**Exhibit4.12**

 

**AIRNET SYSTEMS, INC.**

**Loan and Security Agreement**

 

Loan Number: **1000119650**

 

This Agreement is dated as of June 30, 2004 andis executed by and between BANC ONE LEASING CORPORATION (“Lender”), with Lender’sprincipal office located at 1111 Polaris Parkway, Suite A3 (OH1-1085),Columbus, Ohio 43240 and the borrower identified below (“Borrower”):

 

Borrower: JETRIDE, INC.

 

Borrower’s Address: 3939 International Gateway,Columbus, Ohio 43219

 

**1.  GRANT OF SECURITY INTEREST.** Borrower grants, pledges and assigns to Lender a security interest inall of Borrower’s respective right, title and interest in and to the propertydescribed on the **attached Schedule A-1**,now or hereafter arising or acquired, wherever located, together with any andall additions, accessions, parts, accessories, substitutions and replacementsthereof, now or hereafter installed in, affixed to or used in connection withsaid property (the “Equipment”), in all proceeds thereof, cash and non-cash,including, but not limited to, proceeds of notes, checks, instruments,indemnity proceeds, or any insurance on such and any refund or rebate ofpremiums on such (“Collateral”).  ThisAgreement secures the prompt payment and complete performance in full when due,whether at the stated maturity, by acceleration or otherwise, of all paymentand other obligations of Borrower under or in connection with this Agreement,and the Business Purpose Promissory Note executed in connection with the LoanNumber referenced above with the Borrower as the maker (the “Note”), and anyand all renewals, extensions or substitutions therefor (“Obligations”).  Borrower is and will continue to be (or, withrespect to after acquired property that constitutes Equipment under thisAgreement, will be when acquired) the legal and beneficial owner of theCollateral free and clear of any Lien except for the security interest createdby this Agreement and/or any other prior security agreement delivered byBorrower to Lender.  Except as previouslydisclosed to Lender in writing, no effective Uniform Commercial Code (“UCC”)financing statement or other instrument covering all or any part of theCollateral is on file in any recording office, except those in favor ofLender.  At its sole expense, Borrowershall protect and defend Lender’s first priority security interest in theCollateral against all claims and demands whatsoever.

 

**2.  MAINTENANCE AND USE**.  Atits sole expense, Borrower shall (a) repair and maintain the Equipment in goodcondition and working order and supply and install all replacement parts orother devices when required to so maintain the Equipment or when required byapplicable law or regulation, which parts or devices shall automatically becomepart of the Equipment; (b) use and operate the Equipment in a careful manner inthe normal course of its business and only for the purposes for which it wasdesigned in accordance with the manufacturer’s warranty requirements, andcomply with all laws and regulations relating to the Equipment, and obtain allpermits or licenses necessary to install, use or operate the Equipment;  (c) except as provided in clause (d) below,make no alterations, additions, subtractions, upgrades or improvements to theEquipment without Lender’s prior written consent, which consent will not beunreasonably withheld, but any such alterations, additions, upgrades orimprovements shall automatically become part of the Equipment; (d) maintain,inspect, service and repair, overhaul and test the Equipment in accordance withthe FAA approved maintenance program, manufacturer’s approved maintenanceprogram, FAA airworthiness directives, and the manufacturer’s alert bulletinsand urgently recommended service bulletins and procedures, and perform allduties and tasks which would be required to maintain the Equipment, includingthe engines, in full compliance with the manufacturer’s specification (i) so asto keep the Equipment in as good operating condition as when delivered to theBorrower hereunder, ordinary wear and tear excepted, and (ii) so as to keep theEquipment in such operating condition as may be necessary to enable theairworthiness certification of such Equipment to be maintained in good standingat all times under the Act (as defined in Section 20 hereof); and (e)maintain all records, logs and other materials required by the FAA to bemaintained in respect of the Equipment. The Equipment will not be based outsideof the United States, provided, however, that the Equipment shall not beoutside of the United States for more than ninety (90) days in any calendaryear.  The Equipment shall not beoperated within, over or into any jurisdiction not covered by the insurancepolicies required herein nor shall the Equipment be operated in anyjurisdiction that does not have diplomatic relations with the UnitedStates.  Lender has the right uponreasonable notice to Borrower to inspect the Equipment wherever located.  The Equipment shall be based at the location

 

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specifiedon Schedule A-1.  The Equipment maybe repositioned by Borrower, from time to time, to other locations within theUnited States in the normal course of the Borrower’s business.  Borrower shall notify Lender in writing ofany new location where the Equipment is based within five (5) days of anyrepositioning of the Equipment.

 

**3.  INSURANCE.**  At itssole expense, Borrower at all times shall keep each item of Equipment insuredagainst all risks of loss or damage from every cause whatsoever for an amountnot less than the greater of the full replacement value or the Financed Amount(as defined in Section 20 hereof). All insurers shall be reasonably satisfactory to Lender.  Borrower shall deliver to Lender satisfactoryevidence of such coverage.  Proceeds ofany insurance covering damage or loss of the Equipment in excess of $250,000.00shall be payable to Lender as loss payee and shall, at Lender’s option, beapplied toward (a) the replacement, restoration or repair of the Equipment, or(b) payment of the obligations of Borrower under this Agreement.   If an event of default occurs and iscontinuing, then Borrower automatically appoints Lender as Borrower’sattorney-in-fact with full power and authority in the place of Borrower and inthe name of Borrower or Lender to make claim for, receive payment of, and signand endorse all documents, checks or drafts for loss or damage under any suchpolicy.  Each insurance policy willrequire that the insurer give Lender at least 30 days prior written notice of anycancellation of such policy and will require that Lender’s interests remaininsured regardless of any act, error, omission, neglect or misrepresentation ofBorrower, and will contain those other requirements outlined in Schedule 3hereof.  The insurance maintained byBorrower shall be primary without any right of contribution from insurancewhich may be maintained by Lender.

 

**4.  LOSS OR DAMAGE.** Borrower bears the entire risk of loss, theft, damage or destruction ofEquipment in whole or in part from any reason whatsoever (“Casualty Loss”).  No Casualty Loss to Equipment shall relieveBorrower from the obligation to pay the installment payments or from any otherobligation under this Agreement.  In theevent of Casualty Loss to any item of Equipment, Borrower shall immediatelynotify Lender of the same and Borrower shall, if so directed by Lender,immediately repair the same.  If Lenderdetermines that any item of Equipment has suffered a Casualty Loss beyondrepair (“Lost Equipment”), then Borrower, at the option of Lender, shall:  (1) upon receipt of any insurance proceedsfor the Lost Equipment replace the Lost Equipment with similar equipment ingood repair, condition and working order free and clear of any Liens anddeliver to Lender a bill of sale covering the replacement equipment, in whichevent such replacement equipment shall automatically be Equipment under thisAgreement; or (2) upon receipt of any insurance proceeds for the Lost Equipmentbut no more than 180 days after the date of the Casualty Loss, pay to Lenderall amounts then due and payable by Borrower under this Agreement for the LostEquipment plus the remaining principal balance for such Lost Equipment as ofthe date of the Casualty Loss as determined by Lender’s records.  Upon payment by Borrower of all amounts dueunder the above clause (2), the security interest of the Lender in the LostEquipment will terminate.

 

**5.  TAXES.** Borrower will pay promptly when due all taxes, assessments andgovernmental charges upon or against Borrower, the Collateral or the propertyor operations of Borrower, in each case before same becomes delinquent andbefore penalties accrue thereon, unless and to the extent that same are beingcontested in good faith by appropriate proceedings.

 

**6.  GENERAL INDEMNITY.** Borrower assumes all risk and liability for, and shall defend, indemnifyand keep Lender harmless on an after-tax basis from, any and all liabilities,obligations, losses, damages, penalties, claims, actions, suits, costs andexpenses, including reasonable attorney fees and expenses, of whatsoever kindand nature imposed on, incurred by or asserted against Lender, in any wayrelating to or arising out of the manufacture, purchase, acceptance, rejection,ownership, possession, use, selection, delivery,  operation, condition, sale, return or otherdisposition of the Equipment or any part thereof (including, withoutlimitation, any claim for latent or other defects, whether or not discoverableby Borrower or any other person, any claim for negligence, tort or strictliability, any claim under any environmental protection or hazardous waste lawand any claim for patent, trademark or copyright infringement).  Borrower will not indemnify Lender under thissection for loss or liability caused directly and solely by the negligenceor willful misconduct of Lender.  In thissection, “Lender” also includes any director, officer, employee, agent,successor or assign of Lender.  Borrower’sobligations under this section shall survive the expiration, cancellationor termination of this Agreement.

 

**7.  PERSONAL PROPERTY.** Borrower represents and agrees that the Equipment is, and shall at alltimes remain, separately identifiable personal property.  Upon Lender’s request, Borrower shall usecommercially reasonable efforts to furnish Lender a landlord’s and/or mortgagee’swaiver and consent to remove all Equipment. Lender may display notice of itsinterest in the Equipment by any reasonable identification.  Borrower shall not alter or deface any suchindicia of Lender’s interest.

 

**8.  FINANCIAL REPORTS.** Borrower agrees to furnish to Lender: (a) annual financial statements setting forth the financial conditionand results of operation of Borrower (financial statements shall includebalance sheet, income statement and changes in financial position and all notesthereto) within 120 days of the end of each fiscal year of Borrower; (b)quarterly financial statements setting forth the financial condition andresults of operation of Borrower within 60 days of the end of each of the firstthree fiscal quarters of Borrower; and (c) such other financial

 

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information as Lender may from time to time reasonably requestincluding, without limitation, financial reports filed by Borrower with federalor state regulatory agencies to the extent Borrower may disclose such otherfinancial information without violating the Securities Exchange Act of 1934 orany rule or regulation of the Securities and Exchange Commission.  All such financial information shall beprepared in accordance with generally accepted accounting principles.  If Borrower fails to furnish the annualfinancial statements to Lender within 30 days of Lender’s written request, thenLender may, at its option, charge Borrower a non-performance fee equal to allthe installment payments due under this Agreement for the then current month(unless otherwise prohibited by law) and such fees shall be payable by Borroweron demand.

 

**9.  NO CHANGES IN BORROWER**. Borrower shall not:  (a)liquidate, dissolve or suspend business; (b) sell, transfer or otherwisedispose of all or a majority of its assets, except that Borrower may sell itsinventory in the ordinary course of its business; (c) enter into any merger,consolidation or similar reorganization unless it is the surviving corporation;(d) transfer all, or any substantial part of, its operations or assets outsideof the United States of America; or (e) without 15 days advance written noticeto Lender, change its name or chief place of business.

 

**10.  REPRESENTATIONS.** Borrower represents and warrants that: (a) Borrower is organized, validly existing, and in good standing underthe laws of one of the states of the United States; (b) Borrower is qualifiedto do business in, and is in good standing under the laws of, each other statein which it conducts its business and in which the Equipment is located, exceptto the extent such failure would not have a material adverse effect on theBorrower’s business or the Collateral; (c) Borrower has the power, and is dulyauthorized to enter into, this Agreement and the Note and to execute anddeliver to Lender, now and from time to time hereafter, additional instruments,resolutions, agreements and other instruments or documents relating to theObligation owed to Lender; (d) Borrower has, by proper action, authorized andempowered those persons whose signatures appear in this Agreement, the Note,and any instruments, documents and exhibits that have been delivered inconnection herewith, to execute the same for and on its behalf; (e)  this Agreement, the Note, and each relateddocument constitute a legal, valid, and binding obligation of Borrowerenforceable in accordance with its terms, except as enforceability may belimited by bankruptcy, insolvency or similar laws affecting the enforcement ofcreditors’ rights generally and general principles of equity; (f) thisAgreement and the Note evidence a loan made primarily for business, commercialor agricultural purposes and not primarily for personal, family, or householdpurposes; (g) the Equipment is not, and will not, be registered under the lawsof any foreign country; (h) the Equipment is, and shall remain at all times,eligible for registration under the Act (as defined in Section 20 hereof);(i) the Equipment shall be based in, and primarily used in, the United Statesall as required by the Act; and (j) the Equipment will not be used in violationof any law, regulation, ordinance or policy of insurance affecting themaintenance, use or flight of the Equipment; and (k) Borrower qualifies as acitizen of the United States as defined in the Act and will continue to qualifyas a United States citizen in all respects.

 

**11.  OTHER DOCUMENTS; EXPENSES;APPOINTMENT OF ATTORNEY-IN-FACT**.  Borrower hereby irrevocablyappoints Lender or its designee as Borrower’s attorney in fact, with fullauthority in the place instead of Borrower, from time to time in Lender’sdiscretion upon, during, and after an event of default, to take any action andto execute any instrument which Lender may deem necessary or advisable toaccomplish the purposes of this Agreement, including without limitation, (a) toperfect and continue to perfect the security interests created by thisAgreement, including without limitation to prepare, sign, amend, file, orrecord a Uniform Commercial Code financing statement in the place of Borrowerand in the name of Borrower; (b) to ask, demand, collect or sue for, recover,compound, receive and give acquittance in receipts for any monies due or becomedue under or in respect for any Collateral; (c) to receive, endorse and collectany drafts or other instruments, documents and chattel paper, in connectionwith the Collateral; and (d) to file any claims or take any action or instituteany proceeding which Lender may deem necessary or desirable for the collectionof any Collateral or otherwise to enforce the rights of Lender in theCollateral.  Borrower agrees to sign anddeliver to Lender any additional documents deemed desirable by Lender to effectthe perfection of Lender’s security interest in the Collateral.  Borrower shall pay upon Lender’s request anyout-of-pocket costs and expense paid or incurred by Lender in connection withthe above terms of this Agreement or the funding and closing of this Agreement.

 

**12.**** EVENTS OF DEFAULT.** Each of the following events shall constitutean event of default under this Agreement and the Note:  (a) Borrower fails to pay any installmentpayment or other amount due under this Agreement or the Note within ten days ofits due date; or (b) Borrower fails to perform or observe any of itsobligations in Sections 3, 9, or 18 hereof; or (c) Borrower fails to perform orobserve any of its other obligations in this Agreement or the Note within 30days after Lender notifies Borrower of such failure; or (d) any statement,representation or warranty made by Borrower in this Agreement or in anydocument, certificate or financial statement in connection with this Agreementproves at any time to have been untrue or misleading in any material respect asof the time when made; or (e) Borrower becomes insolvent or bankrupt, orBorrower admits its inability to pay its debts as they mature, or Borrowermakes an assignment for the benefit of creditors, or Borrower applies for,institutes or consents to the appointment of a receiver, trustee or similarofficial for Borrower or any substantial part of its property or any suchofficial is appointed without Borrower’s consent, or Borrower applies for,institutes or consents to any

 

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bankruptcy, insolvency, reorganization, debt moratorium, liquidation orsimilar proceeding relating to Borrower or any substantial part of its propertyunder the laws of any jurisdiction or any such proceeding is instituted againstBorrower without stay or dismissal for more than 60 days, or Borrower commencesa winding up of its affairs, or Borrower ceases to do business as a goingconcern; or (f) with respect to any guaranty, letter of credit, pledgeagreement, security agreement, mortgage, deed of trust, debt subordinationagreement or other credit enhancement or credit support agreement (whether nowexisting or hereafter arising) signed or issued by any party in connection withall or any part of Borrower’s obligations under this Agreement, the partysigning or issuing any such agreement defaults in its obligations thereunder orany such agreement shall cease to be in full force and effect or shall bedeclared to be null, void, invalid or unenforceable by the party signing orissuing it.

 

As used in this section 12, the term “Borrower”also includes any guarantor (whether now existing or hereafter arising) of allor any part of Borrower’s obligations under this Agreement and/or any issuer ofa letter of credit (whether now existing or hereafter arising) relating to allor any part of Borrower’s obligations under this Agreement, and the term “Agreement”also includes any guaranty or letter of credit (whether now existing orhereafter arising) relating to all or any part of Borrower’s obligations underthis Agreement.

 

**13.**** RIGHTS UPON DEFAULT.**  If any event of default exists, Lender mayexercise in any order one or more of the remedies described in the letteredsubparagraphs of this section, and Borrower shall perform its obligationsimposed thereby:

 

(a)  Lender mayrequire Borrower to turnover any and all Collateral to Lender.

 

(b)  Lender orits agent may repossess any or all Collateral wherever found, may enter thepremises where the Collateral is located and disconnect, render unusable andremove it, and may use such premises without charge to store or show theCollateral for sale.

 

(c)  Lender maysell any or all Collateral at public or private sale, with or withoutadvertisement or publication, may lease or otherwise dispose of it or may use,hold or keep it.

 

(d)  Lender mayrequire Borrower to pay to Lender on a date specified by Lender,  (i) all accrued and unpaid interest, latecharges and other amounts due under the Note or this Agreement as of such date,plus (ii) the remaining principal balance of the Note as of such date, plus(iii) interest at the Overdue Rate on the total of the foregoing (“Overdue Rate”means an interest rate per annum equal to the higher of 12% or 2% over thePrime Rate, but not to exceed the highest rate permitted by applicable law).  If an event of default under section 12(f)of this Agreement exists, then Borrower will be automatically liable to payLender the foregoing amounts as of the next installment payment date under theNote unless Lender otherwise elects in writing.

 

(e)  Borrowershall pay all reasonable costs, expenses and damages incurred by Lender becauseof the event of default or its actions under this section, including, withoutlimitation any collection agency and/or attorney fees and expenses, any costsrelated to the repossession, safekeeping, storage, repair, reconditioning ordisposition of the Collateral.

 

(f)  Lender maysue to enforce Borrower’s performance of its obligations under the Note andthis Agreement and/or may exercise any other right or remedy then available toLender at law or in equity.

 

Lender is not required to take any legal process orgive Borrower any notice before exercising any of the above remedies.  If Lender is required to give notice, 10calendar days advanced notice is reasonable notification.  None of the above remedies is exclusive, buteach is cumulative and in addition to any other remedy available toLender.  Lender’s exercise of one or moreremedies shall not preclude its exercise of any other remedy.  No action taken by Lender shall releaseBorrower from any of its obligations to Lender. No delay or failure on the part of Lender to exercise any righthereunder shall operate as a waiver thereof nor as an acquiescence in anydefault, nor shall any single or partial exercise of any right preclude anyother exercise thereof or the exercise of any other right.  After any default, Lender’s acceptance of anypayment by Borrower under the Note or this Agreement shall not constitute awaiver by Lender of such default, regardless of Lender’s knowledge or lack ofknowledge at the time of such payment, and shall not constitute a reinstatementof the Note or this Agreement if this Agreement has been declared in default byLender, unless Lender has agreed in writing to reinstate this Agreement and towaive the default. With respect to any Collateral or any Obligation, Borrowerassents to all extensions or postponements to the time of payment thereof orany other indulgence in connection therewith, to each substitution, exchange orrelease of Collateral, to the release of any party primarily or secondarilyliable, to the acceptance of partial payment thereof or to the settlement orcompromise thereof, all in such matter and such time or times as Lender maydeem advisable.

 

If Lender actually repossesses any Collateral, thenit will use commercially reasonable efforts under the then currentcircumstances to attempt to mitigate its damages; provided, that Lender shallnot be required to sell,

 

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lease or otherwise dispose of any Collateral prior to Lender enforcingany of the remedies described above. Lender may sell or lease the Collateral in any manner it chooses, freeand clear of any claims or rights of Borrower and without any duty to accountto Borrower with respect thereto except as provided below.  If Lender actually sells or leases theCollateral, it will credit the net proceeds of any sale of the Collateral, orthe net present value (discounted at the then current Prime Rate) of the rentspayable under any new lease of the Collateral, against the amounts Borrowerowes Lender.  The term “net” as usedabove shall mean such amount after deducting the costs and expenses describedin clause (e) above of this section. Borrower shall remain liable for anydeficiency if the net proceeds are insufficient to pay all amounts to whichLender is entitled hereunder.

 

**14.**  **LATE CHARGES.**  If any installment payment or other amountpayable under the Note or this Agreement is not paid when due, then ascompensation for the administration and enforcement of Borrower’s obligation tomake timely payments, Borrower shall pay with respect to each overdue paymenton demand an amount equal to the greater of fifteen dollars ($15.00) or fivepercent (5%) of the each overdue payment (but not to exceed the highest latecharge permitted by applicable law) plus any collection agency fees andexpenses**.**

 

**15.  LENDER’S RIGHT TO PERFORM**.  IfBorrower fails to make any payment under this Agreement or fails to perform anyof its other obligations in this Agreement (including, without limitation, itsagreement to provide insurance coverage), Lender may itself make such paymentor perform such obligation, and the amount of such payment and the amount ofthe expenses of Lender incurred in connection with such payment or performanceshall be deemed to be additional principal under the Note which is payable byBorrower on demand.

 

**16.**** NOTICES; POWER OF ATTORNEY.**  (a) Service of all notices under thisAgreement shall be sufficient if given personally or couriered or mailed to theparty involved at its respective address set forth herein or at such otheraddress as such party may provide in writing from time to time.  Any such notice mailed to such address shallbe effective three days after deposit in the United States mail with postageprepaid.  (b) With respect to any powerof attorney covered by this Agreement, the powers conferred on Lenderthereby:  are powers coupled with aninterest; are irrevocable; are solely to protect Lender’s interests under thisAgreement; and do not impose any duty on Lender to exercise such powers.  Lender shall be accountable solely foramounts it actually receives as a result of its exercise of such powers.

 

**17.**  **ASSIGNMENT BY LENDER.**  Lender and any assignee of Lender, * *may,upon ten (10) days’ prior written notice to Borrower, with or without consentof Borrower, sell, assign, transfer or grant a security interest in all or anypart of Lender’s rights, obligations, title or interest in the Collateral, theNote, this Agreement, or the amounts payable under the Note or this Agreementto any entity (“transferee”).  Thetransferee shall succeed to all of Lender’s rights in respect to this Agreement(including, without limitation, all rights to insurance and indemnityprotection described in this Agreement). Borrower agrees to sign any acknowledgment and other documentsreasonably requested by Lender or the transferee in connection with any suchtransfer transaction.  Borrower, uponreceiving notice of any such transfer transaction, shall comply with the termsand conditions thereof.  Borrower agreesthat it shall not assert against any transferee any claim, defense, setoff,deduction or counterclaim which Borrower may now or hereafter be entitled toassert against Lender.

 

**18.  NO ASSIGNMENT OR LEASING BYBORROWER. **BORROWER SHALL NOT, DIRECTLY OR INDIRECTLY,(a) MORTGAGE, ASSIGN, SELL, TRANSFER, OR OTHERWISE DISPOSE OF INTEREST IN THISAGREEMENT OR THE COLLATERAL OR ANY PART THEREOF, OR (b) LEASE, RENT, LEND ORTRANSFER POSSESSION OR USE (OTHER THAN USE IN THE ORDINARY COURSE OF BORROWER’SBUSINESS) OF THE EQUIPMENT OR ANY PART THEREOF TO ANY PARTY, OR (c) CREATE,INCUR, GRANT, ASSUME OR ALLOW TO EXIST ANY LIEN ON ITS INTEREST IN THISAGREEMENT, THE COLLATERAL OR ANY PART THEREOF.

 

**19.****TERMINATION**.This Agreement shall continue in effect until the Obligations have beenindefeasibly paid and performed in full. Upon termination of this Agreement, Lender shall, at Borrower’s expense,take such actions and file such documents as may be necessary or desirable torelease the Collateral from this Agreement.

 

**20.  CERTAIN DEFINITIONS. **“Act” means subtitle VII of Title 49 of the United States Code. “FinancedAmount” for any item of Equipment shall mean the amount set forth on the Schedule A-1that corresponds to that item of Equipment. “Lien” means any security interest, lien, mortgage, pledge, encumbrance,judgment, execution, attachment, warrant, writ, levy, other judicial process orclaim of any nature whatsoever by or of any person.  “Prime Rate” means the prime rate of interestannounced from time to time as the prime rate by Bank One, NA (or itssuccessors or assigns); provided, that the parties acknowledge that the PrimeRate is not intended to be the lowest rate of interest charged by said bank inconnection with extensions of credit. All terms defined herein are equally applicable to both the singular andplural form of such terms.

 

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**21.  CONDITIONS. **Lender is not obligated to make any loan or disburse any principalhereunder unless: (a)  Lender hasreceived the Note signed by the Borrower; (b) Lender has received evidence ofall required insurance; (c) in Lender’s sole judgment, there has been nomaterial adverse change in the financial condition or business of Borrower orany guarantor; (d) Borrower has signed and delivered to Lender this Agreementand Lender has signed and accepted this Agreement; (e) Lender has received thedocuments and instruments and evidence as to satisfaction of the mattersspecified in any **Schedule 2**which may be attached hereto, each of which shall be satisfactory to Lender inform and substance and each document or instrument to be duly authorized,executed and delivered and in full force and effect;  (f) Lender has received, in form andsubstance satisfactory to Lender, such other documents and information asLender shall reasonably request; and (g) Borrower has satisfied all other reasonable conditions established byLender.

 

**22.  USURY.**  It isnot the intention of the parties to this Agreement to make an agreementviolative of the laws of any applicable jurisdiction relating to usury (“UsuryLaws”).  Regardless of any provision inthis Agreement, the Note, or any document in connection therewith, Lender shallnot be entitled to receive, collect or apply, as interest on any Obligation,any amount in excess of the Maximum Amount (the “Excess”).  As used herein, “Maximum Amount” shall meanthe maximum amount of interest which would have accrued if the unpaid principalamount of the Obligation outstanding from time to time had borne interest eachday at the maximum amount of interest which lender is permitted to charge onthe Obligation under the Usury Laws.  IfLender ever receives, collects or applies as interest any Excess, such Excessshall be deemed a partial repayment of principal and treated hereunder as such;and if principal is paid in full, any remaining Excess shall be paid toBorrower.  In determining whether or notthe interest paid or payable under any specific contingency exceeds the MaximumAmount, Borrower and Lender shall, to the maximum extent permitted under theUsury Laws, (a) characterize any nonprincipal payment as an expense, fee orpremium rather than as interest, (b) exclude voluntary prepayments and theeffect thereof, and (c) amortize, prorate, allocate and spread in equal parts,the total amount of interest throughout the entire contemplated term of theObligation so that the interest rate is uniform throughout the entire term ofthe Obligation; provided that if the Obligation is paid and performed in fullprior to the full contemplated term thereof, and if the interest received forthe actual period of existence thereof exceeds the Maximum Amount, Lender shallrefund to Borrower the Excess, and, such event shall not be subject to anypenalties provided by the Usury Laws.

 

**23.  GOVERNING LAW.**  THEINTERPRETATION, CONSTRUCTION AND VALIDITY OF THIS AGREEMENT AND THE NOTE SHALLBE GOVERNED BY THE LAWS OF THE STATE OF OHIO.

 

**24.  MISCELLANEOUS.** (a)Subject to the limitations herein, this Agreement shall be binding upon andinure to the benefit of the parties hereto and their respective heirs,administrators, successors and assigns. (b) This Agreement may be executed in any number of counterparts, whichtogether shall constitute a single instrument. (c) Section and paragraph headings in this Agreement are forconvenience only and have no independent meaning.  (d) The terms of this Agreement shall beseverable and if any term thereof is declared unconscionable, invalid, illegalor void, in whole or in part, the decision so holding shall not be construed asimpairing the other terms of this Agreement and this Agreement shall continuein full force and effect as if such invalid, illegal, void or unconscionableterm were not originally included herein. (e) All indemnity obligations of Borrower under this Agreement and allrights, benefits and protections provided to Lender by warranty disclaimersshall survive the cancellation, expiration or termination of thisAgreement.  (f) Lender shall not beliable to Borrower for any indirect, consequential or special damages for anyreason whatsoever.  (g) This Agreementmay be amended, but only by a written amendment signed by Lender and Borrower.  (h) If this Agreement is signed by more thanone Borrower, each of such Borrowers shall be jointly and severally liable forpayment and performance of all of Borrower’s obligations under this Agreement.(i) This Agreement represents the final, complete and entire agreement betweenthe parties hereto, and there are no oral or unwritten agreements orunderstandings affecting this Agreement or the Collateral.  (j) Borrower agrees that Lender is not theagent of any manufacturer or supplier, that no manufacturer or supplier is anagent of Lender, and that any representation, warranty or agreement made bymanufacturer, supplier or by their employees, sales representatives or agentsshall not be binding on Lender.

 

**24**.  **GOVERNMENT REGULATION**.   Borrower shall not (a) be or become subject,at any time, to any law, regulation, or list of any government agency(including, without limitation, the U.S. Office of Foreign Asset Control list)that prohibits or limits Lender from making any advance or extension of creditto Borrower or from otherwise conducting business with Borrower or (b) fail toprovide documentary and other evidence of Borrower’s identity as may berequested by Lender at any time to enable Lender to verify Borrower’s identityor to comply with any applicable law or regulation, including, withoutlimitation, Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318.

 

**25**. **USA PATRIOT ACT NOTIFICATION**.  The following notification is provided toBorrower pursuant to Section 326 of the USA Patriot Act of 2001, 31 U.S.C.Section 5318:

 

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IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING ANEW ACCOUNT. To help the government fight the funding of terrorism and moneylaundering activities, Federal law requires all financial institutions toobtain, verify, and record information that identifies each person or entitythat opens an account, including any deposit account, treasury managementaccount, loan, other extension of credit, or other financial services product.What this means for Borrower: When Borrower opens an account, if Borrower is anindividual, Lender will ask for Borrower’s name, tax payer identificationnumber, residential address, date of birth, and other information that willallow Lender to identify Borrower, and if Borrower is not an individual, Lenderwill ask for Borrower’s name, taxpayer identification number, business address,and other information that will allow Lender to identify Borrower.  Lender may also ask, if Borrower is anindividual, to see Borrower’s driver’s license or other identifying documents,and if Borrower is not an individual, to see Borrower’s legal organizationaldocuments or other identifying documents.

 

**ALL PARTIES TO THIS AGREEMENT, INCLUDING LENDER AND THE UNDERSIGNED,IRREVOCABLY CONSENT TO THE JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURTIN OHIO, AND WAIVE ALL RIGHTS TO TRIAL BY JURY, IN ANY ACTION, PROCEEDING ORCOUNTERCLAIM BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY ON ANY MATTERWHATSOEVER ARISING OUT OF, IN CONNECTION WITH OR IN ANY WAY RELATED TO THE NOTEOR THIS AGREEMENT.**

 
| **JETRIDE, INC** | ** **                   | Accepted By: |
|------------------|------------------------------|--------------|
| (Borrower)       | BANC ONE LEASING CORPORATION |
|             |                         |
| By:              |   /s/ Gary W. Qualmann  |         | By: |  /s/ Stacy R. Roth |   |
|             |                         |
| Title:           | CFO                          |         | Title: |  Financing Manager |   |
|             |                         |
| Witness:         | /s/ John Gordon              |         | Acceptance Date: | June 30, 2004 |   |
|             |                         |
|                  |                              |              |  |  |  |  |  |  |  |  |  |  |  |  |

 

7

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SCHEDULE A-1

 

LoanNo. 1000119650

 

FinancedAmount: $5,000,000.00

 
| DESCRIPTION OF EQUIPMENT    |
|-----------------------------|
|                        |   |
| Airframe Make/Model:        | LEARJET INC. MODEL 60 |
|                        |   |
| Airframe Serial No.:        | 126 |
|                        |   |
| U.S. Identification No.:    | N160AN |
|                        |   |
| Engine Quantity/Make/Model: | 2 PRATT & WHITNEY 305A |
|                        |   |
| Engine Serial No(s).:       | PCE-CA0088 AND PCE-CA0089 |

 

Together with all engines, propellers, avionics,communication equipment, navigation equipment, instruments, accessories,attachments, parts, appurtenances, accessions, furnishings and other equipmentattached to, installed in or relating to any of the foregoing property and allmaintenance and service logs and records relating to the foregoing property.

 

Eachengine has 750 or more rated takeoff horsepower or the equivalent of suchhorsepower.

 

TheEquipment shall be based at the following location:

 

# ***BirminghamAirport, 5900 Airport Highway, Birmingham, Jefferson, AL 35212***

# *** ***

Nameof Airport and  Street Address                   City         County  State

 

ThisSchedule A-1 is attached to, and made a part of, the Loan and SecurityAgreement with the Loan Number referenced above and contains a true andaccurate description of the Equipment.

 
| **JETRIDE, INC.** |                        |
|-------------------|-----------------------------|
| (Borrower)        |
|              |
| By:               |   /s/ Gary W. Qualmann |   |
|              |
| Title:            |   CFO                  |   |
|                   |                             |  |  |  |  |

 

8

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SCHEDULE 2

 

Attached to Loan and Security Agreement forLoan No. **1000119650**

 

ADDITIONAL CONDITIONS TO FUNDING THE LOAN*

 

1.                                       Airnet Systems, Inc. shall execute and deliver to Lender anabsolute and unconditional guarantee of all obligations of Borrower under theLoan and Security Agreement and the Note.

 

2.                                       Lender shall receive and find acceptable themaintenance and service logs and records relating to the Collateral.

 

3.                                       Lender shall receive terminations or releasesof liens in a form recordable with the Federal Aviation Administration from allcreditors with a lien on any part of the Collateral as shown in the FAA lienrecords.

 

4.                                       Lender shall receive UCC-3 terminations orrelease of liens in recordable form from all creditors with a lien on any partof the Collateral as shown in state or local lien records.

 

 

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*The inclusion of additional funding conditions in this Schedule 2 shallnot limit the generality of the conditions set forth in the Agreement.

 

 
| **JETRIDE, INC.** |                       |
|-------------------|----------------------------|
| (Borrower)        |
|              |
| By:               |  /s/ Gary W. Qualmann |   |
|              |
| Title:            |   CFO                 |   |
|                   |                            |  |  |  |  |

 

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SCHEDULE 3

**AIRCRAFT****LOAN****INSURANCE REQUEST LETTER**

 
|               |   |
|--------------------|--------|
| (Date)             |   |
|               |   |
| (Agent)            |   |
|               |   |
| (Street Address)   |   |
|               |   |
| (City, State, Zip) |   |
|               |   |
| (Telephone Number) |   |

 

DearAgent:

 

BancOne Leasing Corporation (“BOLC”) requires proof of acceptable insurancecoverage before the loan transaction can close. The requirements identified below must stay in full effect throughoutthe term of the transaction.

 

1.               The certificate of insurance must be issueddirectly to Banc One Leasing Corporation and shall be issued by a companyhaving an A.M. Best Rating of at least A with a Financial Size Category of atleast VII.

2.               The certificate of insurance must be executed.

3.               The insurance must be primary and anyinsurance maintained by BOLC or any other loss payee will be in excess andnon-contributory.

4.               Policies must include a Waiver of Subrogationin favor of “Banc One Leasing Corporation, its parent and affiliates,successors or assigns”.

5.               Policies must include a thirty (30) day priorwritten Notice of Cancellation to the Certificate Holder.  Such notice must be directed by certified mailto: Banc One Leasing Corporation, 1111 Polaris Parkway, Suite A3, Columbus,Ohio 43240, Attn:  Insurance Dept.

6.               PHYSICAL DAMAGE

a.               Replacement cost coverage for the equipmentidentified on the attached Schedule A-1, which is estimated to be $5,000,000.00.

b.              “Banc One Leasing Corporation, its parent andaffiliates, successors or assigns” shall be named as Loss Payee.

c.               Breach of Warranty in favor “Banc One LeasingCorporation, its parent and affiliates, successors or assigns”.

d.              War Risk Endorsement, which shall includehijacking and terrorism, in favor of “Banc One Leasing Corporation, its parentand affiliates, successors or assigns” for the amount identified in 6a.

7.  The certificate of insurance shall evidenceliability coverage in the minimum amount of $50 million.

 

Pleaseimmediately send proof of the above insurance requirements **VIAFACSIMILE TRANSMITTAL 614-213-0748**.

 

**PLEASE REFERENCE THE COMPLETE LOAN NUMBER AS LISTED BELOW FOR TRACKINGPURPOSES.**

**THANK YOU.**

 
| Sincerely,           |
|----------------------|
| JETRIDE, INC.        |   |
|                 |
| /s/ Gary W. Qualmann |   |
| (By)                 |
| 1000119650           |   |
| (Loan Number)        |
|                      |  |  |  |

 

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