**Exhibit 4.7**

 

**TERM LOAN AGREEMENT**

 

                THISTERM LOAN AGREEMENT, dated as of February 19, 2002 (this “Agreement”), is byand between AIRNET SYSTEMS, INC., an Ohio corporation (the “Company”), and BankOne, NA, a national banking association (the “Bank”).   The Company desires to obtain a term loan in the aggregateprincipal amount of $3,000,000 in order to provide funds for the financing ofan aircraft, and the Bank is willing to make such term loan on the terms andconditions herein set forth.  Inconsideration of the premises and of the mutual agreements herein contained,the parties hereto agree as follows:

 

 

ARTICLEI:  DEFINITIONS

 

                1.1           Certain Definitions.              As used herein the following termsshall have the following respective meanings:

 

                “CreditAgreement” shall mean the Credit Agreement dated as of December 31, 1999among the Company, the lenders party thereto from time to time, including theBank (the “Lenders”) and Bank One, NA, as agent for the Lenders, as such CreditAgreement as amended or modified from time to time pursuant to any amendmentsagreed to by the Bank, but without giving effect to any other amendments ormodifications of the Credit Agreement.

 

                “EurodollarBase Rate” means, with respect to the Eurodollar Loan for the relevantInterest Period, the applicable British Bankers’ Association LIBOR rate fordeposits in U.S. dollars as reported by any generally recognized financialinformation services as of 11:00 a.m. (London time) two Business Days prior tothe first day of such Interest Period, and having a maturity equal to suchInterest Period, provided that, if no such British Bankers’ Association LIBORrate is available to the Bank, the applicable Eurodollar Base Rate for therelevant Interest Period shall instead by the rate determined by the Bank to bethe rate at which the Bank or one of its affiliate banks offers to placedeposits in U.S. dollars with first-class banks in the London interbank marketat approximately 11:00 a.m. (London time) two Business Days prior to the firstday of such Interest Period, in the approximate amount of such Eurodollar Loanand having a maturity equal to such Interest Period.

 

                “EurodollarLoan” shall mean the Term Loan during any time it bears interest at theEurodollar Rate.

 

                “EurodollarRate” shall mean, with respect to the Term Loan and the related InterestPeriod, the per annum rate that is equal to the sum of:

 

                (a)           one percent (1.0%) per annum, plus

 

                (b)           the rate per annum obtained bydividing (i) the Eurodollar Base Rate for such Interest Period by (ii) anamount equal to one minus the stated maximum rate (expressed as a decimal) ofall reserve requirements (including, without limitation, any marginal,emergency, supplemental, special or other reserves) that is specified on thefirst day of such Interest Period by the Board of Governors of the FederalReserve System (or any successor agency thereto) for determining the maximumreserve requirement with respect to eurocurrency funding (currently referred toas “Eurocurrency liabilities” in Regulation D of such Board) maintained by amember bank such System;

 

all as determined by the Bank, such sum to berounded up, if necessary, to the nearest whole multiple of one one-hundredth ofone percent (1/100 of 1%).

 

 

 

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                “InterestPayment Date” shall mean the 19 day of each month occurring after the datehereof, commencing with the first such day occurring after the date of thisAgreement, except that an adjustment will be made if any Interest Payment Datewould otherwise fall on a day that is not a New York Banking Day and a LondonBanking Day so that the Interest Payment Date will be the first following daythat is a New York Banking Day and a London Banking Day, unless that day fallsin the next calendar month, in which case the Interest Payment Date will be thefirst preceding day that is a New York Banking Day and a London Banking Day.

 

                “InterestPeriod” shall mean, with respect to the Eurodollar Loan, each period oftime commencing on each Interest Payment Date and ending on the next InterestPayment Date, commencing with the Interest Payment Date occurring in Februaryof 2002 and continuing with each Interest Payment Date thereof.

 

                “LondonBanking Day” shall mean any day in which dealings and deposits in U.S.dollars are transaction in the London interbank market.

 

                “MaturityDate”  shall mean the InterestPayment Date occurring in February, 2007.

 

                “NewYork Banking Day” shall mean any day other than a Saturday, a Sunday or aday on which commercial banks in New York City are required or authorized to beclosed.

 

                “PrimeRate” shall mean the per annum rate announced by the Bank from time to timeas its “prime rate” (it being acknowledged that such announced rate may notnecessarily be the lowest rate charged by the Bank to any of its customers),which Prime Rate shall change simultaneously with any change in such announcedrate.

 

                “TermLoan” shall mean the borrowing under Section 2.1 evidenced by the TermNote.

 

                “TermNote” shall mean any promissory note of the Company evidencing the TermLoan, in substantially the form annexed hereto as Exhibit A, as amended ormodified from time to time and together with any promissory note or notesissued in exchange or replacement therefor.

 

                Allcapitalized terms used but not defined herein shall have the meaning ascribedthereto in the Credit Agreement.

 

**ARTICLE II:  THETERM LOAN AND PAYMENTS**

 

                2.1           Commitment of the Bank.  The Bank agrees, subject to and conditionsof this Agreement, to make a single Term Loan to the Company, and the Companyagrees to borrow such Term Loan from the Bank, on the date hereof, in theprincipal amount of $3,000,000.  TheTerm Loan made under this Section 2.1 shall be evidenced by the Term Note, andshall be due and payable and bear interest as provided in Article III.

 

                2.2           Principal Payments.

 

                (a)           Unless earlier payment is requiredunder this Agreement, the Company shall pay to the Bank the outstandingprincipal amount of the Term Loan in sixty equal installments in the amount of$50,000 payable on each Interest Payment Date and on the Maturity Date, whenthe entire outstanding principal amount of, and accrued interest on, the TermLoan shall be due and payable.

 

 

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                (b)           Upon at least five Business Days’prior written notice to the Bank and subject to Section 2.7, the Company mayprepay the term loan.

 

                2.3           Interest Payments.  The Company shall pay interest to the Bankon the unpaid principal amount of the Term Loan, for the period commencing onthe date such Term Loan is made until such Term Loan is paid in full, on eachInterest Payment Date and at maturity (whether at stated maturity, byacceleration or otherwise), and thereafter on demand, at the followingrates:  (i) the period from the datehereof until the Interest Payment Date occurring in February of 2002, at therate determined by the Bank, and (ii) thereafter, at the applicable Eurodollarrate.  Notwithstanding the foregoing,the Company shall pay interest on demand at the Overdue Rate on the outstandingprincipal amount of the Term Loan and any other amount payable by the Companyhereunder (other than interest) which is not paid in full when due (whether atstated maturity by acceleration or otherwise) for the period commencing on thedue date thereof until the same paid in full.

 

                                (b)           The Bank shall reset the EurodollarRate on the second London Banking Day prior to the first day of each InterestPeriod, as described in the definition of Eurodollar Rate for the relatedInterest Period.  Notwithstanding anyother provision of this Agreement to the contrary, if (i) deposits in Dollarsfor the periods comparable to the relevant Interest Periods are not availableto the Bank in the London interbank market, or (ii) the Eurodollar Rate willnot adequately and fairly reflect the cost of the Bank of making, funding ormaintaining the Eurodollar Loan, or (iii) by reason of national orinternational financial, political, or economical conditions or by reasons ofany applicable law, treaty, rule or regulation (whether domestic or foreign)now or hereafter in effect, or the interpretation or administration thereof byand governmental authority charged with the interpretation or administrationthereof, or compliance by the Bank with any guideline, request or directive ofsuch authority (whether or not having the force of the law), including withoutlimitation exchange controls, it is impracticable, unlawful or impossible forthe Bank to make, fund or maintain the Eurodollar Loan, the interest rateapplicable thereafter shall be the Prime Rate.

 

                2.4           Payment Method.  (a) All payments to be made by the Companyhereunder will be made in Dollars and in immediately available funds to theBank not later than 1:00 p.m. Colombus time on the date on which such paymentshall become due.  Payments receivedafter 1:00 p.m. Colombus time shall be deemed to be payments made prior to 1:00p.m. Columbus time on the next succeeding Business Day.

 

                                (b)           At the time of making each suchpayment, the Company shall, subject to the other terms and conditions of thisAgreement, specify to the Bank that obligation of the Company hereunder towhich such payment is to be applied.  Inthe event that the Company fails to so specify the relevant obligation or inany Event of Default shall have occurred and be continuing, the Bank may applysuch payments as it may determine in its sole discretion to obligations of theCompany to the Bank arising under this Agreement or otherwise.

 

                2.5           No Setoff or Deduction.  All payments of principal and interest onthe Term Note and other amounts payable by the Company hereunder shall be madeby the Company without setoff or counterclaim, and free and clear of, andwithout deduction or withholding for, or on account of, any present or futuretaxes, levies, imposts, duties, fees, assessments, or other charges of whatevernature, imposed by any governmental authority, or by any department, agency orpolitical subdivision or taxing authority.

 

                2.6           Payment on Non-business Day:  Payment Computations.  Except as otherwise provided in thisAgreement to the contrary, whenever any installment or principal of, orinterest on, the Term Loan or any other amount due hereunder becomes due andpayable on a day which is not a Business Day, the maturity thereof shall beextended to the next succeeding Business Day and, in the case of anyinstallment

 

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of principal, interest shall be payablethereon at the rate per annum determined in accordance with this Agreementduring such extension.  Computation ofinterest and other amounts due under this Agreement shall be made on the basisof a year of 360 days for the actual number of days elapsed, including thefirst day but excluding the last day of the relevant period.

 

                2.7           Indemnification.  If any payment of the Eurodollar Loan occurson a date which is not the last day of the applicable Interest Period, whetherbecause of acceleration, prepayment or otherwise, or a Eurodollar Loan is notmade on the date specified by the Company for any reason, the Company willindemnify the Bank for any loss or cost incurred by it resulting therefrom,including, without limitation, any loss or cost in liquidating or employingdeposits acquired to fund or maintain such Eurodollar Loan.

 

                2.8           Yield Protection.  If, on or after the date of this Agreement,the adoption of any law or any governmental or quasi-governmental rule, regulation,policy, guideline or directive (whether or not having the force of law), or anychange in the interpretation or administration thereof by any governmental orquasi-governmental authority, central bank or comparable agency charged withthe interpretation or administration thereof, or compliance by the Bank withany request or directive (whether or not having the force of law) of any suchauthority, central bank or comparable agency:

 

(i)                                     subjects theBank to any taxes, or changes the basis of taxation of payments to the Bank inrespect of the Eurodollar loans, or

 

(ii)                                  imposes orincreases or deems applicable any reserve, assessment, insurance charge,special deposit or similar requirement against assets of, deposits with or forthe account of, or credit extended by, the Bank (other than reserves andassessments taken into account in determining the interest rate applicable tothe Eurodollar Loan), or

 

(iii)                               imposes anyother condition the result of which is to increase the cost to the Bank ofmaking, funding or maintaining the Eurodollar Loan or reduces any amountreceivable by the Bank in connection with the Eurodollar Loan or requires theBank to make any payment calculated by reference to the amount of theEurodollar Loan, by an amount deemed material by the Bank,

 

and the result of any of the foregoing is toincrease the cost to the Bank of making or maintaining a Eurodollar Loan or toreduce the return received by the Bank in connection with such Eurodollar Loan,then, within 15 days of demand by the Bank, the Company shall pay the Bank suchadditional amount or amounts as will compensate the Bank for such increasedcost or reduction in amount received.

 

                2.9           Changes in Capital AdequacyRegulations.  If the Bank determinesthe amount of capital required or expected to be maintained by the Bank or anycorporation controlling the Bank is increased as a result of a Change, then,within 15 days of demand by the Bank, the Company shall pay the Bank the amountnecessary to compensate for any shortfall in the rate of return on the portionof such increased capital which the Bank determines is attributable to thisAgreement or its Commitment hereunder (after taking into account the Bank’spolicies as to capital adequacy). “Change” means (i) any change after the date of this Agreement in theRisk-Based Capital Guidelines or (ii) any adoption of or change in any otherlaw, governmental or quasi-governmental rule, regulation, policy, guideline,interpretation, or directive (whether or not having the force of law) after thedate of this Agreement which affects the amount of capital required or expectedto be maintained by the Bank or any corporation controlling the Bank.  “Risk-Based Capital Guidelines” means (i)the risk-based capital guidelines in effect in the United States on the date ofthis Agreement, including transition rules, and (ii) the corresponding capitalregulations promulgated by regulatory authorities outside the United Statesimplementing the July 1988 report of the Basle Committee on Banking Regulationand Supervisory Practices Entitled “International Convergence

 

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of Capital Measurements and Capital Standards,” including transition rules,and any amendments to such regulations adopted prior to the date of thisAgreement.

 

**ARTICLE III:  COVENANTS**

 

                3.1           Incorporation of Covenants fromCredit Agreement.   The Companycovenants and agrees that, until payment in full of the principal of andaccrued interest on the Term Loan and the performance of all other obligationsof the Company under this Agreement and the Term Note, unless the shallotherwise consent in writing, it shall, and shall cause each of itsSubsidiaries to observe and perform, as incorporated herein, the covenants andagreements set forth in Article V of the Credit Agreement. All such provisionsof said Article V, including definitions of the defined terms used therein andexhibits referred to therein, are hereby incorporated by reference and made apart of this Agreement to the same extent as if set forth fully herein exceptthat (i) all cross references shall be deemed to refer to the relevantprovision or provisions as incorporated herein, and (ii) reference therein to“hereof”, “herein” and “hereto” shall be deemed to refer to this Agreement.

 

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**ARTICLE IV:  DEFAULT**

 

                4.1           Incorporation of Events of Defaultfrom Credit Agreement.   For thepurpose of determining Events of Default with respect to the Company, Section6.1 of the Credit Agreement, including definitions of defined terms usedtherein, are hereby incorporated by reference and made a part of this Agreementto the same extent as if set forth fully herein, except that (i) reference insuch sections as incorporated herein to the defined term “Notes” shall bedeemed references to the defined term “Term Note” as defined in this Agreement,(ii) reference in such sections are incorporated herein to the defined term“Advances” shall be deemed reference to the defined term “Term Loan” as definedin this Agreement, (iii) reference to “other documents” in section 6.1(b) asincorporated herein and the “Loan Document” in section 6.1 shall be deemed toalso include the aircraft security agreement (as amended or modified from timeto time, the “Aircraft Security Agreement”) delivered by the Company inconnection herewith and (iv) references therein to “hereof”, “herein” and“hereto” shall be deemed references to this Agreement.

 

                4.2           Remedies.   Upon the occurrence and during thecontinuance of any Event of Default, the Bank may by notice to the Companyterminate the Bank’s obligations under Section 2.1 hereof, declare theoutstanding principal of, and accrued interest on, the Term Loan, and all otheramounts owing under this Agreement, the Term Note and any other agreement ordocument executed in connection herewith at any time to be immediately due andpayable, and exercise all of its rights under the Aircraft Security Agreementand any other agreement, instrument or document executed or delivered inconnection herewith, or any one or more of the foregoing, whereupon all suchamounts shall become immediately due and payable, as the case may be, providedthat in the case of any event or condition described in Section 6.1(h) of theCredit Agreement as incorporated herein with respect to the Company, theCommitment shall automatically become immediately due and payable withoutnotice; in all cases without demand, presentment, protest, diligence, notice ofdishonor or other formality, all of which are hereby expressly waived.

 

 

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**ARTICLE V: MISCELLANEOUS**

 

                5.1           Incorporation of Credit AgreementProvisions.   Any supplement,amendment, modification, waiver or consent made or granted by the Lenders inconnection with the provisions of the Credit Agreement incorporated herein atany time after the date hereof shall be deemed a supplement, amendment,modification, waiver or consent, as the case may be, with respect to suchprovisions as incorporated herein if the Bank shall be one of the Lendersagreeing to such supplement, amendment, modification, waiver or consent.Notwithstanding anything in this Agreement to the contrary, no termination,cancellation or expiry of the Credit Agreement shall have any affect whatsoeverupon the provisions thereof as such provisions of the Credit Agreement areincorporated herein, and all such provisions shall be deemed to survive anysuch termination, cancellation or expiry of the Credit Agreement and shallthereafter continue to be binding upon the Company under this Agreement.

 

                5.2           Conditions To Term Loan.   Prior to making the Term Loan, the Companyagrees to execute and deliver to the Bank (1) the Aircraft Security Agreementin form and substance satisfactory to the Bank granting to the Bank a firstpriority lien and security interest on the aircraft, engines and othercollateral described therein, (2) the Term Note and (3) such resolutions, legalopinions (including without limitation a lien priority opinion of FAA counsel)and such other documents as requested by the Bank, each in form and substancesatisfactory to the Bank.

 

                5.3           Expenses.   The Company agrees to pay, or reimburse theBank for the payment of, on demand, the reasonable fees and expenses of counselthe Bank in connection with the preparation, execution, delivery andadministration of this Agreement and the consummation of the transactionscontemplated hereby, and in connection with any amendments, waivers or consentsin connection therewith, and all reasonable costs and expenses of the Bank(including reasonable fees and expenses of counsel and whether incurred throughnegotiations, legal proceedings or otherwise) in connection with any Event ofDefault or the enforcement of, or the exercise or preservation of any rightsunder, this Agreement or the Term Note or in connections with any refinancingor restructuring of the credit arrangements provided under this Agreement.

 

                5.4           Representations.   The Company represents and warrants thatall representations and warranties contained in Article IV of the CreditAgreement are true and correct as if made on and as of the date hereof, thatthe execution, delivery and performance by the Company of this Agreement, theTerm Note and the Aircraft Security Agreement have been duly authorized by allnecessary corporate action and are not in contravention of any law, rule,regulation, judgment or agreement, and that this Agreement, the Term Note andthe Aircraft Security Agreement are the legal, valid and binding obligations ofthe Company enforceable against the Company and in accordance with theirrespective terms.

 

                5.5           No Waiver By Conduct; RemediesCumulative.   No course of dealing on the part of the Bank,nor any delay or failure on the part of the Bank in exercising any right, poweror privilege hereunder shall operate as a waiver of such right, power orprivilege or otherwise prejudice the Bank’s rights and remedies hereunder; norshall any single or partial exercise thereof preclude any further exercisethereof or the exercise of any other right, power or privilege. No right orremedy conferred upon or reserved to the Bank under this Agreement or the TermNote is intended to be exclusive of any other right or remedy, and every rightand remedy shall be cumulative and in addition to every other right or remedygranted thereunder or now or hereafter existing under any applicable law. Everyright and remedy granted by this Agreement or the Term Note or by applicablelaw to the Bank may be exercised from tie to time and as often as may be deemedexpedient by the Bank and, unless contrary to the express provisions of thisAgreement or the Term Note, irrespective of the occurrence or continuance ofany Default or Event of Default.

 

 

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                5.6             Successors and Assigns.  This Agreement shall be binding upon andinure to the benefit of the parties hereto and their respective successors andassigns, provided that the Company may not, without the prior consent ofthe Bank, assign its rights or obligations hereunder or under the Term Note orthe Aircraft Security Agreement and the Bank shall not be obligated to make theTerm Loan hereunder to any entity other than the Company.

 

                5.7           Counterparts.  This Agreement may be executed in any numberof counterparts, all of which taken together shall constitute one and the sameinstrument and any of the parties hereto may execute this Agreement by signingand such counterpart.

 

                5.8           Governing Law.  This Agreement is a contract made under, andshall be governed by and construed in accordance with, the law of the State ofOhio applicable to contracts made and to be performed entirely within suchState and without giving effect to choice of law principled of such State.

 

                5.9           Integration and Severability.  This Agreement, including without limitationany portion of the Credit Agreement incorporated herein, embodies the entireagreement and understanding between the Company and the Bank, and supersedesall prior agreements and understandings, relating to the subject matterhereof.  In case any one or more of theobligations of the company under this Agreement, the Term Note or the AircraftSecurity Agreement shall be invalid, illegal or unenforceable in anyjurisdiction, the validity, legality and enforceability of the remainingobligations of the Company shall not in any way be affected or impairedthereby, and such invalidity, illegality or unenforceability in onejurisdiction shall not affect the validity, legality or enforceability of theobligations of the Company under this Agreement, the Term Note or the AircraftSecurity Agreement in any other jurisdiction.

 

                INWITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executedand delivered as of the day and year first above written.

 

 
| BANK ONE, NA |           | AIRNET SYSTEMS |
|--------------|----------------|----------------|
|         |           |           |
| By:          | /s/[ILLEGIBLE] |           | By: | /s/[ILLEGIBLE] |
|         |           |           |
| Its:         | F.V.P          |           | Its: | CFO |
|              |                |                |  |  |  |  |

 

 

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**EXHIBIT A**

 

TERMNOTE

 

$3,000,000                                                                                                                              February        , 2002

 

                FORVALUE RECEIVED, AIRNET SYSTEMS, INC., an Ohio Corporation (the “Company”),hereby unconditionally promises to pay to the order of BANK ONE, NA, a nationalbanking association (the “Bank”), at the principal banking office of the Bankin lawful money of the United States of America and in immediately availablefunds, the principal sum of Three Million Dollars ($3,000,000), payable insixty equal monthly installments in the amount of $50,000 payable on eachInterest Payment Date and on the Maturity Date, unless earlier payment payableis required, when the entire outstanding principal balance of the Term Loanevidenced hereby, and all accrued interest thereon, shall be due and payable;and to pay interest on the unpaid principal balance hereof from time to timeoutstanding, in like money and funds, for the period from the date hereof untilsuch Term Loan shall be paid in full, at the rate per annum and on the datesprovided the Term Loan Agreement referred to below.

 

                TheCompany and each endorser or guarantor hereof waives demand, presentment,protest, diligence, notice of dishonor and any other formality in connectionwith this Term Note.  Should theindebtedness evidenced by this Term Note or any part thereof be collected inany proceeding or be placed in the hands of attorneys for collection, theCompany agrees to pay, in addition to the principal, interest and other sumsdue and payable hereon, all costs of collecting this Term Note, includingattorneys fees, expenses.

 

                ThisTerm Note evidences a term Loan made under a Term Loan Agreement, dated as ofthe date hereof (as amended or modified from time to time, the “Term LoanAgreement”), by and between the Company and the Bank to which reference ishereby made for a statement of the circumstances under which this Term Note issubject to prepayment and under which its due date may be accelerated.  Capitalized terms used but not defined inthis Term Note shall have the respective meanings assigned to them in the TermLoan Agreement.

 

                ThisTerm Note is made under, and shall be governed by in accordance with, the lawsof the State of Ohio applicable to contracts made and to be performed entirelywithin such State and without giving effect to choice of law principles of suchState.

 

 
|   |   | AIRNET SYSTEMS |
|--------|--------|----------------|
|   |   |           |
|   |   |           | By: |   |
|   |   |           |
|   |   |           | Its: |   |
|        |        |                |  |  |  |  |

 

 

 

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