Exhibit
10.12


 


MASTER AIRCRAFT LOAN AND SECURITY
AGREEMENT


 


BETWEEN


 


ERICKSON AIR-CRANE INCORPORATED


 


AS THE GRANTOR


 


AND


 


THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA


 


AS THE SECURED PARTY


 


Dated as of September 27, 2007


 

















 


TABLE OF CONTENTS


 


	
  ARTICLE 1 — GRANT OF SECURITY INTEREST

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Grant of Security Interest

  	
   

  	
  1

  
	
  Section 1.2

  	
  Grant Effective

  	
   

  	
  2

  
	
  Section 1.3

  	
  Filing of Financing
  Statements and Continuation Statements; Consent to Registration

  	
   

  	
  2

  
	
  Section 1.4

  	
  Delivery and Acceptance

  	
   

  	
  2

  
	
  Section 1.5

  	
  Additional Documents, Information

  	
   

  	
  3

  
	
  Section 1.6

  	
  Conditions Precedent

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2 — COVENANTS

  	
   

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Registration and Operation

  	
   

  	
  3

  
	
  Section 2.2

  	
  Records and Reports

  	
   

  	
  4

  
	
  Section 2.3

  	
  Maintenance

  	
   

  	
  4

  
	
  Section 2.4

  	
  Replacement of Parts and/or Accessories

  	
   

  	
  4

  
	
  Section 2.5

  	
  Alterations, Modifications and Additions

  	
   

  	
  5

  
	
  Section 2.6

  	
  Maintenance of Other Engines

  	
   

  	
  5

  
	
  Section 2.7

  	
  Payment of Obligations

  	
   

  	
  5

  
	
  Section 2.8

  	
  Change of Name or Location

  	
   

  	
  6

  
	
  Section 2.9

  	
  Inspection

  	
   

  	
  6

  
	
  Section 2.10

  	
  Aircraft Registration;
  International Registry

  	
   

  	
  6

  
	
  Section 2.11

  	
  Financial and Other Data

  	
   

  	
  6

  
	
  Section 2.12

  	
  Late Payments

  	
   

  	
  7

  
	
  Section 2.13

  	
  Transaction Expenses

  	
   

  	
  7

  
	
  Section 2.14

  	
  Financial Covenants

  	
   

  	
  7

  
	
  Section 2.15

  	
  Other Covenants

  	
   

  	
  7

  
	
  Section 2.16

  	
  Guaranty

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3 — EVENTS OF LOSS

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Event of Loss with Respect to any Aircraft

  	
   

  	
  8

  
	
  Section 3.2

  	
  Event of Loss with Respect to an Engine

  	
   

  	
  8

  
	
  Section 3.3

  	
  Application of Payments from Governmental Authorities or
  other Persons

  	
   

  	
  8

  
	
  Section 3.4

  	
  Rights Assigned

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4 — INSURANCE

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  Insurance

  	
   

  	
  9

  
	
  Section 4.2

  	
  Requirements

  	
   

  	
  10

  
	
  Section 4.3

  	
  No Right to Self-insure

  	
   

  	
  10

  
	
  Section 4.4

  	
  Notice of Loss or Damage; Application of Proceeds

  	
   

  	
  10

  
	
  Section 4.5

  	
  Reports, Policies, Certificates

  	
   

  	
  10

  
	
  Section 4.6

  	
  Attorney-in Fact

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5 —
  EVENTS OF DEFAULT AND REMEDIES

  	
   

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Events of Default; Remedies

  	
   

  	
  11

  
	
  Section 5.2

  	
  Remedies

  	
   

  	
  12

  
	
  Section 5.3

  	
  Remedies Cumulative

  	
   

  	
  13

  
	
  Section 5.4

  	
  Grantor’s Waiver of
  Rights

  	
   

  	
  13

  
	
  Section 5.5

  	
  Power of Attorney

  	
   

  	
  13

  
	
  Section 5.6

  	
  Distribution of Amounts
  Received After an Event of Default

  	
   

  	
  14

  
	
  Section 5.7

  	
  Suits for Enforcement

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6 —
  REPRESENTATIONS AND WARRANTIES

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 6.1

  	
  Representations,
  Warranties and Covenants of Grantor

  	
   

  	
  14

  
	
  Section 6.2

  	
  Registration and
  Operation

  	
   

  	
  16

  
	
  Section 6.3

  	
  USA PATRIOT Act Notice

  	
   

  	
  17

  
	
  Section 6.4

  	
  Regulatory Compliance

  	
   

  	
  17

  



 


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  ARTICLE 7 —
  SECURITY INTEREST ABSOLUTE

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 7.1

  	
  Security Interest
  Absolute

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8 —
  MISCELLANEOUS

  	
   

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 8.1

  	
  Governing Law;
  Jurisdiction

  	
   

  	
  18

  
	
  Section 8.2

  	
  Notices

  	
   

  	
  19

  
	
  Section 8.3

  	
  Time of the Essence

  	
   

  	
  19

  
	
  Section 8.4

  	
  Limitation as to
  Enforcement of Rights, Remedies and Claims

  	
   

  	
  19

  
	
  Section 8.5

  	
  Severability of Invalid
  Provisions

  	
   

  	
  19

  
	
  Section 8.6

  	
  Note
  Register

  	
   

  	
  19

  
	
  Section 8.7

  	
  Assignment

  	
   

  	
  19

  
	
  Section 8.8

  	
  Benefit of Parties,
  Successors and Assigns; Entire Agreement

  	
   

  	
  20

  
	
  Section 8.9

  	
  Further Assurances

  	
   

  	
  20

  
	
  Section 8.10

  	
  Performance by Secured
  Party

  	
   

  	
  20

  
	
  Section 8.11

  	
  Aircraft Intercreditor
  Agreement

  	
   

  	
  20

  
	
  Section 8.12

  	
  Indemnity

  	
   

  	
  21

  
	
  Section 8.13

  	
  Amendments

  	
   

  	
  21

  
	
  Section 8.14

  	
  Waiver of Jury Trial

  	
   

  	
  21

  
	
  Section 8.15

  	
  Counterpart Execution;
  Joint and Several Liability

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9 —
  DEFINITIONS

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  Section 9.1

  	
  Definitions

  	
   

  	
  21

  



 


ii














 


$10,000


C#: 52999


L#: 53000


PN#:                          


 


Master Aircraft Loan and Security Agreement


 


THIS MASTER AIRCRAFT LOAN AND SECURITY AGREEMENT (“Agreement”)
is made and entered into as of September 27, 2007 by and between THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation having an
address in care of Prudential Capital Group—Commercial Asset Finance, 3350
Riverwood Parkway, Suite 1500, Atlanta, Georgia 30339 (“Secured Party”)
and ERICKSON AIR-CRANE INCORPORATED, a corporation organized and existing under
the laws of the State of Delaware and having its administrative office located
at 3100 Willow Springs Road, P.O. Box 3247, Central Point, OR 97502 (“Grantor”).
Capitalized terms not otherwise defined herein have the meanings given in Article 9
hereof.


 


RECITALS


 


A.                                   Grantor has requested Secured Party to
make a loan in the amount of Sixty-five Million Dollars ($65,000,000) (the “Loan”)
to Grantor to be evidenced by a promissory note in such amount to refinance
Grantor’s Aircraft (as hereinafter defined).


 


B.                                     Secured Party has agreed to make the Loan
to Grantor on the condition, among other things, that Grantor shall have
executed and delivered (i) the Note (as hereinafter defined) payable to
Secured Party, (ii) this Master Aircraft Loan and Security Agreement, (iii) any
required amendment or supplement hereto granting Secured Party a first priority
security interest in the Collateral (as hereinafter defined) and (iv) related
UCC-1 financing statements, Personal Property Security Act filings, Federal
Aviation Administration filings, International Registry recordations, and other
filings necessary to perfect such security interest.


 


C.                                     Grantor is duly authorized to execute,
deliver and perform this Agreement.


 


NOW, THEREFORE, for good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and in order to
induce the Secured Party to make the Loan pursuant to the Note, the Grantor
agrees, for the benefit of the Secured Party, as follows:


 


ARTICLE 1 — GRANT OF SECURITY INTEREST


 


Section 1.1                                      Grant of Security Interest. The Grantor, in consideration of the
premises and other good and valuable consideration, receipt whereof is hereby
acknowledged, and in order to secure the payment of the principal of and interest
on the Loan according to its tenor and effect, and to secure the payment of all
other indebtedness under the Loan Documents and the performance and observance
of all covenants, agreements and conditions contained in the Loan Documents
(collectively referred to as the “Obligations”), does hereby mortgage, assign,
pledge, and grant a security interest to the Secured Party, its successors and
assigns, in all and singular of the Grantor’s right, title and interest in and
to the properties, rights, interests and privileges described below and all
proceeds thereof (all of which properties, rights, interests and privileges
hereby mortgaged, assigned, pledged and granted or intended so to be, together
with all proceeds thereof, are hereinafter collectively referred to as the “Collateral”)
and agrees that the foregoing grant creates in favor of the Secured Party an
International Interest in an Aircraft (including the Airframe and each Engine):


 


a)                                      all of the
Grantor’s rights, title and interests in the Equipment and substitutions and
replacements of any of the foregoing;


 


b)                                     any and all
service and warranty rights related to the Equipment;


 


1

















 


c)                                      all proceeds
of any or all of the foregoing, whenever acquired, including the proceeds of
any insurance maintained with respect to any of the foregoing and all proceeds
payable or received with respect to any condemnation, expropriation,
requisition or other Event of Loss, or the proceeds of any warranty;


 


d)                                     any and all present and future leases, subleases, management
agreements, interchange agreements, charter agreements, purchase agreements and
any other present and future agreements of any kind whatsoever relating to the
Equipment or any part thereof, including any International Interest (and
associated rights) therein or related thereto in favor of Grantor (but not any
obligations, liabilities and/or duties of any kind whatsoever of Grantor or any
other party, person or entity of any kind whatsoever in connection therewith or
related thereto); provided, however, that the foregoing
assignment and grant of a security interest and lien in this subclause (d) shall
not be deemed in any way whatsoever as an agreement by the Secured Party to
permit or allow the Grantor (or any party, person or entity of any kind
whatsoever) to enter into any such leases, subleases, management agreements,
interchange agreements, charter agreements, purchase agreements and any other
present and future agreements of any kind whatsoever, and the Grantor (or any
party, person or entity of any kind whatsoever) shall only be allowed to enter
into any of the foregoing in accordance with the terms of this Agreement.
Grantor consents to the registration of the forgoing assignment of any
International Interest (and associated rights) with the International Registry.


 


e)                                      any and all present and future records, logs and other
materials required by the Relevant Authority (and any other governmental
authority having jurisdiction) to be maintained in respect of each item of
Equipment including, without limitation, the tapes, disks, diskettes and other
data and software storage media and devices, file cabinets or containers in or
on which the foregoing are stored, including any rights of Grantor with respect
to the foregoing maintained with or by any other person.


 


Section 1.2                                      Grant Effective. The
mortgage, assignment, pledge and grant of security interest created hereunder
in all of the foregoing Collateral and International Interest created hereunder
in and relating to the Equipment are effective and operative immediately, and
will continue in full force and effect until the Grantor has made such payments
and has duly, fully and finally performed and observed all of its agreements
and covenants and provisions then required hereunder and under the other Loan
Documents.


 


Section 1.3                                      Filing
of Financing Statements and Continuation Statements; Consent to Registration.
Grantor hereby authorizes Secured Party to file UCC financing statements and
amendments thereto, listing Grantor as debtor, and Secured Party and/or its
assigns, as secured party, and describing the Collateral, and assignments
thereof and amendments thereto. The Grantor, at the reasonable request of the
Secured Party, will execute and deliver to the Secured Party for filing, if not
already filed, such UCC financing statements Personal Property Security Act
filing statements, or other documents and such continuation statements with
respect to financing statements previously filed relating to the mortgage, assignment,
pledge and grant of security interest created under this Agreement in the
Collateral and execute, deliver, consent to, register or file any other
documents that may be required in order to comply with the Act, the Cape Town
Treaty or other applicable law or as may be specified from time to time by the
Secured Party. The Grantor hereby consents to the registration by the Secured
Party of each International Interest in or relating to any Aircraft (including
the Airframe and each Engine) assigned or created pursuant to this Agreement
(including any Prospective International Interest with respect thereto) with
the International Registry and covenants to effect the registration of such
consent with the International Registry on the date of such assignment or
creation.


 


Section 1.4                                      Delivery and
Acceptance. Grantor shall execute and deliver to Secured Party a Grantor’s
Acknowledgement (Certificate of Acceptance) for the Equipment and SECURED PARTY SHALL HAVE NO OBLIGATION TO ADVANCE ANY
FUNDS TO GRANTOR UNLESS AND UNTIL SECURED PARTY SHALL HAVE RECEIVED SUCH
ACKNOWLEDGEMENT EXECUTED BY GRANTOR.


 


2

















 


Section 1.5                                      Additional Documents, Information. Grantor will deliver to Secured Party (a) such
organizational documents for Grantor as reasonably requested by Secured Party, (b) a
certificate or certificates executed by an authorized representative of Grantor
certifying that the execution, delivery and performance of this Agreement and
the transactions contemplated hereby have been authorized by all necessary
action on the part of the Grantor, (c) an incumbency certificate of the
Grantor containing the name(s), title(s) and specimen signatures of the
person(s) authorized to execute and deliver such documents on behalf of
Grantor, (d) a certificate of good standing for Grantor from the state of
its organization, and (e) an opinion of counsel for Grantor in form and
substance reasonably satisfactory to Secured Party and its counsel.


 


Section 1.6                                      Conditions Precedent. The obligations of Secured Party to
make the Loan are subject to:


 


a)                                      Required
Documents. The delivery to Secured Party on the date hereof of,
each in form and substance satisfactory to Secured Party:


 


(i)                                     The original
of the Note;


 


(ii)                                  The original
of the Master Aircraft Loan and Security Agreement;


 


(iii)                               a copy of
the FAA Airworthiness Certificate with respect to each Aircraft;


 


(iv)                              an opinion
of Crowe and Dunlevy, LLP; and


 


(v)                                 Secured
Party shall have received such other documents, appraisals, certificates,
financing statements and other items, in form and substance reasonably
satisfactory to Secured Party, as Secured Party may reasonably request.


 


ARTICLE 2 — COVENANTS


 


Section 2.1                                      Registration
and Operation.


 


a)                                      Grantor, at
its own cost and expense, will cause each Aircraft to be duly registered in the
name of Grantor as owner and subject only to Secured Party’s first priority
security interest and International Interest, and at all times thereafter to
remain duly registered, in the name of the Grantor as owner with the Relevant
Authority pursuant to the Act.


 


b)                                     Grantor will not use any Aircraft in violation of any law or
any rule, regulation or order (including those concerning alcoholic beverages
or prohibited substances) of any governmental authority having jurisdiction
(domestic or foreign) or in violation of any airworthiness certificate, license
or registration relating to any item of Equipment issued by any such authority,
except to the extent such violation is not material or the validity or application
of any such law, rule, regulation or order is being contested in good faith and
by appropriate proceedings (but only so long as such proceedings do not, in the
Secured Party’s reasonable opinion, involve any material danger of the sale,
forfeiture or loss of such item of Equipment, or any interest, including the
Secured Party’s security interest or International Interest, therein or related
thereto).


 


c)                                      Grantor will
operate each Aircraft solely in the conduct of its business and/or for
commercial purposes (and not for consumer, home or family purposes) and in such
configuration as authorized by the Relevant Authority. Grantor will not operate
any Aircraft or permit any Aircraft to be operated (i) at any time or in
any geographic area when or where insurance required by this Agreement is not
in effect, (ii) in a manner or for any time period such that a Person
other than Grantor will be deemed to have “operational control” of such
Aircraft except with the prior written consent (which consent will not be
unreasonably withheld) of Secured Party, (iii) for the carriage of persons
or property for hire except with the prior written consent of Secured 


 


3

















 


Party or (iv) for the transport
of mail or contraband. Possession, use and maintenance of each Aircraft will be
at the sole risk and expense of Grantor and each Aircraft will be based at the
Primary Hangar Location or other normal operational base. Grantor will use
reasonable commercial efforts to deliver to Secured Party a written waiver of
any Lien or claim of Lien against any Aircraft that is or could be held by any
landlord (other than a governmental entity) or mortgagee of any hangar or
storage facility where any Aircraft is or will be located. Grantor will cause
each Aircraft to be operated at all times by duly qualified pilots who (x) are
supplied by Grantor, (y) hold at least a valid commercial airman
certificate and instrument rating and any other certificate, rating, type
rating or endorsement appropriate to such Aircraft, purpose of flight,
condition of flight or as otherwise required by the Federal Aviation
Regulations or other applicable law or regulation, and (z) meet the
requirements established and specified by the insurance policies required hereunder
and by the Relevant Authority.


 


d)                                     Grantor will
execute and deliver and the Secured Party will file with the Relevant Authority
on or prior to the date hereof an Irrevocable De-Registration and Export
Request Authorization with respect to each Aircraft in the form attached hereto
as Exhibit A.


 


Section 2.2                                      Records and Reports. The Grantor will cause all records,
logs and other materials required by the applicable Relevant Authority and any
other governmental authority having jurisdiction to be maintained in the
English language, in respect of each item of Equipment. Grantor will promptly
furnish or cause to be furnished to the Secured Party such information as may
be required to enable the Secured Party to file any reports required to be
filed by the Secured Party with any governmental authority because of the
Secured Party’s interests in any item of Equipment.


 


Section 2.3                                      Maintenance. Grantor, at its own cost and expense,
will fly, maintain, inspect, service, repair, overhaul and test each Aircraft
(including each Engine of same), or will cause each Aircraft to be flown,
maintained, inspected, serviced, repaired, overhauled and tested, under a
maintenance program approved by the Relevant Authority and in accordance with (a) all
maintenance manuals initially furnished with such Aircraft, including any
subsequent amendments or supplements to such manuals issued by the manufacturer
from time to time, (b) all mandatory “Service Bulletins” issued, supplied,
or available by or through the manufacturer and/or the manufacturer of any
Engine or part with respect to each Aircraft having a compliance date during
the term of the Note and up to twelve (12) months thereafter, and (c) all
airworthiness directives issued by the Relevant Authority or similar regulatory
agency having jurisdictional authority, and causing compliance with such
directives or circulars to be completed through corrective modification or
operating manual restrictions, having a compliance date during the term of the
Note and twelve (12) months thereafter. Grantor will maintain each Aircraft in
good and safe working order and in substantially the same condition as when
originally delivered to Grantor, ordinary wear and tear excepted. Grantor will
cause each Aircraft to be subject to an FAA Airworthiness Certificate or
similar certificate required by any other Relevant Authority at all times other
than when such Aircraft as a whole is the subject of an Event of Loss. All
maintenance procedures required hereby will be undertaken and completed in accordance
with the manufacturer’s recommended procedures, and by properly trained,
licensed and certified maintenance sources and maintenance personnel, so as to
keep each Aircraft and each Engine in as good operating condition as when
originally delivered to Grantor, ordinary wear and tear excepted, and so as to
keep each Aircraft in such operating condition as may be necessary to enable
the airworthiness certification of such Aircraft to be maintained in good
standing at all times under the applicable Act.


 


Section 2.4                                      Replacement of Parts and/or Accessories. The Grantor, at its own cost and
expense, will promptly cause the replacement of all Parts and Accessories which
may from time to time become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair or permanently rendered unfit for use for
any reason whatsoever. In addition, the Grantor, at its own cost and expense,
may permit the removal in the ordinary course of maintenance, service, repair,
overhaul or testing of any Parts or Accessories, whether or not worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond economic repair or
permanently rendered unfit for use; provided, however, that the Grantor, at its
own cost and expense, will cause such Parts and Accessories to be replaced as
promptly as possible. All replacement Parts and Accessories must be free and
clear of all Liens (except for Permitted Liens), will


 


4

















 


be in as good
operating condition as, and will have a value and utility at least
substantially equal to, the Parts or Accessories, as applicable, replaced,
assuming such replaced Parts or Accessories were in the condition and repair
required to be maintained by the terms hereof. The Grantor’s rights, title and
interests in all Parts and Accessories at any time removed from any item of
Equipment will remain subject to the Lien of this Agreement no matter where
located, until such time as such Parts or Accessories will be replaced by Parts
or Accessories which have been incorporated in such item of Equipment and which
meet the requirements for replacement Parts and Accessories specified above.
Immediately upon any replacement Part or Accessory becoming incorporated
or installed in or attached to any item of Equipment as above provided, without
further act, (a) the Grantor’s rights, title and interests in such
replacement Part or Accessory will become subject to the Lien of this
Agreement, and such replacement Part and Accessory will be deemed part of
such item of Equipment for all purposes hereof to the same extent as the Parts
and Accessories originally incorporated in such item of Equipment, and (b) the
Grantor’s rights, title and interests in the replaced Part or Accessories
will be released from the Lien of this Agreement and the replaced Part or
Accessories will no longer be deemed a Part or Accessory hereunder. The
Grantor will, not less often than once during each calendar quarter, provide to
the Secured Party written confirmation, in form and content reasonably acceptable
to the Secured Party, that the Grantor has complied with the provisions of this
Section 2.4.


 


Section 2.5                                      Alterations, Modifications and Additions. The Grantor, at its own cost and
expense, will cause such alterations and modifications in and additions to the
Equipment to be made as may be required from time to time to meet the standards
of the Relevant Authority and of any other governmental authority having
jurisdiction and to maintain the certificate of airworthiness for each
Aircraft; provided, however, that the validity or application of any such law,
rule, regulation or order may be contested in good faith by appropriate
proceedings (but only so long as such proceedings do not, in the Secured Party’s
opinion, involve any material danger of sale, forfeiture or loss of any item of
Equipment, or any interest, including the Secured Party’s security interest or
International Interest, therein or related thereto). In addition, the Grantor,
at no cost or expense to the Secured Party, may, from time to time, cause such
alterations and modifications in and additions to any item of Equipment to be
made as the Grantor may deem desirable; provided, that no such alteration,
modification and addition will (a) materially diminish the value, utility
or condition of such item of Equipment below the value, utility or condition
thereof immediately prior to such alteration, modification or addition,
assuming the item of Equipment was then of the value and utility and in the
condition required to be maintained by the terms of this Agreement, or (b) cause
the airworthiness certification of any Aircraft to cease to be in good standing
under the applicable Act. The Grantor’s rights, title and interests in all
Parts added to any Aircraft, the Airframe, the Rotors, the Rotor Blades, or an
Engine as the result of such alteration, modification or addition will, without
further act, be subject to the Lien of this Agreement. Notwithstanding the
foregoing sentence, so long as no Event of Default has occurred and is
continuing, the Grantor may remove any Part or Accessory added to an
Aircraft, Airframe, the Rotors, the Rotor Blades, or an Engine as contemplated
in this Section 2.5 if (x) such Part or Accessory is in addition
to, and not in replacement of or substitution for, any Part or Accessory
originally incorporated in such item of Equipment at the time of delivery
thereof or any Part or Accessory in replacement of or substitution for any
such Part or Accessory, (y) such Part or Accessory is not
required to be incorporated or installed in or attached or added to such item
of Equipment pursuant to the terms of this Article 2, and (z) such Part or
Accessory can be removed from such item of Equipment without causing any
material damage thereto. Upon the removal of any Part or Accessory as
above provided, such Part or Accessory will be automatically released from
the Lien of this Agreement.


 


Section 2.6                                      Maintenance of Other Engines. Each engine which does not constitute
an Engine (e.g., Free Turbines), but which is installed on the Airframe from
time to time, will be maintained, operated, serviced, repaired, overhauled,
altered, modified and tested in accordance with Section 2.3 to the same
extent as if it were an Engine.


 


Section 2.7                                      Payment of Obligations. The Grantor hereby agrees that it will
promptly pay or cause to be paid when due all taxes, assessments and other
governmental charges imposed with respect to the Collateral (except to the
extent being contested in good faith and by appropriate proceedings which do
not involve any material risk of loss or forfeiture).


 


5

















 


Section 2.8                                      Change of Name or Location. Grantor will give Secured Party thirty
(30) days prior written notice of any relocation of its chief executive office
and of any change in its name, identity or state of organization. At least 10
Business Days prior to the occurrence of any such change or relocation, Grantor
will (a) duly file appropriate financing statements in all applicable
filing offices, and (b) deliver to Secured Party copies of the form of
such financing statements. On the date on which the Note is funded, Grantor
will deliver to Secured Party written notice of the location of each Aircraft
and will deliver to Secured Party, on a quarterly basis thereafter, and upon
Secured Party’s request, written notice of the location of each Aircraft.


 


Section 2.9                                      Inspection. Secured Party will have the right, but not the duty,
to inspect any Aircraft, any component thereof, and the Records at any
reasonable time and from time to time, wherever the same may be located, upon
reasonable prior written notice to Grantor unless a Default or Event of Default
has occurred and is continuing, in which case no prior notice will be required.
One such inspection per year shall be at Grantor’s expense and any additional
inspection in any year will be at Secured Party’s expense unless a Default or
Event of Default has occurred and is continuing, in which case such inspection
will be at Grantor’s expense. Any inspection shall be performed in accordance
with Grantor’s operation and safety policy and otherwise under conditions
reasonably acceptable to Grantor. At Secured Party’s request, Grantor will
confirm to Secured Party the location of each Aircraft and will, at any
reasonable time and from time to time, make any Aircraft and/or the Records
available to Secured Party for inspection.


 


Section 2.10                                Aircraft
Registration; International Registry. Grantor will not
change the Registration Number of any Aircraft without Secured Party’s prior
written consent which consent will not be unreasonably withheld. Grantor will
cause to be filed (a) with the FAA, an FAA Bill of Sale, this Agreement,
and an FAA application for aircraft registration, (b) with any other
Relevant Authority, such documents as may be required to perfect and protect
Secured Party’s interest in the Equipment and to establish and maintain
registration of each Aircraft, and (c) with any Relevant Authority, such
other documents as may be necessary or prudent to cause each Aircraft to be and
remain duly registered at all times with the Relevant Authority in the name of
Grantor as owner and subject only to Secured Party’s first priority perfected
security interest. Grantor will, at all times, keep on board each Aircraft a
current and valid Registration Application or Certificate of Aircraft
Registration and such other documentation as may be required by the applicable
Relevant Authority. Grantor will cause each International Interest in favor of
the Secured Party in or relating to each Aircraft (including in the Airframe
and each Engine) created by this Agreement and, if any Aircraft is acquired by
Grantor on or after March 1, 2006, the contract of sale (i.e. the bill of
sale) transferring title in such Aircraft to Grantor, in each case, to be
validly registered with the International Registry with such International
Interests having priority over all other registered or un-registered
International Interests in the Airframe and Engines. Grantor will discharge or
cause to be discharged any International Interest or Prospective International
Interest in or relating to any Aircraft (including the Airframe and each
Engine) not consented to in writing by Secured Party. Further, Grantor will not
consent to any International Interest or Prospective International Interest in
or relating to any Aircraft unless prior approval is obtained from the Secured
Party in writing.


 


Section 2.11                                Financial and Other Data. During the term of the Note and so long
as any amounts are outstanding thereunder, Grantor agrees to furnish Secured
Party:


 


a)                                      as soon as
available, but in any event within 120 days after the end of each fiscal year
of the Grantor, annual audited consolidated (and unaudited consolidating
schedules) balance sheet of the Grantor and its Subsidiaries as at the end of
such fiscal year, and the related statements of income or operations,
shareholders’ equity and cash flows for such fiscal year, setting forth in each
case in comparative form the figures for the previous fiscal year, all in
reasonable detail, and accompanied by a report and opinion of an independent
certified public accountant of nationally recognized standing reasonably
acceptable to the Secured Party, which report and opinion shall be prepared in
accordance with GAAP and shall not be subject to any qualifications or
exceptions as to the scope of the audit nor to any qualifications and
exceptions not reasonably acceptable to the Secured Party; and


 


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b)                                     as soon as
available, but in any event within forty five (45) days after the end of each
fiscal quarter of each fiscal year of the Grantor, unaudited quarterly
consolidated and consolidating balance sheet of the Grantor and its
Subsidiaries as of the end of such fiscal quarter, and the related consolidated
and consolidating statement of income and the statement of cash flows for such
fiscal quarter and for the portion of the Grantor’s fiscal year then ended,
setting forth in each case in comparative form the figures for the
corresponding fiscal quarter of the previous fiscal year and the corresponding
portion of the previous fiscal year, all in reasonable detail and certified by
the Director of Finance or the Chief Financial Officer of the Grantor as fairly
presenting the financial condition, results of operations and cash flows of the
Grantor and its Subsidiaries in accordance with GAAP, subject only to normal
year end audit adjustments and the absence of footnotes.


 


Section 2.12                                Late Payments. All amounts payable to Secured Party
hereunder that are not paid when due will accrue interest at the Default Rate
for the number of days actually elapsed from the due date until paid in full.
In addition, if Grantor fails to perform any of its obligations contained
herein, Secured Party may (but will not be obligated to) itself perform such
obligations, and the amount of the reasonable costs and expenses of Secured
Party incurred in connection with such performance, together with interest on
such amount from the date said amounts are expended at the Default Rate, will
be payable by Grantor to Secured Party upon demand. No such performance by
Secured Party will be deemed a waiver of any rights or remedies of Secured
Party or be deemed to cure any Default of Grantor hereunder.


 


Section 2.13                                Transaction
Expenses. Grantor will pay all actual and
reasonable fees, costs and expenses incurred by Secured Party in connection
with this Agreement and the other Loan Documents, whether or not the
transactions contemplated hereby are consummated, including (a) appraisal
fees, (b) Secured Party’s counsel fees and expenses, (b) counsel fees
and expenses relating to the FAA or other Relevant Authority, (c) all
applicable title and lien searches, reports, filing, registration and recording
fees, charges and taxes, incurred in connection with the preparation,
negotiation and execution of this Agreement and the other Loan Documents and
any amendment, waiver, consent or other modification of the provisions hereof
and thereof. Grantor also agrees to pay all reasonable fees and expenses of
Secured Party’s counsel, including FAA counsel, and all other third parties who
are engaged by Secured Party to update any lien reports and/or to review, file,
register and record any and all documents and instruments as required by
Secured Party, the International Registry or the Relevant Authority at any time
during which any of the Obligations remain outstanding.


 


Section 2.14                                Financial Covenants. Grantor will comply with the financial
covenants, if any, set forth in Exhibit B attached hereto and by
this reference incorporated herein. Grantor will, within forty-five (45) days
after the end of each fiscal quarter end of Grantor, provide Secured Party with
a certificate (a “Compliance Certificate”) substantially in the form of Exhibit C
hereto, in which Grantor certifies that it is in full compliance with such
covenants and setting forth the calculations used by Grantor to reach its
conclusion. The Compliance Certificate must be signed by Grantor’s chief
financial officer or, if Grantor does not have a chief financial officer, such
other officer or employee of Grantor who performs the duties typically
undertaken by a chief financial officer.


 


Section 2.15                                Other Covenants. Grantor will comply with the Other
Covenants set forth in Exhibit B attached hereto and by this
reference incorporated herein.


 


Section 2.16                                Guaranty. All of the obligations of the Grantor under this
Agreement, the Note and each of the other Loan Documents to which the Grantor
is a party shall be unconditionally guaranteed by the Guarantors pursuant to
the Guaranty.  Grantor shall deliver to
Secured Party written notice of the establishment of a Domestic Subsidiary or
the activation of a previously inactive Domestic Subsidiary of Grantor within
ten (10) Business Day days of the establishment or reactivation of such
Domestic Subsidiary.  Within thirty (30
days thereafter, Grantor shall deliver to Secured Party the Guaranty of such
Domestic Subsidiary (other than a Transitional Subsidiary) and related
organizational documents and certificates of authority to enter into the
Guaranty.


 


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Section 2.17                                Additional Stock Pledge


 


In the event that Grantor pledges any stock in any
domestic or foreign Subsidiary under Section 6.12(b) of the Credit
Agreement (or any replacement or successor primary revolving credit facility
for the Grantor, the Grantor shall simultaneously pledge such stock to Secured
Party to secure Grantor’s Obligations under this Agreement and the other Term
Loan Documents, on a parri passu basis with the Obligations under the Credit
Agreement, pursuant to the terms of the Borrower Stock Pledge and subject to
the Revolving Lender/Term Lender Intercreditor Agreement.


 


ARTICLE 3 — EVENTS OF LOSS


 


Section 3.1                                      Event of Loss with Respect to any
Aircraft. Grantor
will deliver to Secured Party written notice of the occurrence of any Event of
Loss with respect to any Aircraft within five (5) days after becoming
aware of such Event of Loss. Within five (5) days after receipt of
insurance proceeds but in no event more than one hundred twenty (120) days
following the determination by the insurance company of such Event of Loss,
Grantor shall pay to the Secured Party the Loss Value.  Grantor will pay to Secured Party an amount
equal to the sum of (A) all amounts then due hereunder, under any other
Loan Documents, and the pro rata portion of the remaining amounts due under the
Note, plus (B) the Loss Value of such Aircraft determined as of such Note
Payment Date. Upon payment in full by the Grantor of all such amounts, the
Aircraft having suffered the Event of Loss will be released from the lien of
this Agreement and the Secured Party will execute and deliver, at the Grantor’s
cost and expense, such instruments as may be reasonably required to evidence
such release.


 


Section 3.2                                      Event of Loss with Respect to an Engine. Grantor will deliver to Secured Party
written notice of the occurrence of any Event of Loss with respect to an Engine
under circumstances in which there has not occurred an Event of Loss with
respect to the related Airframe within five (5) days after the occurrence
thereof. Within thirty (30) days after the occurrence of such Event of Loss,
Grantor will convey to Secured Party, as replacement for the Engine with
respect to which such Event of Loss occurred, a security interest to and
International Interest in an engine that is (a) the same make and model
number as the Engine suffering the Event of Loss, (b) free and clear of
all Liens other than Permitted Liens, (c) of a value, utility, and useful
life at least equal to, and in as good an operating condition as, the Engine
suffering the Event of Loss, assuming such Engine was of the value and utility
and in the condition and repair required by the terms hereof immediately prior
to the occurrence of such Event of Loss. Grantor, at its sole cost and expense,
will furnish Secured Party with such documents to evidence the conveyance and
the International Interest and shall make such filings and registrations with
the Relevant Authority and the International Registry (and hereby consents to
such registrations with the International Registry) with respect thereto, in
each case, as Secured Party requests. Upon full compliance by Grantor with the
terms of this paragraph, Secured Party will release Secured Party’s right,
title and interest, if any, in and to the Engine suffering the Event of Loss.
Each replacement engine will, after such conveyance, be deemed an “Engine” as
defined herein and will be deemed part of the same Aircraft as was the replaced
Engine. No Event of Loss with respect to an Engine will result in any reduction
or delay in the payment of any amounts due under the Note or hereunder, or
otherwise relieve Grantor of any obligation under this Agreement.


 


Section 3.3                                      Application of Payments from Governmental
Authorities or other Persons. Any payments (other than insurance proceeds, the
application of which is provided for in Article 4), received at any time
by the Secured Party or Grantor from any governmental authority or other Person
with respect to any Event of Loss, or from a governmental authority with
respect to an event which does not constitute an Event of Loss, will be applied
as follows:


 


a)                                      Such
payments will be applied in reduction of the Grantor’s obligation to pay the Loss
Value, if not already paid by the Grantor, or, if already paid by the Grantor,
will be applied to reimburse the Grantor for its payment of such amounts. The
balance, if any, of such payment remaining thereafter, and after payment of all
amounts then due and payable under the Loan Documents, will be paid to the
Grantor.


 


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b)                                     Notwithstanding
the foregoing provisions of this Section 3.3, any payments (other than
insurance proceeds, the application of which is provided for in Article 4)
received at any time by the Secured Party from any governmental authority or
other Person with respect to any Event of Loss, which are payable to the
Grantor, will not be paid to the Grantor if at the time of such payment an Event
of Default or Default has occurred and is continuing, in which event all such
amounts will be paid to and held by the Secured Party as security for the
Obligations or, at the Secured Party’s option, applied by the Secured Party
toward the payment of such Obligations at the time due in such order of
application as the Secured Party may from time to time elect. At such time as
no Event of Default or Default has occurred and is continuing, all such amounts
at the time held by the Secured Party in excess of the amount, if any, the
Secured Party elected to apply as above provided will be paid to the Grantor.


 


Section 3.4                                      Rights Assigned. In furtherance of the foregoing, the
Grantor hereby irrevocably assigns, transfers and sets over to the Secured
Party all rights of the Grantor to any award or payment received by or payable
to the Grantor on account of an Event of Loss.


 


ARTICLE 4 — INSURANCE


 


Section 4.1                                      Insurance. Grantor, at its sole cost and expense, will maintain
or cause to be maintained:


 


a)                                      aircraft liability
insurance covering claims arising from the use or operation of each Aircraft in
or over any area (including contractual liability and bodily injury and
property damage liability) in an amount not less than the greater of (i) $100,000,000
per occurrence or such higher amounts as are required by law in the geographic
location or country in or over which any Aircraft is flown, operated or
located; and (ii) the amounts of aircraft liability insurance from time to
time applicable to aircraft operated by Grantor (whether owned or leased) of
the type of the Aircraft;


 


b)                                     cargo
liability insurance sufficient to cover the maximum value of cargo on each
Aircraft at any one time if Grantor is engaged in transporting property of
others;


 


c)                                      all-risk
aircraft physical damage insurance covering each Aircraft in motion and not in
motion, in flight and on the ground, and the Engine and all Parts and
Accessories while attached to or removed from the Airframe, in an amount not
less than the greater of (i) $10,000,000 for each Aircraft, or (ii) the
then Loss Value;


 


d)                                     for all
locations which each Aircraft travels to and through: war and allied perils
insurance to cover the perils of (i) war, invasion, acts of foreign
enemies, hostilities (whether war be declared or not), civil war, rebellion,
revolution, insurrection, martial law, military or usurped power or attempts at
usurpation of power, (ii) strikes, riots, civil commotions of labor
disturbances, (iii) any act of one or more persons, whether or not agents
of a sovereign power, for political or terrorist purposes and whether the loss
or damage resulting therefrom is accidental or intentional, (iv) any
vandalism, malicious act or act of sabotage, (v) confiscation,
naturalization, seizure, restraint, detention, diversion, appropriation,
requisition for title or use by or under the order of any government (whether
civil, military or de facto) or public or local authority and (vi) hijacking,
or any unlawful seizure or wrongful exercise of control of the crew in flight;
and


 


e)                                      such other
insurance against such other risks as is usually carried by Grantor. All such
insurance will be maintained with insurers of recognized reputation and
responsibility (reasonably satisfactory to Secured Party) having a rating not
less than A-: from A.M. Best, or other rating approved
by Secured Party; provided that the insurers in place today are deemed
acceptable by the Secured Party. All insurance policies will be in a form
reasonably acceptable to Secured Party.


 


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f)                                        If Grantor
fails to maintain insurance as herein provided, Secured Party may, at its
option, provide such insurance, and Grantor will, within five (5) Business
Days of receipt of written notice setting forth the cost of such insurance and
a copy of the invoice, reimburse Secured Party for the cost thereof.


 


Section 4.2                                      Requirements. All insurance policies required
hereunder will: (a) require 30 days’ prior written notice to Secured Party
of cancellation, non-renewal or material change in coverage (any such
cancellation, non-renewal or change, as applicable, not being effective until
the thirtieth (30th) day after the giving of such notice) except, in the case
of cancellation for non-payment of premium, only 10 days’ prior written notice
shall be required and in the case of cancellation of the coverages described
under Section 4.1(d), notice as established under the applicable
endorsements; (b) name the Additional Insureds (as hereinafter defined) as
an additional insured under the liability coverage and name Additional Insureds
as sole loss payee under the physical damage insurance coverage; (c) not
require contributions from other policies held by the Additional Insureds; (d) waive
any right of subrogation against the Additional Insureds; (e) in respect
of any liability of any of the Additional Insureds, except for the insurers’
salvage rights in the event of a loss or damage, waive the right of such
insurers to setoff, to counterclaim or to any other deduction, whether by
attachment or otherwise, to the extent of any monies due the Additional
Insureds under such policies; (f) permit but not require that any of the
Additional Insureds pay or be liable for any premiums with respect to such
insurance covered thereby; (g) provide for coverage in all areas in which
any Aircraft is permitted to fly under the terms hereof; (h) provide that
all of the provisions thereof, except the limits of liability, will operate in
the same manner as if there were a separate policy covering each Additional
Insured; and (i) contain breach of warranty provisions providing that, in
respect of the interests of the Additional Insureds in such policies, the
insurance will not be invalidated by any action or inaction of Grantor or any
other person (other than an Additional Insured, as to itself only) and will
insure the Additional Insureds regardless of any breach or violation of any
warranty, declaration or condition contained in such policies by Grantor or by
any other person (other than an Additional Insured, as to itself only). As used
herein, the term “Additional Insureds” means The Prudential Insurance
Company of America.


 


Section 4.3                                      No Right to Self-insure. Grantor will not self-insure (by
deductible, premium adjustment, or risk retention arrangement of any kind) the
insurance required to be maintained hereunder, except that Grantor may maintain
a $2,000,000 deductible per occurrence per Aircraft.


 


Section 4.4                                      Notice of Loss or Damage; Application of
Proceeds. Grantor
will give Secured Party prompt notice of any damage to or loss of, any
Aircraft, or any part thereof. Insurance proceeds for partial loss or damage to
any Aircraft or any part thereof will be applied as Secured Party in its sole
discretion determines.


 


Section 4.5                                      Reports, Policies, Certificates. Prior the Closing Date, Grantor will
deliver to the Additional Insureds a certificate of insurance and copies of the
lienholder’s endorsement evidencing that the insurance coverage required
hereunder has been obtained beyond the expiration date, together with a
certificate certifying that such insurance complies with the terms hereof,
accompanied, if requested by Secured Party, by the applicable policies and
report(s) of insurance broker(s) or underwriter(s) as to the
conformity of such coverage with such requirements; provided, however, that the Additional Insureds will be
under no duty either to ascertain the existence of or to examine any
certificates or reports or to advise Grantor if such insurance does not comply
with the requirements of this section. Not less than fifteen (15) days after
the annual renewals of the policies obtained by Grantor pursuant to this
Section, Grantor will deliver to the Additional Insured certificate(s) of
insurance and copies of the lienholder’s endorsement evidencing that the
coverage required hereunder has been obtained beyond the expiration date
thereof, evidencing no gaps in coverage, together with a certificate certifying
that such insurance complies with the terms hereof, accompanied by any
additional documentation regarding such insurance requested by Secured Party.


 


Section 4.6                                      Attorney-in Fact. Grantor irrevocably appoints Secured
Party (and any assignee, mortgagee and/or lender of the Secured Party) its
attorney-in-fact to file, settle, or adjust, and receive payment of, claims
under any insurance policy required hereby and to endorse Grantor’s name on any


 


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checks, drafts or
other instruments in payment of such claims, and to otherwise act in Grantor’s
name and on its behalf to make, execute, deliver and file any instruments or
documents necessary in connection therewith, and to take any action as Secured
Party (and any such assignee, mortgagee and/or lender) deems necessary or
appropriate to obtain the benefits intended to inure to Secured Party under
this Section 4. To the extent appropriate or permissible under applicable
law, such appointment is coupled with an interest, is irrevocable, and will
terminate only upon payment in full of the obligations set forth in this
Agreement and/or any agreements, documents or instruments related thereto.
Notwithstanding the foregoing, unless a Default or Event of Default has
occurred and is continuing hereunder, Secured Party agrees that it will not
exercise its powers as attorney in fact with respect to claims for damages in
amounts payable under such policies of insurance which are less than Two
Hundred Fifty Thousand Dollars ($250,000).


 


ARTICLE 5 — EVENTS OF DEFAULT
AND REMEDIES


 


Section 5.1                                      Events of Default; Remedies. As used herein, the term “Event of
Default” means any of the following events:


 


a)                                      Grantor
fails to pay any installment of principal or interest on the Note or any amount
due hereunder within five (5) days after the same has become due;


 


b)                                     Grantor
fails to keep in full force and effect any of the insurance required under this
Agreement, or operates any Aircraft at a time when, or at a place in which, such
insurance is not in effect;


 


c)                                      Grantor
fails to perform or observe any other covenant, condition or agreement required
to be performed or observed by it hereunder or under any agreement, document or
certificate related hereto, and such failure continues for ten (10) days
after written notice thereof from Secured Party to Grantor;


 


d)                                     Grantor
defaults in the payment or performance of any other obligation to Secured Party
or any affiliated Person controlling, controlled by or under common control
with Secured Party;


 


e)                                      any
representation or warranty now or hereafter made or information now or
hereafter provided by Grantor, including any financial information, proves to
be or to have been false, inaccurate, or misleading in any material respect;


 


f)                                        the commencement
of any bankruptcy, insolvency, arrangement, reorganization, receivership,
liquidation or other similar proceeding by or against Grantor or any of its
properties or businesses (which, in the case of a proceeding commenced against
Grantor, has not been dismissed within sixty (60) days of the filing thereof),
the appointment of a trustee, receiver, liquidator or custodian for Grantor or
any of its properties or businesses, or the making by Grantor of a general
assignment or deed of trust for the benefit of creditors;


 


g)                                     Grantor
defaults in any obligation to a third party, as a result of which such third
party has the right to accelerate Grantor’s obligations to such third party in
excess of $1,000,000;


 


h)                                     Grantor does
or agrees to (i) sell, transfer or dispose of all or substantially all of
its stock or other ownership interests, assets or property, (ii) merge
with or into any other entity or engage in any form of corporate
reorganization, (iii) become the subject of, or engage in, a leveraged
buy-out (other than in connection with the transactions contemplated hereby and
under the Credit Agreement) or (iv) terminate its existence by merger,
consolidation or sale of substantially all of its assets or otherwise;


 


11

















 


i)                                         there occurs
any Change of Control with respect to Grantor, except as has been approved in
writing by Secured Party;


 


j)                                         Grantor, if
an individual, dies or, if a legal entity, is dissolved;


 


k)                                      Grantor
becomes insolvent or generally fails to pay its debts as they became due or
Grantor admits in writing its inability to pay its debts or obligations
generally as they become due;


 


l)                                         there has
been a Material Adverse Effect since the date of this Agreement;


 


m)                                   any event or
condition set forth in subsections (d) through (l) of this
section occurs with respect to any affiliated Person, or any Person
controlling, controlled by or under common control with Grantor;


 


n)                                     any of the
liens created or granted hereby, or intended to be granted or created hereby,
to Secured Party fails to be valid, first priority perfected liens subject to
no prior, equal or subordinate lien;


 


o)                                     an additional Lien (other than a Permitted Lien) attaches to
the Equipment or any of the other Collateral, the Equipment or any of the other
Collateral becomes subject to risk of seizure or forfeiture or Grantor creates
in favor of or provides for the benefit of any Person (other than the Secured
Party) or registers or consents to the registration with the International Registry
of, an International Interest or a Prospective International Interest in or
relating to the Airframe or Engines, or provides a IDERA in favor of any Person
with respect to each Aircraft other than Secured Party; and


 


p)                                     Grantor defaults under the Credit Agreement.


 


Section 5.2                                      Remedies. Upon the occurrence and continuance of any Event of
Default, Secured Party may declare any or all of the Obligations to be
immediately due and payable, without demand or notice to Grantor or any
Guarantor, and Secured Party will have the immediate right to enforce its
rights hereunder. The Obligations accelerated thereby will bear interest (both
before and after any judgment) until paid in full at the Default Rate. Should
there occur a Default, and if a voluntary or involuntary petition under the
United States Bankruptcy Code is filed by or against Grantor while such Default
remains uncured, the Secured Obligations will be automatically accelerated and
due and payable, and interest thereon at the Default Rate will automatically
apply as of the date of the first occurrence of the Default, without any
notice, demand or action of any type on the part of Secured Party (including
any action evidencing the acceleration or imposition of the Default Rate). The
fact that Secured Party has, prior to the filing of the voluntary or
involuntary petition under the United States Bankruptcy Code, acted in a manner
which is inconsistent with the acceleration and imposition of such rate will
not constitute a waiver of this provision or estop Secured Party from asserting
or enforcing Secured Party’s rights hereunder. In addition, Secured Party may
exercise any one or more of the following remedies, as Secured Party in its
sole discretion elects:


 


a)                                      Proceed by
appropriate court action, either at law or in equity, to enforce performance by
Grantor of this Agreement or to recover damages, including incidental and
consequential damages, for the breach hereof.


 


b)                                     Cause
Grantor, at its expense, promptly to return each Aircraft to Secured Party at
such reasonable place(s) as Secured Party designates within the
continental United States.


 


c)                                      Enter upon
any premises where any Aircraft is located and, without notice to Grantor, take
immediate possession of and remove the same, together with any Engines and


 


12

















 


Parts, by self-help, summary
proceedings or otherwise without any liability of any kind whatsoever on the
part of Secured Party for or by reason of such entry or taking of possession.


 


d)                                     Sell or otherwise dispose of any Aircraft by public or
private sale, with or without notice to the Grantor, and without having such
Aircraft present at the place of sale and in such manner as it deems
appropriate. Secured Party may elect to purchase any Aircraft at such sale for
a price not less than the highest bona fide bid given by a Person unrelated to
Grantor. Grantor waives all of its rights under laws governing such sale to the
extent permitted by law. Grantor hereby agrees that ten working days’ prior
notice to Grantor of any public sale or of the time after which a private sale
may be negotiated will be conclusively deemed commercially reasonable notice.


 


e)                                      Hold, keep idle, lease, de-register, export or use or operate
all or part of any Aircraft without any liability whatsoever and store any
Aircraft on Grantor’s premises pending lease or sale or hold a sale on such
premises without liability for rent or costs whatsoever.


 


f)                                        Exercise any other right or remedy available to Secured Party
under applicable law.


 


In addition, Grantor will be liable for all costs, charges and
expenses, including reasonable legal fees and disbursements, incurred by
Secured Party by reason of the occurrence of any Event of Default or in
enforcing Secured Party’s rights under the Agreement, before or in connection
with litigation and for any deficiency in the disposition of the Aircraft.


 


Section 5.3                                      Remedies
Cumulative. Each and every right, power and remedy
herein specifically given to the Secured Party or otherwise in this Agreement or
the other Loan Documents are cumulative and are in addition to every other
right, power and remedy herein or therein specifically given or now or
hereafter existing at law, including upon an Event of Default any applicable
remedies specified under the Cape Town Treaty available to Secured Party, in
equity or by statute, and each and every right, power and remedy whether
specifically herein or therein given or otherwise existing may be exercised
from time to time and as often and in such order as may be deemed expedient by
the Secured Party, and the exercise or the beginning of the exercise of any
power or remedy will not be construed to be a waiver of the right to exercise
at the same time or thereafter any other right, power or remedy. No delay or
omission by the Secured Party in the exercise of any right, power or remedy or
in the pursuit of any remedy will impair any such right, power or remedy or be
construed to be a waiver of any default on the part of the Grantor to be an
acquiescence therein.


 


Section 5.4                                      Grantor’s
Waiver of Rights. To the extent permitted by applicable
law, the Grantor hereby waives any rights, now or hereafter conferred by
statute or otherwise, which might limit or modify any of the rights or remedies
of the Secured Party under or in connection with this Article 5, including
any right to require Secured Party to sell, lease or otherwise use any Aircraft
in mitigation of Secured Party’s damages as set forth herein.


 


Section 5.5                                      Power
of Attorney. The Grantor hereby appoints the Secured
Party or its designated agent as such Grantor’s attorney-in-fact, irrevocably,
with full power of substitution, to collect all payments with respect to the
Collateral due and to become due under or arising out of this Agreement or any
other Loan Document, to receive all moneys (including proceeds of insurance)
which may become due under any policy insuring the Collateral and all awards
payable in connection with the condemnation, requisition or seizure of the
Collateral, or any part thereof, to execute proofs of claim, to endorse drafts,
checks and other instruments for the payment of money payable to the Grantor in
payment of such insurance moneys and to do all other acts, things, take any
actions (including the filing of financing statements or other documents) or
institute any proceedings which the Secured Party may deem to be necessary or
appropriate at any time to protect and preserve the interest of the Secured
Party in the Collateral, or in this Agreement or the other Loan Documents.


 


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Section 5.6                                      Distribution
of Amounts Received After an Event of Default. All payments
received and amounts realized by the Secured Party with respect to the
Collateral after an Event of Default has occurred and is continuing (whether
realized from the exercise of any remedies pursuant to this Article 5 or
otherwise), as well as payments or amounts then held by the Secured Party as
part of the Collateral, will be distributed by the Secured Party in the
following order of priority:


 


a)                                      First, to pay the expenses paid by the Secured Party pursuant
to this Article 5 (to the extent not previously reimbursed) will be paid
to the Secured Party;


 


b)                                     Second, to pay the amounts payable to any Indemnified Party
(to the extent not previously reimbursed) will be paid to such Indemnified
Party;


 


c)                                      Third, to pay in full the aggregate unpaid principal amount
of the Loan, the accrued but unpaid interest thereon to the date of
distribution, indemnification for funding losses, if any, and all other
Obligations, will be paid to the Secured Party; such payments or amounts to be
applied to the amounts so due, owing or unpaid in such order of application as
the Secured Party may from time to time elect; and


 


d)                                     Fourth, the balance, if any, will be paid to the Grantor.


 


Section 5.7                                      Suits
for Enforcement. In case of any default in payment of the
Loan beyond any applicable grace period, then, regardless of whether or not the
Loan has then been accelerated, the Secured Party may proceed to enforce the
payment of the Loan. The Grantor agrees that, in the case of any default in the
payment of the Loan, it will pay the Secured Party such further amount as is
sufficient to pay the costs and expenses of collection, including reasonable
attorneys’ fees and expenses.


 


ARTICLE 6 — REPRESENTATIONS
AND WARRANTIES


 


Section 6.1                                      Representations,
Warranties and Covenants of Grantor. Grantor
represents, warrants and covenants that:


 


a)                                      Grantor’s exact legal name is as set forth in the preamble of
this Agreement and Grantor (i) is, and will remain, duly organized,
existing and in good standing under the laws of the State set forth in the
preamble of this Agreement, (ii) has its chief executive offices at the
location set forth in such paragraph, (iii) is, and will remain, duly
qualified and licensed in every jurisdiction wherever necessary to carry on its
business and operations, except where failure to qualify would not have a
Material Adverse Effect, (iv) is at all times while this Agreement or any
Loan Documents are in effect, shall be, or shall cause the Aircraft operated
under United States registration to be registered in the name of a “citizen of
the United States” within the meaning of the U.S. Transportation Code, as
amended from time to time and recodified at Section 40102(a)(15) of
Title 49 et seq, so long as any
Obligations are due to Secured Party under the Loan Documents, (v) has
not, within the previous six (6) years, changed its name, done business
under any other names, changed its chief place of business from its present
location, or merged or consolidated with any other entity except as previously
disclosed to Secured Party, and (vi) is not insolvent within the meaning
of any applicable state or federal law;


 


b)                                     Grantor has full power, authority and legal right to enter
into, and to perform its obligations under, each of the Loan Documents and has
full right and lawful authority to grant the security interest described in
this Agreement;


 


c)                                      The Loan Documents have been duly authorized, executed and
delivered by Grantor and constitute legal, valid and binding agreements
enforceable under all applicable laws in accordance with their terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors’


 


14

















 


rights
generally and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law);


 


d)                                     No approval, consent or withholding of objections is required
from any governmental body, agency, authority or instrumentality or any other
entity with respect to the entry into, or performance by, Grantor of any of the
Loan Documents, except such as have already been obtained;


 


e)                                      The entry into, and performance by, Grantor of the Loan
Documents will not (i) violate any of Grantor’s organizational documents, (ii) violate
any judgment, order, law or regulation applicable to Grantor, except where such
violation would not have a Material Adverse Effect, or (iii) result in any
breach of, constitute a default under, or result in the creation of, any lien,
claim or encumbrance on any of Grantor’s property (except for liens in favor of
Secured Party) pursuant to, any indenture mortgage, deed of trust, bank loan,
credit agreement, or other agreement or instrument to which Grantor is a party;


 


f)                                        There are no suits or proceedings pending or, to Grantor’s
knowledge, threatened in writing in court or before any commission, board or
other administrative agency against or affecting Grantor which could, in the
aggregate, have a Material Adverse Effect;


 


g)                                     All financial statements, if any, delivered to Secured Party
in connection with the Obligations have been prepared in accordance with
generally accepted accounting principles, and since the date of the most recent
financial statement there has been no material adverse change in Grantor’s
financial condition or business prospects;


 


h)                                     Grantor is (or, if any Aircraft is to be acquired hereafter,
will be) and will remain the sole lawful owner of each Aircraft and, except as
otherwise consented to in writing by Secured Party and except as permitted
under Section 8.6 hereof, Grantor will remain in sole, open and notorious
possession of each Aircraft. Grantor has (or, if an Aircraft is to be acquired
hereafter, will upon acquisition thereof have) good and marketable title to
each Aircraft and power to dispose of each Aircraft, free and clear of all
liens and encumbrances other than the lien evidenced by this Agreement and
Permitted Liens. Grantor will, at all times during which any amount remains
unpaid hereunder or under the Note, keep each Aircraft and the other Collateral
free from all Liens, other than those in favor of Secured Party and Permitted
Liens, and Grantor will defend all Aircraft and the other Collateral against
all claims and demands of all other persons claiming any interest therein;


 


i)                                         Grantor has filed or caused to be filed all required federal
and material, state and local tax returns, and has paid or caused to be paid
and will continue to pay all material taxes that are due and payable with
respect to its business and assets (except if being contested in good faith and
if adequate reserves for the payment thereof have been established). All sales,
use, documentation or similar material taxes, fees or other charges due and
payable on or prior to the date hereof with respect to the sale to and purchase
by Grantor of any Aircraft have been paid in full. Grantor will promptly pay or
cause to be paid all material taxes, license fees, assessments and public and
private charges that are or may be levied or assessed on or against any
Aircraft or the ownership or use thereof, or on this Agreement;


 


j)                                         Grantor is the registered owner of each Aircraft, as shown in
the records of the Relevant Authority and, so long as any of the Obligations
remain unpaid, Grantor will not impair such registration or cause it to be
impaired, suspended or cancelled, nor will Grantor register any Aircraft under
the laws of any country except the country of the Relevant Authority;


 


k)                                      Grantor will promptly notify Secured Party of any facts or
occurrences which do or, by passage of time or otherwise, will constitute a
breach of any of the above warranties and covenants it becomes aware of;


 


15

















 


l)                                         Each of the Engines has more than 550 rated
takeoff thrust horsepower or the equivalent of such horsepower.


 


m)                                   Except for (i) registration of each Aircraft with the
Relevant Authority, (ii) filing and recording of this Agreement with the
FAA, (iii) the filing of AC Form 8050-135 with respect to the
International Interests assigned or created (or to be assigned or created in
the case of Prospective Assignments or Prospective International Interests) in
each Aircraft by this Agreement and effecting the registration of such
interests with the International Registry, (iv) filing of a financing
statement under the UCC, and (v) filing a personal property security
interest in Canada if the Aircraft is registered in Canada, no further action,
including any filing, registration or recording of any document, is necessary
or advisable in order to establish and perfect Secured Party’s interest in any
Aircraft as against Grantor and/or any other Person;


 


n)                                     Grantor has no pending claims and Grantor has no knowledge of
any facts upon which a future claim may be based, in each case for breach of
warranty or otherwise, against any prior owner, any manufacturer, or any
supplier of the Airframe, the Rotors, the Rotor Blades, the Accessories, any
Engine, or any Parts;


 


o)                                     The Records have been kept, and Grantor will so long as any
Obligations remain outstanding continue to keep the Records, in accordance with
the requirements of the rules and regulations of any Relevant Authority,
and industry standards.


 


p)                                     Except (i) as disclosed by that certain Phase I
Environmental Site Assessment and Limited Compliance Review of Erickson
Air-Crane Incorporated Central Point Oregon, prepared by ENVIRON International
Corporation, Project No. 02-18298A and dated June 2007 and (ii) where
failure to comply with such representation and warranty would not have a
Material Adverse Effect, all properties of the Grantor and its use thereof
comply in all material respects with all Environmental Laws, applicable zoning
and use restrictions and with applicable laws and regulations relating to
health, safety and the environment in all jurisdictions in which the Grantor is
doing business. Except (x) as disclosed by that certain Phase I
Environmental Site Assessment and Limited Compliance Review of Erickson
Air-Crane Incorporated Central Point Oregon, prepared by ENVIRON International
Corporation, Project No. 02-18298A and dated June 2007 and (y) where
failure to comply with such representation and warranty would not have a
Material Adverse Effect, no Hazardous Materials have been generated,
manufactured, refined, transferred, stored, treated, transported, handled,
managed, discharged or disposed of on any property of the Grantor, by the
Grantor, or to Grantor’s knowledge, by any other Person except in accordance
with applicable laws.


 


Section 6.2                                      Registration and Operation.


 


a)                                      Grantor, at its own cost and expense, shall cause the
Aircraft to be duly registered in the name of Grantor as owner and subject only
to Secured Party’s first priority security interest and International Interest,
and Permitted Liens and at all times thereafter to remain duly registered, in
the name of the Grantor as owner with the Relevant Authority.  The Grantor agrees that it will not utilize
any item of Equipment in violation of any law or any rule, regulation or order
(including, without limitation, concerning alcoholic beverages or prohibited
substances) of any Relevant Authority or other governmental authority having
jurisdiction (domestic or foreign) or in violation of any airworthiness
certificate, license or registration relating to any item of Equipment issued
by any such authority, except, in each case, to the extent such violation is
not material or the validity or application of any such law, rule, regulation
or order is being contested in good faith and by appropriate proceedings (but
only so long as such proceedings do not, in the Secured Party’s reasonable
opinion, involve any material danger of the sale, forfeiture or loss of such
item of Equipment, or any interest, including the Secured Party’s security
interest, therein).


 


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b)                                     The Grantor shall not utilize the Aircraft so as to include
any landings in countries other than countries that then have diplomatic
relations with the United States of America. 
The Grantor shall not operate the Aircraft in any country or territory
where armed conflict exists unless the Aircraft is fully insured against such
risks.


 


Section 6.3                                      USA
PATRIOT Act Notice. 
Secured Party is subject to the Patriot Act (as hereinafter defined) and
hereby notifies the Grantor and each other Loan Party that pursuant to the
requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law
October 26, 2001) as modified from time to time, and the regulations
promulgated thereunder (the “Patriot Act”), it is required to obtain,
verify and record information that identifies the Grantor and such other Loan
Party, which information includes the name and address of Grantor and such
other Loan Party and other information that will allow such Secured Party to
identify Grantor and each other Loan Party in accordance with the Patriot Act.
Grantor represents and warrants that it is not a foreign shell bank, as defined
in the USA Patriot Act, and is not being used by a foreign bank to indirectly
provide banking services to another foreign bank that does not have a physical
presence in any country. Grantor shall, with reasonable promptness, provide to Secured
Party all information and data with respect to Secured Party and/or any of its
affiliates as from time-to-time may be required for Secured Party to comply
with the Patriot Act, with the understanding that Secured Party may share
information with the United States government for the purpose of identifying or
reporting suspected terrorism or money laundering.


 


Section 6.4                                      Regulatory
Compliance. 
Grantor represents and warrants that neither it nor any of its
shareholders, principals, members, managers, directors, officers, employees,
parents, subsidiaries, affiliates or guarantors are: (a) subject to United
States or multilateral economic or trade sanctions currently in force; (b) owned
or controlled by, or act on behalf of, any governments, corporations,
companies, entities or individuals that are subject to United States or
multilateral economic or trade sanctions currently in force; or (c) named,
identified or described on any blocked persons list, designated nationals list,
denied persons list, entity list, debarred party list, unverified list,
sanctions list or other list of individuals or entities with whom United States
persons may not conduct business, including, without limitation, lists
published or maintained by the Office of Foreign Assets Control of the United
States Department of Treasury; lists published or maintained by the United
States Department of Commerce; and lists published or maintained by the United
States Department of State. Grantor further represents and warrants that it
shall operate the Aircraft (or cause the same to be operated) in compliance
with (x) the Aircraft’s certificate of airworthiness, certificate of
registration, or any other license or registration relating to the Aircraft; (y) any
applicable law, regulation or order by any governmental entity having
jurisdiction over Grantor or over the Aircraft or aircraft operations; and (z) any
applicable Executive Order of the President of the United States and any
applicable United States federal, state or local law, statute or regulation,
including, without limitation, regulations issued and/or enforced by the United
States Department of Transportation, regulations issued and/or enforced by the
Federal Aviation Administration, regulations issued and/or enforced by the
Office of Foreign Assets Control of the United States Department of the
Treasury, regulations issued and/or enforced by the United States Department of
State, regulations issued and/or enforced by the United States Department of
Commerce, and regulations issued and/or enforced by the United States Homeland
Security Department (including, the Bureau of Customs and Border Protection and
the Transportation Security Administration) (all such aforementioned Executive
Orders, other orders, laws, statutes and regulations contained in this Section 6.3
collectively referred to herein as “Applicable U.S. Laws”); provided, however,
Grantor shall not be in default of this Section 6.3 if there have been
unintentional minor or nonrecurring violations which are cured promptly and which:
(i) do not involve any loss or reduction of coverage under any insurance
required by this Agreement or the Security Agreement; (ii) do not involve
any significant risk of the sale, forfeiture or loss of or damage to the
Aircraft or any interest therein; (iii) do not subject the Secured Party
to civil penalties; (iv) do not subject the Grantor, Secured Party, or any
of their affiliates to criminal penalties; and (v) do not subject the
Grantor, Secured Party (or any of their affiliates) or any person operating the
Aircraft to any fine, penalty or enforcement action which would materially
adversely affect the business or operations of Grantor or Secured Party, the
operation of the Aircraft or the rights of Grantor or Secured Party hereunder,
provided that, in any such case, Grantor may in good faith diligently contest
the validity or application of any such applicable law, statute or regulation
in any reasonable manner which does not materially adversely affect Grantor or
Secured Party or have any significant risk of the sale or forfeiture of


 


17

















 


the Aircraft or materially adversely affect the rights of the
Secured Party or the obligations of the Grantor hereunder. Grantor acknowledges
that transportation to, from, within, or over the United States is subject to
the laws and regulations of the United States. Grantor covenants and agrees
that neither it nor any of its agents, representatives or affiliates shall use,
operate, lease, sublease, maintain, or insure the Aircraft for any purpose or
in any manner which violates directly or indirectly any Applicable U.S. Laws.
Grantor hereby agrees to comply with all information requests from Secured
Party and from any court, agency, office, department or other instrumentality
of any United States Federal, state or local government regarding Grantor’s or
Secured Party’s (or any of their affiliates) compliance with the Applicable
U.S. Laws.


 


ARTICLE 7 — SECURITY INTEREST
ABSOLUTE


 


Section 7.1                                      Security
Interest Absolute. All rights of the Secured Party and the
security interests and International Interests assigned, granted to and created
in favor of the Secured Party hereunder, and all obligations of the Grantor
hereunder, will be absolute and unconditional, irrespective of:


 


a)                                      any lack of validity or enforceability of any Loan Document;


 


b)                                     the failure of the Secured Party to:


 


(i)                                     assert any claim or demand or to enforce any right or remedy
against the Grantor or any other Person under the provisions of the Loan
Agreement any other Loan Document or otherwise; or


 


(ii)                                  to exercise any right or remedy against any Guarantor of, or
collateral securing, any of the Obligations;


 


c)                                      any change in the time, manner or place of payment of, or in
any other term of, all or any of the Obligations or any other extension,
compromise or renewal of any of the Obligations;


 


d)                                     any reduction, limitation, impairment or termination of any
of the Obligations for any reason, including any claim of waiver, release,
surrender, alteration or compromise, and will not be subject to (and the
Grantor hereby waives any right to or claim of) any defense or setoff,
counterclaim, recoupment or termination whatsoever by reason of the invalidity,
illegality, nongenuineness, irregularity, compromise, unenforceability of, or
any other event or occurrence affecting, any of the Obligations;


 


e)                                      any amendment to, rescission, waiver, or other modification
of, or any consent to departure from, any of the terms of the Loan Agreement or
any other Loan Document;


 


f)                                        any addition, exchange, release, surrender or nonperfection
of any collateral (including the Collateral), or any amendment to or waiver or
release of or addition to or consent to departure from any guaranty, for any of
the Obligations; or


 


g)                                     any other circumstances which might otherwise constitute a
defense available to, or a legal or equitable discharge of, the Grantor.


 


ARTICLE 8 — MISCELLANEOUS


 


Section 8.1                                      Governing
Law; Jurisdiction. THIS AGREEMENT IS BEING DELIVERED IN THE
STATE OF NEW YORK. THIS AGREEMENT WILL BE GOVERNED BY, AND BE CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. Grantor hereby irrevocably
consents and agrees that any legal action, suit or proceeding arising out of or
in any way in connection


 


18

















 


with this Agreement or any of the other Loan Documents may be
instituted or brought in the courts of the State of New York or in the United
States Courts located in the State of New York, and the appellate courts from
any thereof, as Secured Party may elect or in any other state or Federal court
as Secured Party shall deem appropriate, and by execution and delivery of this
Agreement, Grantor hereby irrevocably accepts and submits to, for itself and in
respect of its property, generally and unconditionally, the non-exclusive
jurisdiction of any such court, and to all proceedings in such courts. Grantor
irrevocably consents to service of any summons and/or legal process by first
class, certified United States air mail, postage prepaid, to Grantor at the
address set forth herein, such method of service to constitute, in every
respect, sufficient and effective service of process in any such legal action
or proceeding. Nothing in this Agreement or in any of the other Loan Documents
shall affect the right to service of process in any other manner permitted by
law or limit the right of Secured Party to bring actions, suits or proceedings
in the courts of any other jurisdiction. Grantor further agrees that final
judgment against it in any such legal action, suit or proceeding shall be
conclusive and may be enforced in any other jurisdiction, within or outside the
United States of America, by suit on the judgment, a certified or exemplified
copy of which shall be conclusive evidence of the fact and the amount of the
liability. Secured Party and Grantor agree that such state and Federal courts
of and within the State of New York have non-exclusive jurisdiction in respect
of any claims brought under the Cape Town Treaty relating to any Aircraft.


 


Section 8.2                                      Notices. All
notices and other communications hereunder will be in writing and will be
transmitted by hand, overnight courier or certified mail (return receipt
requested), US postage prepaid. Such notices and other communications will be
addressed if to Secured Party, in care of Prudential Capital Group—Commercial Asset
Finance, 3350 Riverwood Parkway, Suite 1500, Atlanta, Georgia 30339,
Attention: Managing Director, with copy to Attention: Vice President and
Corporate Counsel, and if to Grantor at the address set forth in the
introductory paragraph of this Agreement or at such other address as any party
may, from time to time, designate by notice duly given in accordance with this
section. Such notices and other communications will be effective upon the
earlier of receipt or three days after mailing if mailed in accordance with the
terms of this section.


 


Section 8.3                                      Time
of the Essence. Time is of the essence in the payment
and performance of all of Grantor’s obligations hereunder and under the other
Loan Documents.


 


Section 8.4                                      Limitation
as to Enforcement of Rights, Remedies and Claims. Nothing in this
Agreement, whether express or implied, will be construed to give to any Person
other than the Grantor and the Secured Party any legal or equitable right,
remedy or claim under or in respect of this Agreement or any other Loan
Document.


 


Section 8.5                                      Severability
of Invalid Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction will, as to such
provision, be ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction will not invalidate or render
unenforceable such provision in any other jurisdiction.


 


Section 8.6                                      Note Register. Throughout the term of the Loan, Grantor shall keep a register of all
Notes issued by Grantor pursuant to the terms hereof (the “Register”) and shall
record therein all participations, assignments and transfers described in Section 8.7
hereof. Secured Party, together with any of its assignees or transferees, shall
have the right at any time during Grantor’s regular business hours to inspect
the Register.


 


Section 8.7                                      Assignment.
GRANTOR WILL NOT WITHOUT THE CONSENT OF SECURED PARTY, SELL, TRANSFER, ASSIGN,
CHARTER, CONVEY, PLEDGE, MORTGAGE OR OTHERWISE ENCUMBER ALL OR ANY PART OF
THE EQUIPMENT OR THIS AGREEMENT, AND ANY SUCH ATTEMPTED SALE, TRANSFER,
ASSIGNMENT, CHARTER, CONVEYANCE, PLEDGE, MORTGAGE OR ENCUMBRANCE, WHETHER BY
OPERATION OF LAW OR OTHERWISE, WITHOUT THE PRIOR WRITTEN CONSENT OF SECURED
PARTY WILL BE NULL AND VOID. IN ADDITION, GRANTOR WILL NOT ENTER INTO ANY
INTERCHANGE AGREEMENT WITH RESPECT TO ANY AIRCRAFT OR RELINQUISH POSSESSION OF
ANY AIRCRAFT OR ANY ENGINE, OR INSTALL ANY ENGINE OR


 


19

















 


PART, OR PERMIT ANY ENGINE OR PART TO BE INSTALLED, ON ANY
AIRFRAME OTHER THAN THE AIRFRAME DESCRIBED HEREIN OR AN AIRFRAME OWNED OR
OPERATED BY GRANTOR. No consent by Secured Party to any of the foregoing will
in any event relieve Grantor of primary, absolute and unconditional liability
for its duties and obligations under this Agreement. Secured Party, at any time
with or without notice to Grantor, may sell, transfer, assign and/or grant a
security interest in all or any part of Secured Party’s interest in the Loan
Documents or any Aircraft or any part thereof (each, a “Secured Party Transfer”)
and Grantor hereby expressly consents in advance to any such assignment by
Secured Party of the Loan Documents and Secured Party’s associated rights
therein, including in connection therewith any assignment of Secured Party
International Interests assigned or created hereunder in or relating to any
Aircraft. Any purchaser, transferee, assignee or secured party of Secured Party
(each a “Secured Party Assignee”) will have and may exercise all of Secured
Party’s rights hereunder with respect to the items to which any such Secured
Party Transfer relates, and Grantor will not assert against any Secured Party
Assignee any claim Grantor may have against Secured Party, provided Grantor may
assert any such claim in a separate action against Secured Party. Upon receipt
of written notice of a Secured Party Transfer, Grantor will promptly
acknowledge in writing its obligations under this Agreement, will comply with
the written directions or demands of any Secured Party Assignee and will make
all payments due under the assigned Agreement as directed in writing by the
Secured Party Assignee. Following such Secured Party Transfer, the term “Secured
Party” will be deemed to include or refer to each Secured Party Assignee.
Grantor will provide reasonable assistance to Secured Party to complete any
transaction contemplated by this subsection. Subject to the restriction on
assignment contained in this subsection, this Agreement inures to the benefit
of, and is binding upon, the successors and assigns of the parties hereto.


 


Section 8.8                                      Benefit
of Parties, Successors and Assigns; Entire Agreement. All
representations, warranties, covenants and agreements contained herein or
delivered in connection herewith will be binding upon, and inure to the benefit
of, the Grantor and the Secured Party and their respective legal
representatives, successors and assigns. This Agreement, together with the
other Loan Documents, constitute the entire agreement of the parties hereto
with respect to the subject matter hereof and supersedes all prior
understandings and agreements of such parties.


 


Section 8.9                                      Further
Assurances. At any time and from time to time, upon
the reasonable request of the Secured Party, the Grantor will promptly and duly
execute and deliver any and all such further instruments and documents and take
such action (including providing any necessary consents) with the FAA, Relevant
Authority or International Registry as may be specified in such request, and as
are necessary to perfect, preserve or protect the security interests,
International Interests and assignments created or intended to be created
hereby, or to obtain for the Secured Party the full benefit of the specific
rights and powers herein granted and assigned, including the execution and
delivery of Uniform Commercial Code financing statements and continuation
statements with respect thereto, or similar instruments relating to the
perfection of the mortgage, security interests, International Interests or
assignments created or intended to be created hereby.


 


Section 8.10                                Performance
by Secured Party. In its discretion, the Secured Party may
(but will not be obligated to), at any time and from time to time (regardless
of whether or not a Default or an Event of Default has occurred), for the
account of the Grantor, pay any amount required to be paid by the Grantor
hereunder, or do any act required of the Grantor hereunder, and which the
Grantor fails to pay or do at the time required, and any such payment will be
repayable to the Secured Party by the Grantor on demand, will bear interest at
the Default Rate, and will be secured by the Collateral.


 


Section 8.11                                Aircraft
Intercreditor Agreement. Notwithstanding anything herein
to the contrary, the lien and security interest granted to the Secured Party in
the Aircraft pursuant to this Agreement and the exercise of any right or remedy
by the Secured Party hereunder with respect to the Aircraft is subject to the
provisions of the Aircraft Intercreditor Agreement.  In the event of a conflict between the terms
of the Aircraft Intercreditor Agreement and this Agreement, the terms of the
Aircraft Intercreditor Agreement shall govern and control, except that this
Agreement shall control with respect to (i) the imposition of the lien and
security interest hereof and (ii) the governing law applicable to this
Agreement.


 


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Section 8.12                                Indemnity.
Grantor will indemnify and hold harmless Secured Party and each Secured Party
Assignee, on an after tax basis, from and against any and all liabilities,
causes of action, claims, suits, penalties, damages, losses, costs or expenses
(including attorneys’ fees), obligations, demands and judgments (collectively,
a “Liability”) arising out of or in any way related to: (a) Grantor’s
failure to perform any covenant under any of the Loan Documents, (b) the
untruth of any representation or warranty made by Grantor under the Loan
Documents, (c) the order, manufacture, purchase, ownership, selection,
acceptance, rejection, possession, rental, sublease, operation, use,
maintenance, control, loss, damage, destruction, removal, storage, surrender,
sale, condition, delivery, return or other disposition of or any other matter
relating to any Aircraft, or (d) injury to persons, property or the
environment including any Liability based on strict liability in tort,
negligence, breach of warranties or Grantor’s failure to comply fully with
applicable law or regulatory requirements; provided, that the foregoing
indemnity will not extend to any Liability to the extent resulting solely from
the gross negligence or willful misconduct of Secured Party.


 


Section 8.13                                Amendments.
Neither this Agreement, nor any of the terms hereof, may be terminated,
amended, supplemented, waived or modified orally, but only by an instrument in
writing which is signed by the party against whom the enforcement of the
termination, amendment, supplement, waiver or modification is sought.


 


Section 8.14                                Waiver
of Jury Trial. SECURED PARTY AND GRANTOR HEREBY EACH
WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO ANY AIRCRAFT OR THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS. THIS WAIVER IS MADE KNOWINGLY, WILLINGLY AND
VOLUNTARILY BY SECURED PARTY AND GRANTOR, WHO EACH ACKNOWLEDGE THAT NO
REPRESENTATIONS HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL
BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. THIS WAIVER APPLIES TO
ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO.
GRANTOR AGREES THAT IT WILL NOT ASSERT ANY CLAIM AGAINST THE SECURED PARTY OR
ANY OTHER PERSON INDEMNIFIED UNDER THIS AGREEMENT ON ANY THEORY OF LIABILITY
FOR SPECIAL, INDIRECT, CONSEQUENTIAL, INCIDENTAL OR PUNITIVE DAMAGES.


 


Section 8.15                                Counterpart
Execution; Joint and Several Liability. This Agreement
and any amendments to this Agreement may be executed in any number of
counterparts and by different parties on separate counterparts, each of which,
when so executed and delivered, will be an original, but all such counterparts
will together constitute but one and the same instrument. Fully executed sets
of counterparts will be delivered to, and retained by, the Grantor and the
Secured Party.


 


ARTICLE 9 — DEFINITIONS


 


Section 9.1                                      Definitions. In
this Agreement, unless the context otherwise requires, the terms defined herein
and in any agreement executed in connection herewith include, where
appropriate, the plural as well as the singular and the singular as well as the
plural. Except as otherwise indicated, all agreements defined herein refer to
the same as from time to time amended or supplemented, or the terms thereof
waived or modified in accordance herewith and therewith. The terms “including,”
“includes” and “include” will be deemed to be followed by the words “without
limitation.” Unless otherwise defined herein, capitalized terms used herein
have the meanings given thereto in the Note. The following terms have the
respective meanings set forth below:


 


a)                                      “Accessories”  means the property of the Grantor
consisting of water tanks, pond snorkels, sea snorkels, water cannons, and
other equipment and attachments for any Aircraft that are used by the Grantor
for the purpose of firefighting, logging and construction.


 


b)                                     “Act” means the Federal Aviation Act of 1958, as amended from time
to time and recodified at 49 U.S.C. § 44101 et seq, or the laws
and regulations of other Relevant Authority applicable to registration and
operation of aircraft and recording of security interests therein.


 


21

















 


c)                                      “Adjusted EBITDA” means, for any period, for the
Grantor, Adjusted Net Income plus, to the extent deducted in determining
Net Income, interest, taxes, depreciation and amortization, plus the sum of: (i) any
expense or loss associated with (A) any proposed or completed equity or
debt financing on or prior to the Closing Date and (B) the early
retirement, extinguishment or refinancing of debt, and (C) bonuses paid
with respect to the completion of any of the foregoing, (ii) any fees,
expenses or charges deducted in computing Adjusted Net Income which have been
determined by management of Grantor, which determination is acceptable to the
Administrative Agent, to be non-recurring by virtue of changes in Grantor’s
method of operations pursuant to its cost reduction or restructuring programs, (iii) noncash
charges resulting from the application of purchase accounting, (iv) noncash
expenses resulting from the granting of stock options, restricted stock or
restricted stock unit awards under equity compensation programs solely with
respect to Capital Stock, (v) transaction costs and expenses incurred in
connection with Permitted Acquisitions, (vi) transaction costs incurred in
connection with the transactions consummated during the last 12 months prior to
and including the Closing Date and (vii) any other adjustments which are
mutually agreed upon.


 


d)                                     “Adjusted Net Income” means, for any period, for the
Grantor and Subsidiaries on a consolidated basis, net income excluding (i) extraordinary
gains and extraordinary losses, (ii) the effect of all non-cash currency
translation adjustments (these “currency translation adjustments” shall exclude
from Adjusted Net Income all income statement non-cash gains and losses from
non-speculative, unbalanced hedge positions), (iii) involuntary conversion
gains and losses, (iv) gains and losses from the disposal of property,
plant and equipment, (v) any accretion on preferred stock, and (vi) Management
Fees to the extent deducted from net income.


 


e)                                      “Administrative Agent” means KeyBank National Association in its capacity as
administrative agent under the Credit Agreement.


 


f)                                        “Agreement”, “this Agreement”, “hereby”, “herein”,
“hereof”, “hereunder” or other like words means this
Master Aircraft Loan and Security Agreement, as it may be amended, modified or
supplemented from time to time.


 


g)                                     “Aircraft” means
the Airframe together with the Engine(s), Rotor and Rotor Blades whether or not
such Engine(s), Rotor and/or Rotor Blades are installed on the Airframe or any
other airframe.


 


h)                                     “Aircraft Intercreditor
Agreement” means an intercreditor agreement between Administrative
Agent, Term Lender and Second Lien Lender, and acknowledged by Grantor.


 


i)                                         “Airframe” means
(i) the ten (10) Sikorsky/Erickson model S-64E Airframes (excluding, however, the Engine(s), the Rotors and
Rotor Blades from time to time installed thereon) having the United States
Registration Number and manufacturer’s serial numbers (or other Relevant
Authority registration numbers) specified on Schedule 1 attached hereto,
(ii) any and all avionics, appliances, instruments, accessories and parts,
and all replacements therefor, which are from time to time incorporated or
installed in or attached thereto or which have been removed therefrom, and (iii) any
replacement airframe which may from time to time be substituted for such Airframe
in accordance with the terms of the Agreement.


 


j)                                         “Borrower Stock Pledge”
means a Stock Pledge Agreement by Grantor in favor of Collateral Agent covering
65% of Grantor’s stock in first tier foreign subsidiaries.


 


k)                                      “Business Day”
means a day other than a Saturday, Sunday or a holiday on which the banks are
open for business in New York, New York.


 


l)                                         “Cape Town Treaty” has the meaning provided in 49 U.S.C. § 44113(1).


 


22














 


m)                                   “Capital Expenditures” means, for any period, all
expenditures of the Grantor during such period determined on a consolidated
basis that, in accordance with GAAP, are or should be included in “purchase of
property and equipment, goodwill, rights of way, and other long-term tangible
assets or a similar tangible or intangible property account,” or similar items
reflected in the consolidated statement of cash flows of the Grantor.


 


n)                                     “Change of Control” means, with respect to any Person,
an event or series of events by which:


 


(i)                                     any “person”
or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended, but excluding any employee benefit
plan of such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such
plan) (excluding the Sponsors and EAC Shareholders), becomes the “beneficial
owner” (as defined in Rules 13d-3 and 13d-5 under the Securities Exchange
Act of 1934), directly or indirectly, of more than 50% of the equity securities
of such Person entitled to vote for members of the board of directors or
equivalent governing body of such Person on a fully-diluted basis; or


 


(ii)                                  a majority
of the members of the board of directors or other equivalent governing body of
such Person cease to be composed of individuals who were appointed by the
Sponsors.


 


o)                                     “Closing Date”
means the date on which the Secured Party makes the Loan to Grantor pursuant to
the Note.


 


p)                                     “Collateral” has
the meaning set forth in Section 1.1 hereof.


 


q)                                     “Collateral Agent”
means Administrative Agent as collateral agent under the Revolving Lender/Term
Lender Intercreditor Agreement, and any successor collateral agent thereunder.


 


r)                                        “Credit Agreement” means that certain Credit Agreement
dated as of September       , 2007, in the
amount of $65,000,000 between Grantor and KeyBank National Association, as
Administrative Agent, Lender, Swing Line Lender, and L/C Issuer, and other
Lenders a party thereto, as the same may be amended, restated, supplemented or
otherwise modified from time to time.


 


s)                                      “Debtor Relief Laws” means the Bankruptcy Code of the
United States of America, and all other liquidation, conservatorship,
bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement,
receivership, insolvency, reorganization, or similar debtor relief Laws of the
United States of America or other applicable jurisdictions from time to time in
effect and affecting the rights of creditors generally.


 


t)                                        “Default” means
an event which, after the giving of notice or lapse of time, or both, would
become an Event of Default.


 


u)                                     “Default Rate”
has the meaning given in the Note.


 


v)                                     “Domestic Subsidiary”
means any subsidiary of Grantor that is organized and existing under the laws
of the United States or any state or commonwealth thereof or under the laws of
the District of Columbia.


 


w)                                   “EAC Shareholders”
means, individually and collectively, ZM EAC LLC, a Delaware limited liability
company, Stonehouse Erickson Investment Co. LLC, a Delaware limited


 


23

















 


liability
company, and Stonehouse Erickson Investment Co. LLC., a Delaware limited
liability company.


 


x)                                       “EAC Stock Pledge”
means a Stock Pledge Agreement by EAC Shareholders in favor of Collateral
Agent, for the benefit of Secured Party and Administrative Agent, on behalf of
lenders under the Credit Agreement, 
covering the capital stock of Erickson Air-Crane Incorporated.


 


y)                                     “Engine” means (i) each
of the twenty (20) engines manufactured by Pratt & Whitney model
JFTD12A-4A(5-64E) and JFTD12A-5A (5-64F), as applicable, having the
manufacturer’s serial numbers specified on Schedule 1 attached hereto, whether
or not from time to time installed on an Airframe or the airframe, (ii) any
replacement engine which may from time to time be substituted for the Engine
pursuant to the terms of the Agreement, and (iii) in each case, any and
all parts which are from time to time incorporated or installed in or attached
to any Engine and any and all parts removed therefrom.


 


z)                                       “Equipment”
means any or all of the Airframe, Engines, Rotors, Rotor Blades, Parts and
Accessories.


 


aa)                                “Event of Default”
has the meaning set forth in Section 5.1 hereof.


 


bb)                              “Event of Loss” means, with respect to any item of Equipment:


 


(i)                                     such item of Equipment is lost, stolen, destroyed, rendered
permanently unfit for its intended use, or irreparably damaged, from any cause
whatsoever;


 


(ii)                                  such item of Equipment is returned to the manufacturer or
seller or either of their agents or nominees pursuant to any warranty
settlement or patent indemnity settlement;


 


(iii)                               such item of Equipment is damaged to the extent that an
insurance settlement is made on the basis of a total loss or a constructive or
compromised total loss;


 


(iv)                              such item of Equipment is prohibited from use for air
transportation by any agency of the Government for a period of six months or
more; or


 


(v)                                 such item of Equipment is taken or requisitioned by
condemnation or otherwise by any governmental Person, including a foreign
government or the Government resulting in loss of possession by the Grantor for
a period of six months or more.


 


An Event of Loss with respect to
any Aircraft will be deemed to have occurred if an Event of Loss occurs with
respect to an Airframe and/or Engine that constitutes a part of such Aircraft.


 


cc)                                “Environmental Laws”
means all federal, state and local statutes, regulations, ordinances, and
requirements, now or hereafter in effect, pertaining to environmental
protection, contamination or cleanup, including, without limitation (i) the
Federal Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901, et
seq.), (ii) the Federal Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. § 9601, et seq.), (iii) the
Federal Hazardous Materials Transportation Control Act (49 U.S.C. § 1801, et
seq.), (iv) the Federal Clean Air Act (42 U.S.C. § 7401, et seq.), (v) the
Federal Water Pollution Control Act, Federal Clean Water Act (33 U.S.C. § 1251,
et seq.), (vi) the Federal Insecticide, Fungicide, and Rodenticide Act,
Federal Pesticide Act (7 U.S.C. § 136, et seq.), (vii) the Federal Toxic
Substances Control Act (15 U.S.C. § 2601, et seq.) and (viii) the Federal
Safe Drinking Water Act (42 U.S.C. § 300f, et seq.), all as now or hereafter
amended


 


24

















 


dd)                              “FAA” means the
United States Federal Aviation Administration or any governmental Person,
agency or other authority succeeding to the functions of the Federal Aviation
Administration.


 


ee)                                “Fixed Charge Coverage Ratio” means, as of any
date of determination, for the Grantor and its Subsidiaries on a consolidated
basis, the ratio of (a) the sum of (i) Adjusted EBITDA for the period
of the four prior fiscal quarters ending on such date to (b) Fixed Charges
for such period.


 


ff)                                    “Fixed Charges” means, for any period, for the
Grantor and its Subsidiaries on a consolidated basis, the sum of Cash Interest
Charges for such period, scheduled Debt Amortization for such period, cash
taxes applicable to the subject period, Restricted Payments (other than
Restricted Payments permitted under Section 2.01 of this Exhibit B,
and Unfunded Capital Expenditures.


 


gg)                              “Funded Debt” means, as of any date of determination,
without duplication, for the Grantor and its Subsidiaries on a consolidated
basis, the sum of (a) the outstanding principal amount of all obligations,
whether current or long-term, for borrowed money and letters of credit
(including, with respect to the Grantor or any Guarantor, Obligations
hereunder) and all obligations evidenced by bonds, debentures, notes, loan
agreements or other similar instruments, (b) all purchase money
Indebtedness, and (c) Attributable Indebtedness in respect of capital
leases and Synthetic Lease Obligations.


 


hh)                              “GAAP” means generally accepted accounting
principles in the United States set forth in the opinions and pronouncements of
the Accounting Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or such other principles as may be approved by a significant
segment of the accounting profession in the United States, that are applicable
to the circumstances as of the date of determination and applicable to
privately held companies.


 


ii)                                      “Government”
means the federal government of the United States of America or any
instrumentality or agency thereof.


 


jj)                                      “Guarantor”
means individually, and “Guarantors” means collectively, each future Domestic
Subsidiary owned by the Grantor, and each currently inactive Domestic
Subsidiary of Grantor that becomes active during the term of this Agreement.


 


kk)                                “Guaranty” means individually and collectively, any agreement under
which any Guarantor guarantees Grantor’s obligations owed to Secured Party.


 


ll)                                      “Hazardous Materials”
means all explosive or radioactive substances or wastes and all hazardous or
toxic substances, wastes or other pollutants, including petroleum or petroleum
distillates, asbestos or asbestos containing materials, polychlorinated
biphenyls, radon gas, infectious or medical wastes and all other substances or
wastes of any nature regulated pursuant to any Environmental Law.


 


mm)                          “IDERA” means an Irrevocable De-Registration and Export Request
Authorization in substantially the form annexed to the Cape Town Treaty.


 


nn)                              “incorporated in” means incorporated,
installed in or attached to or otherwise made a part of.


 


oo)                              “Indemnified Parties” means the Secured
Party and its successors, assigns, transferees, directors, officers, employees,
shareholders, and agents.


 


25

















 


pp)                              “Intangible Assets” means assets that are considered to
be intangible assets under GAAP, including customer lists, goodwill, computer
software, copyrights, trade names, trade marks, patents, unamortized deferred
charges, unamortized debt discount and capitalized research and development
costs.


 


qq)                              “International Interest” shall have the meaning provided thereto in the Cape Town
Treaty.


 


rr)                                    “International Registry” has the meaning provided in 49 U.S.C. § 44113(3).


 


ss)                                “Lien”  means any assignment, mortgage, pledge, lien, charge,
encumbrance, lease security, interest International Interest, Prospective
Assignment, Prospective International Interest, or any claim or exercise of
rights affecting the title to or any interest in property.


 


tt)                                    “Loan Documents” means, collectively, this Agreement, the Note, the Guaranty, if any, an IDERA
covering each Aircraft in favor of Secured Party, the Borrower Stock Pledge,
the EAC Shareholder Stock Pledge, the Aircraft Intercreditor Agreement, the
Revolving Lender/Term Lender Intercreditor Agreement, the Guaranty, and all
other documents prepared by Secured Party and now or hereafter executed in
connection therewith, and all amendments, restatements, modifications and
supplements thereto that are specifically designated by its terms as a “Loan
Document” for purposes of this Agreement.


 


uu)                              “Loss Value” means 100% of the amount necessary
to pay in full, as of the date of payment thereof, the principal and accrued
interest on the Loan attributable to such Aircraft, plus any corresponding
prepayment premium calculated pursuant to the terms of the Note. If an Event of
Loss occurs during a period of time when no prepayment is permitted, the Loss
Value will include a prepayment premium in an amount equal to one percent
(1.0%) of the then outstanding principal balance remaining under the Note
attributable to such Aircraft.


 


vv)                              “Management Agreement” means that certain Management
Agreement dated September     , 2007 between Grantor
and Manager.


 


ww)                          “Management Fee” means fees for services by the
Manager pursuant to the Management Agreement.


 


xx)                                  “Manager” means Stonehouse Capital Partners.


 


yy)                              “Material Adverse Effect” means (a) a material adverse
change in, or a material adverse effect upon, the business, prospects,
operations, properties, liabilities (actual or contingent), financial and other
condition and creditworthiness of the Grantor, or the Grantor and its
subsidiaries taken as a whole (for the purposes of this Agreement, the Grantor
and its subsidiaries shall be collectively referred to as the “Loan Party”); (b) a
material impairment of the ability of any Loan Party to perform its obligations
under any Loan Document to which it is a party; or (c) a material adverse
effect upon (i) the enforceability against any Loan Party of any Loan
Documents to which it is a party, or (ii) the perfection or priority of
any Lien granted under this Agreement in excess of $2,000,000.


 


zz)                                  “Net Worth” means, as of the date of
determination, all assets appearing on the balance sheet of Grantor and
Subsidiaries on a consolidated basis, on a GAAP basis, less, without
duplication of deductions, the sum of all liabilities, all reserves established
by Grantor for anticipated losses or expenses, (excluding the effect of
currency translation adjustments recorded in the shareholder’s equity section
of Grantor’s balance sheet and net of the after-tax value of the mark-to-market
balances recorded in the asset and liability sections of the Grantor’s balance
sheet that reflect non-speculative, unbalanced currency hedging positions, all
in accordance with GAAP).


 


26

















 


aaa)                          “Note”  means, collectively, the Promissory Note by Grantor in favor
of Secured Party dated the date hereof in the principal amount of
$65,000,000.00, all now existing or hereafter executed promissory notes by
Grantor as maker in favor of Secured Party, which, according to their
respective terms, are executed pursuant to, and secured by the Collateral
pledged under, this Agreement, and all amendments, restatements, modifications
and supplements thereto.


 


bbb)                       “Note Payment Date” has the meaning set
forth in the Note.


 


ccc)                          “Obligations” has the meaning given in Section 1.1.


 


ddd)                       “Parts” means all appliances, parts,
components, Rotables, instruments, appurtenances, accessories, furnishings and
other equipment of whatever nature (other than a complete engine or engines)
whether now owned or hereafter acquired which may from time to time be
incorporated in any Airframe, any Engine, the Rotor and/or Rotor Blades (and “Part”
means any of the foregoing) or, after removal therefrom, so long as such Parts
remain subject to the Lien of this Agreement in accordance with Section 2.4
or Section 2.5 hereof.


 


eee)                          “Permitted Lien” means (a) Liens in favor of the
Secured Party; (b) Liens arising from operation of law, materialmens,
employees, carriers, warehouseman’s, mechanics’ or other like Liens arising in
the ordinary course of business for amounts which are not material and the
payment of which is either not yet due or is being contested in good faith by
appropriate proceedings, (c) Liens for Taxes that either are not yet due
and payable or are being contested in good faith and by appropriate proceedings
and which do not involve any material risk of loss or forfeiture; (d) Liens
of any of the types referred to in clause (b) above that have been bonded
for not less than the full amount in dispute (or as to which other security
arrangements reasonably satisfactory to the Secured Party have been made),
which bonding (or arrangements) shall comply with applicable law, and has
effectively stayed any execution or enforcement of such Liens, (e) Liens
arising out of judgments or awards with respect to which appeals or other
proceedings for review are being prosecuted in good faith and for the payment
of which adequate reserves have been provided as required by GAAP or other
appropriate provisions have been made, and (f) and Liens, other than of
the type described in clauses (a) through (e) above, created by the
Grantor with the consent of the Secured Party.


 


fff)                                “Permitted Second Lien Financing” means the not to
exceed $23,000,000 in term loan facilities provided by D.B. Zwirn Special
Opportunities Fund L.P. and lenders thereunder pursuant to a Second Lien Credit
Agreement dated September       , 2007.


 


ggg)                       “Person” means any individual, corporation,
partnership, limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization or government or any agency or
political subdivision thereof.


 


hhh)                       “Pledgor” means, individually and collectively, ZM EAC LLC, a
Delaware limited liability company, Stonehouse Erickson Management Co. LLC, a
Delaware limited liability company, and Stonehouse Erickson Investment Co. LLC,
a Delaware limited liability company.


 


iii)                                   “Primary Hangar Location” means the hanger
located at the Grantor’s headquarters in Central Point, Oregon.


 


jjj)                                   “Prospective Assignment” shall have the meaning provided thereto in the Cape Town
Treaty.


 


kkk)                          “Prospective International
Interest” shall have the
meaning provided thereto in the Cape Town Treaty.


 


27

















 


lll)                                   “Records” means the records, logs and other
material described in Section 2.2.


 


mmm)                 “Relevant Authority” means the FAA or other civil
aeronautics authority in any jurisdiction having authority over any Aircraft.


 


nnn)                       “Revolving Lender/Term Lender Intercreditor Agreement” means
a collateral sharing and intercreditor agreement among Administrative Agent for
itself and on behalf of lenders under the Credit Agreement,  Term Lender and Collateral Agent, and
acknowledged by Grantor, with respect to the Borrower Stock Pledge and the
Stock Pledge Agreement and Guaranties,


 


ooo)                       “Restricted Payment” means (a) any dividend or other
distribution (whether in cash, securities or other property) with respect to
any capital stock or other equity interest of the Grantor or any Subsidiary or
any payment (whether in cash, securities or other property), including any
sinking fund or similar deposit on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any such capital stock
or other equity interest or of any option, warrant or other right to acquire
any such capital stock or other equity interest; (b) any principal payment
made in respect of any Subordinated Debt; and (c) Management Fees; provided,
that no dividend or other payment or distribution by any Subsidiary to the
Grantor (directly or indirectly) for the purpose of satisfying any obligation
for the payment of taxes shall constitute a Restricted Payment for purposes of
this Agreement.


 


ppp)                       “Rotables” means spare parts that wear over time and can be
repeatedly restored to a serviceable condition over a period of time
approximating the life of the flight equipment to which they relate, including
without limitation, Rotor(s) and Rotor Blades.


 


qqq)                       “Rotor” means (A) the Sikorsky/Erickson
Rotor having the manufacturer’s part and serial number specified on Schedule
1 attached hereto, whether or not from time to time installed on an
Airframe or any other airframe; (B) any replacement Rotor head and/or
which may from time to time be substituted for any Rotor pursuant to the terms
of the Agreement; and (C) in either case, any and all parts which are from
time to time incorporated or installed in or attached to any Rotor and any and
all parts removed therefrom.


 


rrr)                                “Rotor Blades” shall mean (A) each of the
sixty (60), Sikorsky/Erickson Rotor Blades having the manufacturer’s part and
serial number specified on Schedule 1 attached hereto, whether or not
from time to time installed on the Airframe or any other airframe; (B) any
replacement rotor Blades and/or which may from time to time be substituted for
any Rotor Blades pursuant to the terms of the Agreement; and (C) in either
case, any and all parts which are from time to time incorporated or installed
in or attached to any Rotor Blades and any and all parts removed therefrom.


 


sss)                          “Senior Funded Debt” means the sum of the outstanding
Total Funded Debt less outstanding Subordinated Debt.


 


ttt)                                “Sponsors” means ZM Equity Partners, L.P., a Delaware limited
partnership, D.B. Zwirn & Co., L.P., a Delaware limited partnership,
Stonehouse Management Co., LLC, a Delaware limited liability company and each
of their respective Affiliates.


 


uuu)                       “Subordinated Debt” means the Permitted Second Lien
Financing.


 


vvv)                       “Total Funded Debt” means, without duplication, the sum
of all outstanding liabilities for borrowed money and other interest earning
liabilities including current and long term liabilities, guaranties of
Indebtedness, and letter of credit obligations, including without limitation
the Revolving Credit Facility, Financed Aircraft Term Loans, the Letter of
Credit Facility and the Permitted Second Lien Financing.


 


28

















 


www)                 “Transitional Subsidiary” purpose means any Subsidiary formed
after the Closing Date solely for the purpose of implementing an asset
disposition or a structural transaction (including an acquisition) permitted by
this Agreement and which will cease to be a Subsidiary after the consummation
of such asset disposition or transaction (which will, in no event, be more than
90 days after the date of the formation of such Subsidiary).


 


xxx)                             “UCC” or “Uniform
Commercial Code” means the Uniform Commercial Code as in effect in
any applicable jurisdiction.


 


yyy)                       “Unfunded Capital Expenditures” means Capital
Expenditures which are not financed by a specific long term loan or Capital
Lease.


 


(Signature pages follow)


 


29

















 


IN WITNESS
WHEREOF, the parties have each executed this Master Aircraft Loan and Security
Agreement, as of the date set forth above.


 


	
   

  	
   

  	
  GRANTOR:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ERICKSON AIR-CRANE
  INCORPORATED

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ JAMES RILEY LOFTIN

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  James Riley Loftin

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  	
  Erickson Air-Crane
  incorporated

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
  3100 Willows Spring Road

  
	
   

  	
   

  	
   

  	
  Central Point, OR 97502

  
	
   

  	
   

  	
  Attention:

  	
  Riley Loftin

  
	
   

  	
   

  	
  Telecopier:

  	
  (541) 664-9565

  
	
  STATE OF OREGON

  	
  )

  	
   

  	
   

  	
   

  
	
   

  	
  )
  ss

  	
   

  	
   

  	
   

  
	
  COUNTY
  OF JACKSON

  	
  )

  	
   

  	
   

  	
   

  
						



 


 


On
this 26th day of September, 2007, before me the subscriber personally appeared
James Riley Loftin, who being by me duly sworn, did depose and say that (s)he
resides in Jackson County, State of Oregon; that (s)he is a CFO of ERICKSON
AIR-CRANE INCORPORATED, the corporation described in and which executed the
foregoing instrument; and that (s)he signed his/her name thereto by order of
the Board of Directors of said corporation.


 


 


	
  /s/
  MOLLY CONNER

  	
   

  
	
  NOTARY
  PUBLIC

  	
   

  



 


My
Commission Expires:  Nov. 18, 2010


 


[Master Aircraft Loan and Security Agreement Signature Page 1 of
2]


 


30

















 


IN WITNESS
WHEREOF, the parties have each executed this Master Aircraft Loan and Security
Agreement, as of the date set forth above.


 


 


	
   

  	
   

  	
  SECURED
  PARTY:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The
  Prudential Insurance Company of America

  
	
   

  	
   

  	
  By:

  	
  Prudential Investment
  Management, Inc.,

  
	
   

  	
   

  	
   

  	
  as investment manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ HEIDI L. S. CLEVENGER

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Heidi L. S. Clevenger

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
  c/o Prudential Capital
  Group—Commercial Asset Finance

  
	
   

  	
   

  	
   

  	
  3350 Riverwood Parkway,
  Suite 1500

  
	
   

  	
   

  	
   

  	
  Atlanta, Georgia 30339

  
	
   

  	
   

  	
  Attention: Managing
  Director, and

  
	
   

  	
   

  	
  Telecopier: (770) 701-2460

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  With Copy to:

  
	
   

  	
   

  	
  Attention: Vice President
  and Corporate Counsel

  
	
   

  	
   

  	
  Telecopier: (770) 701-2460

  
					



 


 


	
  STATE
  OF GEORGIA

  	
  )

  
	
   

  	
  )
  ss

  
	
  COUNTY
  OF COBB

  	
  )

  



 


 


On
this 27 day of September, 2007, before me the subscriber personally appeared
Heidi L.S. Clevenger, who being by me duly sworn, did depose and say; that
(s)he resides in DeKalb County, State of Georgia: that (s)he is a Vice
President of Prudential Investment Management, Inc., as Investment Manager
for The Prudential Insurance Company of America, the New Jersey corporation
described in and which executed the foregoing instrument; and that (s)he signed
his/her name thereto by order of the Board of Directors of said corporation.


 


 


	
  /s/
  MARY K. NEUMAN

  	
   

  
	
  NOTARY
  PUBLIC

  	
   

  
	
  My
  Commission Expires:

  	
  Notary
  Public, Cherokee County, Georgia

  
	
   

  	
  My
  Commission Expires August 16, 2011

  
			



 


[Master Aircraft Loan and Security Agreement
Signature Page 2 of 2]


 


31

















 


AMENDMENT TO MASTER AIRCRAFT LOAN SECURITY AGREEMENT


 


THIS AMENDMENT TO MASTER
AIRCRAFT LOAN AND SECURITY AGREEMENT (“Amendment”) dated effective as of the
27th day of September, 2007, is made by and between THE
PRUDENTIAL INSURANCE COMPANY OF AMERICA, a New Jersey corporation
(“Secured Party”), and ERICKSON AIR-CRANE
INCORPORATED, a Delaware corporation (“Grantor”).


 


RECITALS


 


A.                                   Secured Party
and Grantor are parties to that certain Master Aircraft Loan and Security
Agreement dated as of September 27, 2007 (the “Term Loan Agreement”).


 


B.                                     The Collateral
description under the Term Loan Agreement is in error.  Grantor and Secured Party have agreed to
amend the Term Loan Agreement to correct the error.


 


NOW, THEREFORE, in
consideration of the mutually agreed terms and conditions set forth herein, the
parties agree as follows:


 


AGREEMENT


 


1.                                      Ratification and Incorporation of
Security Agreement.  Except as expressly waived or modified under
this Amendment, the parties hereto acknowledge, confirm and ratify all of the
terms and conditions of the Term Loan Agreement.  Unless otherwise defined herein, capitalized
terms shall have the same meaning as those terms are defined in the Term Loan
Agreement.


 


2.                                      Amendments to Term Loan
Agreement.  The Term Loan Agreement is hereby amended as
follows:


 


2.1                               Section 2.4 of the Term Loan
Agreement is amended to delete each occurrence of “and
Accessories”, “or Accessories”, “and Accessory” and “or Accessory”.


 


2.2                               Section 2.5 of the Term Loan
Agreement is amended to delete each occurrence of “or
Accessory”.


 


2.3                               Section 4.1(c) of the Term Loan
Agreement is amended to delete “and Accessories”.


 


2.4                               Section 6.1(n) of the Term Loan
Agreement is amended to delete “the Accessories”.


 


2.5                               Section 9.1(a) of the Term Loan
Agreement is amended to delete the definition of “Accessories”
in its entirety.


 


2.6                               Section 9.1(z) of the Term Loan
Agreement is amended to delete the words “and Accessories”
from the definition of “Equipment”.


 

















 


3.                                      Miscellaneous.


 


3.1                               Entire Agreement. 
This Amendment, together with the Term Loan Agreement and the other Loan
Documents is the entire agreement between Secured Party on the one hand and
Grantor on the other hand with respect to the subject matter hereof.  This Amendment supersedes all prior and
contemporaneous oral and written agreements and discussions with respect to the
subject matter hereof.  Except as
otherwise expressly modified, the Loan Documents remain in full force and effect.


 


3.2                               Counterparts. 
This Amendment may be executed in one or more identical counterparts,
each of which shall be an original, but all of which shall constitute one and
the same agreement.  Delivery of an
executed counterpart of a signature page to this Amendment by facsimile
transmission shall be effective as delivery of a manually executed counterpart.


 


3.3                               Headings.  Section headings
used herein are for convenience of reference only, are not part of this
Amendment, and are not to be taken into consideration in interpreting this
Amendment.


 


3.4                               Recitals. 
The recitals set forth at the beginning of this Amendment are true and
correct, and such recitals are incorporated into and are made a part of this
Amendment.


 


3.5                               Governing Law. 
This Amendment shall be governed by, and construed in accordance with,
the laws of the State of New York.


 


3.6                               Conflicting Terms. 
In the event of any inconsistency between the provisions of this
Amendment and any provision of the Term Loan Agreement or any other Loan Document,
the terms of this Amendment shall govern and control.


 


[SIGNATURE PAGE FOLLOWS]


 


2

















 


IN WITNESS WHEREOF, this
First Amendment to Security Agreement is executed and delivered by the duly
authorized officers of the parties hereto effective as of the day and date
first written above.


 


	
   

  	
  GRANTOR:

  
	
   

  	
   

  	
   

  
	
   

  	
  ERICKSON
  AIR-CRANE INCORPORATED

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  JAMES RILEY LOFTIN

  
	
   

  	
  Name:

  	
  James
  Riley Loftin

  
	
   

  	
  Title:

  	
  Chief
  Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SECURED
  PARTY:

  
	
   

  	
   

  	
   

  
	
   

  	
  THE
  PRUDENTIAL INSURANCE COMPANY OF AMERICA

  
	
   

  	
  By:

  	
  Prudential
  Investment Management, Inc.

  
	
   

  	
   

  	
  as
  investment manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  HEIDI L.S. CLEVENGER

  
	
   

  	
  Name:

  	
  Heidi
  L. S. Clevenger

  
	
   

  	
  Title:

  	
  Vice
  President

  



 


[Amendment to Master Aircraft Loan and Security Agreement Signature
Page]


 


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