exhibit10_63a.htm


    


    
      
         

         

        
           


          
            EXHIBIT
10.63(a)

            CONFIDENTIAL
TREATMENT

            REQUESTED
PURSUANT TO RULE 24b-2

            Certain
portions of this exhibit have been omitted pursuant to a request for
confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934.
The omitted materials have been filed separately with the Securities and
Exchange Commission. 

            


            Execution
Version 

          

        

      

    

    


    
      


       

      


    

    LOAN
AGREEMENT

     

    Dated as
of October 10, 2008

     

    among

     

    MOKULELE FLIGHT SERVICE,
INC.,

     

    as the
Borrower,

     

    


     

    THE
SUBSIDIARIES OF

     

    MOKULELE
FLIGHT SERVICE, INC.

     

    as
Guarantors,

     

    and

     

    REPUBLIC AIRWAYS HOLDINGS
INC.,

     

    as
Lender

     

    


     

    


     

    
      


    

    


    
      
        
          
             

            
              


            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    TABLE OF
CONTENTS

     

     

    Section Page

    
 

    
      Article
I

      DEFINITIONS
AND ACCOUNTING TERMS

       

      
        	
                1.01 

              	
                          Defined
      Terms                                

              


      

      
        	
                1.02 

              	
                          Other
      Interpretive
      Provisions                                                             

              


      

      
        	
                1.03 

              	
                          Accounting
      Terms                                          

              


      

      
        	
                1.04 

              	
                          References
      to Agreements and
      Laws                                                                          

              


      

      
        	
                1.05 

              	
                          Times
      of
      Day                               

              


      

      
        	
                1.06 

              	
                          Uniform
      Commercial
      Code.                                                                

              


      

       

      Article
II

      the Term
COMMITMENTS and Term Loan

       

      
        	
                2.01 

              	
                          Making
      of the Term
      Loan                                                     

              


      

      
        	
                2.02 

              	
                          Repayment
      of Term
      Loan                                                      

              


      

      
        	
                2.03 

              	
                          Prepayments                               

              


      

      
        	
                2.04 

              	
                          Interest                      

              


      

      
        	
                2.05 

              	
                          Computation
      of
      Interest                                                      

              


      

      
        	
                2.06 

              	
                          Evidence
      of
      Indebtedness                                                    

              


      

      
        	
                2.07 

              	
                          Payments
      Generally.                                          

              


      

      
        	
                2.08 

              	
                          Conversion
      Option                                           

              


      

       

      Article
III

      TAXES

       

      
        	
                3.01 

              	
                          Taxes                      

              


      

      
        	
                3.02 

              	
                          Matters
      Applicable to All Requests for
      Compensation                                                                                                                

              


      

      
        	
                3.03 

              	
                          Survival                     

              


      

       

      Article
IV

      CONDITIONS
PRECEDENT TO Term Loan

       

      
        	
                4.01 

              	
                          Effective
      Date
      Conditions                                                      

              


      

      
        	
                4.02 

              	
                          Post-Effective
      Date
      Conditions.                                                              

              


      

       

      Article
V

      REPRESENTATIONS
AND WARRANTIES

       

      
        	
                5.01 

              	
                          Existence,
      Qualification and Power; Compliance with Laws; “Air Carrier
      Status”

              


      

      
        	
                5.02 

              	
                          Authorization;
      No
      Contravention                                                                           

              


      

      
        	
                5.03 

              	
                          Governmental
      Authorization; Other
      Consents                                                                                                

              


      

      
        	
                5.04 

              	
                          Binding
      Effect                                

              


      

      
        	
                5.05 

              	
                          [Intentionally
      Omitted]                                                     

              


      

      
        	
                5.06 

              	
                          Litigation                      

              


      

      
        	
                5.07 

              	
                          No
      Default                                

              


      

      
        	
                5.08 

              	
                          Ownership
      of
      Property                                                     

              


      

      
        	
                5.09 

              	
                          Environmental
      Compliance                                                                

              


      

      
        	
                5.10 

              	
                          Insurance                      

              


      

      
        	
                5.11 

              	
                          Taxes                      

              


      

      
        	
                5.12 

              	
                          ERISA
      Compliance                                           

              


      

      
        	
                5.13 

              	
                          Subsidiaries;
      Equity
      Interests                                                              

              


      

      
        	
                5.14 

              	
                          Margin
      Regulations; Investment Company
      Act;                                                                                            

              


      

      
        	
                5.15 

              	
                          Disclosure                             

              


      

      
        	
                5.16 

              	
                          Compliance
      with
      Laws                                                      

              


      

      
        	
                5.17 

              	
                          Security/Priority                                           

              


      

      
        	
                5.18 

              	
                          Representations
      and Warranties as to
      Collateral                                                                                               

              


      

      
        	
                5.19 

              	
                          Indebtedness
      and Guaranteed
      Indebtedness                                                                                               

              


      

      
        	
                5.20 

              	
                          Deposit
      Accounts                                          

              


      

      
        	
                5.21 

              	
                          Outstanding
      Obligations                                                    

              


      

      
        	
                5.22 

              	
                          Equity
      Interests                                           

              


      

      
        	
                5.23 

              	
                          Material
      Contracts and
      Obligations                                                                          

              


      

      
        	
                5.24 

              	
                          Capital
      Structure                                           

              


      

      
        	
                5.25 

              	
                          Airframe
      Leases                                          

              


      

       

      Article
VI

      AFFIRMATIVE
COVENANTS

       

      
        	
                6.01 

              	
                          Financial
      Statements                                          

              


      

      
        	
                6.02 

              	
                          Certificates;
      Other
      Information                                                               

              


      

      
        	
                6.03 

              	
                          Notices                      

              


      

      
        	
                6.04 

              	
                          Payment
      of
      Obligations                                                      

              


      

      
        	
                6.05 

              	
                          Preservation
      of Existence,
      Etc                                                              

              


      

      
        	
                6.06 

              	
                          Maintenance
      of
      Properties                                                      

              


      

      
        	
                6.07 

              	
                          Maintenance
      of
      Insurance                                                  

              


      

      
        	
                6.08 

              	
                          Compliance
      with
      Laws                                                     

              


      

      
        	
                6.09 

              	
                          Books
      and
      Records                                           

              


      

      
        	
                6.10 

              	
                          Inspection
      Rights                                          

              


      

      
        	
                6.11 

              	
                          Use
      of
      Proceeds                                          

              


      

      
        	
                6.12 

              	
                          Further
      Assurances                                           

              


      

      
        	
                6.13 

              	
                          Cash
      Management System; Controlled Accounts; Initial
  Drawing[

              


      

      
        	
                6.14 

              	
                          FAA
      and DOT Matters;
      Citizenship                                                                         

              


      

      
        	
                6.15 

              	
                          Cape
      Town
      Convention                                                     

              


      

      
        	
                6.16 

              	
                          Payment
      of
      Taxes                                       

              


      

      
        	
                6.17 

              	
                          Hangar
      Property                                           

              


      

      
        	
                6.18 

              	
                          Subordinated
      Liens                                           

              


      

      
        	
                6.19 

              	
                          Subordination
      of Loan of Susan
      Silver                                                                                     

              


      

      
        	
                6.20 

              	
                          Gates
      and other Airport
      Space                                                               

              


      

      
        	
                6.21 

              	
                          Evidence
      of Debt Subject to
      Conversion                                                                                    

              


      

       

      Article
VII

      NEGATIVE
COVENANTS

       

      
        	
                7.01 

              	
                          Liens                      

              


      

      
        	
                7.02 

              	
                          Investments                              

              


      

      
        	
                7.03 

              	
                          Indebtedness                                

              


      

      
        	
                7.04 

              	
                          Guarantees
      and Other
      Liabilities                                                                       

              


      

      
        	
                7.05 

              	
                          Fundamental
      Changes                                                      

              


      

      
        	
                7.06 

              	
                          Dispositions                                

              


      

      
        	
                7.07 

              	
                          Restricted
      Payments                                         

              


      

      
        	
                7.08 

              	
                          Change
      in Nature of
      Business                                                                

              


      

      
        	
                7.09 

              	
                          Transactions
      with
      Affiliates                                                               

              


      

      
        	
                7.10 

              	
                          Use
      of
      Proceeds                                           

              


      

      
        	
                7.11 

              	
                          Amendments
      of Organization
      Documents                                                                                     

              


      

      
        	
                7.12 

              	
                          Changes
      in Fiscal
      Year                                                      

              


      

      
        	
                7.13 

              	
                          Prepayments,
      Etc. of
      Indebtedness                                                                          

              


      

      
        	
                7.14 

              	
                          Partnerships,
      Etc                                          

              


      

      
        	
                7.15 

              	
                          Speculative
      Transactions                                                      

              


      

      
        	
                7.16 

              	
                          Formation
      of
      Subsidiaries                                                      

              


      

      
        	
                7.17 

              	
                          Change
      in Capital
      Structure                                                               

              


      

      
        	
                7.18 

              	
                          Sales
      and
      Leasebacks                                                   

              


      

      
        	
                7.19 

              	
                          Negative
      Pledge
      Clauses                                                      

              


      

      
        	
                7.20 

              	
                          Clauses
      Restricting Subsidiary
      Distributions                                                                                              

              


      

      
        	
                7.21 

              	
                          Capital
      Expenditures                                                      

              


      

      
        	
                7.22 

              	
                          Board
      Changes                                

              


      

      
        	
                7.23 

              	
                          Material
      Contracts and
      Obligations                                                                       

              


      

      
        	
                7.24 

              	
                          Compensation
      of Officers and
      Managers                                                                                    

              


      

      
        	
                7.25 

              	
                          Debt
      Payments upon Event of
      Default                                                                               

              


      

       

      Article
VIII

      EVENTS OF
DEFAULT AND REMEDIES

       

      
        	
                8.01 

              	
                          Events
      of
      Default                                           

              


      

      
        	
                8.02 

              	
                          Remedies
      upon Event of
      Default                                                                          

              


      

      
        	
                8.03 

              	
                          Application
      of
      Funds                                                     

              


      

      
        	
                8.04 

              	
                          Default
      by the
      Lender                                                     

              


      

       

      Article
IX

      [INtentionally
omitted]

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Article
X

      SECURITY

       

      
        	
                10.01 

              	
                    Grant
      of
      Security                                          

              


      

      
        	
                10.02 

              	
                    Further
      Assurances                                          

              


      

      
        	
                10.03 

              	
                    Rights
      of the Lender; Limitations on the Lender’s
  Obligations

              


      

      
        	
                10.04 

              	
                    Covenants of
      the Loan Parties with Respect to Pledged
  Collateral

              


      

      
        	
                10.05 

              	
                    Remedies                      

              


      

      
        	
                10.06 

              	
                    Modifications                                

              


      

      
        	
                10.07 

              	
                    Release;
      Termination                                                    

              


      

       

      Article
XI

      GUARANTY

       

      
        	
                11.01 

              	
                    Guaranty                      

              


      

      
        	
                11.02 

              	
                    Guaranty
      Absolute                                           

              


      

      
        	
                11.03 

              	
                    Waivers
      and
      Acknowledgments                                                                

              


      

      
        	
                11.04 

              	
                    Subrogation                                

              


      

      
        	
                11.05 

              	
                    Continuing
      Guarantee;
      Assignments                                                                           

              


      

      
        	
                11.06 

              	
                    No
      Reliance                                

              


      

      Article
XII

      MISCELLANEOUS

       

      
        	
                12.01 

              	
                    Amendments,
      Etc.                                          

              


      

      
        	
                12.02 

              	
                    Notices
      and Other Communications; Facsimile
Copies

              


      

      
        	
                12.03 

              	
                     No
      Waiver; Cumulative
      Remedies                                                                          

              


      

      
        	
                12.04 

              	
                    Attorney Costs,
      Expenses and
      Taxes                                                                        

              


      

      
        	
                12.05 

              	
                    Indemnification
      by the
      Borrower                                                                          

              


      

      
        	
                12.06 

              	
                    Payments Set
      Aside                                         

              


      

      
        	
                12.07 

              	
                    Successors and
      Assigns                                                   

              


      

      
        	
                12.08 

              	
                    Setoff                      

              


      

      
        	
                12.09 

              	
                    Counterparts                              

              


      

      
        	
                12.10 

              	
                    Integration                                

              


      

      
        	
                12.11 

              	
                    Survival of
      Representations and
      Warranties                                                                                              

              


      

      
        	
                12.12 

              	
                    Severability                                

              


      

      
        	
                12.13 

              	
                    Governing
      Law                                          

              


      

      
        	
                12.14 

              	
                    Waiver
      of Right to Trial by
      Jury                                                                         

              


      

      
        	
                12.15 

              	
                    Binding
      Effect                                

              


      

      




    


    


    
      
        
          
                                                        

            
              


            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


     

    
      SCHEDULES

       

      
      

       

      
        	I	Pledged
    Equity
	II	Pledged
    Equity


      

      
      

      
        
          	
                  5.02 

                	
                  Defaults

                


        

        
          	
                  5.03 

                	
                  Certain
      Authorizations

                


        

        
          	
                  5.11 

                	
                  Taxes

                


        

        
          	
                  5.13 

                	
                  Subsidiaries
      and Other Equity Investments

                


        

        5.18(a)(1)UCC
Information

        5.18(a)(2)UCC
Information Changes

        
          	
                  5.20 

                	
                  Deposit
      Accounts

                


        

        
          	
                  5.21 

                	
                  Outstanding
      Obligations

                


        

        
          	
                  5.22 

                	
                  Equity
      Interests

                


        

        
          	
                  5.23 

                	
                  Material
      Contracts and Obligations

                


        

        
          	
                  5.24 

                	
                  Capital
      Structure

                


        

        
          	
                  5.25 

                	
                  Airframe
      Leases

                


        

        
          	
                  7.01 

                	
                  Liens

                


        

        
          	
                  7.03 

                	
                  Existing
      Indebtedness

                


        

        
          	
                  7.06 

                	
                  Permitted
      Dispositions

                


        

        
          	
                  12.02 

                	
                  Certain
      Addresses for Notices

                


        



        EXHIBITS

        


        
          	
                  A 

                	
                  Form
      of Term Note

                


        

        
          	
                  B 

                	
                  Form
      of Spare Parts Security Agreement

                


        

        
          	
                  C 

                	
                  Form
      of Aircraft and Engine Security
Agreement

                


        

        
          	
                  D 

                	
                  Copy
      of Executed Airline Services
Agreement

                


        

        
          	
                  E 

                	
                  Form
      of Administrative Services
Agreement

                


        





      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

    

     

     

    
    

     

    
      	
              LOAN
      AGREEMENT

            


    

     

     

    This LOAN
AGREEMENT (“Agreement”)
is entered into as of October 10, 2008, among MOKULELE FLIGHT SERVICE, INC., a
Hawaii corporation (the “Borrower”),
each of the Subsidiaries of the Borrower from time to time party hereto
(together with any future direct and indirect Subsidiaries of the Borrower, the
“Guarantors”),
and REPUBLIC AIRWAYS HOLDINGS INC., a Delaware corporation (the “Lender”).

     

    
    

     

    
      	PRELIMINARY
      STATEMENTS


    

     

     

    WHEREAS, the Borrower desires
that the Lender extend, and the Lender is willing to provide, a Term Loan on the
Effective Date in an aggregate principal amount not to exceed $8,000,000 on the
terms and conditions set forth herein;

     

    NOW,
THEREFORE, in consideration of the premises and the agreements, provisions and
covenants herein contained, the parties hereto hereby agree as
follows:

     

     

     

    
      	
              ARTICLE
      I     

            
	DEFINITIONS AND
      ACCOUNTING TERMS


    

     

     

    1.01 Defined
Terms.  As
used in this Agreement, the following terms shall have the meanings set forth
below:

     

    “Administrative
Services Agreement” means a copy of the administrative services agreement
dated as of October 8, 2008 attached hereto as Exhibit
E.

     

    “Affiliate”
means, with respect to any Person, another Person that directly, or indirectly
through one or more intermediaries, Controls or is Controlled by or is under
common Control with the Person specified.

     

    “Agreement”
has the meaning specified in the preamble.

     

    “Aircraft and
Engine Mortgage” means any and/or all of the aircraft and engine mortgage
and security agreements executed and delivered pursuant to Section
4.01(a)(viii).

     

    “Airframes”
means any and/or all of the Cessna model 208B aircraft owned or leased by any
Loan Party.

     

    “Airline Services
Agreement” means that certain Amended and Restated Airline Services
Agreement dated October 8, 2008 between Borrower and Shuttle America
Corporation, a copy of which is attached hereto as Exhibit
D.

     

    “Airline Services
Agreement Obligations” means any payment obligations that are outstanding
and owed to Republic by the Borrower pursuant to the terms of the Airline
Services Agreement.

     

    “Applicable
Rate” means a per annum rate equal to 10.00%.

     

    “Attorney
Costs” means and includes all reasonable fees, expenses and disbursements
of any law firm or other external counsel.

     

    “Bank Control
Agreements” means each deposit account control agreement, dated as of the
Effective Date, among the Borrower, the Lender and each respective financial
institution as listed on Schedule 5.20 and each deposit account control
agreement, dated as of the Effective Date, among each Loan Party other than the
Borrower, the Lender and each respective financial institution at which such
Loan Party maintains any deposit account.

     

    “Bankruptcy
Code” means Chapter 11 of 11 U.S.C. §§ 101 et seq. (as heretofore
and hereafter amended).

     

    “Borrower”
has the meaning specified in the introductory paragraph hereto.

     

    “Business
Day” means any day other than a Saturday, Sunday or day on which banks in
New York City, New York are authorized or required by law to close.

     

    “Cape Town
Convention” means the official English language text of the Cape Town
Convention on International Interests in Mobile Equipment and the Cape Town
Protocol to the Convention on International Interests in Mobile Equipment on
Matters Specific to Aircraft Equipment prepared under the joint auspices of the
International Institute for the Unification of Private Law and the International
Civil Aviation Organization, which was signed in Cape Town South Africa on
November 16, 2001.

     

    “Capital
Expenditures” means, with respect to the Borrower and its Subsidiaries,
for any period the sum of (without duplication) all expenditures (whether paid
in cash or accrued as liabilities) by the Borrower or any Subsidiary during such
period for items that would be classified as “property or equipment” or
comparable items on the consolidated balance sheet of the Borrower and its
Subsidiaries, including without limitation all transactional costs incurred in
connection with such expenditures provided the same have been
capitalized.

     

    “Capital Lease
Obligations” means, as to any Person, the obligations of such Person to
pay rent or other amounts under any lease of (or other arrangement conveying the
right to use) real or personal property, or a combination thereof, which
obligations are required to be classified and accounted for as capital leases on
a balance sheet of such Person under GAAP and, for the purposes of this
Agreement, the amount of such obligations at any time shall be the capitalized
amount thereof at such time determined in accordance with GAAP.

     

    “Capital
Stock” means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all
equivalent ownership interests in a Person (other than a corporation) and any
and all warrants, rights or options to purchase any of the
foregoing.

     

    “Cash
Equivalents” means any of the following types of Investments, to the
extent owned by any Loan Party free and clear of all Liens (other than Liens
created under the Collateral Documents):

     

    (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency or instrumentality of the United States the obligations of which are
backed by the full faith and credit of the United States, in each case maturing
no more than 180 days after such date; (ii) commercial paper issued by domestic
corporations or institutions, states or municipalities maturing no more than 180
days after such date if such commercial paper, at the time of the acquisition
thereof, has a rating of at least A-1 from S&P or at least P-1 from Moody’s;
(iii) certificates of deposit or bankers’ acceptances maturing no more than 180
days after such date and issued or accepted by the Lender or by any commercial
bank organized under the laws of the United States of America or any state
thereof or the District of Columbia that (a) is at least “adequately
capitalized” (as defined in the regulations of its primary Federal banking
regulator) and (b) has net assets of not less than $1,000,000,000 and that has a
rating of at least AA from S&P or at least Aa from Moody’s; and (iv) shares
of any money market mutual fund registered with the SEC under Rule 2a-7 that
guarantees 100% same day liquidity and has net assets not less than
$1,000,000,000.

     

    “CERCLA”
means the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended from time to time.

     

    “CERCLIS”
means the Comprehensive Environmental Response, Compensation and Liability
Information System maintained by the U.S. Environmental Protection
Agency.

     

    “Change of
Control” means an event or series of events by which:

     

     (a)           any
“person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934) (other than the Lenders and its Affiliates)
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, except that a person or group shall be deemed
to have “beneficial ownership” of all securities that such person or group has a
right acquire (such right, an “option
right”), whether such option right is exercisable immediately or only
after the passage of time), directly or indirectly, of 20% or more of the voting
power or economic interests of the Equity Interests of Borrower, and taking into
account all such securities that such person or group has the right to acquire
pursuant to any option right); or

     

    (b)           William
J. Boyer, Jr. ceases to own at least 30% of the Equity Interests of the Borrower
(except if the foregoing occurs due solely to the exercise by the Lender of the
conversion option provided by Section
2.08).

     

    “Code”
means the Internal Revenue Code of 1986.

     

    “Collateral”
means all of the “Collateral” referred to in
the Collateral Documents, the Pledged Collateral, and all of the other property
and assets that are or are intended under the terms of the Collateral Documents
to be subject to Liens in favor of the Lender, which property and assets shall
not include the Excluded Assets.

     

    “Collateral
Documents” means, collectively, the provisions of Article X of this
Agreement, the Aircraft and Engine Mortgages, the Spare Parts Security
Agreement, the Bank Control Agreements, the Pledge Agreement and each of the
other agreements, instruments or documents that creates or purports to create a
Lien in favor of the Lender to secure any of the Obligations or any control
agreement entered into by a Loan Party with respect to a Controlled
Account.

     

    “Contractual
Obligation” means, as to any Person, any provision of any security issued
by such Person or of any indenture, mortgage, deed of trust, contract,
agreement, instrument or other undertaking to which such Person is a party or by
which it or any of its property is bound.

     

    “Control”
means either (x) the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise or (y)
the ownership of 15% of a Person.  “Controlling”
and “Controlled”
have meanings correlative thereto.

     

    “Controlled
Account” means a deposit account or securities account of any Loan Party
at a depository bank or other financial institution acceptable to the Lender
that has entered into account control agreements in form and substance
satisfactory to the Lender, and otherwise established in a manner satisfactory
to the Lender.

     

    “Debtor Relief
Laws” means the Bankruptcy Code, 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 or other applicable jurisdictions from
time to time in effect and affecting the rights of creditors
generally.

     

    “Default”
means any event or condition that constitutes an Event of Default or that, with
the giving of any notice, the passage of time, or both, would be an Event of
Default.

     

    “Disposition”
or “Dispose”
means the sale, transfer, license, lease or other disposition (including any
sale and leaseback transaction) of any property by any Person, including any
sale, assignment, transfer or other disposal, with or without recourse, of any
notes or accounts receivable or any rights and claims associated therewith,
including Slot trades.

     

    “Dollar”
and “$” mean
lawful money of the United States.

     

    “DOT” means
the United States Department of Transportation.

     

    “Effective
Date” means the first date on which all of the conditions precedent set
forth in Section 4.01 are
satisfied or waived.

     

    “Engines”
means any and/or all of the aircraft engines owned by any Loan
Party.

     

    “Environmental
Action” means any action, suit, demand, demand letter, claim, notice of
non-compliance or violation, notice of liability or potential liability,
investigation, proceeding, consent order or consent agreement relating in any
way to any Environmental Law, Environmental Permit or Hazardous Materials or
arising from alleged injury or threat of injury to health, safety or the
environment, including, without limitation, (a) by any governmental or
regulatory authority for enforcement, cleanup, removal, response, remedial or
other actions or damages and (b) by any governmental or regulatory
authority or any third party for damages, contribution, indemnification, cost
recovery, compensation or injunctive relief.

     

    “Environmental
Laws” means any and all Federal, state, local, and foreign statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, noise, air emissions and discharges to waste or
public systems.

     

    “Environmental
Liability” means any liability, contingent or otherwise (including any
liability for damages, costs of environmental remediation, fines, penalties or
indemnities), of the Borrower, any other Loan Party or any of their respective
Subsidiaries directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials, (c)
exposure to any Hazardous Materials, (d) the release or threatened release of
any Hazardous Materials into the environment or (e) any contract, agreement or
other consensual arrangement pursuant to which liability is assumed or imposed
with respect to any of the foregoing.

     

    “Environmental
Permit” means any permit, approval, identification number, license or
other authorization required under any Environmental Law.

     

    “Equity
Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, all of the securities convertible into or exchangeable for shares
of capital stock of (or other ownership or profit interests in) such Person or
warrants, rights or options for the purchase or acquisition from such Person of
such shares (or such other interests), and all of the other ownership or profit
interests in such Person (including, without limitation, partnership, member or
trust interests therein), whether voting or nonvoting, and whether or not such
shares, warrants, options, rights or other interests are outstanding on any date
of determination.

     

    “Equipment”
has the meaning specified in Section
10.01(a).

     

    “ERISA”
means the Employee Retirement Income Security Act of 1974, as amended from time
to time.

     

    “Event of
Default” has the meaning specified in Section
8.01.

     

    “Excluded
Assets” shall mean:

     

    (a)           any
permit or license issued by a Governmental Authority to any Loan Party or any
agreement or property subject to any agreement to which any Loan Party is a
party, in each case, only to the extent and for so long as the terms of such
permit, license or agreement or any Laws applicable thereto, validly prohibit
the creation by such Loan Party of a security interest in such permit, license,
agreement or property in favor of the Lender (after giving effect to Sections
9-406(d), 9-407(a), 9-408(a) or 9-409 of the UCC (or any successor provision or
provisions) or any other applicable law (including the Bankruptcy Code) or
principles of equity); and

     

    (b)           any
Loan Party’s leasehold interest in any aircraft, airframe, engine or part to the
extent that the applicable lease validly prohibits the creation by such Loan
Party of a security interest in such leasehold interest, and any aircraft,
airframe, engine or part subject to a Lien permitted under Section
7.01(b);

     

    provided,
however, that Excluded Assets shall not include any Proceeds (as defined in the
UCC), substitutions or replacements of any Excluded Assets referred to in clause
(a) or (b) (unless such Proceeds, substitutions or replacements would constitute
Excluded Assets referred to in clause (a) or (b)).

     

    “Existing
Indebtedness” means the Indebtedness set forth on Schedule
7.03.

     

     “FAA” means
the Federal Aviation Administration.

     

    “FRB” means
the Board of Governors of the Federal Reserve System of the United
States.

     

    “GAAP”
means generally accepted accounting principles in the United States as in effect
from time to time.

     

    “Governmental
Authority” means any nation or government, any state or other political
subdivision thereof, any agency, authority, instrumentality, regulatory body,
court, administrative tribunal, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or
functions of or pertaining to government.

     

    “Guarantors”
means, collectively, each of the existing and future direct and indirect
Subsidiaries of the Borrower.

     

    “Guaranty”
has the meaning specified in Section
11.01.

     

    “Guarantee”
means, as to any Person, (a) any obligation, contingent or otherwise, of such
Person guaranteeing or having the economic effect of guaranteeing any
Indebtedness payable or performable by another Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including
any obligation of such Person, direct or indirect, (i) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness, (ii)
to purchase or lease property, securities or services for the purpose of
assuring the obligee in respect of such Indebtedness of the payment or
performance of such Indebtedness, (iii) to maintain working capital, equity
capital or any other financial statement condition or liquidity or level of
income or cash flow of the primary obligor so as to enable the primary obligor
to pay such Indebtedness, or (iv) entered into for the purpose of assuring in
any other manner the obligee in respect of such Indebtedness of the payment or
performance thereof or to protect such obligee against loss in respect thereof
(in whole or in part), or (b) any Lien on any assets of such Person securing any
Indebtedness of any other Person, whether or not such Indebtedness is assumed by
such Person (or any right, contingent or otherwise, of any holder of such
Indebtedness to obtain any such Lien).  The amount of any Guarantee
shall be deemed to be an amount equal to the stated or determinable amount of
the related primary obligation, or portion thereof, in respect of which such
Guarantee is made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by the guaranteeing
Person in good faith.  The term “Guarantee”
as a verb has a corresponding meaning.

     

    “Guaranteed
Obligations” has the meaning specified in Section
11.01.

     

    “Hangar
Property” means that certain land area situated on the South Ramp at the
Honolulu International Airport, designated as Space No. 009-165 and subject to
the Hangar Facilities Lease between the State of Hawaii, Department of
Transportation, as lessor, and the Borrower, as lessee, (State Lease No.
DOT-A-06-0011) and any structures thereon.

     

    “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.

     

    “Indebtedness”
means, as to any Person at a particular time, without duplication, all of the
following, whether or not included as indebtedness or liabilities in accordance
with GAAP:

     

    (a)           all
obligations of such Person for borrowed money and all obligations of such Person
evidenced by bonds, debentures, notes, loan agreements or other similar
instruments;

     

    (b)           all
direct or contingent obligations of such Person arising under letters of credit
(including standby and commercial), bankers’ acceptances, bank guaranties,
surety bonds and similar instruments;

     

    (c)           net
obligations of such Person under any Swap Contract;

     

    


    
      
        
          
             

            
              


            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    (d)           all
obligations of such Person to pay the deferred purchase price of property or
services (other than current trade accounts payable in the ordinary course of
business);

     

    (e)           indebtedness
secured by a Lien on property owned or being purchased by such Person (including
indebtedness arising under conditional sales or other title retention
agreements), whether or not such indebtedness shall have been assumed by such
Person or is limited in recourse;

     

    (f)           capital
leases, operating leases and Synthetic Lease Obligations;

     

    (g)           all
obligations of such Person to purchase, redeem, retire, defease or otherwise
make any payment in respect of any Equity Interests in such Person or any other
Person or any warrants, rights or options to acquire such Equity Interests,
valued, in the case of redeemable preferred interests, at the greater of its
voluntary or involuntary liquidation preference plus accrued and
unpaid dividends; and

     

    (h)           all
Guarantees of such Person in respect of any of the foregoing.

     

    For all
purposes hereof, the Indebtedness of any Person shall include the Indebtedness
of any partnership or joint venture (other than a joint venture that is itself a
corporation or limited liability company) in which such Person is a general
partner or a joint venturer, unless such Indebtedness is expressly made
non-recourse to such Person.

     

    “Indemnified
Liabilities” has the meaning set forth in Section
12.05.

     

    “Indemnitees”
has the meaning set forth in Section
12.05.

     

    “International
Interest” has the meaning as expressed in the Cape Town
Convention.

     

    “Interest Payment
Date” means the last Business Day of each month and the Maturity
Date.

     

    “Investment”
means, as to any Person, any direct or indirect acquisition or investment by
such Person, whether by means of (a) the purchase or other acquisition of Equity
Interests or other securities of another Person, (b) a loan, advance or capital
contribution to, Guarantee or assumption of debt of, or purchase or other
acquisition of any other debt or equity participation or interest in, another
Person, including any partnership or joint venture interest in such other Person
and any arrangement pursuant to which the investor incurs debt of the type
referred to in clause (h) of the definition of “Indebtedness” set forth in
this Section
1.01 in respect of such Person, or (c) the purchase or other acquisition
(in one transaction or a series of transactions) of assets of another Person
that constitute a business unit or all or a substantial part of the business of,
such Person.

     

    “IRS” means
the United States Internal Revenue Service.

     

    “Laws”
means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, any Governmental Authority, in each case whether
or not having the force of law.

     

    


    
      
        
          
             

            
              


            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    “Leis
Letter” means the letter, in form satisfactory to the Lender, from Dorvin
D. Leis to the Lender (x) representing to the Lender that he has converted all
of his outstanding loans to the Borrower into equity in the Borrower and (y)
covenanting that he will make an equity contribution to the Borrower during 2009
in the amount of [*].

     

    “Lender”
has the meaning specified in the introductory paragraph hereto.

     

    “Lien”
means any mortgage, pledge, hypothecation, assignment, deposit arrangement,
encumbrance, lien (statutory or other), charge, or preference, priority or other
security interest or preferential arrangement of any kind or nature whatsoever
intended for security (including any conditional sale or other title retention
agreement, any easement, right of way or other encumbrance on title to real
property, and any financing lease having substantially the same economic effect
as any of the foregoing).

     

    “Loan
Documents” means, collectively, (a) this Agreement, (b) the Term
Note, (c) the Collateral Documents and (d) the Subordination
Agreements.

     

    “Loan
Parties” means, collectively, the Borrower and each
Guarantor.

     

    “Material Adverse
Effect” means (a) a material adverse effect upon the business, condition
(financial or otherwise), operations, performance, properties or prospects of
the Loan Parties taken as a whole; (b) a material impairment of the rights and
remedies of the Lender under any Loan Document, or of the ability of any Loan
Party to perform its obligations under any Loan Document to which it is a party;
(c) a material adverse effect upon the legality, validity, binding effect or
enforceability against any Loan Party of any Loan Document to which it is a
party; or (d) a material impairment of the Collateral; provided that a
termination of the Mesa Code Share Agreement shall not be deemed a “Material
Adverse Effect” for purposes of this Agreement.

     

    “Maturity
Date” means the earlier of (a) the two year anniversary of the Effective
Date and (b) the acceleration of the maturity of the Term Loan in accordance
with Section
8.02.

     

    “Mesa Code Share
Agreement” means that certain Code Share Agreement dated as of February
9, 2007 between Mesa Airlines, Inc. and Mokulele Air Group, Inc.

     

    “Minimum Proceeds
Amount” means
with respect to any offering of Equity Interests by the Borrower, Net Cash
Proceeds greater than $100,000 for each .5% interest in the Borrower on a fully
diluted basis (calculated immediately prior to such offering).

     

    “Moody’s”
means Moody’s Investors Service, Inc. and any successor thereto.

     

    “Multiemployer
Plan” means a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.

     

    “Net Cash
Proceeds” means
with respect to the issuance of any capital stock or other Equity Interest by
the Borrower, the excess of (i) the cash received in connection with such
issuance over (ii) the underwriting discounts and commissions, and other
out-of-pocket expenses, actually incurred by such Loan Party in connection with
such issuance.

     

    “NPL” means
the National Priorities List under CERCLA.

     

    


    
      
        
          
             

            
              *Confidential

            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    “Obligations”
means (i) all advances to, and debts, liabilities, obligations, performance
obligations, covenants and duties of, any Loan Party arising under any Loan
Document or otherwise with respect to any Term Loan, whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to
become due, now existing or hereafter arising and including interest and fees
that accrue (or would accrue but for the commencement of any case or proceeding
under any Debtor Relief Law) after the commencement by or against any Loan Party
or any Affiliate thereof of any case or proceeding under any Debtor Relief Laws
naming such Person as the debtor in such case or proceeding, regardless of
whether such interest and fees are allowed claims in such case or proceeding and
(ii) any Airline Services Agreement Obligations.

     

    “Organization
Documents” means (a) with respect to any corporation, the certificate or
articles of incorporation and the bylaws (or equivalent or comparable
constitutive documents with respect to any non-U.S. jurisdiction); (b) with
respect to any limited liability company, the certificate or articles of
formation or organization and operating agreement; and (c) with respect to any
partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

     

    “Other
Taxes” has the meaning specified in Section
3.01(b).

     

    “Participant”
has the meaning specified in Section
12.07(c).

     

    “Permitted
Liens” means Liens described (i) in Sections 7.01(a), and (c) (to the extent
such tax liens do not result in a material risk of loss of the applicable
asset), (ii) in  Section 7.01(d), with
respect to Airframes and Engines, to the extent permitted by the Aircraft and
Engine Mortgages, and (iii) on Schedule
7.01.

     

    “Person”
means any natural person, corporation, limited liability company, trust, joint
venture, association, company, partnership, Governmental Authority or other
entity.

     

    “Plan”
means any employee pension benefit plan (other than a Multiemployer Plan)
subject to the provisions of Title IV of ERISA or Section 412 of the
Code or Section 307 of ERISA, and in respect of which the Borrower or any
ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an “employer” as defined in
Section 3(5) of ERISA.

     

    “Pledge
Agreement” means that certain Pledge Agreement by William J. Boyer, Jr.
and Golden Pacific Land Corporation in favor of the Lender, dated as of the
Effective Date.

     

    “Pledged
Collateral” has the meaning set forth in Section 10.01.

     

    “Pledged
Debt” means the Indebtedness set forth opposite each Loan Party’s name on
and as otherwise described in Schedule II.

     

    “Pledged
Equity” means the shares of stock and other Equity Interests set forth
opposite each Loan Party’s name on and as otherwise described in Schedule I.

     

    “Pledged Spare
Parts” has the meaning assigned to such term in the Spare Parts Security
Agreement.

     

    “Republic”
means Republic Airways Holdings Inc.

     

    “Responsible
Officer” means, (i) the chief executive officer, president, chief
financial officer, executive vice president, treasurer or assistant treasurer of
a Loan Party, and (ii) with respect to each Loan Party (other than the
Borrower), any person authorized by the Board of Directors or shareholders of
such Loan Party to execute documents in connection with the Loan Documents on
behalf of such Loan Party.  Any document delivered hereunder or
thereunder that is signed by a Responsible Officer of a Loan Party shall be
conclusively presumed to have been authorized by all necessary corporate,
partnership and/or other action on the part of such Loan Party and such
Responsible Officer shall be conclusively presumed to have acted on behalf of
such Loan Party.

     

    “Restricted
Payment” means any dividend or other distribution (whether in cash,
securities or other property) with respect to any capital stock or other Equity
Interest of any Loan Party, or any payment (whether in cash, securities or other
property), including any sinking fund or similar deposit, on account of the
purchase, redemption, retirement, defeasance, acquisition, cancellation or
termination of any such capital stock or other Equity Interest, or on account of
any return of capital to any Loan Party’s stockholders, partners or members (or
the equivalent Persons thereof).

     

    “Routes”
means each right, license, permit, and other authorization whereby any Loan
Party is entitled or permitted to fly between two or more points, either within
one country or between two countries.

     

    “S&P”
means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. and any successor thereto.

     

    “SEC” means
the Securities and Exchange Commission, or any Governmental Authority succeeding
to any of its principal functions.

     

    “Secured Credit
Documents” means, collectively, (i) the Loan Documents and (ii) the
Airline Services Agreement.

     

    “Silver
Loan” has the meaning specified in Section 6.19.

     

    “Smith Complaint”
means the complaint filed with the Hawaii Civil Rights Commission bearing
the caption Stephanie L. Smith v. Mokulele Flight Service, Inc. and Rob
McKinney, as an individual; FEP No. WH-13805, EEOC Charge No.
37B-2007-00076.

     

    “Spare
Part” has the meaning specified in the Spare Parts Security
Agreement.

     

    “Spare Parts
Security Agreement” has the meaning specified in Section
4.01(a)(ix).

     

    “Subordination
Agreement” means each of the Subordination Agreements, dated as of the
Effective Date, between the Lender and the subordinated creditor referred to
therein and acknowledged by the Borrower.

     

    “Subsidiary”
of a Person means a corporation, partnership, joint venture, limited liability
company or other business entity of which a majority of the shares of securities
or other interests having ordinary voting power for the election of directors or
other governing body (other than securities or interests having such power only
by reason of the happening of a contingency) are at the time beneficially owned,
or the management of which is otherwise controlled, directly, or indirectly
through one or more intermediaries, or both, by such Person.  Unless
otherwise specified, all references herein to a “Subsidiary”
or to “Subsidiaries”
shall refer to a Subsidiary or Subsidiaries of the Borrower.

     

    “Swap
Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master
Agreement”), including any such obligations or liabilities under any
Master Agreement.

     

    “Swap Termination
Value” means, in respect of any one or more Swap Contracts, after taking
into account the effect of any legally enforceable netting agreement relating to
such Swap Contracts, (a) for any date on or after the date such Swap
Contracts have been closed out and termination value(s) determined in accordance
therewith, such termination value(s), and (b) for any date prior to the date
referenced in clause (a), the amount(s) determined as the mark-to-market
value(s) for such Swap Contracts, as determined based upon one or more
mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include the Lender or any Affiliate of
the Lender).

     

    “Synthetic Lease
Obligation” means the monetary obligation of a Person under (a) a
so-called synthetic, off-balance sheet lease in which the lessee is
contractually entitled to the tax benefits of ownership of the leased assets, or
(b) an agreement for the use or possession of property creating obligations that
do not appear on the balance sheet of such Person but which, upon the insolvency
or bankruptcy of such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

     

    “Term
Borrowing” means any borrowing of the Term Loan in accordance with
Sections 2.01(a) or 2.01(c), as applicable.

     

    “Term
Commitment” means $8,000,000.

     

    “Term Loan”
means the extensions of credit by the Lender to the Borrower pursuant to Section
2.01.

     

    “Term Note”
means a promissory note of the Borrower payable to the order of the Lender, in
substantially the form of Exhibit A.

     

    “Title 49”
means Title 49 of the United States Code, as amended and in effect from time to
time, and the regulations promulgated pursuant thereto.

     

    “UCC”
shall mean the Uniform Commercial Code as in effect from time to time in the
State of New York; provided, however, that, at any time, if by reason of
mandatory provisions of law, any or all of the perfection or priority of the
Lender’s security interest in any item or portion of the Pledged Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of New York, the term “UCC” shall mean the Uniform Commercial
Code as in effect, at such time, in such other jurisdiction for purposes of the
provisions hereof relating to such perfection or priority and for purposes of
definitions relating to such provisions.

     

    “United
States” and “U.S.” mean
the United States of America.

     

    “United States
Citizen” has the meaning specified in Section
5.01.

     

    1.02 Other Interpretive
Provisions.  With
reference to this Agreement and each other Loan Document, unless otherwise
specified herein or in such other Loan Document:

     

    (a) The
meanings of defined terms are equally applicable to the singular and plural
forms of the defined terms.

     

    (b) (i)  The words “herein,”
“hereto,”
“hereof”
and “hereunder”
and words of similar import when used in any Loan Document shall refer to such
Loan Document as a whole and not to any particular provision
thereof.

     

    (ii) Article,
Section, Exhibit and Schedule references are to the Loan Document in which such
reference appears.

     

    (iii) The term
“including”
is by way of example and not limitation.

     

    (iv) The term
“documents”
includes any and all instruments, documents, agreements, certificates, notices,
reports, financial statements and other writings, however evidenced, whether in
physical or electronic form.

     

    (c) In the
computation of periods of time from a specified date to a later specified date,
the word “from”
means “from
and including;” the words “to” and
“until”
each mean “to but
excluding;” and the word “through”
means “to
and including.”

     

    (d) Section
headings herein and in the other Loan Documents are included for convenience of
reference only and shall not affect the interpretation of this Agreement or any
other Loan Document.

     

    1.03 Accounting
Terms.  All
accounting terms not specifically or completely defined herein shall be
construed in conformity with, and all financial data required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP, as in
effect from time to time.

     

    1.04 References to Agreements and
Laws.  Unless
otherwise expressly provided herein, (a) references to Organization
Documents, agreements (including the Loan Documents) and other contractual
instruments shall be deemed to include all subsequent amendments, restatements,
extensions, supplements and other modifications thereto, but only to the extent
that such amendments, restatements, extensions, supplements and other
modifications are not prohibited by any Loan Document; and (b) references
to any Law shall include all statutory and regulatory provisions consolidating,
amending, replacing, supplementing or interpreting such Law.

     

    1.05 Times of
Day.  Unless
otherwise specified, all references herein to times of day shall be references
to Eastern time (daylight or standard, as applicable).

     

    1.06 Uniform Commercial
Code.

     

    Unless
otherwise defined herein, terms used in Article X that are
defined in the UCC shall have the meanings assigned to them in the
UCC.

     

     

    
    

     

    
      	ARTICLE
      II     
	THE TERM COMMITMENTS
      AND TERM LOAN


    

     

     

    2.01 Making of the Term
Loan

     

    (a) Term
Borrowing on the Effective Date. Subject to the terms and
conditions hereof, the Lender agrees to make, on the Effective Date, a Term
Borrowing to the Borrower in the amount as set forth in written notice to the
Lender, such amount to be a multiple of $100,000 up to $1,000,000 and in
increments of $500,000 thereafter (but not to exceed the Term
Commitment).  Any amount borrowed under this Section 2.01(a) and
subsequently repaid or prepaid may not be reborrowed.

     

    (b) Mechanics of a Term
Borrowing on the Effective Date.  Borrower shall provide the
Lender with written notice no later than 10:00 a.m. (New York City time) on the
Effective Date with respect to the Term Borrowing under Section 2.01(a).  The
Lender shall make such Term Borrowing available to Borrower not later than 3:00
p.m. (New York City time) on the Effective Date by wire transfer of same day
funds in Dollars to the Controlled Account designated by the Borrower in such
notice.

     

    (c) Term Borrowing after the
Effective Date.  Subject to the terms and conditions hereof,
the Lender agrees to make, upon notice from time to time from the Borrower as
set forth in Section 2.10(d), during the period that is the earlier of 365 days
following the Effective Date or the entry into service of the sixth aircraft
pursuant to the Airline Services Agreement, a Term Borrowing to Borrower in a
minimum amount of $1,000,000 and in increments of $500,000 thereafter, provided that the aggregate
for such Term Borrowings and all previous Term Borrowings shall not to exceed
the Term Commitment  Any amount borrowed under this Section 2.01(c)and
subsequently repaid or prepaid may not be reborrowed.

     

    (d) Mechanics of a Term
Borrowing after the Effective Date.  Borrower shall provide the
Lender with written notice no later no later than 10:00 a.m. (New York City
time) on the date that is at least two Business Days prior to the proposed date
of such Term Borrowing) under Section 2.01(c).  The
Lender shall make such Term Borrowing available to Borrower not later than 3:00
p.m. (New York City time) on the date for such Term Borrowing set forth in such
notice, subject to the continued satisfaction of the conditions set forth in
Section 4.02 by wire transfer of same day funds in Dollars to the Controlled
Account designated by the Borrower in such notice.

     

    2.02 Repayment of Term
Loan.  The
Borrower shall repay to the Lender on the Maturity Date the aggregate principal
amount of the Term Loan outstanding on such date.

     

     

    2.03 Prepayments

     

    The Borrower may not without prior
written consent of the Lender, prepay the Term Loan in whole or in part;
provided that, the Borrower may prepay the Term
Loan, in whole or in part (x) upon 20 days notice to the Lender (subject to the
right of  the Lender, during such period, (I) to exercise its right
under Section
2.08 with respect to the
amount of the Term Loan proposed to be prepaid, and (II) in the event such
prepayment is to occur utilizing any Indebtedness referenced in clause (y)(ii)
below, the Lender may elect to reduce the interest rate on that portion of the
Term Loan proposed to be so prepaid to the interest rate so offered, and to the
extent of such exercise or election by the Lender, as applicable, such
prepayment may not occur) and (y) so long as the amount utilized for such
prepayment represents either (i) the Net Cash Proceeds of an issuance of
additional Equity Interests pursuant to Section 7.17 or (ii) Indebtedness that:
(a) is at an interest rate at least 1% lower than the Applicable Rate; and(b) is
owed to a Person who is not an Affiliate of the Borrower.

     

    2.04 Interest

     

    
      	
              (a)

            	
               Interest
      Rate.  Subject to the provisions of subsection (b) below,
      the Term Loan shall bear interest on the outstanding principal amount
      thereof at a rate per annum equal to the Applicable
  Rate.

            


    

     

    
      	
              (b)

            	
               Default
      Rate.  Upon the occurrence and during the continuance of
      a Event of Default, the Borrower shall pay interest on (i) the unpaid
      principal amount of the Term Loan owing to the Lender, payable in arrears
      on the dates referred to in clause (c) below and on demand, at a rate
      per annum equal at all times to 2% per annum above the Applicable Rate and
      (ii) to the fullest extent permitted by law, the amount of any
      interest, fee or other amount payable under the Loan Documents that is not
      paid when due, from the date such amount shall be due until such amount
      shall be paid in full, payable on demand, at a rate per annum equal at all
      times to 2% above the Applicable
Rate.

            


    

     

    
      	
              (c)

            	
               Payment
      Dates.  Interest on the Term Loan shall be due and
      payable in arrears on each Interest Payment Date and, to the extent
      provided in Section
      2.04(b), on demand.

            


    

     

    2.05 Computation of
Interest.  All
computations of interest shall be made on the basis of a 365-day year and actual
days elapsed.

     

    2.06 Evidence of
Indebtedness.  The
Term Loan shall be evidenced by one or more accounts or records maintained by
the Lender in the ordinary course of business.  The accounts or
records maintained by the Lender shall be conclusive absent manifest error of
the amount of the Term Loan made by the Lender to the Borrower and the interest
and payments thereon.  Any failure to so record or any error in doing
so shall not, however, limit or otherwise affect the obligation of the Borrower
hereunder to pay any amount owing with respect to the
Obligations.  Upon the request of the Lender, the Borrower shall
execute and deliver to the Lender a Term Note, which shall evidence the Lender’s
Term Loan in addition to such accounts or records.  The Lender may
attach schedules to the Term Note and endorse thereon the date, amount and
maturity of the Term Loan and payments with respect thereto.

     

    2.07 Payments
Generally.

     

    
      	
              (a)

            	
               All
      payments to be made by the Borrower shall be made without condition or
      deduction for any counterclaim, defense, recoupment or
      setoff.  Except as otherwise expressly provided herein, all
      payments by the Borrower hereunder shall be made to the Lender, at the
      account specified by the Lender in Dollars and in immediately available
      funds not later than 2:00 p.m. (New York City time) on the dates
      specified herein.  All payments received by the Lender after
      2:00 p.m. (New York City time) shall be deemed received on the next
      succeeding Business Day and any applicable interest shall continue to
      accrue.

            


    

     

    
      	
              (b)

            	
               If
      any payment to be made by the Borrower shall come due on a day other than
      a Business Day, payment shall be made on the next following Business Day,
      and such extension of time shall be reflected in computing
      interest.

            


    

     

    2.08 Conversion
Option

     

    The
Lender may at any time until the Maturity Date and in its sole discretion
convert all or part (in increments of at least $500,000) of the unpaid principal
amount hereunder into such number of fully diluted shares (calculated
immediately prior to giving effect to such conversion) of the Borrower at a
conversion rate of 2.8875% per  $500,000.

     

     

     

    
      	ARTICLE
      III      
	TAXES  


    

     

    3.01 Taxes

     

    
      	
              (a)

            	
               Except
      as otherwise provided in this Section 3.01,
      any and all payments by the Borrower to or for the account of the Lender
      under any Loan Document shall be made free and clear of and without
      deduction for any and all present or future taxes, duties, levies,
      imposts, deductions, assessments, fees, withholdings or similar charges,
      and all liabilities with respect thereto, excluding, in
      the case of the Lender, taxes imposed on or measured by its overall net
      income, and franchise taxes imposed on it (in lieu of net income taxes),
      by the jurisdiction (or any political subdivision thereof) under the Laws
      of which the Lender is organized or maintains its Lending Office or is
      otherwise a resident or doing business (other than a jurisdiction in which
      such Person is deemed to be doing business solely as a result of entering
      into, or performing its obligations under, any Loan Document) (all
      non-excluded taxes, duties, levies, imposts, deductions, assessments,
      fees, withholdings or similar charges, and liabilities being hereinafter
      referred to as “Taxes”).  If
      the Borrower shall be required by any Laws to deduct any Taxes from or in
      respect of any sum payable under any Loan Document to the Lender, then,
      except as otherwise provided in this Section 3.01,
      (i) the sum payable shall be increased as necessary so that after making
      all required deductions with respect to Taxes (including deductions
      applicable to additional sums payable under this Section), the Lender
      receives an amount equal to the sum it would have received had no such
      deductions been made, (ii) the Borrower shall make such deductions, (iii)
      the Borrower shall pay the full amount deducted to the relevant taxation
      authority or other authority in accordance with applicable Laws, and (iv)
      within 30 days after the date of such payment, the Borrower shall furnish
      to the Lender the original or a certified copy of a receipt evidencing
      payment thereof to the extent such a receipt is issued therefor, or other
      written proof of payment thereof that is satisfactory to the
      Lender.

            


    

     

    
      	
              (b)

            	
               In
      addition, the Borrower agrees to pay any and all present or future stamp,
      court or documentary taxes and any other excise or property, intangible,
      mortgage recording taxes or similar charges or similar levies which arise
      from any payment made under any Loan Document or from the execution,
      delivery, performance, enforcement or registration of, or otherwise with
      respect to, any Loan Document (hereinafter referred to as “Other
      Taxes”).

            


    

     

    
      	
              (c)

            	
               If
      the Borrower shall be required to deduct or pay any Taxes or Other Taxes
      from or in respect of any sum payable under any Loan Document to the
      Lender, the Borrower shall also pay to the Lender at the time interest is
      paid, such additional amount that the Lender specifies is necessary to
      preserve the after-tax yield (after factoring in all taxes, including
      taxes imposed on or measured by net income) that the Lender would have
      received if such Taxes or Other Taxes had not been
  imposed.

            


    

     

    
      	
              (d)

            	
               The
      Borrower agrees to indemnify the Lender for (i) the full amount of Taxes
      and Other Taxes (including any Taxes or Other Taxes imposed or asserted by
      any jurisdiction on amounts payable under this Section) paid by the
      Lender, (ii) amounts payable under Section 3.01(c)
      without duplication and (iii) any liability (including additions to tax,
      penalties, interest and expenses) arising therefrom or with respect
      thereto, in each case whether or not such Taxes or Other Taxes were
      correctly or legally imposed or asserted by the relevant Governmental
      Authority; but excluding amounts resulting from the failure to comply with
      the requirements of Section
      12.05.  Payment under this subsection (d) shall be made
      within 30 days after the date the Lender makes a demand
      therefor.

            


    

     

    3.02 Matters Applicable to All
Requests for Compensation.  A
certificate of the Lender claiming compensation under this Article III and
setting forth the additional amount or amounts to be paid to it hereunder and
the basis therefor shall be conclusive in the absence of manifest
error.  In determining such amount, the Lender may use any reasonable
averaging and attribution methods.

     

    3.03 Survival.  All
of the Borrower’s obligations under this Article III shall
survive termination of the Term Loan and repayment of all other Obligations
hereunder.

     

     

    
      	ARTICLE
      IV       
	CONDITIONS PRECEDENT
      TO TERM LOAN


    

     

     

    4.01 Effective Date
Conditions.  The
obligation of the Lender to make the Term Loan on the Effective Date pursuant to
Sections
2.01(a) and 2.01(b) shall become
effective on the first date on which all of the following conditions precedent
shall have been satisfied to the satisfaction of the Lender:

     

    
      	
              (a)

            	
               The
      Lender’s receipt of the following, each of which shall be originals,
      facsimiles or in ‘PDF’ format by electronic mail (followed promptly by
      originals) unless otherwise specified, each properly executed by a
      Responsible Officer of the signing Loan Party, each dated the Effective
      Date (or, in the case of certificates of governmental officials, a recent
      date before the Effective Date) and each in form and substance
      satisfactory to the Lender:

            


    

     

    
      	
              (i)

            	
               duly
      executed and completed counterparts hereof (in the form provided and
      specified by the Lender) that, when taken together, bear the signatures of
      (1) the Borrower, (2) each Guarantor, and (3) the
  Lender;

            


    

     

    
      	
              (ii)

            	
               Each
      of the following:

            


    

     

    
      	
              (A)

            	
               to
      the extent consisting of shares of stock or other certificated securities,
      certificates representing the Pledged Equity accompanied by undated stock
      powers executed in blank;

            


    

     

    
      	
              (B)

            	
               evidence
      (1) of the insurance required by the terms of this Agreement and the other
      Loan Documents and (2) that the Lender has been named as additional
      insured and/or loss payee thereunder to the extent required under Section 6.07;
      and

            


    

     

    
      	
              (C)

            	
               completed
      requests for information, dated on or before the Effective Date, listing
      all effective financing statements that name any Loan Party as debtor,
      together with copies of such financing
  statements.

            


    

     

    
      	
              (iii)

            	
               such
      certificates of resolutions or other action, incumbency certificates
      and/or other certificates of Responsible Officers of each Loan Party as
      the Lender may reasonably require evidencing the identity, authority and
      capacity of each Responsible Officer thereof authorized to act as a
      Responsible Officer in connection with this Agreement and the other Loan
      Documents to which such Loan Party is a party or is to be a
      party;

            


    

     

    
      	
              (iv)

            	
               such
      documents and certifications as the Lender may reasonably require to
      evidence that each Loan Party is duly organized or formed, and that each
      of the Loan Parties is validly existing and in good standing in its
      jurisdiction of organization;

            


    

     

    
      	
              (v)

            	
               a
      favorable opinion of Allen Sakai, Esq., counsel to the Loan Parties,
      addressed to the Lender, in form and substance satisfactory to the
      Lender;

            


    

     

    
      	
              (vi)

            	
               a
      favorable opinion of Daugherty, Fowler, Peregrin, Haught & Jenson,
      special aviation counsel to the Lender with regard to, among other things,
      (A) the granting of a security interest and perfection of the security
      interest in Engines owned by the Loan Parties in favor of the Lender and
      (B) the absence of Liens (other than Liens granted in connection with this
      Agreement) on engines and aircraft spare parts on which the Lender is
      entitled to have a Lien, in each case, in form and substance satisfactory
      to the Lender;

            


    

     

    
      	
              (vii)

            	
               a
      certificate of a Responsible Officer of each Loan Party either (A) listing
      all consents, licenses and approvals required in connection with the
      execution, delivery and performance by such Loan Party and the validity
      against such Loan Party of the Loan Documents to which it is a party, and
      such consents, licenses and approvals shall be in full force and effect,
      or (B) stating that no such consents, licenses or approvals are so
      required;

            


    

     

    
      	
              (viii)

            	
               aircraft
      and engine mortgage and security agreements, in substantially the form
      attached hereto as Exhibit C, duly
      executed by each Loan Party that owns any Airframes or Engines (and in
      respect of all such Airframes and Engines) as of the Effective Date,
      except as provided by Section 6.18;

            


    

     

    
      	
              (ix)

            	
               Spare Parts Security Agreement,
      in substantially the form attached hereto as Exhibit
      B, duly executed by
      each Loan Party that owns any Spare Parts as of the Effective
      Date;

            


    

     

    
      	
              (x)

            	
               a
      copy of the Pledge Agreement duly executed by each party
      thereto;

            


    

     

    
      	
              (xi)

            	
               a
      copy of each Bank Control
Agreement;

            


    

     

    
      	
              (xii)

            	
               a
      copy of the Administrative Services Agreement duly executed by each party
      thereto;

            


    

     

    
      	
              (xiii)

            	
               a
      copy of the Airline Services Agreement duly executed by each party
      thereto;

            


    

     

    
      	
              (xiv)

            	
               a
      copy of a Subordination Agreement duly executed by (x) William J. Boyer
      and Yung J. Boyer and (y) William J. Boyer, Jr.,
    respectively;

            


    

     

    
      	
              (xv)

            	
               evidence
      that all registrations requested by the Lender in accordance with the Cape
      Town Convention have been made and are (or will be) effective pursuant to
      the terms of the Cape Town
Convention;

            


    

     

    
      	
              (xvi)

            	
               evidence
      that (x) all FAA filings for Airframes, Engines and Pledged Spare Parts
      requested by the Lender have been made and are (or will be) effective to
      perfect the Lender’s security interest in such Airframes, Engines and
      Pledged Spare Parts, as applicable, and (y) all FAA filings for Airframes
      and Engines leased by the Borrower have been
  made;

            


    

     

    
      	
              (xvii)

            	
               financing
      statements, in proper form for filing under the Uniform Commercial Code of
      all jurisdictions that the Lender may deem necessary or desirable in order
      to perfect and protect the first priority liens and security interests
      created hereunder, covering the Collateral described in Article
      X;

            


    

     

    
      	
              (xviii)

            	
               certified true copies of the
      plans, timeline, drawings, invoices, merchant contracts and the building
      contract with respect to the Hangar
  Property;

            


    

     

    
      	
              (xix)

            	
               copies
      of all written communications received by any Loan Party from any taxing
      authority in respect of the failure to file any tax returns as listed in
      Schedule 5.11;

            


    

     

    
      	
              (xx)

            	
               a
      copy of an employment agreement between the Borrower and William J. Boyer,
      Jr. in form and substance satisfactory to the
  Lender;

            


    

     

    
      	
              (b)

            	
               The
      representations and warranties of the Borrower and each other Loan Party
      contained in Article V and
      each other Loan Document, and which are contained in any document
      furnished at any time under or in connection herewith or therewith, shall
      be true and correct in all material respects on and as of the Effective
      Date, except to the extent that such representations and warranties
      specifically refer to an earlier date, in which case they shall be true
      and correct in all material respects as of such earlier
    date;

            


    

     

    
      	
              (c)

            	
               No
      Default shall exist or would result from the making of the Term Loan
      pursuant to Section 2.01:

            


    

     

    
      	
              (d)

            	
               No
      material work disruptions or stoppages by employees of any of the Loan
      Parties shall have occurred and be
continuing.

            


    

     

    
      	
              (e)

            	
               William
      J. Boyer, Jr. shall have converted his outstanding personal loans to the
      Borrower into equity in the Borrower and has provided evidence
      satisfactory to the Lender of such
conversion.

            


    

     

    
      	
              (f)

            	
               The
      Leis Letter has been executed and delivered to the
  Lender.

            


    

     

    4.02 Post-Effective Date
Conditions.

     

     The
obligation of the Lender to advance any Term Borrowing pursuant to Section
2.01(c) shall become effective on the first date on which all of the following
conditions precedent shall have been satisfied to the satisfaction of the
Lender:

     

    
      	
              (a)

            	
               The
      Effective Date shall have occurred;

            


    

     

    
      	
              (b)

            	
               The
      representations and warranties of the Borrower and each other Loan Party
      contained in Article V and
      each other Loan Document, and which are contained in any document
      furnished at any time under or in connection herewith or therewith, shall
      be true and correct in all material respects on and as of the date of the
      Term Borrowing pursuant to Section 2.01(c)
      as certified by a Responsible Officer of each Loan Party to the
      Lender;

            


    

     

    
      	
              (c)

            	
               No
      Default shall exist or would result from the making of such Term
      Borrowing;

            


    

     

    
      	
              (d)

            	
               No
      event or circumstance shall have occurred since the Effective Date that,
      in the view of each of the Lender, in its sole discretion, has resulted in
      a Material Adverse Effect that is continuing or that would be reasonably
      expected to result in a Material Adverse Effect;
  and

            


    

     

    
      	
              (e)

            	
               The
      Borrower shall have delivered to the Lender a certificate from a
      Responsible Officer of the Borrower certifying that the conditions
      precedent to such Term Borrowing have been satisfied (except as to matters
      that require the approval or satisfaction of the Lender), together with
      such evidence with respect thereto as the Lender may
    request.

            


    

     

    
    

     

    
      	ARTICLE
      V   
	REPRESENTATIONS AND
      WARRANTIES


    

     

                              

    The Loan
Parties jointly and severally represent and warrant to the Lender
that:

     

    5.01 Existence, Qualification and
Power; Compliance with Laws; “Air Carrier
Status”.  Each
Loan Party (a) is a corporation, partnership or limited liability company duly
organized or formed, validly existing and in good standing under the Laws of the
jurisdiction of its incorporation or organization, (b) has all requisite power
and authority and all requisite governmental licenses, authorizations, consents
and approvals to (i) own or lease its assets and carry on its business and
(ii) execute, deliver and perform its obligations under the Loan Documents
and (c) is duly qualified and is licensed and in good standing under the
Laws of each jurisdiction where its ownership, lease or operation of properties
or the conduct of its business requires such qualification or license; except in
the case of clause (c), to the extent that failure to do so could not reasonably
be expected to have a Material Adverse Effect.  The Borrower (and no
other Loan Party) is an “air carrier” within the meaning of Section 40102 of
Title 49 and holds a certificate under Section 41102 of Title 49 or commuter air
carrier authorizations.  Each such Person holds air carrier operating
certificates issued pursuant to Chapter 447 of Title 49.  The Borrower
is an “air carrier” and is  a “citizen of the United States” as
defined in Section 40102(a)(15) of Title 49 (a “United States
Citizen”).  The Borrower possesses all necessary governmental
certificates, franchises, licenses, permits, rights, authorizations and
concessions and consents which are material to the operation of the Routes flown
by it and the conduct of its business and operations as currently
conducted.

     

    5.02 Authorization; No
Contravention.  The
execution, delivery and performance by each Loan Party of each Loan Document to
which such Person is or is to be a party are within such Loan Party’s corporate
or other powers, have been duly authorized by all necessary corporate or other
organizational action, and do not and will not (a) contravene the terms of
any of such Person’s Organization Documents; (b) conflict with or result in
any breach or contravention of, or the creation of any Lien under, or require
any payment to be made under (i) any Contractual Obligation to which such
Person is a party or affecting such Person or the properties of such Person or
(ii) any order, injunction, writ or decree of any Governmental Authority or
any arbitral award to which such Person or its property is subject; or
(c) violate any Law.  Except as set forth on Schedule 5.02, no
Loan Party is in material breach of any material Contractual
Obligation.

     

    5.03 Governmental Authorization;
Other Consents.  Except
for any review by the Department of Transportation in respect of a substantial
change of operations and/or a substantial change of ownership of the Borrower
pursuant to 14 C.F.R. Part 204, no approval, consent, exemption, authorization,
or other action by, or notice to, or filing with, any Governmental Authority or
any other Person is necessary or required in connection with (i) the execution,
delivery or performance by, or enforcement against, any Loan Party of this
Agreement or any other Loan Document, (ii) the grant by any Loan Party of
the Liens granted by it pursuant to the Collateral Documents or (iii) the
perfection or maintenance of the Liens created under the Collateral Documents
except in each case for such consents, exemptions, authorizations, approvals,
actions, notices and filings listed on Schedule 5.03
hereto, all of which have been duly obtained, taken, given or made and are in
full force and effect.

     

    5.04 Binding
Effect.    This
Agreement and each other Loan Document has been duly executed and delivered by
each Loan Party that is party thereto.  This Agreement constitutes and
each other Loan Document constitutes a legal, valid and binding obligation of
such Loan Party, enforceable against each Loan Party that is party thereto in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by equitable principles relating to
enforceability.

     

    5.05 [Intentionally
Omitted].

     

    5.06 Litigation.  Except
for the Smith Complaint, there are no actions, suits, proceedings, claims or
disputes pending or, to the best knowledge of the Borrower, threatened or
contemplated, at law, in equity, in arbitration or before any Governmental
Authority, by or against the Borrower or any of the Borrower’s Subsidiaries or
against any of their properties or revenues that either individually or in the
aggregate could reasonably be expected to have a Material Adverse
Effect.  The performance of any action by any Loan Party required or
contemplated by any of the Loan Documents is not restrained or enjoined (either
temporarily, preliminary or permanently).  There are no actions, suits
or proceedings pending that challenge the validity of any Loan Document or the
applicability or enforceability of any Loan Document which seek to void, avoid,
limit, or otherwise adversely affect the security interest created by or in any
Loan Document or any payment made pursuant thereto.

     

    5.07 No
Default.  No
Default has occurred and is continuing or would result from the execution,
delivery or performance of this Agreement or any other Loan Document or the
transactions contemplated hereby or thereby.

     

    5.08 Ownership of
Property

     

    (a) The
Collateral subject to each Aircraft and Engine Mortgage and the Spare Parts
Security Agreement is free and clear of all Liens other than Permitted
Liens.

     

    (b) No Loan
Party (other than the Borrower) currently owns or will own any interest in any
Spare Part.

     

    (c) No Loan
Party (other than the Borrower) currently owns or will own any interest in any
Engine or Airframe.

     

    5.09 Environmental
Compliance

     

    (a)           None
of the properties currently owned or operated by any Loan Party, and, to the
best of the Borrower’s knowledge, formerly owned or operated by any Loan Party,
is listed or proposed for listing on the NPL or on the CERCLIS or any analogous
foreign, state or local list; there are no and never have been any underground
or aboveground storage tanks or any surface impoundments, septic tanks, pits,
sumps or lagoons in which Hazardous Materials are being or have been treated,
stored or disposed on any property currently owned or operated by any Loan Party
or, to the best of the Borrower’s knowledge, on any property formerly owned or
operated by any Loan Party, which treatment, storage or disposal could
individually, or in the aggregate reasonably be expected to have a Material
Adverse Effect; there is no asbestos or asbestos-containing material on any
property currently owned by any Loan Party as could individually or in the
aggregate reasonably be expected to have a Material Adverse Effect; and to the
best of the Borrower’s knowledge Hazardous Materials have not been released,
discharged or disposed of on any property currently or formerly owned or
operated by any Loan Party in each case as could individually or in the
aggregate reasonably be expected to have a Material Adverse Effect.

     

    (b)           No
Loan Party is undertaking, and has not completed, either individually or
together with other potentially responsible parties, any investigation or
assessment or remedial or response action relating to any actual or threatened
release, discharge or disposal of Hazardous Materials at any site, location or
operation, either voluntarily or pursuant to the order of any Governmental
Authority or the requirements of any Environmental Law; and all Hazardous
Materials generated, used, treated, handled or stored at, or transported to or
from, any property currently or formerly owned or operated by any Loan Party
have been disposed of in a manner not reasonably expected to result in Material
Adverse Effect.

     

    5.10 Insurance.  The
properties of the Loan Parties are insured or reinsured with financially sound
and reputable insurance companies not Affiliates of the Borrower, in such
amounts, with such deductibles and covering such risks as are customarily
carried by companies engaged in similar businesses and owning similar properties
in localities where the applicable Loan Party operates.

     

    5.11 Taxes.  Except
as set forth on Schedule 5.11, the Loan Parties have filed all Federal, state
and other material tax returns and reports required to be filed, and have paid
or made adequate provision for payment of all Federal, state and other taxes,
assessments, fees and other governmental charges levied or imposed upon them or
their properties, income or assets that are due and payable, except, in each
case, those which are being contested in good faith by appropriate proceedings
promptly instituted and diligently conducted and for which adequate reserves
have been provided in accordance with GAAP.  There is no proposed tax
assessment against any Loan Party that would, if made, have a Material Adverse
Effect.  No Loan Party is party to any tax sharing agreement with any
Person.  No Loan Party is aware of any potential Liens on their
properties, income or assets as a result of any nonpayment of any such
taxes.

     

    5.12 ERISA
Compliance. The
Borrower has no Plans.

     

    5.13 Subsidiaries; Equity
Interests.  Each
Loan Party has no Subsidiaries other than those specifically disclosed in Part
(a) of Schedule
5.13, and all of the outstanding Equity Interests in such Subsidiaries
have been validly issued, are fully paid and non-assessable, and are owned by a
Loan Party in the amounts specified on Part (a) of Schedule 5.13
free and clear of all Liens except those created under the Collateral
Documents.  Set forth in Part (b) of Schedule 5.13 is a
complete and accurate list of all Investments (other than (i) Cash Equivalents
and (ii) those Investments set forth in Part (a) of Schedule 5.13) held
by any Loan Party on the date hereof, showing as of the date hereof the amount,
obligor or issuer and maturity, if any, thereof.  No Loan Party has
any equity investments in any other corporation or entity other than those
specifically disclosed in Part (a) or Part (b) of Schedule
5.13.

     

    5.14 Margin Regulations;
Investment Company Act; 

     

    
      	
              (a)

            	
               The
      Borrower is not engaged and will not engage, principally or as one of its
      important activities, in the business of purchasing or carrying margin
      stock (within the meaning of Regulation U issued by the FRB), or extending
      credit for the purpose of purchasing or carrying margin stock and no
      proceeds of the Term Loan will be used to purchase or carry any margin
      stock or to extend credit to others for the purpose of purchasing or
      carrying any margin stock.

            


    

     

    
      	
              (b)

            	
               None
      of the Borrower or any Subsidiary is or is required to be registered as an
      “investment company” under the Investment Company Act of 1940 (the “ICA”).  Neither
      the making of the Term Loan nor the application of the proceeds or
      repayment thereof by the Borrower, nor the consummation of the other
      transactions contemplated by the Loan Documents, will violate any
      provision of any the ICA or any rule, regulation or order of the SEC
      thereunder.

            


    

     

    5.15 Disclosure.  All
information that has been made available to the Lender by the Borrower or any of
its representatives in connection with the transactions contemplated hereby is
complete and correct in all material respects and does not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements contained therein not misleading in light of the
circumstances under which such statements were made.

     

    5.16 Compliance with
Laws.  Each
Loan Party is in compliance in all material respects with the requirements of
all Laws and all orders, writs, injunctions and decrees applicable to it or to
its properties, except in such instances in which (a) such requirement of Law or
order, writ, injunction or decree is being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted, or (b) the
failure to comply therewith, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.

     

    5.17 Security/Priority

     

    The
provisions of the Loan Documents are effective to create in favor of the Lender,
legal, valid and first priority perfected Liens (subject, in the case of
priority, to Permitted Liens) on and security interests in all right, title and
interest in the Collateral, enforceable against each Loan Party that owns an
interest in such Collateral and any other Person.

     

    5.18 Representations and
Warranties as
to Collateral.  (a)  Each
Loan Party’s exact legal name, as defined in Section 9-503(a) of the Uniform
Commercial Code, is correctly set forth in Schedule 5.18(a)(1)
hereto.  Each Loan Party is located (within the meaning of section
9-307 of the Uniform Commercial Code) and has its chief executive office in the
state or jurisdiction set forth in Schedule 5.18(a)(1)
hereto.  The information set forth in Schedule 5.18(a)(1)
hereto with respect to each Loan Party is true and accurate in all
respects.  Except as set forth in Schedule 5.18(a)(1),
no Loan Party has previously changed its name, location, chief executive office,
type of organization, jurisdiction of organization or organizational
identification number during the 5 years preceding the execution of this
Agreement from those set forth in Schedule 5.18(a)(1)
hereto except as disclosed in Schedule 5.18(a)(2)
hereto.

     

    
      	
              (b)

            	
               Each
      Loan Party is the legal and beneficial owner of the Collateral of such
      Loan Party free and clear of any Lien of others, except for Permitted
      Liens.

            


    

     

    
      	
              (c)

            	
               Except
      for possessory interests of landlords and warehousemen, each Loan Party
      has exclusive possession and control of the Equipment.  In the
      case of Equipment located on leased premises or in warehouses, no lessor
      or warehouseman of any premises or warehouse upon or in which such
      Equipment is located has (i) issued any warehouse receipt or other receipt
      in the nature of a warehouse receipt in respect of any Equipment, (ii) to
      the best knowledge of any Loan Party, issued any document for any of any
      Loan Party’s Equipment and (iii) to the best knowledge of any Loan
      Party, received notification of any secured party’s interest (other than
      the security interest granted hereunder) in any Loan Party’s
      Equipment.

            


    

     

    
      	
              (d)

            	
               The
      Pledged Equity of any Subsidiary of any Loan Party pledged by each Loan
      Party hereunder has been duly authorized and validly issued and is fully
      paid and non-assessable.  If any Loan Party is an issuer of
      Pledged Equity, such Loan Party confirms that it has received notice of
      such security interest.

            


    

     

    
      	
              (e)

            	
               The
      Pledged Equity of any Subsidiary of any Loan Party pledged by each Loan
      Party constitutes the percentage of the issued and outstanding Equity
      Interests of the issuers thereof indicated on Schedule I
      hereto.  The Pledged Debt constitutes all of the outstanding
      indebtedness owed to each Loan Party by the issuers thereof and, as of the
      Effective Date, is outstanding in the principal amount indicated on Schedule II
      hereto.

            


    

     

    5.19 Indebtedness and Guaranteed
Indebtedness.  All
Indebtedness and Guaranteed Indebtedness outstanding as of the Effective Date
for each Loan Party (other than the Obligations) is described on Schedule
7.03.

     

    5.20 Deposit
Accounts.  Schedule 5.20 lists
all banks and other financial institutions at which any Loan Party maintains
deposit or other accounts in the United States, and such Schedule correctly
identifies the name, address and telephone number of each depository, the name
in which the account is held and the complete account number
therefor.

     

    5.21 Outstanding
Obligations

     

    Except as
set forth on Schedule 5.21, no Loan Party owes any obligation, for the payment
of money or otherwise, to any current or former Affiliate or current or former
shareholder.

     

    5.22 Equity
Interests

     

    Schedule
5.22 sets forth all Persons that held an Equity Interest in the Borrower during
the 5 years preceding the execution of this Agreement.

     

    5.23 Material Contracts and
Obligations

     

    Schedule
5.23 lists all contracts entered into by any Loan Party and any other
obligations of such Loan Party that may require payment by such Loan Party of
more than $10,000 in any calendar year and/or the performance by such Loan Party
of any material obligations..

     

    5.24 Capital
Structure

     

    The
capital structure of the Borrower is as set forth on Schedule 5.24
hereto.

     

    5.25 Airframe
Leases

     

    The
Airframes operated by the Borrower are subject to the leases as set forth on
Schedule 5.25.

     

     

    
      	ARTICLE
      VI    
	AFFIRMATIVE
      COVENANTS


    

     

     

    So long
as (i) the Term Loan remains outstanding or (ii) any other Obligation hereunder
which is accrued and payable shall remain unpaid or unsatisfied, the Borrower
shall, and shall (except in the case of the covenants set forth in Sections 6.01, 6.02, and 6.03) cause each Loan
Party to:

     

    6.01 Financial
Statements.  Deliver
to the Lender, in form and detail reasonably satisfactory to the
Lender:

     

    
      	
              (a)

            	
               within
      30 days following the Effective Date, the unaudited consolidated financial
      statements of the Borrower and its Subsidiaries dated December 31, 2007,
      and the related consolidated statements of income or operations,
      shareholders’ equity and cash flows for the fiscal quarter ended on that
      date, prepared in accordance with
GAAP;

            


    

     

    
      	
              (b)

            	
               as
      soon as available, but in any event within 90 days after the end of each
      fiscal year of the Borrower, a consolidated balance sheet of the Borrower
      and its Subsidiaries as at the end of such fiscal year, and the related
      consolidated 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 prepared in accordance with GAAP, audited and accompanied by a report
      and opinion of an independent certified public accountant of nationally
      recognized standing acceptable to the Lender, which report and opinion
      shall be prepared in accordance with generally accepted auditing standards
      and shall not be qualified in any material respect except with respect to
      a “going concern” or like qualification or
  exception;

            


    

     

    
      	
              (c)

            	
               as
      soon as available, but in any event within 45 days after the end of each
      of the first three fiscal quarters of each fiscal year of the Borrower, a
      consolidated balance sheet of the Borrower and its Subsidiaries as at the
      end of such fiscal quarter, and the related consolidated statements of
      income or operations, shareholders’ equity and cash flows for such fiscal
      quarter and for the portion of the Borrower’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 Chief Executive Officer and the Chief
      Financial Officer of the Borrower as fairly presenting the financial
      condition, results of operations, shareholders’ equity and cash flows of
      the Borrower and its Subsidiaries in accordance with GAAP, subject only to
      normal year end audit adjustments and the absence of footnotes;
      and

            


    

     

    
      	
              (d)

            	
               as
      soon as available, but in any event within 30 days after the end of each
      month, other than the third month of any fiscal quarter, a consolidated
      balance sheet of the Borrower and its Subsidiaries as at the end of such
      fiscal month, and the related consolidated statements of income or
      operations, shareholders’ equity and cash flows for such fiscal month and
      for the portion of the Borrower’s fiscal year then ended, setting forth in
      each case in comparative form the figures for the corresponding fiscal
      month of the previous fiscal year and the corresponding portion of the
      previous fiscal year, all in reasonable detail and certified by the Chief
      Executive Officer and the Chief Financial Officer of the Borrower as
      fairly presenting the financial condition, results of operations,
      shareholders’ equity and cash flows of the Borrower and its Subsidiaries
      in accordance with GAAP, subject only to normal year end audit adjustments
      and the absence of footnotes.

            


    

     

    6.02 Certificates; Other
Information.  Deliver
to the Lender, in form and detail reasonably satisfactory to the
Lender:

     

    
      	
              (a)

            	
               promptly
      after any request by the Lender, copies of any detailed audit reports,
      management letters or recommendations submitted to the board of directors
      (or the audit committee of the board of directors) of any Loan Party by
      independent accountants in connection with the accounts or books of any
      Loan Party, or any audit of any of
them;

            


    

     

    
      	
              (b)

            	
               promptly
      after the furnishing thereof, copies of any statement or report furnished
      to any holder of debt securities of any Loan Party pursuant to the terms
      of any indenture, loan or credit or similar agreement and not otherwise
      required to be furnished to the Lender pursuant to any other clause of
      this Section 6.02;

            


    

     

    
      	
              (c)

            	
               promptly
      after the assertion or occurrence thereof, notice of any Environmental
      Action against or of any noncompliance by any Loan Party with any
      Environmental Law or Environmental Permit that could reasonably be
      expected to have a Material Adverse
Effect.

            


    

     

    
      	
              (d)

            	
               promptly,
      such additional information regarding the business, financial or corporate
      affairs of any Loan Party, or compliance with the terms of the Loan
      Documents, as the Lender may from time to time reasonably request;
      and

            


    

     

    
      	
              (e)

            	
               promptly
      upon request of the Lender a schedule listing all locations at which
      $100,000 or more of Equipment of any Loan Party is
  located.

            


    

     

    
      	
              6.03

            	
               Notices.  Promptly
      notify the Lender:

            


    

     

    
      	
              (a)

            	
               of
      the occurrence of any Default;

            


    

     

    
      	
              (b)

            	
               of
      any matter that has resulted or could reasonably be expected to result in
      a Material Adverse Effect;

            


    

     

    
      	
              (c)

            	
               of
      any material setoff, claims (including with respect to material
      environmental claims), withholdings or other defenses to which any of the
      Collateral, or any of the Lender’s rights with respect to the Collateral,
      in any material respect, are
subject.

            


    

     

    Each
notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower has taken and proposes
to take with respect thereto.  Each notice pursuant to Section 6.03(a) shall
describe with particularity any and all provisions of this Agreement and any
other Loan Document that have been breached.

     

    6.04 Payment of
Obligations.  Pay
all taxes, assessments and other governmental charges imposed upon it or any of
its properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, prior to the time when any penalty or fine shall be incurred with
respect thereto; provided that no such tax, assessment, charge or claim need be
paid if it is being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, so long as (i) such reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor and (ii) such proceedings conclusively operate to
stay the sale of any portion of the Collateral to satisfy such charge or
claim.

     

    6.05 Preservation of Existence,
Etc.  (a)  Preserve,
renew and maintain in full force and effect its legal existence and good
standing under the Laws of the jurisdiction of its organization except in a
transaction permitted by Section 7.05 or 7.06; (b) take all
reasonable action to maintain all rights, privileges, permits, licenses and
franchises necessary or desirable in the normal conduct of its business, except
to the extent that failure to do so could not reasonably be expected to have a
Material Adverse Effect or is due to a termination of the Mesa Code Share
Agreement; and (c) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect, except to the extent that failure to
do so is due to a termination of the Mesa Code Share Agreement.

     

    6.06 Maintenance of
Properties.  (a)  Maintain,
preserve and protect all of its material properties and equipment necessary in
the operation of its business in good working order and condition, ordinary wear
and tear excepted; (b) make all necessary repairs thereto and renewals and
replacements thereof except where the failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (c) use the standard of care
typical in the industry in the operation and maintenance of its
facilities.

     

    6.07 Maintenance of
Insurance.  Maintain
with financially sound and reputable insurance companies not Affiliates of the
Borrower, insurance or reinsurance in accordance with the terms of the
Collateral Documents and otherwise with respect to its properties and business
against loss or damage of the kinds customarily insured against by Persons
engaged in the same or similar business, of such types and in such amounts as
are customarily carried under similar circumstances by such other Persons and
providing for not less than 30 days’ prior notice to the Lender of termination,
modification, lapse or cancellation of such insurance or
reinsurance.  Each such policy of insurance shall (a) name the Lender
as an additional insured thereunder as its interests may appear and (b) in the
case of each business interruption and casualty insurance policy, contain a loss
payable clause or endorsement, satisfactory in form and substance to the Lender,
that names the Lender as the loss payee thereunder for any covered
loss.

     

    6.08 Compliance with
Laws.  Comply
in all material respects with the requirements of all Laws and all orders,
writs, injunctions and decrees applicable to it or to its business or property,
except in such instances in which the failure to comply therewith could not
reasonably be expected to have a Material Adverse Effect.

     

    6.09 Books and
Records.  (a)  Maintain
proper books of record and account, in which full, true and correct entries
consistent with GAAP shall be made of all financial transactions and matters
involving the assets and business of the Borrower and its Subsidiaries; and (b)
maintain such books of record and account in material conformity with all
applicable requirements of any Governmental Authority having regulatory
jurisdiction over the Borrower and its Subsidiaries.

     

    6.10 Inspection
Rights.  Permit
representatives and independent contractors of the Lender, at the expense of the
Borrower, to visit and inspect any of its properties, to inspect the Collateral,
to examine its corporate, financial and operating records, and make copies
thereof or abstracts therefrom, and to discuss its affairs, finances and
accounts with its directors, officers, and independent public accountants (with
the Borrower having the right to have a representative present at all such
communications) and at such reasonable times during normal business hours and as
often as may be reasonably desired, upon reasonable advance notice to the
Borrower; provided, however, that when an
Event of Default exists the Lender (or any of its respective representatives or
independent contractors) may do any of the foregoing at the expense of the
Borrower at any time during normal business hours and without advance
notice.

     

    6.11 Use of
Proceeds.  Use
the proceeds of the Term Loan to provide general working capital and to pay
ordinary operating costs and expenses of the Loan Parties.

     

    6.12 Further
Assurances.  Promptly
upon request by the Lender (a) correct any material defect or error that may be
discovered in any Loan Document or in the execution, acknowledgment, filing or
recordation thereof, and (b) do, execute, acknowledge, deliver, record,
re-record, file, re-file, register and re-register any and all such further
acts, deeds, certificates, assurances and other instruments as the Lender may
reasonably require from time to time in order to (i) carry out more effectively
the purposes of the Loan Documents, (ii) to the fullest extent permitted by
applicable law, subject any Loan Party’s or any of its Subsidiaries’ properties,
assets, rights or interests to the Liens now or hereafter intended to be covered
by any of the Collateral Documents, (iii) perfect and maintain the validity,
effectiveness and priority of any of the Collateral Documents and any of the
Liens intended to be created thereunder and (iv) assure, convey, grant, assign,
transfer, preserve, protect and confirm more effectively unto the Lender the
rights granted or now or hereafter intended to be granted to the Lender under
any Loan Document or under any other instrument executed in connection with any
Loan Document to which any Loan Party or any of its Subsidiaries is or is to be
a party, and cause each of its Subsidiaries to do so.

     

    6.13 Cash Management System;
Controlled Accounts; Initial
Drawing.  Maintain
and cause each of its Subsidiaries to maintain (a) a cash management system
reasonably acceptable to the Lender and (b) all cash in Controlled Accounts
(except to the extent held in accounts not at any time having an aggregate
balance in excess of $25,000).

     

    6.14 FAA and DOT Matters;
Citizenship.  (a)
possess and maintain, and cause each other Loan Party to possess and maintain,
all necessary franchises, licenses, permits, rights, concessions, authorizations
and consents which are material to the operation of the Routes flown by it and
the conduct of its business and operations as currently conducted except in any
case described in this clause (a), where the failure to do so, either
individually or in the aggregate, could not be reasonably likely to have a
Material Adverse Effect and (b) solely with respect to the Borrower, (i)
maintain at all times its status at the DOT, as applicable, as an “air carrier”
within the meaning of Section 40102(a)(2) of Title 49, and hold a certificate
under Section 41102(a)(1) of Title 49, or a commuter air carrier authorization,
as applicable; (ii) at all times hereunder be a citizen of the United States as
defined by Section 40102(a)(15) of Title 49 and as that statutory provision has
been interpreted by the DOT pursuant to its policies; and (iii) maintain at all
times its status at the FAA as an air carrier and hold air carrier operating
certificates and other operating authorizations issued by the FAA pursuant to 14
C.F.R. Sections 119, 121 or 135 as currently in effect or as may be amended or
recodified from time to time.

     

    6.15 Cape Town
Convention.  With
respect to the Cape Town Convention which has been ratified by, and is in full
force and effect in the United States of America, the parties hereto hereby
agree to permit the interests created under the Loan Documents to constitute
International Interests under the Cape Town Convention. Upon request by the
Lender, the Borrower at its own cost and expense shall from time to time do or
cause to be done any and all acts and things which may be required or desirable
(in the opinion of the Lender) to ensure that the Lender has the full benefit of
the Cape Town Convention in connection with any Airframes or Engines,
including:

     

    
      	
              (a)

            	
               any
      matters connected with registering, perfecting, preserving and/or
      enhancing any International Interest vested in the Lender with respect to
      any Airframes or Engines and constituted by the Loan
      Documents;

            


    

     

    
      	
              (b)

            	
               entry
      in to agreements (subordination or otherwise) to protect and/or enhance
      and/or, improve the priority of any International Interest referred to in
      the foregoing paragraph;

            


    

     

    
      	
              (c)

            	
               excluding,
      in writing, the application of any provisions of the Cape Town Convention
      that the Lender may deem desirable in connection with the foregoing;
      and

            


    

     

    
      	
              (d)

            	
               if
      any subsequent action taken by any party, including any permitted sublease
      or re-registration of any Airframes or Engines, gives rise to a new
      International Interest under the Cape Town Convention, registering such
      interest with the International Registry (as such term is defined in the
      Cape Town Convention) with the consent of the Lender, or any duly
      authorized agent thereof, and any other party hereto as necessary to
      complete such registration.

            


    

     

    6.16 Payment of
Taxes.  Each
Loan Party shall pay and discharge or cause to be paid and discharged promptly
all taxes payable by it, including taxes imposed upon it, its income and
profits, or any of its operations, its property (real, personal or mixed) and
all taxes with respect to tax, social security and unemployment withholding with
respect to its employees, before any thereof shall become past due, except in
each case, (i) to the extent such taxes are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted, so long as
(x) such reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor and (y) such proceedings
conclusively operate to stay the sale of any portion of the Collateral to
satisfy such taxes or (ii) where the failure to pay or discharge such taxes
would not result in aggregate liabilities in excess of $50,000.

     

    6.17 Hangar
Property

     

    The
Borrower shall undertake best efforts to provide the Lender, within 180 days of
the Effective Date, a mortgage on and collateral assignment of its interest in
the Hangar Property together with such related title insurance and legal
opinions as well as any other documents reasonably requested by the Lender
(including all consents from any applicable landlord or Governmental Authority
as required by applicable law).

     

    6.18 Subordinated
Liens

     

    In
respect of any Airframe owned by the Borrower that is subject to a purchase
money security interest in favor of the Airframe manufacturer, the Borrower
shall use commercially reasonable efforts to enter into an aircraft mortgage and
security agreement in the form attached as Exhibit C in respect
of such Airframe and to obtain consent from such manufacturer to a subordinated
lien on such Airframe in favor of the Lender within 30 days of the Effective
Date.

     

    6.19 Subordination of Loan of
Susan Silver

     

    The
Borrower shall undertake best efforts to obtain a subordination of all loans by
Susan Silver to the Borrower (the “Silver
Loan”) within 30
days of the Effective Date pursuant to a Subordination Agreement, which shall
(a) include an extension of the maturity date of the Silver Loan beyond the
Maturity Date, (b) provide that no principal shall be payable under the Silver
Loan until all amounts due hereunder have been paid to the Lender and (c)
provide that no interest shall be payable under the Silver Loan upon the
occurrence of an Event of Default.

     

    6.20 Gates and other Airport
Space

     

    To the
extent permitted by applicable law, the Borrower shall undertake commercially
reasonable efforts to provide the Lender, within 180 days of the Effective Date,
a mortgage on and collateral assignment of its interest in all airport gate
spaces, ticket counters, lounge spaces and any other airport spaces leased to
the Borrower from any Governmental Authority (including all consents from any
such Governmental Authority as required by applicable law).

     

    6.21 Evidence of Debt Subject to
Conversion

     

    Within
150 days of the Effective Date, the Borrower shall provide such evidence and
documentation as required by the Lender in its sole discretion to document the
basis for the conversion (as carried out immediately prior to the Effective
Date) of loans to the Borrower by William J. Boyer, Jr. to Equity Interests in
the Borrower.

     

     

    
    

     

    
      	ARTICLE
      VII      
	NEGATIVE
      COVENANTS


    

     

     

    So long
as (i) the Term Loan remains outstanding, or (ii) any other Obligation hereunder
which is accrued and payable shall remain unpaid or unsatisfied, the Borrower
shall not, without the prior written consent of Lender, which consent, with
respect to Sections 7.03, 7.06, 7.21 and 7.22, shall not be unreasonably
withheld or delayed, nor shall it permit any other Loan Party to, directly or
indirectly:

     

    7.01 Liens.  Create,
incur, assume or suffer to exist any Lien upon any of its property, assets or
revenues, whether now owned or hereafter acquired, or sign or file or suffer to
exist under the Uniform Commercial Code of any jurisdiction a financing
statement that names the Borrower or any of the Borrower’s Subsidiaries as
debtor, or sign or suffer to exist any security agreement authorizing any
secured party thereunder to file such financing statement, or assign any
accounts or other right to receive income, other than the
following:

     

    
      	
              (a)

            	
               Liens
      pursuant to any Loan Document;

            


    

     

    
      	
              (b)

            	
               Liens
      existing on the Effective Date and set forth on Schedule
    7.01;

            


    

     

    
      	
              (c)

            	
               Liens
      for taxes, assessments or governmental charges or claims not delinquent or
      which are being contested in good faith by appropriate proceedings
      promptly instituted and diligently conducted, if adequate reserves with
      respect thereto are maintained on the books of the applicable Person in
      accordance with GAAP;

            


    

     

    
      	
              (d)

            	
               Liens
      of landlords, carriers’, warehousemen’s, mechanics’, materialmen’s,
      repairmen’s or other like Liens arising in the ordinary course of business
      which are not overdue or which are being contested in good faith by
      appropriate proceedings promptly instituted and diligently conducted, if
      adequate reserves with respect thereto are maintained on the books of the
      applicable Person;

            


    

     

    
      	
              (e)

            	
               Liens
      incurred or pledges or deposits in the ordinary course of business made in
      connection with workers’ compensation, unemployment insurance and other
      social security legislation, other than any Lien imposed by
      ERISA;

            


    

     

    
      	
              (f)

            	
               Liens
      incurred or deposits made to secure the performance of tenders, bids,
      trade contracts, leases (real and personal) (other than Indebtedness),
      statutory obligations, surety bonds (other than bonds related to judgments
      or litigation), performance and return of money (but not borrowed money)
      bonds, reimbursement obligations and chargeback rights of Persons
      performing credit card processing services for a Loan Party and other
      obligations of a like nature incurred in the ordinary course of
      business;

            


    

     

    
      	
              (g)

            	
               easements,
      rights-of-way, restrictions, minor defects, encroachments or
      irregularities of title and other similar charges or encumbrances
      affecting real property which do not materially detract from the value of
      the property subject thereto or materially interfere with the ordinary
      conduct of the business of the applicable
  Person;

            


    

     

    
      	
              (h)

            	
               Liens
      securing judgments and attachments or securing appeal or other surety
      bonds related to such judgments;

            


    

     

    
      	
              (i)

            	
               operating
      leases or subleases of real or personal property granted to others not
      interfering in any material respect with the business of the Loan Parties,
      taken as a whole;

            


    

     

    
      	
              (j)

            	
               Liens
      in favor of collecting or payor banks and credit card processors having a
      right of setoff, revocation, refund or chargeback with respect to money or
      instruments of any Loan Party on deposit with or in possession of such
      bank; and

            


    

     

    7.02 Investments.  Make
or hold any Investments, except:

     

    
      	
              (a)

            	
               Investments
      held by any Loan Party in the form of Cash
  Equivalents;

            


    

     

    
      	
              (b)

            	
               equity
      Investments of the Borrower in any Subsidiary existing on the date
      hereof;

            


    

     

    
      	
              (c)

            	
               Investments
      in accounts, contract rights and chattel paper (each as defined in the
      UCC), notes receivable and similar items arising or acquired in the
      ordinary course of business and Investments received in settlement of
      amounts due to any Loan Party effected in the ordinary course of business
      (including as a result of Dispositions not prohibited by Section
      7.06);

            


    

     

    
      	
              (d)

            	
               Guarantees
      permitted by Section 7.03;
      and

            


    

     

    
      	
              (e)

            	
               Investments
      (other than Cash Equivalents) existing on the Effective Date and set forth
      on Schedule
      5.13 hereof.

            


    

     

    7.03 Indebtedness.  Create,
incur, assume or suffer to exist any Indebtedness, except:

     

    
      	
              (a)

            	
               Indebtedness
      under the Loan Documents;

            


    

     

    
      	
              (b)

            	
               Existing
      Indebtedness and permitted future Indebtedness as provided by Schedule
      7.03;

            


    

     

    
      	
              (c)

            	
               Indebtedness
      incurred after the Effective Date consisting of Guarantees permitted by
      Section
      7.04;

            


    

     

    
      	
              (d)

            	
               Indebtedness
      incurred in the ordinary course of business in connection with letters of
      credit or surety bonds required by Law or third parties in connection with
      the Loan Parties’ operations.

            


    

     

    7.04 Guarantees and Other
Liabilities.  Purchase
or repurchase (or agree, contingently or otherwise, so to do) the Indebtedness
of, or assume, guarantee (directly or indirectly or by an instrument having the
effect of assuring another’s payment or performance of any obligation or
capability of so doing, or otherwise), endorse or otherwise become liable,
directly or indirectly, in connection with the Indebtedness, stock or dividends
of any Person, except (a) for any guaranty of Indebtedness or other obligations
of the Borrower or any Guarantor if the Borrower or such Guarantor could have
incurred such Indebtedness or obligations under this Agreement, (b) by
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business, (c) customary indemnities in favor of officers, employees,
directors, consultants, attorneys, accountants or other advisors, and (d)
guarantees of Obligations under the Loan Documents.

     

    7.05 Fundamental
Changes.  Merge,
dissolve, liquidate, consolidate with or into another Person, or Dispose of
(whether in one transaction or in a series of transactions) all or substantially
all of its assets (whether now owned or hereafter acquired) to or in favor of
any Person.

     

    7.06 Dispositions.  Make
any Disposition of Collateral, except:

     

    
      	
              (a)

            	
               Dispositions
      of unused, obsolete or worn out property and surplus aircraft, engines and
      parts related thereto, whether now owned or hereafter acquired, in the
      ordinary course of business not to exceed $50,000 per
  year;

            


    

     

    
      	
              (b)

            	
               Dispositions
      of inventory in the ordinary course of business (which, for the avoidance
      of doubt shall not include the assets set forth on Schedule 7.06 or any
      Spare Parts related thereto);

            


    

     

    provided, however, that any
Disposition pursuant to this Section 7.06 shall be
for fair market value.

     

    7.07 Restricted
Payments.  Declare
or make, directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so, or issue or sell any Equity Interests or
accept any capital contributions (except as provided in Section 7.17), except
that, so long as no Default shall have occurred and be continuing at the time of
any action described below or would result therefrom, each Loan Party (other
than the Borrower) may make Restricted Payments to any Loan Party which is its
direct parent.

     

    7.08 Change in Nature of
Business.  Except
for a termination of the Mesa Code Share Agreement, engage in any line of
business different from those lines of business conducted by the Borrower and
its Subsidiaries on the Effective Date.

     

    7.09 Transactions with
Affiliates.  Enter
into any transaction of any kind with any shareholder or Affiliate of the
Borrower, whether or not in the ordinary course of business, other than on fair
and reasonable terms substantially as favorable to the Borrower or such Loan
Party as would be obtainable by the Borrower or such Loan Party at the time in a
comparable arm’s length transaction with a Person other than an
Affiliate.

     

    7.10 Use of
Proceeds.  Use
the proceeds of any Term Loan, whether directly or indirectly, and whether
immediately, incidentally or ultimately, to purchase or carry margin stock
(within the meaning of Regulation U of the FRB) or to extend credit to others
for the purpose of purchasing or carrying margin stock or to refund Indebtedness
originally incurred for such purpose.

     

    7.11 Amendments of Organization
Documents.  Amend
any of its Organization Documents.

     

    7.12 Changes in Fiscal
Year.  Make
any change in fiscal year.

     

    7.13 Prepayments, Etc. of
Indebtedness.  Prepay,
redeem, purchase, defease or otherwise satisfy prior to the scheduled maturity
thereof in any manner, or make any payment in violation of any subordination
terms of, any Indebtedness.

     

    7.14 Partnerships,
Etc.  Become
a general partner in any general or limited partnership or joint
venture.

     

    7.15 Speculative
Transactions.  Engage
in any transaction involving any Swap Contract.

     

    7.16 Formation of
Subsidiaries.  Organize
or invest in any new Subsidiary.

     

    7.17 Change in Capital
Structure.  Except
for (a) any exchange or reapportionment of equity between William J. Boyer, Jr.
and Dorvin D. Leis and (b) any sale by William J. Boyer, Jr. of a portion of his
Equity Interests in the Borrower to a third party as approved by the Lender in
its sole discretion (it being understood that both of the foregoing shall always
be subject to Section
8.01(h)), make any material change in its equity capital structure as in
existence on the Effective Date or issue any new or additional Equity Interests;
provided that, subject to
Section 2.03, the Borrower may issue additional Equity Interests so long as the
Net Cash Proceeds from such issuance are greater than the Minimum Proceeds
Amount (except in the case of the equity contribution as provided by the Leis
Letter, which shall not be subject to receipt of the Minimum Proceeds Amount);
provided further that, in the event
that a proposed sale by William J. Boyer, Jr. of a portion of his Equity
Interests in the Borrower as described by subpart (b) of this Section 7.17 is
for an amount less than the Minimum Proceeds Amount, the Lender shall have a
right of first refusal to purchase such Equity Interests.

     

    7.18 Sales and
Leasebacks.  Enter
into any arrangement with any Person providing for the leasing by any Loan Party
of real or personal property that has been or is to be sold or transferred by
such Loan Party to such Person or to any other Person to whom funds have been or
are to be advanced by such Person on the security of such property or rental
obligations of such Loan Party.

     

    7.19 Negative Pledge
Clauses.  Enter
into or suffer to exist or become effective any agreement that prohibits or
limits the ability of any Loan Party to create, incur, assume or suffer to exist
any Lien upon any of its property or revenues, whether now owned or hereafter
acquired, to secure its obligations under the Loan Documents to which it is a
party other than (a) this Agreement and the other Loan Documents and (b) any
agreements governing any purchase money Liens or Capital Lease Obligations not
prohibited hereby (in which case, any prohibition or limitation shall only be
effective against the assets financed thereby).

     

    7.20 Clauses Restricting
Subsidiary Distributions.  Enter
into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary of the Borrower to (a) make
Restricted Payments in respect of any Capital Stock of such Subsidiary held by,
or pay any Indebtedness owed to, any Loan Party, (b) make loans or advances to,
or other Investments in, any Loan Party or (c) transfer any of its assets to any
Loan Party, except for such encumbrances or restrictions existing under or by
reason of (i) any restrictions existing under the Loan Documents and (ii) any
restrictions with respect to a Subsidiary imposed pursuant to an agreement that
has been entered into in connection with the Disposition of all or substantially
all of the Capital Stock or assets of such Subsidiary.

     

    7.21 Capital
Expenditures

     

    Make or
become legally obligated to make any Capital Expenditures, except for (a)
Capital Expenditures not exceeding, in the aggregate for the Borrower and its
Subsidiaries during each Fiscal Year (commencing with the Fiscal Year ending
December 31, 2008, and on a noncumulative basis, with effect that amounts not
expended in any such period may not be carried forward to a subsequent period),
$25,000; (b) [*]
and (c) [*].

     

    7.22 Board
Changes

     

    Change
the composition of the Board of Directors of the Borrower.

     

    7.23 Material Contracts and
Obligations

     

    Enter
into any contract or assume any other obligation that may require payment by the
Borrower of more than $10,000 in any calendar year and/or the performance by the
Borrower of any material obligations other than any such contract or obligation
reasonably incurred in the ordinary course of the Borrower’s business and in
respect of the day-to-day operations of the Borrower.

     

    7.24 Compensation of Officers and
Managers

     

    Increase
or materially amend the compensation of any officer or manager (or, in the case
of an officer or manager hired by the Borrower after the Effective Date of this
Agreement, enter into an employment agreement or employment relationship with
such officer or manager) except upon the prior consent of the
Lender.

     

    
      
        7.25 Debt Payments upon Event of
Default

      

    

     

    Upon the occurrence and during the
continuance of an Event of Default, make any payments of any kind whatsoever in
respect of any of the obligations described by Schedule 5.21.

     

    
    

    *Confidential

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	ARTICLE
      VIII      
	
              EVENTS OF DEFAULT
      AND REMEDIES

            

                         

    8.01 Events of
Default.  Any
of the following shall constitute an Event of Default:

     

     

    
      	
              (a)

            	
              Non-Payment.  The
      Borrower or any other Loan Party fails to pay when and as required to be
      paid herein, any amount of principal of, or interest on, the Term Loan, or
      when and as the same becomes due, any other amount payable hereunder or
      under any other Loan Document; or

            


    

     

    
      	
              (b)

            	
              Specific
      Covenants.  The Borrower fails to perform or observe any
      term, covenant or agreement contained in any of Sections 6.03,
      6.05,
      6.07,
      6.10,
      6.11,
      6.13,
      6.14 or
      6.15, or
      Article
      VII; or

            


    

     

    
      	
              (c)

            	
              Other
      Defaults.  Any Loan Party fails to perform or observe any
      other covenant or agreement (not specified in subsection (a)
      or (b)
      above) contained in any Loan Document on its part to be performed or
      observed and such failure continues unremedied for five (5) Business Days
      after the earlier of the date on which (A) a Responsible Officer
      becomes aware of such failure or (B) written notice thereof shall have
      been given to the Borrower by the Lender;
or

            


    

     

    
      	
              (d)

            	
               Representations and
      Warranties.  Any representation, warranty, certification
      or statement of fact made by or on behalf of the Borrower or any other
      Loan Party herein, in any other Loan Document, or in any document
      delivered in connection herewith or therewith shall be incorrect or
      misleading in any material respect when made;
or

            


    

     

    
      	
              (e)

            	
               Cross-Default on
      Indebtedness.  Any event shall have occurred that permits
      any holder or holders (or a trustee or agent on behalf of such holder or
      holders) of Indebtedness (other than Indebtedness hereunder) to demand the
      payment of such Indebtedness prior to its stated maturity, or cash
      collateral in respect thereof; or

            


    

     

    
      	
              (f)

            	
              Judgments.  There
      is entered against any Loan Party or any Subsidiary (i) a final judgment
      or order for the payment of money in an aggregate amount exceeding
      $100,000 (to the extent not covered by independent third-party insurance
      as to which the insurer is rated at least “A” by A.M. Best Company, has
      been notified of such claim and does not dispute coverage), or (ii) any
      one or more non-monetary final judgments that have, or could reasonably be
      expected to have, individually or in the aggregate, a Material Adverse
      Effect and, in either case, there is a period of five (5) consecutive
      Business Days during which a stay of enforcement of such judgment, by
      reason of a pending appeal or otherwise, is not in effect;
    or

            


    

     

    
      	
              (g)

            	
               Invalidity of Loan
      Documents.  Any provision of any Loan Document, at any
      time after its execution and delivery and for any reason other than as
      expressly permitted hereunder or thereunder or satisfaction in full of all
      the Obligations, ceases to be valid and binding on or enforceable against
      any Loan Party intended to be a party to it; any Loan Party files a motion
      or other pleading seeking to challenge the validity of any Loan Document
      or the applicability or enforceability of any Loan Document or which seeks
      to void, avoid, limit, or otherwise adversely affect the security interest
      created by or in any Loan Document or any payment made pursuant thereto;
      or any Loan Party denies that it has any or further liability or
      obligation under any Loan Document, or purports to revoke, terminate or
      rescind any Loan Document; or

            


    

     

    


    
      
        
          
             

            
              


            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    
      	
              (h)

            	
               Change of
      Control.  There occurs any Change of Control;
      or

            


    

     

    
      	
              (i)

            	
               Collateral
      Document.  Any Collateral Document after delivery thereof
      (other than pursuant to the terms thereof) ceases to create a valid and
      perfected lien on and security interest in the Collateral purported to be
      covered thereby having the priority contemplated by the Loan Documents;
      or

            


    

     

    
      	
              (j)

            	
               Material Adverse
      Effect.  Other than a termination of the Mesa Code Share
      Agreement, there occurs any event or circumstance that would give rise to
      a Material Adverse Effect since the Effective Date;
  or

            


    

     

    
      	
              (k)

            	
               Change in
      Business.  Other than a termination of the Mesa Code
      Share Agreement, the Borrower and its Subsidiaries cease to operate their
      business as conducted on the date hereof or cease to operate flights
      substantially in accordance with the flight schedule of the Borrower and
      its Subsidiaries as of the Effective Date;
or

            


    

     

    
      	
              (l)

            	
               Involuntary
      Proceedings.  An involuntary proceeding shall be
      commenced and not dismissed or stayed within 60 days or an involuntary
      petition shall be filed in a court of competent jurisdiction seeking (i)
      relief in respect of the Borrower or any Subsidiary, or of a substantial
      part of the property or assets of the Borrower or a Subsidiary, under
      Title 11 of the United States Code, as now constituted or hereafter
      amended, or any other Federal, state or foreign bankruptcy, insolvency,
      receivership or similar law, (ii) the appointment of a receiver, trustee,
      custodian, sequestrator, conservator or similar official for the Borrower
      or any Subsidiary or for a substantial part of the property or assets of
      the Borrower or a Subsidiary and the appointment continues undischarged or
      unstayed for 60 calendar days, or (iii) the winding-up or liquidation of
      the Borrower or any Subsidiary; or

            


    

     

    
      	
              (m)

            	
                Voluntary
      Proceedings.  the Borrower or any Subsidiary shall (i)
      voluntarily commence any proceeding or file any petition seeking relief
      under Title 11 of the United States Code, as now constituted or hereafter
      amended, or any other Federal, state or foreign bankruptcy, insolvency,
      receivership or similar law, (ii) consent to the institution of, or fail
      to contest in a timely and appropriate manner, any proceeding or the
      filing of any petition described in (m) above, (iii) apply for or consent
      to the appointment of a receiver, trustee, custodian, sequestrator,
      conservator or similar official for the Borrower or any
      Subsidiary  or for a substantial part of the property or assets
      of the Borrower or any Subsidiary, (iv) file an answer admitting the
      material allegations of a petition filed against it in any such
      proceeding, (v) make a general assignment for the benefit of creditors or
      (vi) become unable, admit in writing its inability or fail generally to
      pay its debts as they become due (other than with respect to Indebtedness
      described on Schedule 5.02); or

            


    

     

    
      	
              (n)

            	
               Cross Default on
      Airline Services Agreement.  Any default under the
      Airline Services Agreement which permits Shuttle America Corporation to
      terminate the Airline Services Agreement;
or

            


    

     

    
      	
              (o)

            	
               Leis
      Letter.  Any default
      by Dorvin D. Leis under the Leis
Letter.

            


    

     

    
      	
              (p)

            	
               Cross Default on
      Administrative Services Agreement.  Any default by the
      Borrower in the performance of its obligations under the Administrative
      Services Agreement.

            


    

     

    8.02 Remedies upon Event of
Default.  Upon
the occurrence of any Event of Default described in Section 8.01(l) or (m)
above, automatically, and upon the occurrence and during the continuance of any
other Event of Default, at the request of the Lender:

     

    
      	
              (i)

            	
              the
      unpaid principal amount of all outstanding Term Loan, all interest accrued
      and unpaid thereon, and all other amounts owing or payable hereunder or
      under any other Loan Document shall be immediately due and payable,
      without presentment, demand, protest or other notice of any kind, all of
      which are hereby expressly waived by the Borrower;
  and

            


    

     

    
      	
              (ii) 

            	
               the
      Lender shall exercise all rights and remedies available to it under the
      Loan Documents or applicable laws.

            


    

     

    8.03 Application of
Funds.  After
the exercise of remedies provided for in Section 8.02 or upon
the commencement of any case or proceeding under any Debtor Relief Law, any
amounts received on account of any Obligations or from or with respect to the
Collateral or any enforcement proceedings with respect thereto shall be applied
by the Lender in such order as it so elects and, the balance, if any, after all
of the Obligations have been indefeasibly paid in full, to the Borrower or as
otherwise required by Law.

     

    All
payments made pursuant to this Section 8.03 shall be
made to the Lender.

     

    8.04 Default by the
Lender

     

    In
respect of a Term Borrowing after the Effective Date and so long as (a) the
Borrower has fully satisfied the conditions set forth in Section 4.02 and (b)
the Borrower and the Guarantors have satisfied all their respective obligations
pursuant to this Agreement, any failure by the Lender to make a Term Borrowing
as provided by Section
2.01(c) shall be deemed a material default of this Agreement by the
Lender.

     

     

     

    
    

     

    
      	
              ARTICLE
      IX          

            
	[INTENTIONALLY
      OMITTED]


    

     

                          

     

     

    
       

      
        	ARTICLE
      X      
	SECURITY


      

       

    

     

    10.01 Grant of
Security.  To
induce the Lender to make the Term Loan, each Loan Party hereby grants to the
Lender, as security for the full and prompt payment when due of the Obligations
of such Loan Party a continuing Lien and security interest in and to all Pledged
Collateral of such Loan Party.  “Pledged
Collateral” means all of the property and assets (other than the Excluded
Assets) of each Loan Party and its estate, tangible and intangible, whether now
owned or hereafter acquired or arising and regardless of where located,
including but not limited to:

     

    
      	
              (a)

            	
               all
      equipment in all of its forms, including, without limitation, all
      machinery, tools, motor vehicles, vessels, aircraft, aircraft engines,
      aircraft propellers, furniture and fixtures, and all parts thereof and all
      accessions thereto and all software related thereto, including, without
      limitation, software that is embedded in and is part of the equipment (any
      and all such property being the “Equipment”);

            


    

     

    
      	
              (b)

            	
               all
      inventory in all of its forms, including, without limitation, (i) all
      raw materials, work in process, finished goods and materials used or
      consumed in the manufacture, production, preparation or shipping thereof,
      (ii) goods in which such Loan Party has an interest in mass or a
      joint or other interest or right of any kind (including, without
      limitation, goods in which such Loan Party has an interest or right as
      consignee) and (iii) goods that are returned to or repossessed or
      stopped in transit by such Loan Party), and all accessions thereto and
      products thereof and documents therefore, and all software related
      thereto, including, without limitation, software that is embedded in and
      is part of the inventory (any and all such property being the “Inventory”);

            


    

     

    
      	
              (c)

            	
               all
      accounts (including, without limitation, health-care-insurance
      receivables), chattel paper (including, without limitation, tangible
      chattel paper and electronic chattel paper), instruments (including,
      without limitation, promissory notes), deposit accounts, letter-of-credit
      rights, general intangibles (including, without limitation, payment
      intangibles) and other obligations of any kind, whether or not arising out
      of or in connection with the sale or lease of goods or the rendering of
      services and whether or not earned by performance, and all rights now or
      hereafter existing in and to all supporting obligations and in and to all
      security agreements, mortgages, Liens, leases, letters of credit and other
      contracts securing or otherwise relating to the foregoing property (any
      and all of such accounts, chattel paper, instruments, deposit accounts,
      letter-of-credit rights, general intangibles and other obligations, to the
      extent not referred to in clause (d), (e) or (f) below, being the
      “Receivables”,
      and any and all such supporting obligations, security agreements,
      mortgages, Liens, leases, letters of credit and other contracts to the
      extent not referred to in clause (d), (e) or (f) below being the “Related
      Contracts”);

            


    

     

    
      	
              (d)

            	
               the
      following (the “Security
      Collateral”):

            


    

     

    
      	
              (i)

            	
               the
      Pledged Equity and the certificates, if any, representing the Pledged
      Equity, and all dividends, distributions, return of capital, cash,
      instruments and other property from time to time received, receivable or
      otherwise distributed in respect of or in exchange for any or all of the
      Pledged Equity and all subscription warrants, rights or options issued
      thereon or with respect thereto and all rights with respect to such
      Pledged Equity, including all rights to vote such Pledged Equity or
      exercise rights under any partnership agreement, limited liability company
      agreement or similar agreement relating to Initial Pledged
      Equity;

            


    

     

    
      	
              (ii)

            	
               the
      Pledged Debt and the instruments, if any, evidencing the Initial Pledged
      Debt, and all interest, cash, instruments and other property from time to
      time received, receivable or otherwise distributed in respect of or in
      exchange for any or all of the Pledged Debt;
and

            


    

     

    
      	
              (iii)

            	
               all
      other investment property (including, without limitation, all (A)
      securities, whether certificated or uncertificated, (B) security
      entitlements, (C) securities accounts, (D) commodity contracts and (E)
      commodity accounts) in which such Loan Party has now, or acquires from
      time to time hereafter, any right, title or interest in any manner, and
      the certificates or instruments, if any, representing or evidencing such
      investment property, and all dividends, distributions, return of capital,
      interest, distributions, value, cash, instruments and other property from
      time to time received, receivable or otherwise distributed in respect of
      or in exchange for any or all of such investment property and all
      subscription warrants, rights or options issued thereon or with respect
      thereto;

            


    

     

    
      	
              (e)

            	
               the
      following (collectively, the “Account
      Collateral”):

            


    

     

    
      	
              (i)

            	
               all
      deposit and other bank accounts and all funds and financial assets from
      time to time credited thereto (including, without limitation, all cash
      equivalents), all interest, dividends, distributions, cash, instruments
      and other property from time to time received, receivable or otherwise
      distributed in respect of or in exchange for any or all of such funds and
      financial assets, and all certificates and instruments, if any, from time
      to time representing or evidencing such
  accounts;

            


    

     

    
      	
              (ii)

            	
               all
      promissory notes, certificates of deposit, deposit accounts, checks and
      other instruments from time to time delivered to or otherwise possessed by
      the Lender for or on behalf of such Loan Party, including, without
      limitation, those delivered or possessed in substitution for or in
      addition to any or all of the then existing Account Collateral;
      and

            


    

     

    
      	
              (iii)

            	
               all
      interest, dividends, distributions, cash, instruments and other property
      from time to time received, receivable or otherwise distributed in respect
      of or in exchange for any or all of the then existing Account
      Collateral;

            


    

     

    
      	
              (f)

            	
               all
      books and records (including, without limitation, customer lists, credit
      files, printouts and other computer output materials and records) of such
      Loan Party pertaining to any of the Pledged Collateral;
  and

            


    

     

    
      	
              (g)

            	
               all
      proceeds of, collateral for, income, royalties and other payments now or
      hereafter due and payable with respect to, and supporting obligations
      relating to, any and all of the Pledged Collateral (including, without
      limitation, proceeds, collateral and supporting obligations that
      constitute property of the types described in clauses (a) through (g)
      of this Section 10.01
      and this clause (h)) and, to the extent not otherwise included, all
      (A) payments under insurance (whether or not the Lender is the loss
      payee thereof), or any indemnity, warranty or guaranty, payable by reason
      of loss or damage to or otherwise with respect to any of the foregoing
      Pledged Collateral, (B) tort claims, including, without limitation, all
      commercial tort claims and (C)
cash.

            


    

     

    10.02 Further
Assurances.  

     

    
      	
              (a)

            	
               Each Loan Party
      agrees that from time to time, at the expense of such Loan Party, such
      Loan Party will promptly execute and deliver, or otherwise authenticate,
      all further instruments and documents, and take all further action that
      may be necessary or desirable, or that the Lender may reasonably request,
      in order to perfect and protect any pledge or security interest granted or
      purported to be granted by such Loan Party hereunder or to enable the
      Lender to exercise and enforce its rights and remedies hereunder with
      respect to any Pledged Collateral of such Loan Party.  Without
      limiting the generality of the foregoing, each Loan Party will, within a
      commercially reasonable time with respect to Pledged Collateral of such
      Loan Party:  (i) at the request of the Lender, mark
      conspicuously each document included in Inventory, each chattel paper
      included in Receivables, each Related Contract, and each of its records
      pertaining to such Pledged Collateral with a legend, in form and substance
      satisfactory to the Lender, indicating that such document, chattel paper,
      Related Contract, or Pledged Collateral is subject to the security
      interest granted hereby; (ii) execute or authenticate and file such
      financing or continuation statements, or amendments thereto, and such
      other instruments or notices, as may be necessary or desirable, or as the
      Lender may reasonably request, in order to perfect and preserve the
      security interest granted or purported to be granted by such Loan Party
      hereunder; (iii) at the request of the Lender, deliver to the Lender
      certificates representing Security Collateral that constitutes
      certificated securities, accompanied by undated stock or bond powers
      executed in blank; (iv) at the request of the Lender, take all action
      reasonably necessary to ensure within the time required hereunder that the
      Lender has control of Pledged Collateral consisting of deposit accounts,
      electronic chattel paper, investment property, letter-of-credit rights and
      transferable records as provided in Sections 9-104, 9-105, 9-106 and 9-107
      of the Uniform Commercial Code and in Section 16 of the Uniform Electronic
      Transactions Act, as in effect in the jurisdiction governing such
      transferable record; (v) at the request of the Lender, take all action
      reasonably necessary to ensure that the Lender’s security interest is
      noted on any certificate of ownership related to any Pledged Collateral
      evidenced by a certificate of ownership; (vi) at the reasonable request of
      the Lender, cause the Lender to be the beneficiary under all letters of
      credit that constitute Pledged Collateral, with the exclusive right to
      make all draws under such letters of credit, and with all rights of a
      transferee under Section 5-114(e) of the Uniform Commercial Code; and
      (viii) deliver to the Lender evidence that all other action that the
      Lender may deem reasonably necessary or desirable in order to perfect and
      protect the security interest created by such Loan Party in the Pledged
      Collateral under this Agreement has been
taken.

            


    

     

    
      	
              (b)

            	
               Each
      Loan Party hereby authorizes the Lender to file one or more
      financing or continuation statements, and amendments thereto, including,
      without limitation, one or more financing statements indicating that such
      financing statements cover all assets or all personal property (or words
      of similar effect) of such Loan Party, in each case without the signature
      of such Loan Party, and regardless of whether any particular asset
      described in such financing statements falls within the scope of the
      Uniform Commercial Code or the granting clause of this
      Agreement.  A photocopy or other reproduction of this Agreement
      or any financing statement covering the Pledged Collateral or any part
      thereof shall be sufficient as a financing statement where permitted by
      Law.  Each Loan Party ratifies its authorization for the Lender
      to have filed such financing statements, continuation statements or
      amendments filed prior to the date
hereof.

            


    

     

    
      	
              (c)

            	
               Each
      Loan Party will furnish to the Lender from time to time
      statements and schedules further identifying and describing the Pledged
      Collateral of such Loan Party and such other reports in connection with
      such Pledged Collateral as the Lender may reasonably request, all in
      reasonable detail.

            


    

     

    10.03 Rights of the Lender;
Limitations on the Lender’s Obligations

     

    
      	
              (a)

            	
                 (i) Each Loan Party
      shall remain liable under the contracts and agreements included in such
      Loan Party’s Pledged Collateral to the extent set forth therein to perform
      all of its duties and obligations thereunder to the same extent as if this
      Agreement had not been executed (including paying cure costs if such
      contracts or agreements are assumed), (ii) the exercise by the Lender
      of any of the rights hereunder shall not release any Loan Party from any
      of its duties or obligations under the contracts and agreements included
      in the Pledged Collateral, and (iii) the Lender shall not have any
      obligation or liability under the contracts and agreements included in the
      Pledged Collateral by reason of this Agreement or any other Loan Document,
      nor shall the Lender be obligated to perform any of the obligations or
      duties of any Loan Party thereunder or to take any action to collect or
      enforce any claim for payment assigned
  hereunder.

            


    

     

    
      	
              (b)

            	
               Except
      as otherwise provided in this subsection (b), each Loan Party will
      continue to collect, at its own expense, all amounts due or to become due
      such Loan Party under the Receivables and Related Contracts.  In
      connection with such collections, such Loan Party may take (and, at the
      Lender’s direction,
      will take) such action as such Loan Party or the Lender may reasonably deem
      necessary or advisable to enforce collection of the Receivables and
      Related Contracts; provided, however, that,
      subject to any requirement of notice provided in Section 8.02,
      the Lender shall
      have the right at any time, upon the occurrence and during the continuance
      of an Event of Default, to notify the obligors under any Receivables and
      Related Contracts of the assignment of such Receivables and Related
      Contracts to the Lender and to direct such
      obligors to make payment of all amounts due or to become due to such Loan
      Party thereunder directly to the Lender and, upon such
      notification and at the expense of such Loan Party, to enforce collection
      of any such Receivables and Related Contracts, to adjust, settle or
      compromise the amount or payment thereof, in the same manner and to the
      same extent as such Loan Party might have done, and to otherwise exercise
      all rights with respect to such Receivables and Related Contracts,
      including, without limitation, those set forth in Section 9-607 of the
      Uniform Commercial Code.  Upon and during the exercise by the
      Lender of any of the remedies described in the proviso of the immediately
      preceding sentence, (i) any and all amounts and proceeds (including,
      without limitation, instruments) received by such Loan Party in respect of
      the Receivables and Related Contracts of such Loan Party shall be received
      in trust for the benefit of the Lender hereunder, shall be
      segregated from other funds of such Loan Party and shall be forthwith paid
      over to the Lender
      in the same form as so received (with any necessary indorsement) to be
      deposited in a collateral account maintained with the Lender and applied
      as provided in Section 10.05(b)
      and (ii) such Loan Party will not adjust, settle or compromise the
      amount or payment of any Receivable or amount due on any Related Contract,
      release wholly or partly any obligor thereof, or allow any credit or
      discount thereon.  No Loan Party will permit or consent to the
      subordination of its right to payment under any of the Receivables and
      Related Contracts to any other indebtedness or obligations of the obligor
      thereof.

            


    

     

    
      	
              (c)

            	
               The
      Lender shall have
      the right to make test verification of the Receivables in any manner and
      through any medium that it considers advisable in its reasonable
      discretion, and each Loan Party agrees to furnish all such assistance and
      information as the Lender may reasonably
      require in connection therewith.

            


    

     

    10.04 Covenants of the Loan
Parties with Respect to Pledged Collateral.  Each
Loan Party hereby covenants and agrees with the Lender that from and after the
date of this Agreement and until the Obligations (other than contingent
indemnification obligations which are not then due and payable) are fully
satisfied:

     

    
      	
              (a)

            	
               Delivery and Control of Pledged
      Equity

            


    

     

    
      	
              (i)

            	
               All
      certificates or instruments representing or evidencing Pledged Equity
      shall be delivered to and held by or on behalf of the Lender pursuant hereto at
      the request of the Lender, and shall be in suitable form for transfer by
      delivery, or shall be accompanied by duly executed instruments of transfer
      or assignment in blank, all in form and substance reasonably satisfactory
      to the Lender.

            


    

     

    
      	
              (ii)

            	
               With
      respect to any Pledged Equity in which any Loan Party has any right, title
      or interest and that constitutes an uncertificated security, such Loan
      Party will cause the issuer thereof either (i) to register the Lender as the registered
      owner of such security or (ii) to agree in an authenticated record with
      such Loan Party and the Lender that such issuer
      will comply with instructions with respect to such security originated by
      the Lender without
      further consent of such Loan Party, such authenticated record to be in
      form and substance reasonably satisfactory to the Lender.  With
      respect to any Security Collateral in which any Loan Party has any right,
      title or interest and that is not an uncertificated security, upon the
      request of the Lender, such Loan Party will notify each such issuer of
      Pledged Equity that such Pledged Equity is subject to the security
      interest granted hereunder.

            


    

     

    
      	
              (iii)

            	
               Except
      as provided in Section 10.05,
      such Loan Party shall be entitled to receive all cash dividends paid in
      respect of the Pledged Equity with respect to the Pledged
      Equity.

            


    

     

    
      	
              (iv)

            	
               Except
      as provided in Section 10.05
      and subject to Article VII, such Loan Party will be entitled to exercise
      all voting, consent and corporate rights with respect to the Pledged
      Equity.

            


    

     

    
      	
              (b)

            	
               Maintenance of
      Records.  Such
      Loan Party will keep and maintain, at its own cost and expense,
      satisfactory and complete records of the Pledged Collateral, in all
      material respects, including, without limitation, a record of all payments
      received and all credits granted with respect to the Pledged Collateral
      and all other dealings concerning the Pledged Collateral in each case in
      accordance with its normal business
practice.

            


    

     

    
      	
              (c)

            	
               Indemnification with
      Respect to Pledged Collateral.  In
      any suit, proceeding or action brought by the Lender relating to any
      Pledged Collateral for any sum owing thereunder or to enforce any
      provision of any Pledged Collateral in each case, brought by the Lender in
      accordance with this Agreement, such Loan Party will save, indemnify and
      keep the Lender harmless from and against all expense, loss or damage
      suffered by the Lender by reason of any defense, setoff, counterclaim,
      recoupment or reduction of liability whatsoever of the obligor thereunder,
      arising out of a breach by such Loan Party of any obligation thereunder or
      arising out of any other agreement, indebtedness or liability at any time
      owing to, or in favor of, such obligor or its successors from such Loan
      Party, and all such obligations of such Loan Party shall be and remain
      enforceable against and only against such Loan Party and shall not be
      enforceable against the Lender.

            


    

     

    
      	
              (d)

            	
               Limitation on Liens on
      Pledged Collateral.  Such
      Loan Party will defend the Pledged Collateral against and take such other
      action as is necessary to remove, any Lien on the Pledged Collateral
      except Liens permitted under Section 7.01
      and will defend the right, title and interest of the Lender in and to all
      of such Loan Party’s rights under the Pledged Collateral against the
      claims and demands of all Persons whomsoever other than claims or demands
      arising out of Liens permitted under Section
      7.01.

            


    

     

    
      	
              (e)

            	
               Limitations on
      Modifications of Receivables.  Except
      with respect to intercompany Receivables among the Loan Parties, such Loan
      Party will not, without the Lender’s prior written consent, grant any
      extension of the time of payment under or in respect of any of the
      Receivables or Related Contracts, compromise, compound or settle the same
      for less than the full amount thereof, release, wholly or partly, any
      Person liable for the payment thereof, or allow any credit or discount
      whatsoever thereon other than any of the foregoing which are done in the
      ordinary course of business, consistent with past practices, and trade
      discounts granted in the ordinary course of business of such Loan
      Party.

            


    

     

    
      	
              (f)

            	
               Notices.  Such
      Loan Party will advise the Lender promptly after it obtains knowledge
      thereof, in reasonable detail, (i) of any Lien asserted against any of the
      Pledged Collateral other than Liens permitted under Section 7.01,
      and (ii) of the occurrence of any other event which would result in a
      material adverse change with respect to the aggregate value of the Pledged
      Collateral or on the security interests created
  hereunder.

            


    

     

    
      	
              (g)

            	
               Maintenance of
      Equipment.  Such
      Loan Party will keep and maintain the Equipment in good operating
      condition sufficient for the continuation of the business conducted by
      such Loan Party on a basis consistent with past practices, ordinary wear
      and tear excepted.

            


    

     

    10.05 Remedies.  If
any Event of Default shall have occurred and be continuing:

     

    
      	
              (a)

            	
               The
      Lender may exercise
      in respect of the Pledged Collateral, in addition to other rights and
      remedies provided for herein or otherwise available to it, all the rights
      and remedies of a secured party upon default under the Uniform Commercial
      Code (whether or not the Uniform Commercial Code applies to the affected
      Pledged Collateral) and also may:  (i) require each Loan
      Party to, and each Loan Party hereby agrees that it will at its expense
      and upon request of the Lender forthwith, assemble all or part of the
      Pledged Collateral as directed by the Lender and make it
      available to the Lender at a place and time
      to be designated by the Lender that is reasonably
      convenient to such Loan Party and the Lender; (ii) without
      notice except as specified below, sell the Pledged Collateral or any part
      thereof in one or more parcels at public or private sale, at any of the
      Lender’s offices or
      elsewhere, for cash, on credit or for future delivery, and upon such other
      terms as are commercially reasonable; (iii) occupy any premises owned or
      leased by any of the Loan Parties where the Pledged Collateral or any part
      thereof is assembled or located for a reasonable period in order to
      effectuate its rights and remedies hereunder or under law, without
      obligation to such Loan Party in respect of such occupation; and (iv)
      exercise any and all rights and remedies of any of the Loan Parties under
      or in connection with the Pledged Collateral, or otherwise in respect of
      the Pledged Collateral, including, without limitation, (A) any and all
      rights of such Loan Party to demand or otherwise require payment of any
      amount under, or performance of any provision of, the Receivables, the
      Related Contracts and the other Pledged Collateral, (B) withdraw, or cause
      or direct the withdrawal, of all funds with respect to the Account
      Collateral and (C) exercise all other rights and remedies with respect to
      the Receivables, the Related Contracts and the other Pledged Collateral,
      including, without limitation, those set forth in Section 9-607 of the
      Uniform Commercial Code.  To the extent not inconsistent with
      the Federal Aviation Act, the DOT requirements and the FAA requirements,
      the Lender may be
      the purchaser of any or all of the Pledged Collateral at any such sale and
      shall be entitled, for the purpose of bidding and making settlement or
      payment of the purchase price for all or any portion of the Collateral
      sold at such sale, to use and apply any of the Obligations owed to such
      Person as a credit on account of the purchase price of any Collateral
      payable by such Person at such sale.  Each purchaser at any such
      sale shall acquire the property sold absolutely free from any claim or
      right on the part of the Grantors, and each Grantor hereby waives, to the
      fullest extent permitted by law, all rights of redemption, stay or
      appraisal which it now has or may at any time in the future have under any
      rule of law or statute now existing or hereafter enacted.  Each
      Loan Party agrees that, to the extent notice of sale shall be required by
      law, at least 10 days’ notice to such Loan Party of the time and place of
      any public sale or the time after which any private sale is to be made
      shall constitute reasonable notification.  The Lender shall not be
      obligated to make any sale of Pledged Collateral regardless of notice of
      sale having been given.  The Lender may adjourn any
      public or private sale from time to time by announcement at the time and
      place fixed therefor, and such sale may, without further notice, be made
      at the time and place to which it was so adjourned.  Any Account
      Collateral and any Proceeds of any Security Collateral may be applied by
      the Lender towards payment of the
Obligations.

            


    

     

    
      	
              (b)

            	
               Any
      cash held by or on behalf of the Lender and all cash
      proceeds received by or on behalf of the Lender in respect of any
      sale of, collection from, or other realization upon all or any part of the
      Pledged Collateral shall be applied against the Obligations, in the manner
      set forth in Section
      8.03.  Any surplus of such cash or cash proceeds held by
      the Lender and
      remaining after payment in full of the Obligations shall be paid over to
      the applicable Loan Party or to whomever may be lawfully entitle to
      receive such surplus.

            


    

     

    
      	
              (c)

            	
               All
      payments received by any Loan Party under or in connection with the
      Pledged Collateral shall be received in trust for the benefit of the Lender, shall be
      segregated from other funds of such Loan Party and shall be forthwith paid
      over to the Lender
      in the same form as so received (with any necessary
      indorsement).

            


    

     

    
      	
              (d)

            	
               The
      Lender may, without
      notice to any Loan Party except as required by law or Section 8.02
      and at any time or from time to time, charge, set off and otherwise apply
      all or any part of the Obligations against any funds held with respect to
      the Account Collateral or in any other deposit
  account.

            


    

     

    
      	
              (e)

            	
               The
      Lender is
      authorized, in connection with any sale of the Security Collateral
      pursuant to this Section 10.05,
      to deliver or otherwise disclose to any prospective purchaser of the
      Security Collateral any information in its possession relating to such
      Security Collateral.

            


    

     

    10.06 Modifications
.The
Liens, lien priority and other rights and remedies granted to the Lender
pursuant to this Agreement and the other Secured Credit Documents shall not be
modified, altered or impaired in any manner by any other financing or extension
of credit or incurrence of Indebtedness by any of the Loan Parties or by any
other act or omission whatsoever.

     

    10.07 Release;
Termination.  Upon
the latest of (i) the payment in full in cash of the Obligations (other
than contingent indemnification obligations which are not then due and payable)
or the conversion of the outstanding amount of the Term Loan pursuant to Section
2.08 and (ii) the Maturity Date, the pledge and security interest granted
hereby shall terminate and all rights to the Pledged Collateral shall revert to
the applicable Loan Party.  Upon any such termination, the Lender
will, at the applicable Loan Party’s expense, execute and deliver to such Loan
Party such documents as such Loan Party shall reasonably request to evidence
such termination.

     

     

    
    

     

    
      	
              ARTICLE
      XI       

            
	
              GUARANTY

            


    

     

     

    11.01 Guaranty.  Each
Guarantor, severally, unconditionally and irrevocably guarantees (the
undertaking by each Guarantor under this Article XI being the
“Guaranty”)
the punctual payment when due, whether at scheduled maturity or on any date of a
required prepayment or by acceleration, demand or otherwise, of all of the
Obligations of each of the other Loan Parties now or hereafter existing under or
in respect of the Loan Documents (including, without limitation, any extensions,
modifications, substitutions, amendments or renewals of any or all of the
foregoing Obligations), whether direct or indirect, absolute or contingent, and
whether for principal, interest, premium, fees, indemnification payments,
contract causes of action, costs, expenses or otherwise (such Obligations being
the “Guaranteed
Obligations”), and agrees to pay any and all expenses (including, without
limitation, reasonable fees and expenses of counsel) incurred by the Lender in
enforcing any rights under this Guaranty or any other Loan
Document.  Anything herein or in any other Loan Document to the
contrary notwithstanding, the maximum liability of each Guarantor hereunder and
under the other Loan Documents shall in no event exceed the amount which can be
guaranteed by such Guarantor under applicable federal and state laws relating to
the insolvency of debtors.

     

    11.02 Guaranty
Absolute.  Each
Guarantor guarantees that the Guaranteed Obligations will be paid strictly in
accordance with the terms of the Loan Documents, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting any
of such terms or the rights of the Lender with respect thereto.  The
Obligations of each Guarantor under this Guaranty are independent of the
Guaranteed Obligations or any other Obligations of any Loan Party under the Loan
Documents, and a separate action or actions may be brought and prosecuted
against such Guarantor to enforce this Guaranty, irrespective of whether any
action is brought against any other Loan Party or whether any other Loan Party
is joined in any such action or actions.  The liability of each
Guarantor under this Guaranty shall be absolute, unconditional and irrevocable
irrespective of, and such Guarantor hereby irrevocably waives any defenses it
may now or hereafter have in any way relating to, any and all of the
following:

     

    
      	
              (a)

            	
               any
      lack of validity or enforceability of any Loan Document or any other
      agreement or instrument relating
thereto;

            


    

     

    
      	
              (b)

            	
               any
      change in the time, manner or place of payment of, or in any other term
      of, all or any of the Guaranteed Obligations or any other Obligations of
      any Loan Party under the Loan Documents, or any other amendment or waiver
      of or any consent to departure from any Loan Document, including, without
      limitation, any increase in the Guaranteed Obligations resulting from the
      extension of additional credit to any Loan Party or any of its
      Subsidiaries or otherwise;

            


    

     

    
      	
              (c)

            	
               any
      taking, exchange, release or nonperfection of any Collateral, or any
      taking, release or amendment or waiver of or consent to departure from
      this Guaranty or any other guaranty, for all or any of the Guaranteed
      Obligations;

            


    

     

    
      	
              (d)

            	
               any
      manner of application of Collateral, or proceeds thereof, to all or any of
      the Guaranteed Obligations, or any manner of sale or other disposition of
      any Collateral for all or any of the Guaranteed Obligations or any other
      Obligations of any Loan Party under the Loan Documents, or any other
      property and assets of any other Loan Party or any of its
      Subsidiaries;

            


    

     

    
      	
              (e)

            	
               any
      change, restructuring or termination of the corporate structure or
      existence of any other Loan Party or any of its
    Subsidiaries;

            


    

     

    
      	
              (f)

            	
               any
      failure of the Lender to disclose to any
      Loan Party any information relating to the business, condition (financial
      or otherwise), operations, performance, properties or prospects of any
      other Loan Party now or hereafter known to the Lender, as the case may be
      (such Guarantor waiving any duty on the part of the Lender to disclose
      such information);

            


    

     

    
      	
              (g)

            	
               the
      failure of any other Person to execute this Agreement or any other
      guarantee or agreement of the release or reduction of the liability of any
      of the other Loan Parties or any other guarantor or surety with respect to
      the Guaranteed Obligations; or

            


    

     

    
      	
              (h)

            	
               any
      other circumstance (including, without limitation, any statute of
      limitations or any existence of or reliance on any representation by the
      Lender) that might
      otherwise constitute a defense available to, or a discharge of, such
      Guarantor, any other Loan Party or any other guarantor or
      surety.

            


    

     

    This
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment of any of the Guaranteed Obligations is rescinded or
must otherwise be returned by the Lender or by any other Person
upon the insolvency, bankruptcy or reorganization of any other Loan Party or
otherwise, all as though such payment had not been made.

     

    11.03 Waivers and
Acknowledgments.

     

    
      	
              (a)

            	
               Each
      Guarantor hereby unconditionally and irrevocably waives promptness,
      diligence, notice of acceptance, presentment, demand for performance,
      notice of nonperformance, default, acceleration, protest or dishonor and
      any other notice with respect to any of the Guaranteed Obligations and
      this Guaranty, and any requirement that the Lender protect, secure,
      perfect or insure any Lien or any property or assets subject thereto or
      exhaust any right or take any action against any other Loan Party or any
      other Person or any Collateral.

            


    

     

    
      	
              (b)

            	
               Each
      Guarantor hereby unconditionally waives any right to revoke this Guaranty,
      and acknowledges that this Guaranty is continuing in nature and applies to
      all Guaranteed Obligations, whether existing now or in the
      future.  Each Guarantor acknowledges and agrees that this
      Guaranty is a guarantee of payment and not of
  collection.

            


    

     

    
      	
              (c)

            	
               Each
      Guarantor hereby unconditionally and irrevocably waives (i) any defense
      arising by reason of any claim or defense based upon an election of
      remedies by the Lender which in any manner impairs, reduces, releases or
      otherwise adversely affects the subrogation, reimbursement, exoneration,
      contribution or indemnification rights of such Guarantor or other rights
      to proceed against any of the other Loan Parties, any other guarantor or
      any other Person or any Collateral, and (ii) any defense based on any
      right of setoff or counterclaim against or in respect of the Obligations
      of such Guarantor hereunder.

            


    

     

    
      	
              (d)

            	
               Each
      Guarantor acknowledges that the Lender may, without notice
      to or demand upon such Guarantor and without affecting the liability of
      such Guarantor under this Guaranty, foreclose under any Collateral
      Document by nonjudicial sale, and such Guarantor hereby waives any defense
      to the recovery by the Lender against such
      Guarantor of any deficiency after such nonjudicial sale and any defense or
      benefits that may be afforded by applicable
law.

            


    

     

    
      	
              (e)

            	
               Each
      Guarantor hereby unconditionally and irrevocably waives any duty on the
      part of the Lender to disclose to such Guarantor any matter, fact or thing
      relating to the business, condition (financial or otherwise), operations,
      performance, properties or prospects of any other Loan Party or any of its
      Subsidiaries now or hereafter known by the
  Lender.

            


    

     

    
      	
              (f)

            	
               Each
      Guarantor acknowledges that it will receive substantial direct and
      indirect benefits from the financing arrangements contemplated by the Loan
      Documents and that the waivers set forth in Section 11.02 and this
      Section 11.03 are
      knowingly made in contemplation of such
  benefits.

            


    

     

    11.04 Subrogation.  Each
Guarantor hereby unconditionally and irrevocably agrees not to exercise any
rights that it may now have or may hereafter acquire against any other Loan
Party or any other insider guarantor that arise from the existence, payment,
performance or enforcement of its Obligations under this Guaranty or under any
other Loan Document, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution or indemnification and any right to
participate in any claim or remedy of the Lender against such other Loan Party
or any other insider guarantor or any Collateral, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law,
including, without limitation, the right to take or receive from such other Loan
Party or any other insider guarantor, directly or indirectly, in cash or other
property or by set-off or in any other manner, payment or security on account of
such claim, remedy or right, until such time as all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall have been
paid in full in cash and the Term Loan shall have expired or
terminated.  If any amount shall be paid to any Guarantor in violation
of the immediately preceding sentence at any time prior to the latest of (a) the
payment in full in cash of all of the Guaranteed Obligations and all other
amounts payable under this Guaranty and (b) the Maturity Date, such amount shall
be received and held in trust for the benefit of the Lender (in the same form as
so received) and shall forthwith be paid to the Lender (without any necessary
endorsement or assignment) to be credited and applied to the Guaranteed
Obligations and all other amounts payable under this Guaranty, whether matured
or unmatured, in accordance with the terms of the Loan Documents, or to be held
as Collateral for any Guaranteed Obligations or other amounts payable under this
Guaranty thereafter arising.  If (i) any Guarantor shall pay to the
Lender all or any part of the Guaranteed Obligations, (ii) all of the Guaranteed
Obligations and all other amounts payable under this Guaranty shall have been
paid in full in cash and (iii) the Maturity Date shall have occurred, the Lender
will, at such Guarantor’s request and expense, execute and deliver to such
Guarantor appropriate documents, without recourse and without representation or
warranty, necessary to evidence the transfer by subrogation to such Guarantor of
an interest in the Guaranteed Obligations resulting from the payment made by
such Guarantor pursuant to this Guaranty.

     

    11.05 Continuing Guarantee;
Assignments.  This
Guaranty is a continuing guaranty and shall (a) remain in full force and
effect until the latest of (i) the payment in full in cash of all of the
Guaranteed Obligations and all other amounts payable under this Guaranty and
(ii) the Maturity Date, (b) be binding upon each Guarantor and its
successors and assigns and (c) inure to the benefit of, and be enforceable
by, the Lender and its respective successors, transferees and
assigns.  Without limiting the generality of clause (c) of the
immediately preceding sentence, the Lender may assign or otherwise transfer all
or any portion of its rights and obligations under this Agreement (including,
without limitation, all or any portion of the Term Loan owing to it and the Term
Note held by it) to any other Person, and such other Person shall thereupon
become vested with all the benefits in respect thereof granted to the Lender
Party under this Article XI or
otherwise, in each case as provided in Section
12.07.  Notwithstanding clause (b) of this Section 11.05, no
Guarantor may assign any of its obligations under this Guaranty.

     

    11.06 No
Reliance.  Each
Guarantor has, independently and without reliance upon the Lender and based on
such documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Guaranty and each other Loan Document
to which it is or is to be a party, and such Guarantor has established adequate
means of obtaining from each other Loan Party on a continuing basis information
pertaining to, and is now and on a continuing basis will be completely familiar
with, the business, condition (financial or otherwise), operations, performance,
properties and prospects of such other Loan Party.

     

     

    
    

     

    
      	ARTICLE
      XII       
	MISCELLANEOUS


    

     

    12.01 Amendments,
Etc.

     

    No
amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent to any departure by the Borrower or any other Loan
Party therefrom, shall be effective unless in writing signed by the Lender and
the Borrower or the applicable Loan Party, as the case may be, and acknowledged
by the Lender, and each such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.

     

    


    12.02 Notices and Other
Communications; Facsimile Copies

     

    
      	
              (a)

            	
               General.  Unless
      otherwise expressly provided in this Agreement, all notices and other
      communications provided for hereunder or any other Loan Document shall be
      in writing (including by facsimile transmission).  All such
      written notices shall be mailed, faxed or delivered to the applicable
      address, facsimile number or electronic mail address, and all notices and
      other communications expressly permitted hereunder to be given by
      telephone shall be made to the applicable telephone number, as
      follows:

            


    

     

    
      	
              (i)

            	
               if
      to the Borrower, to the address, facsimile number, electronic mail address
      or telephone number specified for the Borrower on Schedule 12.02
      or to such other address, facsimile number, electronic mail address or
      telephone number as shall be designated by such party in a notice to the
      Lender; and

            


    

     

    
      	
              (ii)

            	
               if
      to the Lender, to the address, facsimile number, electronic mail address
      or telephone number specified by the Lender on Schedule 12.02
      or to such other address, facsimile number, electronic mail address or
      telephone number as shall be designated by such party in a notice to the
      Borrower.

            


    

     

    All such
notices and other communications shall be deemed to be given or made upon the
earlier to occur of (i) actual receipt by the relevant party hereto and (ii) (A)
if delivered by hand or by courier, when signed for by or on behalf of the
relevant party hereto; (B) if delivered by mail, four Business Days after
deposit in the mails, first-class postage prepaid; (C) if delivered by
facsimile, when sent; and (D) if delivered by electronic mail, when received;
provided, however, that notices
and other communications to the Lender pursuant to Article II shall not
be effective until actually received by such Person.  In no event
shall a voicemail message be effective as a notice, communication or
confirmation hereunder.

     

    
      	
              (b)

            	
               Effectiveness of
      Facsimile Documents and Signatures.  Loan Documents may
      be transmitted and/or signed by facsimile.  The effectiveness of
      any such documents and signatures shall, subject to applicable Law, have
      the same force and effect as manually-signed originals and shall be
      binding on all Loan Parties and the Lender.  The Lender may also require
      that any such documents and signatures be confirmed by a manually-signed
      original thereof; provided, however, that
      the failure to request or deliver the same shall not limit the
      effectiveness of any facsimile document or
  signature.

            


    

     

    
      	
              (c)

            	
               Reliance by the
      Lender.  The Lender shall be entitled to rely and act
      upon any notices purportedly given by or on behalf of the Borrower even if
      (i) such notices were not made in a manner specified herein, were
      incomplete or were not preceded or followed by any other form of notice
      specified herein, or (ii) the terms thereof, as understood by the
      recipient, varied from any confirmation thereof.  The Borrower
      shall indemnify the Lender from all losses, costs, expenses and
      liabilities resulting from the reliance by such Person on each notice
      purportedly given by or on behalf of the
  Borrower.

            


    

     

    12.03 No Waiver; Cumulative
Remedies.  No
failure by the Lender to exercise, and no delay by any such Person in
exercising, any right, remedy, power or privilege hereunder or any other Loan
Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege.  The rights, remedies, powers and privileges herein
provided, and provided under each other Loan Document, are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by
law.

     

    12.04 Attorney Costs, Expenses and
Taxes.  The
Borrower agrees (a) to pay or reimburse the Lender for all out-of-pocket costs
and expenses incurred in connection with any amendment, waiver, consent or other
modification of the provisions hereof and the other Loan Documents (whether or
not the transactions contemplated hereby or thereby are consummated), and the
administration of the transactions contemplated hereby and thereby, including
all Attorney Costs (including, without limitation, specialty and local counsel)
and (b) to pay or reimburse the Lender for all costs and expenses incurred
in connection with the enforcement of any rights or remedies under this
Agreement or the other Loan Documents (including all such costs and expenses
incurred during any legal proceeding, including any proceeding under any Debtor
Relief Law), including all Attorney Costs.  The foregoing costs and
expenses shall include all search, filing, recording, title insurance and
appraisal charges and fees and taxes related thereto, and other out-of-pocket
expenses incurred by the Lender and the cost of independent public accountants
and other outside experts retained by the Lender.  All amounts due
under this Section
12.04 shall be payable within two Business Days after demand
therefor.  The agreements in this Section shall survive the
termination of the Term Loan and repayment of all other
Obligations.  If any Loan Party fails to pay when due any costs,
expenses or other amounts payable by it hereunder or under any Loan Document,
including, without limitation, Attorney Costs and indemnities, such amount may
be paid on behalf of such Loan Party by the Lender, in its sole discretion and
any such amounts so paid by the Lender, shall constitute Obligations owing to
such person.

     

    12.05 Indemnification by the
Borrower.  Whether
or not the transactions contemplated hereby are consummated, the Borrower shall
indemnify and hold harmless the Lender and its respective Affiliates, directors,
officers, employees, counsel, agents and attorneys-in-fact (collectively the
“Indemnitees”)
from and against any and all liabilities, obligations, losses, damages,
penalties, claims, demands, actions, judgments, suits, costs, expenses and
disbursements (including Attorney Costs) of any kind or nature whatsoever which
may at any time be imposed on, incurred by or asserted against any such
Indemnitee in any way relating to or arising out of or in connection with (a)
the execution, delivery, enforcement, performance or administration of any Loan
Document or any other agreement, letter or instrument delivered in connection
with the transactions contemplated thereby or the consummation of the
transactions contemplated thereby, (b) the Term Loan or the use or proposed use
of the proceeds therefrom, (c) any actual or alleged presence or release of
Hazardous Materials on or from any property currently or formerly owned or
operated by the Borrower, any Subsidiary or any other Loan Party, or any
Environmental Liability related in any way to any Loan Party, or (d) any actual
or prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory (including
any investigation of, preparation for, or defense of any pending or threatened
claim, investigation, litigation or proceeding) and regardless of whether any
Indemnitee is a party thereto (all the foregoing, collectively, the “Indemnified
Liabilities”), in all cases, whether or not caused by or arising, in
whole or in part, out of the negligence of the Indemnitee; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such
liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses or disbursements are determined by a court of
competent jurisdiction by final and nonappealable judgment to have resulted from
the gross negligence or willful misconduct of such Indemnitee.  No
Indemnitee shall have any liability for any indirect, special or consequential
damages relating to this Agreement or any other Loan Document or arising out of
its activities in connection herewith or therewith (whether before or after the
Effective Date).  In the case of an investigation, litigation or other
proceeding to which the indemnity in this Section 12.05
applies, such indemnity shall be effective whether or not such investigation,
litigation or proceeding is brought by any Loan Party, its directors,
shareholders or creditors or an Indemnitee or any other Person, whether or not
any Indemnitee is otherwise a party thereto and whether or not any of the
transactions contemplated hereunder or under any of the other Loan Documents is
consummated. All amounts due under this Section 12.05 shall
be payable within ten Business Days after demand therefor.  The
agreements in this Section shall survive the resignation of the replacement of
the Lender, the termination of the Term Loan,, and the repayment, satisfaction
or discharge of all the other Obligations.

     

    12.06 Payments Set
Aside.  To
the extent that any payment by or on behalf of the Borrower is made to the
Lender, or the Lender exercises its right of setoff, and such payment or the
proceeds of such setoff or any part thereof is subsequently invalidated,
declared to be fraudulent or preferential, set aside or required (including
pursuant to any settlement entered into by the Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such setoff had not occurred.

     

    12.07 Successors and
Assigns

     

    
      	
              (a)

            	
               The
      provisions of this Agreement shall be binding upon and inure to the
      benefit of the parties hereto and their respective successors and assigns
      permitted hereby, except that the Borrower may not assign or otherwise
      transfer any of its rights or obligations hereunder without the prior
      written consent of the Lender and the Lender may not assign or otherwise
      transfer any of its rights or obligations hereunder except (i) in
      accordance with the provisions of subsection (b) of this Section or
      (ii) by way of participation in accordance with the provisions of
      subsection (d) of this Section (and any other attempted assignment or
      transfer by any party hereto shall be null and void).  Nothing
      in this Agreement, expressed or implied, shall be construed to confer upon
      any Person (other than the parties hereto, their respective successors and
      assigns permitted hereby, Participants to the extent provided in
      subsection (d) of this Section and, to the extent expressly contemplated
      hereby, the Indemnitees) any legal or equitable right, remedy or claim
      under or by reason of this Agreement.  In addition, no Guarantor
      may assign or otherwise transfer any of its rights or obligations
      hereunder without the prior written consent of the
  Lender.

            


    

     

    
      	
              (b)

            	
               The
      Lender may at any time assign to any assignee that is an Affiliate of the
      Lender (an “Assignee”)
      all or a portion of its rights and obligations under this
      Agreement.  Upon request, the Borrower (at its expense) shall
      execute and deliver a Term Note to the Assignee in the amount of such
      assignment.

            


    

     

    
      	
              (c)

            	
               The
      Lender may at any time, without the consent of, or notice to, the
      Borrower, sell participations to any Person (other than a natural person
      or the Borrower or any of the Borrower’s Subsidiaries) (each, a “Participant”)
      in all or a portion of the Lender’s rights and/or obligations under this
      Agreement; provided that
      (i) the Lender’s obligations under this Agreement shall remain
      unchanged, (ii) the Lender shall remain solely responsible to the
      other parties hereto for the performance of such obligations and
      (iii) the Borrower shall continue to deal solely and directly with
      the Lender in connection with the Lender’s rights and obligations under
      this Agreement.  Subject to subsection (d) of this Section, the
      Borrower agrees that each Participant shall be entitled to the benefits of
      Sections
      3.01 to the same
      extent as if it were the Lender and had acquired its interest by
      assignment pursuant to subsection (b) of this Section.  To the
      extent permitted by law, each Participant also shall be entitled to the
      benefits of Section 12.08 as though it were
      the Lender.

            


    

     

    
      	
              (d)

            	
               A
      Participant shall not be entitled to receive any greater payment under
      Section 3.01 than the applicable Lender would have been entitled to
      receive with respect to the participation sold to such Participant, unless
      the sale of the participation to such Participant is made with the
      Borrower’s prior written
consent.  

            


    

     

    12.08 Setoff.  In
addition to any rights and remedies of the Lender provided by law, upon the
occurrence and during the continuance of any Event of Default, the Lender and
each of its Affiliates is authorized at any time and from time to time, without
prior notice to the Borrower or any other Loan Party, any such notice being
waived by the Borrower (on its own behalf and on behalf of each Loan Party) to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness or other obligations at any time owing by, the Lender to
or for the credit or the account of the respective Loan Parties against any and
all Obligations owing to the Lender hereunder or under any other Loan Document,
now or hereafter existing, irrespective of whether or not the Lender shall have
made demand under this Agreement or any other Loan Document and although such
Obligations may be contingent or unmatured or denominated in a currency
different from that of the applicable deposit or indebtedness.  The
Lender agrees promptly to notify the Borrower after any such setoff and
application made by the Lender; provided, however, that the
failure to give such notice shall not affect the validity of such setoff and
application.  The rights of the Lender and their respective Affiliates
under this Section are in addition to other rights and remedies (including,
without limitation, other rights of setoff) that the Lender and its respective
Affiliates may have.

     

    12.09 Counterparts.  This
Agreement and each other Loan Document may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.  Delivery by
telecopier or electronic image transmission (e.g., PDF) of an executed
counterpart of a signature page to this Agreement and each other Loan Document
shall be effective as delivery of an original executed counterpart of this
Agreement and such other Loan Document.  The Lender may also require
that any such documents and signatures delivered by telecopier or electronic
image transmission be confirmed by a manually-signed original thereof; provided that the
failure to request or deliver the same shall not limit the effectiveness of any
document or signature delivered by telecopier or electronic image
transmission.

     

    12.10 Integration.  This
Agreement, together with the other Loan Documents, comprises the complete and
integrated agreement of the parties on the subject matter hereof and thereof and
supersedes all prior agreements, written or oral, on such subject
matter.  In the event of any conflict between the provisions of this
Agreement and those of any other Loan Document, the provisions of this Agreement
shall control; provided that the
inclusion of supplemental rights or remedies in favor of the Lender in any other
Loan Document shall not be deemed a conflict with this
Agreement.  Each Loan Document was drafted with the joint
participation of the respective parties thereto and shall be construed neither
against nor in favor of any party, but rather in accordance with the fair
meaning thereof.

     

    12.11 Survival of Representations
and Warranties.  All
representations and warranties made hereunder and in any other Loan Document or
other document delivered pursuant hereto or thereto or in connection herewith or
therewith shall survive the execution and delivery hereof and
thereof.  Such representations and warranties have been or will be
relied upon by the Lender, regardless of any investigation made by the Lender or
on their behalf and notwithstanding that the Lender may have had notice or
knowledge of any Default or breach of such representation and warranty at the
time the Term Loan were extended, and shall continue in full force and effect as
long as any Loan or any other Obligation hereunder shall remain unpaid or
unsatisfied.

     

    12.12 Severability.  If
any provision of this Agreement or the other Loan Documents is held to be
illegal, invalid or unenforceable, (a) the legality, validity and enforceability
of the remaining provisions of this Agreement and the other Loan Documents shall
not be affected or impaired thereby and (b) the parties shall endeavor in good
faith negotiations to replace the illegal, invalid or unenforceable provisions
with valid provisions the economic effect of which comes as close as possible to
that of the illegal, invalid or unenforceable provisions.  The
invalidity of a provision in a particular jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

     

    12.13 Governing
Law

     

    
      	
              (a)

            	
               THIS
      AGREEMENT AND THE OTHER LOAN DOCUMENTS (EXCEPT AS OTHERWISE EXPRESSLY SET
      FORTH IN ANY SUCH LOAN DOCUMENT), AND THE RIGHTS AND OBLIGATIONS OF THE
      PARTIES HEREUNDER AND THEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
      CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
      OF NEW YORK (INCLUDING SUBSECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF
      THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES
      THAT WOULD REQUIRE APPLICATION OF ANOTHER
LAW.

            


    

     

    
      	
              (b)

            	
               ALL
      JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY LOAN PARTY ARISING OUT OF OR
      RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
      HEREUNDER AND THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF
      COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW
      YORK.  BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH LOAN
      PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, THE LENDER,
      IRREVOCABLY

            


    

     

    
      	
              (i)

            	
               ACCEPTS
      GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF
      SUCH COURTS;

            


    

     

    
      	
              (ii)

            	
               WAIVES
      ANY DEFENSE OF FORUM NON
CONVENIENS;

            


    

     

    
      	
              (iii)

            	
               AGREES
      THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY
      BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO
      BORROWER (IN THE CASE OF ANY LOAN PARTY), OR TO ANY PERSON THAT IS NOT A
      LOAN PARTY, TO SUCH PERSON AT THE APPLICABLE ADDRESS SET FORTH ON SCHEDULE
      12.02;

            


    

     

    
      	
              (iv)

            	
               AGREES
      THAT SERVICE AS PROVIDED IN CLAUSE (iii) ABOVE IS SUFFICIENT TO CONFER
      PERSONAL JURISDICTION OVER IT IN ANY SUCH PROCEEDING IN ANY SUCH COURT,
      AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY
      RESPECT;

            


    

     

    
      	
              (v)

            	
               AGREES
      THAT LENDER RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER
      PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST IT IN THE COURTS OF ANY
      OTHER JURISDICTION; AND

            


    

     

    
      	
              (vi)

            	
               AGREES
      THAT THE PROVISIONS OF THIS SECTION 12.15 RELATING TO JURISDICTION AND
      VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE
      UNDER NEW YORK GENERAL OBLIGATIONS LAW SUBSECTION 5-1402 OR
      OTHERWISE.

            


    

     

    12.14 Waiver of Right to Trial by
Jury.  EACH
OF THE PARTIES HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER
ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS BETWEEN THEM RELATING TO THE
SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE LENDER/COMPANY RELATIONSHIP THAT
IS BEING ESTABLISHED.  THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL
ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING CONTRACT CLAIMS,
TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY
CLAIMS.  EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, WHICH EACH HAS ALREADY RELIED
ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT, AND THAT EACH WILL CONTINUE TO
RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS.  EACH PARTY HERETO
FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL
COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION
12.14 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS HERETO OR
ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING
TO THE TERM LOAN MADE HEREUNDER.  IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.

     

    12.15 Binding
Effect.           This
Agreement shall become effective when it shall have been executed by the Lender,
and shall be binding upon and inure to the benefit of the Loan Parties and the
Lender and their respective successors and assigns, except that the Loan Parties
shall not have the right to assign their respective rights or obligations
hereunder or any interest herein without the prior written consent of the
Lender.

     

     

     [signature pages
follow]

     

    


    
      
        
          
             

            
              *Confidential

            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed as of the date
first above written.

     

     

     

     

    
      
        	 	MOKULELE
      FLIGHT SERVICE, INC., as Borrower	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ William
      J. Boyer Jr.	 
	 	 	Name:
      William J. Boyer Jr. 	 
	 	 	Title:
      CEO, President 	 
	 	 	 	 


      

    

     

    
      
        	 	REPUBLIC
      AIRWAYS HOLDINGS INC. , as Lender	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ Bryan
      Bedford	 
	 	 	Name:
      Bryan Bedford 	 
	 	 	Title: President
      & CEO 	 
	 	 	 	 


      

    

                                  

    
      
        	 	THE
      BRAND BUILDERS, INC., as a Guarantor	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ William
      J. Boyer Jr.	 
	 	 	Name:
      William J. Boyer Jr. 	 
	 	 	Title:
      CEO, President 	 
	 	 	 	 


      



    
      
        	 	MOKULELE
      AIR GROUP, INC., as a Guarantor	 
	 	 	 	 
	
                 

              	
                By:
      

              	/s/ William
      J. Boyer Jr.	 
	 	 	Name:
      William J. Boyer Jr. 	 
	 	 	Title:
      CEO, President 	 
	 	 	 	 


      



    


    
       

    

    
    

    
      
        
          
             

             

            
              


            

            


          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    SCHEDULE
I

    


    PLEDGED
EQUITY

    


     

    
      	
              
                Pledgor

              

            	
              
                Issuer

              

            	
              
                Certificate
      No.

              

            	
              
                Number
      of Shares

              

            
	
              [*]

            	
              [*]

            	
              [*]

            	
              [*]

            
	
              [*]

            	
              [*]

            	
              [*]

            	
              [*]

            


    

    


    


    
      
        
          
             

             

            
              *Confidential

            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    SCHEDULE
II

    


    PLEDGED
DEBT

    


    [*]

    


    
      
        
          
             

             

            
              *Confidential

            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    SCHEDULE
5.02

    


    DEFAULTS

    


    [*]

    


    
      
        
          
             

             

            
              *Confidential

            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    SCHEDULE
5.03

    


    CERTAIN
AUTHORIZATIONS

    


    [*]

    


    
      
        
          
             

             

            
              *Confidential

            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    SCHEDULE
5.11

    


    TAXES

    


    [*]

    


    
      
        
          
             

             

            
              *Confidential

            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    SCHEDULE
5.13

    


    SUBSIDIARIES
AND OTHER EQUITY INVESTMENTS

    


    
      


       

      [*]

       

      


    

    
      1. [*]

    

    
      2. [*]

    

    
      


    

    
      [*]

    

    


    


    


    
      
        
          
             

             

            
              *Confidential

            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    SCHEDULE
5.18(a)(1)

    


    UCC
INFORMATION

    


     

    
      	
              
                Name

              

            	
              
                Jurisdiction
      of Formation/ID Number

              

            	
              
                Address
      of Chief

              

              
                Executive
      Office

              

            
	
              [*]

            	
              [*]

            	
              [*]

            
	
              [*]

            	
              [*]

            	
              [*]

            
	
              [*]

            	
              [*]

            	
              [*]

            
	
              [*]

            	
              [*]

            	
              [*]

            


    

    


    
      
        
          
             

             

            
              *Confidential

            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    SCHEDULE
5.18(a)(2)

    


    UCC
INFORMATION CHANGES

    


    


    [*]

    


    
      
        
          
             

             

            
              *Confidential

            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    SCHEDULE
5.20

    


    DEPOSITS

    
      1.                                [*]

    

    
      


    

    
      2.                                [*]

    

    
      


    

    
      3.                                [*]

    

    
      


    

    
      4.                                [*]

    

    
      


    

    


    
      
        
          
             

             

            
              *Confidential

            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    


    SCHEDULE
5.21

    


    OUTSTANDING
OBLIGATIONS

    


     

    
      [*]

    

    
      


    

    
      


    

    
      See also
attachment to Schedule 5.21

    

    
      


    

    
      


    

    
           [*]

    

    


    


    


    
      
        
          
             

             

            
              *Confidential

            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    SCHEDULE
5.22

    


    EQUITY
INTERESTS

    


    


    See
attached Stock Ledger

    


    


    [*]

    


    
      
        
          
             

             

            
              *Confidential

            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    


    SCHEDULE
5.23

    


    MATERIAL
CONTRACTS AND OBLIGATIONS

    


    [to be
provided by Borrower]

    


    


    


    
      
        
          
             

             

            
              


            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    SCHEDULE
5.24

    


    CAPITAL
STRUCTURE

    


    See
attached spreadsheet

    


    


    [*]

    


    
      
        
          
             

             

            
              *Confidential

            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    


     

    SCHEDULE
5.25

    


    AIRFRAME
LEASES

    


                                                                                                          

     

    
      	 Aircraft Tail No.	 Monthly Rent	Expiration
      Date	 
	 	 	 	 
	1. [*]	[*]	$[*]	 
	 	 	 	 
	2. [*]	[*]	$[*]	 
	 	 	 	 
	3. [*]	[*]	$[*]	 


    

     

    
    

    


    
      
        
          
             

             

            
              *Confidential

            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    SCHEDULE
7.01

    


    LIENS

    


     

     

    
      	
              1.
      

            	[*]
	 	 
	
              2.  

            	
              [*]

            


    

     

    


    


    
      
        
          
             

             

            
              *Confidential

            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    SCHEDULE
7.03

    


    EXISTING
INDEBTEDNESS

    


    See
Schedule 5.21 and its attachment.

     

    [*].

     

    


    


    


    
      
        
          
             

             

            
              *Confidential

            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    SCHEDULE
7.06

    


    PERMITTED
DISPOSITIONS

    


    


    [*]

    


    
      
        
          
             

             

            
              *Confidential

            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    SCHEDULE
12.02

    


    NOTICES

    


    if to the
Borrower:

    


    [*]

    


    copy
to:

    [*]

    


    With copy
to:

    [*]

    


    if to the
Lender:

    


    [*]

    


    With copy
to:

    


    [*]

    


     

    


    


    
      
        
          
             

             

            
              *Confidential

            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
A

     

    FORM OF TERM
NOTE

     

    


     

    THIS NOTE
AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED EXCEPT IN
COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE LOAN AGREEMENT REFERRED TO
BELOW.  TRANSFERS OF THIS TERM NOTE AND THE OBLIGATIONS REPRESENTED
HEREBY MUST BE RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT
PURSUANT TO THE TERMS OF SUCH LOAN AGREEMENT.

     

    $____________ New
York, New York

    ________
__, ____

    FOR VALUE
RECEIVED, the undersigned, MOKULELE FLIGHT SERVICE, INC., a Hawaii
corporation (the “Borrower”),
HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of [NAME OF LENDER] (the
“Lender”)
or its registered assigns to the account specified by the Lender (as defined in
the Loan Agreement (as hereinafter defined)) in Dollars and in immediately
available funds, on the Maturity Date (or earlier in accordance with the terms
of the Loan Agreement) the principal amount of (a) ________________ DOLLARS AND
_________________ CENTS ($_________), or, if less, (b) the aggregate unpaid
principal amount of the Term Loan made by the Lender pursuant to Section 2.01 of
the Loan Agreement.  The Borrower further agrees to pay interest in
like money to such account on the unpaid principal amount hereof from time to
time outstanding at the rates and on the dates specified in Section 2.04 of the
Loan Agreement.

     

    The
holder of this Term Note is authorized to indorse on the schedules annexed
hereto and made a part hereof the date, type and amount of the Term Loan and the
date and amount of each payment or prepayment of principal with respect
thereto.  Each such indorsement shall constitute conclusive evidence
of the accuracy of the information indorsed, absent manifest
error.  The failure to make any such indorsement or any error in any
such indorsement shall not affect the obligations of the Borrower in respect of
the Term Loan.

     

    This Term
Note (a) is the Term Note issued pursuant to that certain Loan Agreement, dated
as of October 10, 2008 (including all annexes, exhibits and schedules thereto,
and as amended, restated, amended and restated, supplemented, restructured or
otherwise modified, renewed or replaced from time to time, the “Loan
Agreement”), among the Borrower, Mokulele Flight Service, Inc., a Hawaii
corporation, the Subsidiaries of the Borrower and Republic Airways Holdings
Inc., as Lender, (b) is subject to the provisions of the Loan Agreement, which
are hereby incorporated by reference, (c) is subject to optional and mandatory
prepayment in whole or in part as provided in the Loan Agreement and (d) is
secured and guaranteed as provided in the Loan Documents.  Reference
is hereby made to the Loan Agreement for a statement of all of the terms and
conditions under which the Term Loan evidenced hereby are made and are to be
repaid.  Reference is hereby made to the Loan Documents for a
description of the properties and assets in which a security interest has been
granted, the nature and extent of the security and the guarantees, the terms and
conditions upon which the security interests and each guarantee were granted and
the rights of the holder of this Term Note in respect thereof.  The
principal balance of the Term Loan, the rates of interest applicable thereto and
the date and amount of each payment made on account of the principal thereof,
shall be recorded by the Lender on its books; provided that the failure of the
Lender to make any such recordation shall not affect the obligation of the
Borrower to make a payment when due of any amount owing under the Loan Agreement
or this Term Note.

     

    Upon the
occurrence of any one or more Events of Default, all principal and all accrued
interest then remaining unpaid on this Term Note shall become, or may be
declared to be, immediately due and payable, all as provided in the Loan
Agreement.  No failure in exercising any rights hereunder or under the
other Loan Documents on the part of the Lender shall operate as a waiver of such
rights.

     

    All
parties now and hereafter liable with respect to this Term Note, whether maker,
principal, surety, guarantor, indorser or otherwise, hereby expressly waive
presentment, demand, protest and all other notices or requirements of any
kind.

     

    Unless
otherwise defined herein, terms defined in the Loan Agreement and used herein
shall have the meanings given to them in the Loan Agreement.

     

    NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE LOAN AGREEMENT, THIS TERM
NOTE MAY NOT BE TRANSFERRED EXCEPT IN ACCORDANCE WITH THE LOAN
AGREEMENT.

     

    [signature page
follows]

    


    
      
        
          
             

             

            
              


            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
B

     

    FORM OF SPARE PARTS SECURITY
AGREEMENT

     

    


     

    


    
      
        
          
             

             

            
              


            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
C

     

    FORM OF AIRCRAFT AND ENGINE
SECURITY AGREEMENT

     

    


     

    


    
      
        
          
             

             

            
              


            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
D

     

    COPY OF EXECUTED AIRLINE
SERVICES AGREEMENT

     

    


     

    


    
      
        
          
             

             

            
              


            

          

           


        

        
           


          
            

          

        

        
           


        

      

    

    


    EXHIBIT
E

     

    FORM OF ADMINISTRATIVE
SERVICES AGREEMENT