrence and during the continuance of a
Default, Float’s rights under all licenses and all franchise agreements shall
inure to the Agent’s benefit.  In
addition, Float hereby irrevocably agrees that the Agent may, following the
occurrence and during the continuance of a Default, sell any of Float’s
Inventory directly to any person, including without limitation persons who have
previously purchased Float’s Inventory from Float and in connection with any
such sale or other enforcement of the Agent’s rights under this Security
Agreement, may sell Inventory which bears any trademark owned by or licensed to
Float and any Inventory that is covered by any copyright owned by or licensed
to Float and the Agent may finish any work in process and affix any trademark
owned by or licensed to Float and sell such Inventory as provided herein.


 


ARTICLE
VI


 


Waivers,
Amendments and Remedies


 


No delay or omission of the Agent to exercise any right or remedy
granted under this Security Agreement shall impair such right or remedy or be
construed to be a waiver of any Default or an acquiescence therein, and any
single or partial exercise of any such right or remedy shall not preclude any
other or further exercise thereof or the exercise of any other right or
remedy.  No waiver, amendment or other
variation of the terms, conditions or provisions of this Security Agreement
whatsoever shall be valid unless in writing signed by the Agent and Float or
AirNet on behalf of Float and then only to the extent in such writing
specifically set forth.  All


 


11

















 


rights and remedies contained
in this Security Agreement or by law afforded shall be cumulative and all shall
be available to the Agent until the Secured Obligations have been paid in full.


 


ARTICLE VII


 


Proceeds;
Collection of Receivables


 


Section
7.1                                   Lockboxes.
 Upon request of the Agent made after
the occurrence and during the continuance of a Default, Float shall execute and
deliver to the Agent irrevocable lockbox agreements in the form provided by or
otherwise acceptable to the Agent, which agreements shall be accompanied by an
acknowledgment by the bank where the lockbox is located of the Lien of the
Agent granted hereunder and of irrevocable instructions to wire all amounts
collected therein to a special collateral account at the Agent.


 


Section
7.2                                   Collection
of Receivables.  The Agent may, by
giving Float and/or AirNet written notice at any time after the occurrence and
during the continuance of any Default, elect to require that the Receivables be
paid directly to the Agent.  In such
event, Float shall, and shall permit the Agent to, promptly notify the account
debtors or obligors under the Receivables of the Agent’s interest therein and
direct such account debtors or obligors to make payment of all amounts then or
thereafter due under the Receivables directly to the Agent.  Upon receipt of any such notice from the
Agent, Float shall thereafter hold in trust for the Agent all amounts and
proceeds received by it with respect to the Receivables and Other Collateral
and immediately and at all times thereafter deliver to the Agent all such
amounts and proceeds in the same form as so received, whether by cash, check,
draft or otherwise, with any necessary endorsements.  The Agent shall hold and apply funds so received as provided by
the terms of Sections 7.3 and 7.4.


 


Section
7.3                                   Special
Collateral Account.  The Agent may,
by giving Float and/or AirNet written notice at any time after the occurrence
and during the continuance of any Default, require all cash proceeds of the
Collateral to be deposited in a special non-interest bearing cash collateral
account with the Agent and held there as security for the Secured
Obligations.  Float shall have no
control whatsoever over said cash collateral account.  If no Unmatured Default or Default has thereafter occurred and is
then continuing, the Agent shall from time to time deposit the collected
balances in said cash collateral account into the general operating account of
Float and/or AirNet with the Agent.  If
any Unmatured Default or Default has occurred and is continuing, the Agent may,
from time to time, apply the collected balances in said cash collateral account
to the payment of the Secured Obligations whether or not the Secured
Obligations shall then be due.


 


Section
7.4                                   Application
of Proceeds.  The proceeds of the Collateral
shall be applied by the Agent to payment of the Secured Obligations in the
following order unless a court of competent jurisdiction shall otherwise
direct:


 


(a)                                  FIRST, to payment of
all costs and expenses of the Agent incurred in connection with the collection
and enforcement of the Secured Obligations or of the security interest granted
to the Agent pursuant to this Security Agreement;


 


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(b)                                 SECOND, to payment of
that portion of the Secured Obligations constituting accrued and unpaid
interest and fees pro rata among those parties to whom such interest and fees
are due in accordance with the amount of such accrued and unpaid interest and
fees among each of them;


 


(c)                                  THIRD, to payment of
the principal of the Secured Obligations then due and unpaid pro rata among
those parties to whom such Secured Obligations are due in accordance with the
amounts owing to each of them; and


 


(d)                                 FOURTH, the balance,
if any, after all of the Secured Obligations have been satisfied, shall be
deposited by the Agent into the general operating account of Float and/or
AirNet with the Agent.


 


ARTICLE VIII


 


General Provisions


 


Section
8.1                                   Notice
of Disposition of Collateral.  To
the extent permitted by law, Float hereby waives notice of the time and place
of any public sale or the time after which any private sale or other
disposition of all or any part of the Collateral may be made.  To the extent such notice may not be waived
under applicable law, any notice made shall be deemed reasonable if sent to
Float, addressed as set forth in Section 8.16, at least ten days prior to (i)
the date of any such public sale or (ii) the time after which any such private
sale or other disposition may be made.


 


Section
8.2                                   Compromises
and Collection of Collateral.  Float
and the Agent recognize that setoffs, counterclaims, defenses and other claims
may be asserted by obligors with respect to certain of the Receivables, that
certain of the Receivables may be or become uncollectible in whole or in part
and that the expense and probability of success in litigating a disputed
Receivable may exceed the amount that reasonably may be expected to be
recovered with respect to a Receivable. 
In view of the foregoing, Float agrees that the Agent may at any time
and from time to time, if a Default has occurred and is continuing, compromise
with the obligor on any Receivable, accept in full payment of any Receivable
such amount as the Agent in its sole discretion shall determine or abandon any
Receivable, and any such action by the Agent shall be commercially reasonable
so long as the Agent acts in good faith based on information known to it at the
time it takes any such action.


 


Section
8.3                                   Secured
Party Performance of Float Obligations. 
Without having any obligation to do so, the Agent may perform or pay any
obligation which Float and/or AirNet has agreed to perform or pay in this
Security Agreement and Float shall reimburse the Agent for any amounts paid by
the Agent pursuant to this Section 8.3. 
Float’s obligation to reimburse the Agent pursuant to the preceding
sentence shall be a Secured Obligation payable on demand.


 


Section
8.4                                   Authorization
for Secured Party to Take Certain Action. 
Float irrevocably authorizes the Agent in the sole discretion of the
Agent and appoints the Agent as its attorney in fact (i) to execute, if
necessary, on behalf of Float as debtor, and to file financing statements


 


13

















 


necessary or desirable in the
Agent’s sole discretion to perfect and to maintain the perfection and priority
of the Agent’s security interest in the Collateral, (ii) to, with respect to
any such cash proceeds received by Agent after the occurrence and during the
continuance of any Default and/or at all other times to the extent any such
cash proceeds are received by Agent pursuant to this Agreement or any cash
management or other agreement between Agent and Float and/or AirNet, indorse
and collect any cash proceeds of the Collateral, (iii) to file a carbon, photographic
or other reproduction of this Security Agreement or any financing statement
with respect to the Collateral as a financing statement in such offices as the
Agent in its sole discretion deems necessary or desirable to perfect and to
maintain the perfection and priority of the Agent’s security interest in the
Collateral, (iv) to contact and enter into one or more agreements with the
issuers of uncertificated securities which are Collateral and which are
Securities or with financial intermediaries holding other Investment Property
as may be necessary or advisable to give the Agent Control over such Securities
or other Investment Property, (v) at any time after the occurrence and during
the continuance of a Default, to enforce payment of the Receivables in the name
of the Agent or Float, (vi) to apply the proceeds of any Collateral received by
the Agent to the Secured Obligations as provided in Article VII and (vii) to
discharge past due taxes, assessments, charges, fees or Liens on the Collateral
(except for such Liens as are specifically permitted hereunder), and Float
agrees to reimburse the Agent on demand for any payment made or any expense
incurred by the Agent in connection therewith, provided that this
authorization shall not relieve Float or any other Person of any of its or
their respective obligations under this Security Agreement or under the Credit
Agreement.


 


Section
8.5                                   Specific
Performance of Certain Covenants. 
Float acknowledges and agrees that a breach of any of the covenants
contained in Sections 4.1(e), 4.1(f), 4.4, 5.3, or 8.7 or in Article VII will
cause irreparable injury to the Agent that the Agent have no adequate remedy at
law in respect of such breaches and therefore agrees, without limiting the
right of the Agent to seek and obtain specific performance of other obligations
of Float contained in this Security Agreement, that the covenants of Float
contained in the Sections referred to in this Section 8.5 shall be specifically
enforceable against Float.


 


Section
8.6                                   Use
and Possession of Certain Premises. 
Upon the occurrence and during the continuance of a Default, the Agent
shall be entitled to occupy and use any premises owned or leased by Float where
any of the Collateral or any records relating to the Collateral are located until
the Secured Obligations are paid or the Collateral is removed therefrom,
whichever first occurs, without any obligation to pay Float for such use and
occupancy.


 


Section
8.7                                   Dispositions
Not Authorized.  Float is not
authorized to sell or otherwise dispose of the Collateral except as set forth
in Section 4.1(e) and notwithstanding any course of dealing between Float
and/or AirNet and the Agent or any Lender or other conduct of the Agent or any
Lender, no authorization to sell or otherwise dispose of the Collateral (except
as set forth in Section 4.1(e)) shall be binding upon the Agent unless such
authorization is in writing signed by the Agent.


 


Section
8.8                                   Benefit
of Agreement.  The terms and
provisions of this Security Agreement shall be binding upon and inure to the
benefit of Float, the Agent and the Lenders, except that Float shall not have
the right to assign its rights or delegate its obligations under this


 


14

















 


Security Agreement or any
interest herein, without the prior written consent of the Agent and/or the
Lenders as required under the Credit Agreement.


 


Section
8.9                                   Survival
of Representations.  All
representations and warranties of Float contained in this Security Agreement
shall survive the execution and delivery of this Security Agreement.


 


Section
8.10                            Taxes
and Expenses.  Any taxes (including
income taxes) payable or ruled payable by Federal or State authority in respect
of this Security Agreement shall be paid by Float, together with interest and
penalties, if any.  Float shall
reimburse the Agent for any and all out-of-pocket expenses and internal charges
(including reasonable attorneys’, auditors’ and accountants’ fees and
reasonable time charges of attorneys, paralegals, auditors and accountants who
may be employees of the Agent paid or incurred by the Agent in connection with
the preparation, execution, delivery, administration, collection and
enforcement of this Security Agreement and in the audit, analysis,
administration, collection, preservation or sale of the Collateral (including
the expenses and charges associated with any periodic or special audit of the
Collateral).  Any and all costs and
reasonable expenses incurred by Float in the performance of actions required
pursuant to the terms hereof shall be borne solely by Float.


 


Section
8.11                            Headings.  The title of and section headings in this
Security Agreement are for convenience of reference only, and shall not govern
the interpretation of any of the terms and provisions of this Security
Agreement.


 


Section
8.12                            Termination.  This Security Agreement shall continue in
effect (notwithstanding the fact that from time to time there may be no Secured
Obligations outstanding) until (i) the Credit Agreement has terminated pursuant
to its express terms and (ii) all of the Secured Obligations have been
indefeasibly paid and performed in full and no commitments of the Agent which
would give rise to any Secured Obligations are outstanding.


 


Section
8.13                            Entire
Agreement.  This Security Agreement embodies
the entire agreement and understanding between Float, the Lenders and the Agent
relating to the Collateral and supersedes all prior agreements and
understandings between Float, the Lenders and the Agent relating to the
Collateral.


 


Section
8.14                            Choice
of Law.  This Security Agreement
shall be construed in accordance with the internal laws (but without regard to
the conflict of laws principles) of the State of Ohio, but giving effect to
federal laws applicable to national banks.


 


Section
8.15                            Indemnity.  Float hereby agrees to indemnify the Agent,
the Lenders, and their respective officers, agents, employees, representatives,
directors and shareholders from and against any and all liabilities, damages,
penalties, suits, costs, and expenses of any kind and nature (including,
without limitation, all expenses of litigation or preparation therefor whether
or not the Agent a party thereto) imposed on, incurred by or asserted against
any of them in any way relating to or arising out of this Security Agreement,
or the manufacture, purchase, acceptance, rejection, ownership, delivery,
lease, possession, use, operation, condition, sale, return or other disposition
of any Collateral (including, without limitation, latent and other defects,
whether or


 


15

















 


not discoverable by any such
indemnified party or Float, and any claim for patent, trademark or copyright
infringement) unless such liabilities, damages, penalties, suits, costs and
expenses are determined by a court of competent jurisdiction in a final
non-appealable judgment to have occurred directly as a result of any such
indemnified party’s gross negligence or willful misconduct.


 


Section
8.16                            Sending
Notices.  Any notice required or
permitted to be given under this Security Agreement shall be sent (and deemed
received) in the manner and to the addresses set forth in Section 12.14 of the
Credit Agreement.


 


Section
8.17                            WAIVER
OF JURY TRIAL.  FLOAT AND THE AGENT
HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR
INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT CONTRACT OR OTHERWISE) IN ANY
WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS SECURITY AGREEMENT OR
THE RELATIONSHIP ESTABLISHED THEREUNDER.


 


Section
8.18                            Consent
To Jurisdiction.  Float hereby
irrevocably submits to the non-exclusive jurisdiction of any U.S. federal or
Ohio state court sitting in Columbus, Ohio in any action or proceeding arising
out of or relating to this Security Agreement and Float hereby irrevocably agrees
that all claims in respect of such action or proceeding may be heard and
determined in any such court and irrevocably waives any objection it may now or
hereafter have as to the venue of any such suit, action or proceeding brought
in such a court or that such court is an inconvenient forum.  Nothing herein shall limit the right of the
Agent to bring proceedings against Float in the courts of any other
jurisdiction.  Any judicial proceeding
by Float against the Agent or any affiliate of the Agent involving, directly or
indirectly, any matter in any way arising out of, related to, or connected with
this Security Agreement shall be brought only in a court in Columbus, Ohio.


 


Section
8.19                             Counterparts.  This Security Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this Security Agreement by
signing any such counterpart.


 


16

















 


IN WITNESS WHEREOF, Float and the Agent have
executed this Security Agreement as of the date first above written.


 


	
   

  	
  FLOAT:

  
	
   

  	
   

  
	
   

  	
  FLOAT CONTROL, INC.,

  a Michigan corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Gary W. Qualmann

  	
   

  
	
   

  	
   

  	
   

  	
  Gary W. Qualmann

  
	
   

  	
  Title:

  	
  Secretary

  
	
   

  	
   

  
	
   

  	
  AGENT:

  
	
   

  	
   

  
	
   

  	
  THE HUNTINGTON NATIONAL BANK,

  a national banking association, individually and as

  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ John M. Luehmann

  	
   

  
	
   

  	
   

  	
  John M. Luehmann, Vice President

  



 


17

















 


EXHIBIT “A”


(See Sections
3.3, 3.4, and 4.1.(g) of Security Agreement)


 


 


Principal Place of Business and Mailing Address:


 


 


Location(s) of Receivables Records (if different from Principal Place
of Business above):


 


 


Locations of Inventory and Equipment and Fixtures:


 


A.                                   Properties
Owned by Float:


 


 


B.                                     Properties
Leased by Float (Include Landlord’s Name):


 


 


C.                                     Public
Warehouses or other Locations pursuant to Bailment or Consignment Arrangements
(include name of Warehouse Operator or other Bailee or Consignee):


 


18

















 


EXHIBIT “B”


(See Section
3.8 of Security Agreement)


 


A.            Vehicles
subject to certificates of title:


 


	
  Description

  	
   

  	
  Title Number & State Where Issued

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


B.            Aircraft/engines,
ships, railcars and other vehicles governed by federal statute:


 


	
  Description

  	
   

  	
  Registration Number

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  



 


C.                                     Patents,
copyrights, trademarks protected under federal law*:


 


 












*For (i) trademarks, show the trademark itself, the registration date
and the registration number; (ii) trademark applications, show the trademark
applied for, the application filing date and the serial number of the
application; (iii) patents, show the patent number, issue date and a brief
description of the subject matter of the patent; and (iv) patent applications,
show the serial number of the application, the application filing date and a
brief description of the subject matter of the patent applied for.  Any licensing agreements for patents or
trademarks should be described on a separate schedule.


 


19

















 


EXHIBIT “C”


(See Section
3.8 of Security Agreement)


 


Legal
description, county and street address of property on which

Fixtures are located:


 


 


	
  Name and Address of Record Owner:

  
	
   

  
	
   

  



 


20

















 


EXHIBIT “D”


(See Sections 3.9 and 4.1(f) of Security Agreement)


 


EXISTING LIENS ON THE COLLATERAL


 


 


	
  Secured Party

  	
   

  	
  Collateral

  	
   

  	
  Principal Balance

  	
   

  	
  Maturity

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 


21

















 


EXHIBIT “E”


(See Section
3.1 of Security Agreement)


 


OFFICES IN
WHICH FINANCING STATEMENTS HAVE BEEN FILED


 


Secretary of State of the State
of Michigan


 


22