Unassociated Document


    PROMISSORY
NOTE


     

    
      
        
          	
                  January
      __, 2009

                	 
      	
                  $
      5,200,000.00

                
	
                  Maturity
      Date: May 8, 2009

                	 
      	 
      
	 	 	 
	 	 	 
	
                  BORROWER:

                	
                  LENDER:

                	 
      
	
                  Avantair,
      Inc.

                	
                  Century
      Bank, F.S.B.

                	 
      
	
                  4311
      General Howard Drive

                	
                  1680
      Fruitville Road

                	 
      
	
                  Clearwater,
      FL 33762

                	
                  Sarasota,
      FL 34236

                	 
      


        

      

    

    


    Payment.
For value received, Borrower promises to pay to the order of Century Bank (the
“Bank”), in lawful money of the United States of America, at its office
indicated above or wherever else Bank may specify, the sum of Five Million Two
Hundred Thousand Dollars ($5,200,000.00) on the terms provided in this
promissory note (including all renewals, extensions or modifications hereof,
this “Note”) on or before the 120th day
from the date of this Note.

     

    Security.
Borrower has granted Bank a security interest in the Collateral described in the
Aircraft Mortgage, Collateral Assignment and Security Agreement dated of even
date herewith (the “Security Agreement”; capitalized terms used herein and not
otherwise defined herein shall have the meaning provided thereto in the Security
Agreement).

     

    Borrowing
Fees. Borrower will pay the following fees for the loan:  (1)
$75,000.00 on the date of this Note and (2) $75,000.00 on the 9th day of each
month thereafter until repayment of the principal in full.  There will
be no reduction in or reimbursement for the fee for repayment of the principal
in full prior to the next payment date. Borrower will also pay a fee of
$52,000.00 at the time of repayment in full of the principal amount of this
Note, constituting a fee of 1% of the principal. If repayment is made in full
within 90 days after the date hereof, this fee will be reduced to $26,000,
constituting a fee of 0.5% of the principal.

     

    Fee
Computation. Fees shall be computed on the basis of the actual number of
days within the period in which the principal balance has been outstanding and
on the basis of a year consisting of 365 days.

     

    Repayment
Terms. The principal amount shall be repaid 120 days from the date of
this Note, and all outstanding and unpaid fees thereon will be paid at that
time.  Upon the each sale of each 1/16 fractional interest in the
Collateral, Borrower will repay $325,000.00 of the principal amount of this
Note.  The repayment will be increased proportionately upon the sale
of an interest larger than 1/16.

     

    Prepayment.
Borrower may pay without penalty all or a portion of the amount owed earlier
than it is due. Early payments will not, unless agreed to by Bank in writing,
relieve Borrower of Borrower’s obligation to continue to make payments under the
payment schedule. Rather, early payments will reduce the principal balance due
and may result in Borrower’s making fewer payments. Borrower agrees not to send
Bank payments marked “paid in full”, “without recourse”, or similar language. If
Borrower sends such a payment, Bank may accept it without losing any of Bank’s
rights under this Note, and Borrower will remain obligated to pay any
PROMISSORY
NOTE further
amount owed to Bank. All written communications concerning disputed amounts,
including any check or other payment instrument that indicates that the payment
constitutes “payment in full” of the amount owed or that is tendered with other
conditions or limitations or as full satisfaction of the disputed amount must be
mailed or delivered to: Century Bank, FSB; 1680 Fruitville Road; Sarasota, FL
34236.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Application of
Payments.  Monies received by Bank from any source for
application toward payment of the obligations under this note (the
“Obligations”) shall be applied to fees that are due and payable and then to
principal. If a Default occurs, monies may be applied to the Obligations in any
manner or order deemed appropriate by Bank.  If any payment received
by Bank under this Note or other Loan Documents is rescinded, avoided or for any
reason returned by Bank because of any adverse claim or threatened action, the
returned payment shall remain payable as an obligation of all persons liable
under this Note or other Loan Documents as though such payment had not been
made.

     

    Late
Charge. Should Borrower fail to pay any payment under this note or any
other sum required to be paid Bank within ten (10) days after the due date
thereof, Borrower shall pay a late payment charge equal to five percent (5.0%)
of the delinquent payment. Acceptance by Bank of any late payment without an
accompanying late charge shall not be deemed a waiver of Bank’s right to collect
such late charge or to collect a late charge for any subsequent late payment
received.

     

    Attorneys’
Fees and Other Collection Costs. If Bank must sue Borrower, or defend any
action, suit, claim, or arbitration filed by Borrower, Borrower shall pay all of
Bank’s reasonable attorneys’ fees and costs if Bank is a prevailing party.
Attorneys’ fees and costs shall include, but not be limited to, arbitration and
litigation fees and expenses, paralegal fees, the fees and costs associated with
enforcing a judgment or filing or defending appeals, and expenses incurred to
enforce or collect any of the Obligations, whether incurred without the
commencement of a suit, in any trial, arbitration, or administrative proceeding,
or in any appellate or bankruptcy proceeding.

     

    Usury.
Regardless of any other provision of this Note or other Loan Documents, if for
any reason the effective interest should exceed the maximum lawful rate of
interest, the effective interest rate shall be deemed reduced to, and shall be,
such maximum lawful interest rate, and (i) the amount which would be excessive
interest shall be deemed applied to the reduction of the principal balance of
this Note and not to the payment of interest, and (ii) if the loan evidenced by
this Note has been or is thereby paid in full, the excess shall be returned to
the party paying same, such application to the principal balance of this Note or
the refunding of excess to be complete settlement and acquittance
thereof.

     

    Default. Each of the following
shall constitute an event of default (“Event of Default”) under  this
Note:

     

    Payment Default. Borrower
fails to make any payment when due under this Note.

     

    Other Defaults. Borrower fails
to comply with or to perform any other term, obligation, covenant or condition
contained in this Note or in any of the Loan Documents or to comply with or to
perform any term, obligation, covenant or condition contained in any other
agreement between Bank and Borrower. Any affiliate of Borrower, including,
without limitation, Borrower’s affiliate Aircraft Support, LLC, fails to comply
with or to perform any term, obligation, covenant or condition contained in any
other agreement between Bank and such affiliate.  For purposes of this
Note, an affiliate shall be any entity that is controlling, controlled by or
under common control with Borrower.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Default In Favor of Third
Parties. Borrower or any grantor defaults under any loan, extension of
credit, security agreement, purchase or sales agreement, or any other agreement,
in favor of any other creditor or person that may materially adversely affect
any of Borrower’s property or Borrower’s ability to repay this Note or perform
Borrower’s obligations under this Note or any of the related
documents.

     

    False Statements. Any
warranty, representation or statement made or furnished to Bank by Borrower or
on Borrower’s behalf under this Note or the related documents is false or
misleading in any material respect, either now or at the time made or furnished
or becomes false or misleading in any material respect at any time
thereafter.

     

    Insolvency. The dissolution or
termination of Borrower’s existence as a going business, the insolvency of
Borrower, the appointment of a receiver for any part of Borrower’s property, any
assignment for the benefit of creditors, any type of creditor workout, or the
commencement of any proceeding under any bankruptcy of insolvency laws by or
against Borrower (unless, if involuntary, the proceeding is dismissed within
sixty (60) days of the filing thereof).

     

    Creditor or Forfeiture
Proceedings. Commencement of foreclosure or forfeiture proceedings,
whether by judicial proceeding, self-help, repossession or any other method, by
any creditor of Borrower or by any governmental agency against any collateral
securing the loan. This includes the garnishment of any of Borrower’s accounts,
including deposit accounts, with Bank. However, this Event of Default shall not
apply if there is a good faith dispute by Borrower as to the validity or
reasonableness of the claim which is the basis of the creditor or forfeiture
proceeding and if Borrower gives Bank written notice of the creditor or
forfeiture proceeding and deposits with Bank monies or a surety bond for the
creditor or forfeiture proceeding, in an amount determined by Bank, in its sole
discretion, as being an adequate reserve or bond for the dispute.

     

    Events Affecting Guarantor.
Any of the preceding events occurs with respect to any Guarantor of any of the
indebtedness or any Guarantor dies or becomes incompetent, or revokes or
disputes the validity of, or liability under, any guaranty of the indebtedness
evidenced by this Note. In the event of death of a guarantor, Bank, at its
option, may, but shall not be required to, permit the Guarantor’s estate to
assume unconditionally the obligations arising under the guaranty in a manner
satisfactory to Bank, and, in doing so, cure any Event of Default.

     

    Change in Ownership. Any
change in ownership of twenty-five percent (25%) or more of the outstanding
voting stock of Borrower.

     

    Adverse Change. A material
adverse change occurs in Borrower’s financial condition or Bank believes that
the payment of principal or performance of this Note is impaired or Bank in good
faith believes itself insecure.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Cure Provisions. If any
default, other than a default in payment is curable and if Borrower has not been
given a notice of a breach of the same provision of this Note within the
preceding twelve (12) months, it may be cured if Borrower, after receiving
written notice from Bank demanding cure of such default: (1) cures the default
within ten (10) days; or (2) if the cure requires more than ten (10) days,
immediately initiates steps which Bank deems in Bank’s sole discretion to be
sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practicable.

     

    Bank’s Rights upon
Default. If a Default occurs under this Note or any Loan Document
and is continuing, Bank may at any time thereafter, take the following actions:
(i) foreclose its security interest or lien against Borrower’s accounts with
Bank without notice; (ii) accelerate the maturity of this Note and all other
Obligations, and all of the Obligations shall be immediately due and payable; or
(iii) exercise any rights and remedies as provided under the Note and other Loan
Documents, or as provided by law or equity.

     

    Dishonored
Item Fee. Borrower will pay a fee to Bank of $32.00 if Borrower makes a
payment on Borrower’s loan and the check or preauthorized charge with which
Borrower pays is later dishonored.

     

    Right of
Setoff. To the extent permitted by applicable law, Bank reserves a right
of setoff in all of Borrower’s accounts with Bank (whether checking, savings, or
some other account). This includes all accounts Borrower holds jointly with
someone else and all accounts Borrower may open in the future. However, this
does not include any IRA or KEOGH accounts, or any trust accounts for which
setoff would be prohibited by law. Borrower authorizes Bank, to the extent
permitted by applicable law, to charge or setoff all sums owing on the debt
against any and all such accounts, and, at Bank’s option, to administratively
freeze all such accounts to allow Bank to protect Bank’s charge and setoff
rights provided in this paragraph.

     

    Waivers.
Borrower and any other person who signs, guarantees, or endorses this Note, to
the extent permitted by law, waive presentment, protest, notice of dishonor,
demand for payment, notice of intention to accelerate maturity, notice of
acceleration of maturity, notice of sale and all other notices of any kind.
Further, Borrower agrees that Bank may extend, modify or renew this Note or make
a novation of the loan evidenced by this Note for any period and grant any
releases, compromises or indulgences with respect to any Collateral securing
this Note, or with respect to any other person liable under this Note or other
Loan Documents, all without notice to or consent of Borrower or any person who
may be liable under this Note or other Loan Documents and without affecting the
liability of Borrower or any person who may be liable under this Note or other
Loan Documents.

     

    Security
Agreement. The Collateral is held by the Bank as security for this Note.
The provisions of this Note are subject to the Security Agreement. Reference is
hereby made to the Security Agreement and the Commitment Letter for a complete
statement of the rights of the holder of, and the nature and extent of the
security for, this Note.

     

    Notice
and Cure. Prior to any suit, arbitration, or other claim by Borrower
against Bank, Borrower shall give Bank notice and opportunity to cure. Written
notice shall be delivered by Certified Mail to Bank’s registered agent.
Borrower’s notice shall describe with specificity all items, defects, issues,
problems, breaches, errors, omissions, or other matters – regardless of severity
– so that Bank may correct the same within 45 days. Failure to comply with this
provision is a material breach of this Note.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    Claims
against Bank.  Borrower
must submit to arbitration any claims against Bank, including, but not limited
to, claims arising out of this Note and statutory claims, provided, however that
Borrower may submit equitable claims, to a court within Sarasota County,
Florida. The arbitration shall be filed with the American Arbitration
Association in Sarasota, Florida. Bank and Borrower will share equally all
filing fees and arbitration expenses, except that each will pay the fees of its
own attorneys. Borrower must follow this provision and may not file
counterclaims to a suit brought by Bank to enforce this Note. Nor shall any
dispute concerning Bank’s performance be raised as a defense to the enforcement
of this Note. PLEASE NOTE: IF A DISPUTE CONCERNING BANK’S PERFORMANCE ARISES,
BOTH PARTIES ARE OBLIGATED TO ENGAGE IN BINDING ARBITRATION. IN DOING SO, BOTH
PARTIES WAIVE THEIR RIGHT TO TRIAL BY JURY. No arbitrator shall award Borrower
consequential, punitive, incidental, treble, or any other damages based upon a
multiplier. The arbitrator shall issue a reasoned award, one citing controlling
authority and reciting material findings of fact. No arbitrator shall award
damages in favor of Borrower if Borrower fails to follow the notice and cure
provision of this Note.

     

    Governing Law and
Venue. This Note shall be governed by and construed in accordance
with the internal laws of the State of Florida, including all matters of
construction, validity and performance, without reference to the conflicts of
laws principles thereof. Venue shall be in Sarasota, County, Florida. Bank and
Borrower hereby waive the right to any jury trial in any action, proceeding, or
counterclaim brought by either Bank or Borrower against the other. A copy, scan,
or fax of this Note shall be as effective as an original.

     

    General
Provisions. The terms of this Note shall be binding upon Borrower, and
upon Borrower’s heirs, personal representatives, successors and assigns, and
shall inure to the benefit of Bank and its successors and assigns.

     

    PRIOR TO
SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE.
BORROWER AGREES TO THE TERMS OF THIS NOTE.

     

    BORROWER
ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS NOTE.

     

    [Signature
page follows.]

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

        IN WITNESS
WHEREOF, Borrower has caused this Note to be executed on the day and year
first above written.

     

    DEBTOR:

     

        AVANTAIR,
INC.

     

        By:
______________________________

     

        Name:
Richard A. Pytak, Jr. Title:  Chief Financial Officer

    State of
Florida                  )

    ss:


    County of
Pinellas           
)

     

     

    I,
___________________________________, a Notary Public in and for said state and
county, do hereby certify that Richard A. Pytak, Jr., the Chief Financial
Officer of Avantair, Inc. appeared before me this ____ day of January, 2009, and
acknowledged that he executed the foregoing Promissory Note in the principal
amount of Five Million Two Hundred Thousand Dollars ($5,200,000.00) on behalf of
Avantair, Inc.

     

     

    Witness
my hand and official seal this ___________ day of January, 2009.

     

     

    __________________________________________      

    Notary
Public

     

    My
commission expires:

     

     

     

                        

     

    [NOTARY
SEAL]