Exhibit
4.5


 


EXECUTION COPY


 


CONTINUING
SECURITY AGREEMENT


 


THIS CONTINUING SECURITY AGREEMENT (this “Security
Agreement”) is entered into as of May 28, 2004, by and between Jetride, Inc.,
an Ohio corporation (“Jetride”), 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 Jetride 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, Jetride 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.


 


“Aircraft Mortgage”
means the Mortgage, Security Agreement and Assignment dated the date hereof
given by AirNet in favor of Agent, for the benefit of the Lenders, as the same may
be amended, modified, supplemented, extended, restated or replaced from time to
time.


 


“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 Jetride 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;
provided, however, that notwithstanding anything contained or implied herein to
the contrary, (i) any aircraft, airframe, engine or related component
regardless of whether or not the same is subject to and/or constitutes
“Collateral” as such term is used and defined in the Aircraft Mortgage, whether
or not the same is now or hereafter acquired, and (ii) the “Collateral” as such
term is defined in the Pledge, shall be excluded from this definition and the
meaning of Collateral as defined and used herein.


 


“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,


 


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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 Jetride in its business and
all other tangible personal property (other than Inventory), and all accessions
and additions thereto, including, without limitation, all Fixtures.


 


“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.


 


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“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 Jetride, 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 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 Jetride.


 


“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
Jetride, 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 Jetride 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 Jetride 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.


 


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ARTICLE II


 


Grant of Security
Interest


 


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


 


ARTICLE III


 


Representations and
Warranties


 


Jetride represents and
warrants to the Agent that:


 


Section 3.1                                   Title,
Authorization, Validity and Enforceability.  Jetride 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 Jetride of this Security Agreement
has been duly authorized by proper corporate proceedings, and this Security
Agreement constitutes a legal, valid and binding obligation of Jetride, 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 Jetride
in all now owned and hereafter acquired Collateral. When financing statements
have been filed in the appropriate offices against Jetride 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 Jetride 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
Jetride or Jetride’s articles of incorporation or code of regulations, the
provisions of any indenture, instrument or agreement to which Jetride 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.  Jetride’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”; Jetride 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


 


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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 Jetride proposes that any such items of Collateral be located at any
new locations (i.e., not shown on the Exhibit “A” originally attached hereto),
Jetride shall provide thirty (30) days’ prior notice thereof to Agent together
with an updated Exhibit “A”.  All of
said locations are owned by Jetride or AirNet except for locations (i) which
are leased by Jetride 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 Jetride has used its best commercially reasonable efforts to
obtain and deliver bailment agreements, 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.  Jetride 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 Jetride relating thereto and in all invoices and
reports with respect thereto furnished to the Agent by Jetride from time to
time.  As of the time when each Account
or each item of Chattel Paper arises, Jetride 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 Jetride 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 Jetride 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. 
Jetride’s Federal employer identification number is 30-0025430.


 


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ARTICLE IV


 


Covenants


 


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


 


Section 4.1                                   General.


 


(a)                                  Inspection.  Jetride shall permit the Agent, by its
representatives and agents (i) to inspect the Collateral, provided that Agent
or such representative or agent shall provide reasonable notice to Jetride 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 Jetride relating
to the Collateral and (iii) to discuss the Collateral and the related records
of Jetride with, and to be advised as to the same by, Jetride’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 Jetride’s expense.


 


(b)                                 Taxes.  Jetride 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.  Jetride 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.  Jetride 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.  Jetride
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.  Jetride 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 Jetride instructing Jetride to
cease such transactions, sales or leases of Inventory in the ordinary course of
business, and (iii) Agent has issued a notice to Jetride pursuant to
Article VII, proceeds of Inventory and Accounts collected in the ordinary
course of business.


 


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(f)                                    Liens.  Jetride 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.  Jetride 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 Jetride 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 Jetride and/or AirNet shall have given Agent not less than 15
days’ prior written notice thereof, (v) change its mailing address, unless
Jetride 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 Jetride
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.  Jetride 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.  Jetride
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, Jetride 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, Jetride shall collect and enforce, at
Jetride’s sole expense, all amounts due or hereafter due to Jetride under the
Receivables included at such time by AirNet in the calculation of the Borrowing
Base.


 


(c)                                  Delivery
of Invoices.  Jetride 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 Jetride, any dispute, setoff,


 


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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,
Jetride shall disclose such fact to the Agent in writing in connection with the
inspection by the Agent of any record of Jetride relating to such Receivable and
in connection with any invoice or report furnished by Jetride to the Agent
relating to such Receivable.


 


Section 4.3                                   Inventory
and Equipment.


 


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


 


(b)                                 Insurance.


 


(i)                                     Jetride
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, Jetride shall give prompt written notice to
the insurance carrier and to the Agent. 
So long as no Default has occurred and is continuing, Jetride 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 Jetride, 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 Jetride 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 Jetride hereby assigns to the Agent
all rights of Jetride 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 Jetride for the cost of
restoration, repair or replacement of the Collateral, Jetride shall,
notwithstanding the adequacy of the insurance


 


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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 Jetride upon delivery to the Agent of satisfactory proof
of said restoration, repair and/or replacement.


 


(c)                                  Titled
Vehicles. Upon request, Jetride 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, Jetride shall,
upon the request of the Agent at any time and from time to time (i) 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.  Jetride 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.  Jetride 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.  Jetride
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.


 


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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, 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                                   Jetride’s
Obligations Upon a Default.  Upon
the request of the Agent after the occurrence and during the continuance of a
Default, Jetride 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 Jetride.


 


(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, Jetride’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, Jetride’s rights under all licenses and all franchise
agreements shall inure to the Agent’s benefit. 
In addition, Jetride hereby irrevocably agrees that the Agent may,
following the occurrence and during the


 


11

















 


continuance of a Default,
sell any of Jetride’s Inventory directly to any person, including without limitation
persons who have previously purchased Jetride’s Inventory from Jetride 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 Jetride and any Inventory that is covered by any copyright owned
by or licensed to Jetride and the Agent may finish any work in process and
affix any trademark owned by or licensed to Jetride 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
Jetride or AirNet on behalf of Jetride and then only to the extent in such
writing specifically set forth.  All
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, Jetride 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 Jetride 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, Jetride 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, Jetride 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.


 


12

















 


Section 7.3                                   Special
Collateral Account.  The Agent may,
by giving Jetride 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.  Jetride 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
Jetride 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;


 


(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 Jetride
and/or AirNet with the Agent.


 


ARTICLE VIII


 


General Provisions


 


Section 8.1                                   Notice
of Disposition of Collateral.  To
the extent permitted by law, Jetride 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
Jetride, 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.


 


13

















 


Section 8.2                                   Compromises
and Collection of Collateral. 
Jetride 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, Jetride 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 Jetride Obligations. 
Without having any obligation to do so, the Agent may perform or pay any
obligation which Jetride and/or AirNet has agreed to perform or pay in this
Security Agreement and Jetride shall reimburse the Agent for any amounts paid
by the Agent pursuant to this Section 8.3.  Jetride’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. 
Jetride 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 Jetride as debtor, and to file financing statements
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
Jetride 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 Jetride, (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 Jetride 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
Jetride 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. 
Jetride 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


 


14

















 


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 Jetride contained in
this Security Agreement, that the covenants of Jetride contained in the
Sections referred to in this Section 8.5 shall be specifically enforceable
against Jetride.


 


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 Jetride
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 Jetride for
such use and occupancy.


 


Section 8.7                                   Dispositions
Not Authorized.  Jetride 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
Jetride 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 Jetride, the Agent and the Lenders, except that Jetride shall not
have the right to assign its rights or delegate its obligations under this
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 Jetride 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 Jetride, together with interest and
penalties, if any.  Jetride 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 Jetride in the performance of actions required
pursuant to the terms hereof shall be borne solely by Jetride.


 


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


 


15

















 


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 Jetride, the Lenders
and the Agent relating to the Collateral and supersedes all prior agreements
and understandings between Jetride, 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.  Jetride 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 not discoverable by any such indemnified party or
Jetride, 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.  JETRIDE 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.  Jetride 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 Jetride 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 Jetride in the courts of any other jurisdiction.  Any judicial proceeding by Jetride against
the Agent or any affiliate of the Agent involving, directly or indirectly, any
matter in any way


 


16

















 


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.


 


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


 


	
   

  	
  JETRIDE:

  
	
   

  	
   

  
	
   

  	
  JETRIDE, INC.,

  
	
   

  	
  an Ohio 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 Jetride:


 


 


 


B.                                     Properties
Leased by Jetride (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 Ohio


 


22