Document:

Exhibit 4

 

Exhibit 4.7

 

TERM LOAN AGREEMENT

 

                THIS

TERM LOAN AGREEMENT, dated as of February 19, 2002 (this “Agreement”), is by

and between AIRNET SYSTEMS, INC., an Ohio corporation (the “Company”), and Bank

One, NA, a national banking association (the “Bank”).   The Company desires to obtain a term loan in the aggregate

principal amount of $3,000,000 in order to provide funds for the financing of

an aircraft, and the Bank is willing to make such term loan on the terms and

conditions herein set forth.  In

consideration of the premises and of the mutual agreements herein contained,

the parties hereto agree as follows:

 

 

ARTICLE

I:  DEFINITIONS

 

                1.1           Certain Definitions.              As used herein the following terms

shall have the following respective meanings:

 

                “Credit

Agreement” shall mean the Credit Agreement dated as of December 31, 1999

among the Company, the lenders party thereto from time to time, including the

Bank (the “Lenders”) and Bank One, NA, as agent for the Lenders, as such Credit

Agreement as amended or modified from time to time pursuant to any amendments

agreed to by the Bank, but without giving effect to any other amendments or

modifications of the Credit Agreement.

 

                “Eurodollar

Base Rate” means, with respect to the Eurodollar Loan for the relevant

Interest Period, the applicable British Bankers’ Association LIBOR rate for

deposits in U.S. dollars as reported by any generally recognized financial

information services as of 11:00 a.m. (London time) two Business Days prior to

the first day of such Interest Period, and having a maturity equal to such

Interest Period, provided that, if no such British Bankers’ Association LIBOR

rate is available to the Bank, the applicable Eurodollar Base Rate for the

relevant Interest Period shall instead by the rate determined by the Bank to be

the rate at which the Bank or one of its affiliate banks offers to place

deposits in U.S. dollars with first-class banks in the London interbank market

at approximately 11:00 a.m. (London time) two Business Days prior to the first

day of such Interest Period, in the approximate amount of such Eurodollar Loan

and having a maturity equal to such Interest Period.

 

                “Eurodollar

Loan” shall mean the Term Loan during any time it bears interest at the

Eurodollar Rate.

 

                “Eurodollar

Rate” shall mean, with respect to the Term Loan and the related Interest

Period, the per annum rate that is equal to the sum of:

 

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

 

                (b)           the rate per annum obtained by

dividing (i) the Eurodollar Base Rate for such Interest Period by (ii) an

amount equal to one minus the stated maximum rate (expressed as a decimal) of

all reserve requirements (including, without limitation, any marginal,

emergency, supplemental, special or other reserves) that is specified on the

first day of such Interest Period by the Board of Governors of the Federal

Reserve System (or any successor agency thereto) for determining the maximum

reserve requirement with respect to eurocurrency funding (currently referred to

as “Eurocurrency liabilities” in Regulation D of such Board) maintained by a

member bank such System;

 

all as determined by the Bank, such sum to be

rounded up, if necessary, to the nearest whole multiple of one one-hundredth of

one percent (1/100 of 1%).

 

 

 

 

                “Interest

Payment Date” shall mean the 19 day of each month occurring after the date

hereof, commencing with the first such day occurring after the date of this

Agreement, except that an adjustment will be made if any Interest Payment Date

would otherwise fall on a day that is not a New York Banking Day and a London

Banking Day so that the Interest Payment Date will be the first following day

that is a New York Banking Day and a London Banking Day, unless that day falls

in the next calendar month, in which case the Interest Payment Date will be the

first preceding day that is a New York Banking Day and a London Banking Day.

 

                “Interest

Period” shall mean, with respect to the Eurodollar Loan, each period of

time commencing on each Interest Payment Date and ending on the next Interest

Payment Date, commencing with the Interest Payment Date occurring in February

of 2002 and continuing with each Interest Payment Date thereof.

 

                “London

Banking Day” shall mean any day in which dealings and deposits in U.S.

dollars are transaction in the London interbank market.

 

                “Maturity

Date”  shall mean the Interest

Payment Date occurring in February, 2007.

 

                “New

York Banking Day” shall mean any day other than a Saturday, a Sunday or a

day on which commercial banks in New York City are required or authorized to be

closed.

 

                “Prime

Rate” shall mean the per annum rate announced by the Bank from time to time

as its “prime rate” (it being acknowledged that such announced rate may not

necessarily be the lowest rate charged by the Bank to any of its customers),

which Prime Rate shall change simultaneously with any change in such announced

rate.

 

                “Term

Loan” shall mean the borrowing under Section 2.1 evidenced by the Term

Note.

 

                “Term

Note” shall mean any promissory note of the Company evidencing the Term

Loan, in substantially the form annexed hereto as Exhibit A, as amended or

modified from time to time and together with any promissory note or notes

issued in exchange or replacement therefor.

 

                All

capitalized terms used but not defined herein shall have the meaning ascribed

thereto in the Credit Agreement.

 

ARTICLE II:  THE

TERM LOAN AND PAYMENTS

 

                2.1           Commitment of the Bank.  The Bank agrees, subject to and conditions

of this Agreement, to make a single Term Loan to the Company, and the Company

agrees to borrow such Term Loan from the Bank, on the date hereof, in the

principal amount of $3,000,000.  The

Term Loan made under this Section 2.1 shall be evidenced by the Term Note, and

shall be due and payable and bear interest as provided in Article III.

 

                2.2           Principal Payments.

 

                (a)           Unless earlier payment is required

under this Agreement, the Company shall pay to the Bank the outstanding

principal amount of the Term Loan in sixty equal installments in the amount of

$50,000 payable on each Interest Payment Date and on the Maturity Date, when

the entire outstanding principal amount of, and accrued interest on, the Term

Loan shall be due and payable.

 

 

2

 

                (b)           Upon at least five Business Days’

prior written notice to the Bank and subject to Section 2.7, the Company may

prepay the term loan.

 

                2.3           Interest Payments.  The Company shall pay interest to the Bank

on the unpaid principal amount of the Term Loan, for the period commencing on

the date such Term Loan is made until such Term Loan is paid in full, on each

Interest Payment Date and at maturity (whether at stated maturity, by

acceleration or otherwise), and thereafter on demand, at the following

rates:  (i) the period from the date

hereof until the Interest Payment Date occurring in February of 2002, at the

rate determined by the Bank, and (ii) thereafter, at the applicable Eurodollar

rate.  Notwithstanding the foregoing,

the Company shall pay interest on demand at the Overdue Rate on the outstanding

principal amount of the Term Loan and any other amount payable by the Company

hereunder (other than interest) which is not paid in full when due (whether at

stated maturity by acceleration or otherwise) for the period commencing on the

due date thereof until the same paid in full.

 

                                (b)           The Bank shall reset the Eurodollar

Rate on the second London Banking Day prior to the first day of each Interest

Period, as described in the definition of Eurodollar Rate for the related

Interest Period.  Notwithstanding any

other provision of this Agreement to the contrary, if (i) deposits in Dollars

for the periods comparable to the relevant Interest Periods are not available

to the Bank in the London interbank market, or (ii) the Eurodollar Rate will

not adequately and fairly reflect the cost of the Bank of making, funding or

maintaining the Eurodollar Loan, or (iii) by reason of national or

international financial, political, or economical conditions or by reasons of

any applicable law, treaty, rule or regulation (whether domestic or foreign)

now or hereafter in effect, or the interpretation or administration thereof by

and governmental authority charged with the interpretation or administration

thereof, or compliance by the Bank with any guideline, request or directive of

such authority (whether or not having the force of the law), including without

limitation exchange controls, it is impracticable, unlawful or impossible for

the Bank to make, fund or maintain the Eurodollar Loan, the interest rate

applicable thereafter shall be the Prime Rate.

 

                2.4           Payment Method.  (a) All payments to be made by the Company

hereunder will be made in Dollars and in immediately available funds to the

Bank not later than 1:00 p.m. Colombus time on the date on which such payment

shall become due.  Payments received

after 1:00 p.m. Colombus time shall be deemed to be payments made prior to 1:00

p.m. Columbus time on the next succeeding Business Day.

 

                                (b)           At the time of making each such

payment, the Company shall, subject to the other terms and conditions of this

Agreement, specify to the Bank that obligation of the Company hereunder to

which such payment is to be applied.  In

the event that the Company fails to so specify the relevant obligation or in

any Event of Default shall have occurred and be continuing, the Bank may apply

such payments as it may determine in its sole discretion to obligations of the

Company to the Bank arising under this Agreement or otherwise.

 

                2.5           No Setoff or Deduction.  All payments of principal and interest on

the Term Note and other amounts payable by the Company hereunder shall be made

by the Company without setoff or counterclaim, and free and clear of, and

without deduction or withholding for, or on account of, any present or future

taxes, levies, imposts, duties, fees, assessments, or other charges of whatever

nature, imposed by any governmental authority, or by any department, agency or

political subdivision or taxing authority.

 

                2.6           Payment on Non-business Day:  Payment Computations.  Except as otherwise provided in this

Agreement to the contrary, whenever any installment or principal of, or

interest on, the Term Loan or any other amount due hereunder becomes due and

payable on a day which is not a Business Day, the maturity thereof shall be

extended to the next succeeding Business Day and, in the case of any

installment

 

3

 

of principal, interest shall be payable

thereon at the rate per annum determined in accordance with this Agreement

during such extension.  Computation of

interest and other amounts due under this Agreement shall be made on the basis

of a year of 360 days for the actual number of days elapsed, including the

first day but excluding the last day of the relevant period.

 

                2.7           Indemnification.  If any payment of the Eurodollar Loan occurs

on a date which is not the last day of the applicable Interest Period, whether

because of acceleration, prepayment or otherwise, or a Eurodollar Loan is not

made on the date specified by the Company for any reason, the Company will

indemnify the Bank for any loss or cost incurred by it resulting therefrom,

including, without limitation, any loss or cost in liquidating or employing

deposits acquired to fund or maintain such Eurodollar Loan.

 

                2.8           Yield Protection.  If, on or after the date of this Agreement,

the adoption of any law or any governmental or quasi-governmental rule, regulation,

policy, guideline or directive (whether or not having the force of law), or any

change in the interpretation or administration thereof by any governmental or

quasi-governmental authority, central bank or comparable agency charged with

the interpretation or administration thereof, or compliance by the Bank with

any request or directive (whether or not having the force of law) of any such

authority, central bank or comparable agency:

 

(i)                                     subjects the

Bank to any taxes, or changes the basis of taxation of payments to the Bank in

respect of the Eurodollar loans, or

 

(ii)                                  imposes or

increases or deems applicable any reserve, assessment, insurance charge,

special deposit or similar requirement against assets of, deposits with or for

the account of, or credit extended by, the Bank (other than reserves and

assessments taken into account in determining the interest rate applicable to

the Eurodollar Loan), or

 

(iii)                               imposes any

other condition the result of which is to increase the cost to the Bank of

making, funding or maintaining the Eurodollar Loan or reduces any amount

receivable by the Bank in connection with the Eurodollar Loan or requires the

Bank to make any payment calculated by reference to the amount of the

Eurodollar Loan, by an amount deemed material by the Bank,

 

and the result of any of the foregoing is to

increase the cost to the Bank of making or maintaining a Eurodollar Loan or to

reduce the return received by the Bank in connection with such Eurodollar Loan,

then, within 15 days of demand by the Bank, the Company shall pay the Bank such

additional amount or amounts as will compensate the Bank for such increased

cost or reduction in amount received.

 

                2.9           Changes in Capital Adequacy

Regulations.  If the Bank determines

the amount of capital required or expected to be maintained by the Bank or any

corporation controlling the Bank is increased as a result of a Change, then,

within 15 days of demand by the Bank, the Company shall pay the Bank the amount

necessary to compensate for any shortfall in the rate of return on the portion

of such increased capital which the Bank determines is attributable to this

Agreement or its Commitment hereunder (after taking into account the Bank’s

policies as to capital adequacy). 

“Change” means (i) any change after the date of this Agreement in the

Risk-Based Capital Guidelines or (ii) any adoption of or change in any other

law, governmental or quasi-governmental rule, regulation, policy, guideline,

interpretation, or directive (whether or not having the force of law) after the

date of this Agreement which affects the amount of capital required or expected

to be maintained by the Bank or any corporation controlling the Bank.  “Risk-Based Capital Guidelines” means (i)

the risk-based capital guidelines in effect in the United States on the date of

this Agreement, including transition rules, and (ii) the corresponding capital

regulations promulgated by regulatory authorities outside the United States

implementing the July 1988 report of the Basle Committee on Banking Regulation

and Supervisory Practices Entitled “International Convergence

 

4

 

of 

Capital Measurements and Capital Standards,” including transition rules,

and any amendments to such regulations adopted prior to the date of this

Agreement.

 

ARTICLE III:  COVENANTS

 

                3.1           Incorporation of Covenants from

Credit Agreement.   The Company

covenants and agrees that, until payment in full of the principal of and

accrued interest on the Term Loan and the performance of all other obligations

of the Company under this Agreement and the Term Note, unless the shall

otherwise consent in writing, it shall, and shall cause each of its

Subsidiaries to observe and perform, as incorporated herein, the covenants and

agreements set forth in Article V of the Credit Agreement. All such provisions

of said Article V, including definitions of the defined terms used therein and

exhibits referred to therein, are hereby incorporated by reference and made a

part of this Agreement to the same extent as if set forth fully herein except

that (i) all cross references shall be deemed to refer to the relevant

provision or provisions as incorporated herein, and (ii) reference therein to

“hereof”, “herein” and “hereto” shall be deemed to refer to this Agreement.

 

 

ARTICLE IV:  DEFAULT

 

                4.1           Incorporation of Events of Default

from Credit Agreement.   For the

purpose of determining Events of Default with respect to the Company, Section

6.1 of the Credit Agreement, including definitions of defined terms used

therein, are hereby incorporated by reference and made a part of this Agreement

to the same extent as if set forth fully herein, except that (i) reference in

such sections as incorporated herein to the defined term “Notes” shall be

deemed references to the defined term “Term Note” as defined in this Agreement,

(ii) reference in such sections are incorporated herein to the defined term

“Advances” shall be deemed reference to the defined term “Term Loan” as defined

in this Agreement, (iii) reference to “other documents” in section 6.1(b) as

incorporated herein and the “Loan Document” in section 6.1 shall be deemed to

also include the aircraft security agreement (as amended or modified from time

to time, the “Aircraft Security Agreement”) delivered by the Company in

connection herewith and (iv) references therein to “hereof”, “herein” and

“hereto” shall be deemed references to this Agreement.

 

                4.2           Remedies.   Upon the occurrence and during the

continuance of any Event of Default, the Bank may by notice to the Company

terminate the Bank’s obligations under Section 2.1 hereof, declare the

outstanding principal of, and accrued interest on, the Term Loan, and all other

amounts owing under this Agreement, the Term Note and any other agreement or

document executed in connection herewith at any time to be immediately due and

payable, and exercise all of its rights under the Aircraft Security Agreement

and any other agreement, instrument or document executed or delivered in

connection herewith, or any one or more of the foregoing, whereupon all such

amounts shall become immediately due and payable, as the case may be, provided

that in the case of any event or condition described in Section 6.1(h) of the

Credit Agreement as incorporated herein with respect to the Company, the

Commitment shall automatically become immediately due and payable without

notice; in all cases without demand, presentment, protest, diligence, notice of

dishonor or other formality, all of which are hereby expressly waived.

 

 

5

 

ARTICLE V: MISCELLANEOUS

 

                5.1           Incorporation of Credit Agreement

Provisions.   Any supplement,

amendment, modification, waiver or consent made or granted by the Lenders in

connection with the provisions of the Credit Agreement incorporated herein at

any time after the date hereof shall be deemed a supplement, amendment,

modification, waiver or consent, as the case may be, with respect to such

provisions as incorporated herein if the Bank shall be one of the Lenders

agreeing to such supplement, amendment, modification, waiver or consent.

Notwithstanding anything in this Agreement to the contrary, no termination,

cancellation or expiry of the Credit Agreement shall have any affect whatsoever

upon the provisions thereof as such provisions of the Credit Agreement are

incorporated herein, and all such provisions shall be deemed to survive any

such termination, cancellation or expiry of the Credit Agreement and shall

thereafter continue to be binding upon the Company under this Agreement.

 

                5.2           Conditions To Term Loan.   Prior to making the Term Loan, the Company

agrees to execute and deliver to the Bank (1) the Aircraft Security Agreement

in form and substance satisfactory to the Bank granting to the Bank a first

priority lien and security interest on the aircraft, engines and other

collateral described therein, (2) the Term Note and (3) such resolutions, legal

opinions (including without limitation a lien priority opinion of FAA counsel)

and such other documents as requested by the Bank, each in form and substance

satisfactory to the Bank.

 

                5.3           Expenses.   The Company agrees to pay, or reimburse the

Bank for the payment of, on demand, the reasonable fees and expenses of counsel

the Bank in connection with the preparation, execution, delivery and

administration of this Agreement and the consummation of the transactions

contemplated hereby, and in connection with any amendments, waivers or consents

in connection therewith, and all reasonable costs and expenses of the Bank

(including reasonable fees and expenses of counsel and whether incurred through

negotiations, legal proceedings or otherwise) in connection with any Event of

Default or the enforcement of, or the exercise or preservation of any rights

under, this Agreement or the Term Note or in connections with any refinancing

or restructuring of the credit arrangements provided under this Agreement.

 

                5.4           Representations.   The Company represents and warrants that

all representations and warranties contained in Article IV of the Credit

Agreement are true and correct as if made on and as of the date hereof, that

the execution, delivery and performance by the Company of this Agreement, the

Term Note and the Aircraft Security Agreement have been duly authorized by all

necessary corporate action and are not in contravention of any law, rule,

regulation, judgment or agreement, and that this Agreement, the Term Note and

the Aircraft Security Agreement are the legal, valid and binding obligations of

the Company enforceable against the Company and in accordance with their

respective terms.

 

                5.5           No Waiver By Conduct; Remedies

Cumulative.   No course of dealing on the part of the Bank,

nor any delay or failure on the part of the Bank in exercising any right, power

or privilege hereunder shall operate as a waiver of such right, power or

privilege or otherwise prejudice the Bank’s rights and remedies hereunder; nor

shall any single or partial exercise thereof preclude any further exercise

thereof or the exercise of any other right, power or privilege. No right or

remedy conferred upon or reserved to the Bank under this Agreement or the Term

Note is intended to be exclusive of any other right or remedy, and every right

and remedy shall be cumulative and in addition to every other right or remedy

granted thereunder or now or hereafter existing under any applicable law. Every

right and remedy granted by this Agreement or the Term Note or by applicable

law to the Bank may be exercised from tie to time and as often as may be deemed

expedient by the Bank and, unless contrary to the express provisions of this

Agreement or the Term Note, irrespective of the occurrence or continuance of

any Default or Event of Default.

 

 

6

 

                5.6             Successors and Assigns.  This Agreement shall be binding upon and

inure to the benefit of the parties hereto and their respective successors and

assigns, provided that the Company may not, without the prior consent of

the Bank, assign its rights or obligations hereunder or under the Term Note or

the Aircraft Security Agreement and the Bank shall not be obligated to make the

Term Loan hereunder to any entity other than the Company.

 

                5.7           Counterparts.  This Agreement may be executed in any number

of counterparts, all of which taken together shall constitute one and the same

instrument and any of the parties hereto may execute this Agreement by signing

and such counterpart.

 

                5.8           Governing Law.  This Agreement is a contract made under, and

shall be governed by and construed in accordance with, the law of the State of

Ohio applicable to contracts made and to be performed entirely within such

State and without giving effect to choice of law principled of such State.

 

                5.9           Integration and Severability.  This Agreement, including without limitation

any portion of the Credit Agreement incorporated herein, embodies the entire

agreement and understanding between the Company and the Bank, and supersedes

all prior agreements and understandings, relating to the subject matter

hereof.  In case any one or more of the

obligations of the company under this Agreement, the Term Note or the Aircraft

Security Agreement shall be invalid, illegal or unenforceable in any

jurisdiction, the validity, legality and enforceability of the remaining

obligations of the Company shall not in any way be affected or impaired

thereby, and such invalidity, illegality or unenforceability in one

jurisdiction shall not affect the validity, legality or enforceability of the

obligations of the Company under this Agreement, the Term Note or the Aircraft

Security Agreement in any other jurisdiction.

 

                IN

WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed

and delivered as of the day and year first above written.

 

 

	

  BANK ONE, NA

  	

   

  	

  AIRNET SYSTEMS

  
	

   

  	

   

  	

   

  
	

  By:

  	

  /s/[ILLEGIBLE]

  	

   

  	

  By:

  	

  /s/[ILLEGIBLE]

  
	

   

  	

   

  	

   

  
	

  Its:

  	

  F.V.P

  	

   

  	

  Its:

  	

  CFO

  
							

 

 

7

 

EXHIBIT A

 

TERM

NOTE

 

$3,000,000                                                                                                                              February        , 2002

 

                FOR

VALUE RECEIVED, AIRNET SYSTEMS, INC., an Ohio Corporation (the “Company”),

hereby unconditionally promises to pay to the order of BANK ONE, NA, a national

banking association (the “Bank”), at the principal banking office of the Bank

in lawful money of the United States of America and in immediately available

funds, the principal sum of Three Million Dollars ($3,000,000), payable in

sixty equal monthly installments in the amount of $50,000 payable on each

Interest Payment Date and on the Maturity Date, unless earlier payment payable

is required, when the entire outstanding principal balance of the Term Loan

evidenced hereby, and all accrued interest thereon, shall be due and payable;

and to pay interest on the unpaid principal balance hereof from time to time

outstanding, in like money and funds, for the period from the date hereof until

such Term Loan shall be paid in full, at the rate per annum and on the dates

provided the Term Loan Agreement referred to below.

 

                The

Company and each endorser or guarantor hereof waives demand, presentment,

protest, diligence, notice of dishonor and any other formality in connection

with this Term Note.  Should the

indebtedness evidenced by this Term Note or any part thereof be collected in

any proceeding or be placed in the hands of attorneys for collection, the

Company agrees to pay, in addition to the principal, interest and other sums

due and payable hereon, all costs of collecting this Term Note, including

attorneys fees, expenses.

 

                This

Term Note evidences a term Loan made under a Term Loan Agreement, dated as of

the date hereof (as amended or modified from time to time, the “Term Loan

Agreement”), by and between the Company and the Bank to which reference is

hereby made for a statement of the circumstances under which this Term Note is

subject to prepayment and under which its due date may be accelerated.  Capitalized terms used but not defined in

this Term Note shall have the respective meanings assigned to them in the Term

Loan Agreement.

 

                This

Term Note is made under, and shall be governed by in accordance with, the laws

of the State of Ohio applicable to contracts made and to be performed entirely

within such State and without giving effect to choice of law principles of such

State.

 

 

	

   

  	

   

  	

  AIRNET SYSTEMS

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  By:

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

  Its:Exhibit 4

Exhibit 4.8

 

AIRCRAFT SECURITY AGREEMENT

 

THIS

AGREEMENT, dated as of February 19, 2002, is made by AIRNET SYSTEMS, INC., an

Ohio corporation (the "Company"), in favor of BANK ONE, NA, a

national banking association (the "Bank").

 

RECITAL

 

The Company

and the Bank have entered into a Term Loan Agreement dated as of the date

hereof (as the same may be amended, modified or revised by prior agreement of

the Bank and the Company, the "Loan Agreement").  As a condition to the effectiveness of the

obligations of the Bank under the Loan Agreement, the Company is required,

among other things, to grant to the Bank a security interest in the collateral

hereinafter described.

 

AGREEMENT

 

In

consideration of the premises of the mutual agreements herein contained, the parties

agree as follows:

 

SECTION 1.  

Definitions.

 

1.1           Certain Definitions.  As used herein, the following terms shall have the following

meanings:

 

"Aircraft"

shall mean the Airframes and the Engines.

 

"Airframes"

shall mean each of the Airframes described on Schedule A hereto, together with

any and all Parts related thereto.

 

"Collateral"

shall have the meaning ascribed thereto in Section 2 hereof.

 

"Default"

shall mean any Event of Default and any event or condition which might become

such an Event of Default with notice or with lapse of time, or both.

 

"Engines"

shall mean each of the aircraft engines attached to any Airframe, including

without limitation those described on Schedule B hereto.

 

"Event

of Default" shall have the meaning ascribed thereto in Section 4.1

hereof.

 

"FAA"

shall mean as the context requires, the United States Federal Aviation

Administration and/or the Administrator of the United States Federal Aviation

Administration, or any person, governmental department, bureau, commission or agency

succeeding to the functions of either of the foregoing.

 

"Item

of Equipment" shall mean any Airframe, any of the Engines or any of

the Parts.

 

"Leases"

shall  mean all leases, subleases,

rental agreements, charter agreements, and other agreement or agreements,

whether now or hereafter existing, relating to any Item of Equipment.

 

"Lien"

shall mean any pledge, assignment, hypothecation, mortgage, deposit

arrangement, option, title retaining contract, sale and leaseback transaction,

the filing of any financing statement, lessor's interest under any lease which,

in accordance with generally accepted accounting principles, is or should

 

 

be capitalized, subordination

of any claim or right, or any other type of lien, charge, encumbrance, security

interest, preferential arrangement or other claim or right.  For purposes of this Agreement, the Company

shall be deemed to own subject to a Lien any asset which it has acquired or

holds subject to the interest of a vendor or lessor under any conditional sale

agreement, lease which, in accordance with generally accepted accounting

principles, is or should be capitalized or other title retention agreement

relating to such asset.

 

"Notes"

shall have the meaning ascribed thereto in Section 2 hereof.

 

"Parts"

shall mean any and all appliances, spare parts, engines, propellers,

instruments, appurtenances, accessories, furnishings, seats, and other

equipment and parts of whatever nature (including without limitation radio,

radar, navigation systems, and other electronic equipment) which are

incorporated or installed in or attached to the Aircraft.

 

"Proceeds"

shall have the meaning ascribed thereto in Section 2, clause (vi), hereof.

 

"Reserves"

shall have the meaning ascribed thereto in Section 3.13 hereof.

 

"Secured

Obligations" shall have the meaning ascribed thereto in Section 2

hereof.

 

1.2           Other Definitions: 

Rules of Construction.  As

used herein, the terms the "Bank" and the "Company" shall

have the respective meanings ascribed thereto in the introductory paragraph of

this Agreement and the term the "Loan Agreement" shall have the

meaning ascribed thereto in the recital paragraphs of this Agreement.  Such terms, together with other terms

defined in Section 1.1 hereof, shall include both the singular and plural forms

thereof and shall be construed accordingly.

 

SECTION 2.         Grant

of Security Interests

 

To secure (a)

the prompt and complete payment of the principal sum of $3,000,000.00 (Three

Million Dollars) together with interest thereon, in accordance with the terms of

a promissory note dated as of the date hereof, issued by the Company to the

Bank pursuant to the Loan Agreement, and the payment of the principal of, and

interest on, each promissory note or notes issued in exchange or replacement

therefor (all such promissory notes to herein as the "Notes"), (b)

all obligations and other liabilities with respect to any transaction

(including an agreement with respect thereto) now existing or hereafter entered

into among the Company and the Bank or any subsidiary or affiliate of the Bank,

which is a rate swap, basis swap, forward rate transaction, commodity swap,

commodity option, equity or equity index swap, equity or equity index option,

bond option, interest rate option, foreign exchange transaction, cap

transaction, floor transaction, collar transaction, forward transaction,

currency swap transaction, cross-currency rate swap transaction, currency

option or any other similar transaction (including any option with respect to

any of these transactions) or any combination thereof, whether linked to one or

more interest rates, foreign currencies, commodity prices, equity prices or

other financial measures (any of the foregoing referred to herein as a

"Rate Management Transaction"), (c) the performance of the covenants

herein contained and any monies expended by the Bank in connection therewith

and (d) the payment of all obligations and performance of all covenants of the

Company under the Loan Agreement, any agreement entered into in connection with

any Rate Management Transaction and all other documents, agreements or

instruments between the Company and the Bank, in all cases whether now in

existence or hereafter arising, executed in connection with the Loan Agreement

or any agreement with respect to any Rate Management Transaction, whether now

in existence or hereafter arising, absolute or contingent, direct or indirect

or otherwise, and including without limitation all interests, cost, expenses

and attorneys fees accruing to, or incurred in collecting any of the foregoing,

or protecting, maintaining or liquidating any collateral with respect to any of

the foregoing and further including all obligations incurred or 

 

2

 

accrued during the pendency of

any bankruptcy, insolvency, receivership or similar proceeding, regardless of

whether allowed or allowable in any such proceeding, and all renewals,

extensions, modifications, consolidations or substitutions of any of the

foregoing (all of such indebtedness, obligations and liabilities of the Company

being herein called the "Secured Obligations"), for value received

and pursuant to the Loan Agreement, the Company hereby grants, assigns and

transfers to the Bank a first-priority security interest and lien in and on the

following described property whether now owned or existing or hereafter

acquired or arising and wherever located (all of which is herein collectively

called the "Collateral"):

 

(i)            All the Airframes, Engines and

Parts;

 

(ii)           All rights, title and interest in, to

and under all Leases, and all of the rents, issues, profits, accounts, general

intangibles, chattel paper, and revenues arising from or otherwise relating to

any Item of Equipment, including without limitation those arising under the

Leases, whether now due and payable or hereafter becoming due and payable;

 

(iii)          All right, title and interest in, to

and under all purchase agreements relating to any of the foregoing, and the

full warranty bill of sale for all of the property purchased under such

purchase agreements;

 

(iv)          All books and records related in any

way to any of the above, including, without limitation, all maintenance logs

and flight manuals and logs;

 

(v)           All substitutions and replacements

for, and all additions and accessions to, any and all of the foregoing; and

 

(vi)          All products and proceeds of any and

all of the foregoing, including without limitation, (A) any and all proceeds of

any insurance, indemnity, warranty or guaranty from time to time with respect

to any of the Collateral, (B) any and all payments (in any form whatsoever)

made or due and payable form time to time in connection with any requisition,

confiscation, condemnation, seizure or forfeiture of all or any part of the

Collateral by any governmental body, authority, bureau or agency (or any person

or entity acting under color of governmental authority) and (C) any and all

other amounts from time to time paid or payable under or in connection with any

of the Collateral (all such amounts described in this clause (vi) referred

herein as "Proceeds").

 

SECTION 3.         Warranties,

Covenants and Agreements

 

The company

warrants, covenants, and agrees as follows:

 

3.1           Maintenance and Use.

 

(a)           Maintenance and Repair.  The Company, at its cost and expense, shall

(i) maintain, service, repair, overhaul, and test the Aircraft so as to keep

the Aircraft in as good operating condition as when this Agreement is executed

and delivered by the Company, ordinary wear and tear excepted, (ii) maintain

and keep the Aircraft in good order and repair and airworthy condition in

accordance with the requirements of each of the manufacturers' manuals and

mandatory service bulletins; (iii) maintain and keep the Aircraft in such

condition as may be necessary to enable the airworthiness certification of the

Aircraft to be maintained in good standing at all times under all applicable

laws and regulations; and (iv) without limiting the generality of the

foregoing, cause to be performed, on all Items of Equipment, all applicable

mandatory Airworthiness Directives, Federal Aviation Regulations, Special

Federal Aviation Regulations, and manufacturers' service bulletins relating to

airworthiness.  The Company shall

maintain 

 

3

 

all records, logs and other

materials required to be maintained in respect of the Aircraft by all

applicable laws and regulations, the FAA or other governmental authority, and

shall promptly furnish to the Bank such information as the Bank may request

with respect thereto.  The Company will

not permit the Aircraft to be maintained, used or operated in violation of any

insurance policy provisions or any law, rule, regulation or order of any

government or any governmental authority having jurisdiction (domestic or

foreign), including without limitation the FAA, or in violation of any

airworthiness certificate, license, registration or operating certificate

relating to the Aircraft and issued by any such authority, nor will the Company

suffer the Aircraft to be so maintained, used or operated.  In the event that any law, rule, regulation

or order requires alteration or modification of the Aircraft, the Company will

conform thereto or obtain conformance therewith at no expense to the Bank.  The Company will permit the Aircraft to be

operated only by pilots, appropriately qualified and licensed, considering the

particular authorized business or commercial purpose involved, and will permit

the Aircraft to be maintained only by duly licensed and qualified mechanics.

 

(b)           Overhaul and Replacement.

 

(i)            If any Engine or Part shall reach

such a condition as to require overhaul, repair or replacement in order to

comply with the standards for maintenance and other provisions set forth in

this Agreement, the Company may (A) install on the Aircraft such items of

substantially the same type and of equal or greater value in temporary

replacement of those then installed on the Aircraft, pending overhaul or repair

of the unsatisfactory item; provided, however, that such replacement items must

be in such a condition as to be permissible for use upon the Aircraft in

accordance with the standards for maintenance and other provisions set forth in

this Agreement; provided further, however, that the Company must, at all times,

retain unencumbered title to any and all items temporarily removed; or (B)

install on the Aircraft such items of substantially the same type and of equal

or greater value in permanent replacement of those then installed on the

Aircraft; provided, however, that such replacement items must be in such

condition as to be permissible for use upon the Aircraft in accordance with the

standards for maintenance and other provisions set forth in this Agreement;

provided further, however, that the Company must first comply with each of the

requirements of subsection (ii) below.

 

(ii)           If the Company shall be required or

permitted to install upon any Airframe or any Engine any Parts in permanent

replacement of those then installed on such Airframe or such Engine, the

Company may do so provided that, in addition to any other requirements provided

for in this Agreement:  (A) the Bank is

not divested of its security interest in any item removed from the Aircraft and

no such item shall be or become subject to any Lien other than the security

interest hereunder; (B) the Company's title to every substituted item shall

immediately be and become subject to the security interests of the Bank

hereunder, and each of the provisions of this Agreement; and (C) the Company

shall provide prior notice of such permanent replacement if such replacement is

an engine which is 750 or more rated takeoff horsepower or the equivalent

thereof or is a propeller which is capable of absorbing 750 or more rated

takeoff shaft horsepower or the equivalent thereof and shall execute all

documents and agreements required by the Bank to perfect, further perfect or

re-document a security interest therein or in any other Collateral pursuant to

this Agreement.

 

(c)           Area of Use.  The Company will not operate or suffer the

Aircraft to be operated except within the geographical limits set forth in

applicable insurance policies or operating certificates, whichever may be more

restrictive.  Without limiting the

generality of the foregoing, and as an additional restriction, the Company will

not operate or locate the Aircraft or suffer any Aircraft to be operated or

located outside North America.

 

3.2           Notices. 

The Company shall immediately notify the Bank of each Event of Default,

each material accident involving the Aircraft, each acquisition of any

airframe, any aircraft engine which is 

 

4

 

750

or more rated takeoff horsepower or the equivalent thereof or any aircraft

propeller which is capable of absorbing 750 or more rated takeoff shaft

horsepower or the equivalent thereof, each formal or informal investigation

initiated by the FAA, the Department of Transportation, the National

Transportation Safety Board or any other federal or state agency regulating the

Company, and any other material events affecting the Collateral in any manner.  The Company shall promptly execute all

agreements and other documents requested by the Bank to grant to the Bank a

first-priority security interest in any airframe, aircraft engine which is 750

or more rated take off horsepower or the equivalent thereof, any aircraft

propeller which is capable of absorbing 750 or more rated takeoff shaft

horsepower or the equivalent thereof or any other assets whether now owned by

the Company or hereafter acquired.

 

3.3           Registration and Certificates.  (a) 

From and after the date hereof, the Company has, and at all times

thereafter will have, good title to the Collateral free and clear of all Liens

(other than the Lien created hereunder) and has, and at all times will have,

full power and authority to mortgage and grant a lien and security interest in,

and assign, the Collateral in the manner aforesaid.

 

(b)           The Company is, and

at all times will be, (i) a "Citizen of the United States" as defined

in Section 40102(a)(15) of 49 U.S.C., (ii) an air carrier as to which the provisions

of Section 1110 of the United States Bankruptcy Code apply, and (iii) an air

carrier certificated under Sections 41102(a) and 44705 of 49 U.S.C. and holds

air carrier operating certificates.

 

(c)           Each of the Aircraft

is duly registered with the FAA in the name of the Company and in accordance

with all applicable laws and regulations, and the Company will take all

necessary action to cause such registration to remain in effect.  An airworthiness certificate has been duly

issued under all applicable laws and regulations for each of the Aircraft and

all of such airworthiness certificates are in full force and effect.

 

3.4           Insurance.  (a) The Company, at its cost and expense,

shall procure and continuously maintain in full force and effect policies of insurance

issued by such issuers, in all amounts and covering such risks as are in all

respects satisfactory to and approved by the Bank.  Any policies carried in accordance with this Section 3.4 shall:

(i) designate the Bank as loss payee or beneficiary under such insurance; (ii)

provide that if such insurance is cancelled or materially changed for any

reason whatsoever, or the same is allowed to lapse for non-payment of premium,

such cancellation, change or lapse shall not be effective as to the Bank for thirty

(30) days after receipt by the Bank of written notice from such insurers of

such cancellation or lapse or material change in policy terms and conditions;

and (iii) provide that such policies shall insure the Bank regardless of any

breach or violation of any warranties, declarations or conditions contained in

such policies by the Company.

 

(b)           The Company will

make all payments of insurance premiums and will deliver to the Bank promptly

upon request, the originals of all insurance policies required hereunder

together with evidence of payment of all premiums due thereon.

 

(c)           Any amounts advanced

or expended by the Bank to pay costs of collection of insurance proceeds

hereunder, including without limitation, reasonable attorneys' fees, costs and

disbursements, shall be paid by the Company to the Bank on demand, with

interest thereon from the date of advance or expenditure at the rate of

interest equal to the sum of the per annum rate of interest from time to time

publicly announced by Bank One, NA as its prime rate plus three percent (3%)

per annum (the "Default Rate").

 

(d)           The Company shall be

entitled to negotiate the settlement of any insurance payment from any insurer

in connection with the insurance required hereunder subject to final approval

by the Bank,

 

5

 

provided,

however, that if there is any Default under this Agreement the Company will not

be entitled to negotiate the settlement of any such insurance payments.

 

(e)           Any payments

received by the Bank from any insurance with respect to loss or damage to the

Collateral shall be held by the Bank and, at the Bank's option, (i) applied on

the Indebtedness or (ii) paid over to the Company for use in the replacement or

restoration of the part of the Collateral which suffered such damage or loss.

 

3.5           Ownership Free of Encumbrances.  The Company represents and warrants to the

Bank that the Company is, and will remain, the owner of the Collateral free and

clear of any Liens except the security interests created hereby in favor of the

Bank.  None of the Collateral is subject

to any Lease.  The Company represents

and warrants to the effective date hereof, the Engines are the only aircraft

engines owned by the Company as of the effective date hereof which are 750 or

more rated takeoff horsepower or the equivalent thereof.  The Company will not transfer or offer or

attempt to transfer, by Lease, sale or otherwise, any interest in the

Collateral or possession thereof.  The

Company will defend the Collateral against all claims and demands of all

persons at any time claiming the Collateral or any interest therein.

 

3.6           Recording; Filing; Further

Assurances.  At the request of the

Bank, from time to time, the Company will execute one or more financing

statements in a form satisfactory to the Bank, and will promptly cure any

defects in the execution and delivery of this Agreement or the creation,

perfection or priority of the security interests created hereby, including any

engines or propellers hereafter acquired, and including the execution and

delivery of any documents reasonably requested by the Bank.  The Company shall assist and cooperate with

the Bank in causing to be filed and recorded all documents reasonably required

by the Bank to be filed or recorded in all public or other offices where filing

or recording is deemed by the Bank to be necessary or desirable, including,

without limitation, filing of this Agreement with the FAA and the recording

thereof by the FAA.

 

3.7           Location of Items of Equipment.  The Company shall cause the primary location

and base of all Aircraft at all times to be Port Columbus Airport, Columbus,

Ohio and shall maintain all Parts and other Collateral not installed on any

Aircraft at such location at all times.

 

3.8           Payment of Taxes, Etc.  The Company will pay promptly, and within

the time that they can be paid without interest or penalty, any taxes,

assessments and similar imposts and charges which are now, or hereafter may

become, a Lien, other than the security interest created hereby, upon any of

the Collateral.  If the Company fails to

pay any such taxes, assessments or other imposts or charges in accordance with

this Section 3.8, the Bank shall have the option to do so, and the Company

agrees to repay forthwith all amounts so expended by the Bank together with

interest thereon at the Default Rate.

 

3.9           Reimbursement of Expenses.  The Company will reimburse the Bank for all

expenses, including reasonable attorney fees and legal expenses, incurred by

the Bank in seeking to collect the Indebtedness or any part thereof, in

defending the Bank's security interests and the priority thereof, or in

pursuing any of the Bank's rights or remedies hereunder or under any Note or

any other agreement relating to the Indebtedness.

 

3.10         Records.  The

Company shall keep accurate and complete logs, manuals, books and records

relating to the Collateral, and provide the Bank with copies of reports and

information relating to the Collateral as the Bank may reasonably require from

time to time, and allow the Bank access to all such logs, manuals, books, and

records at any time for purposes of inspection and copying.

 

3.11         Further Representations and

Warranties.  The Company represents

and warrants that (a) the execution, delivery and performance of this Agreement

by the Company are within its corporate powers,

 

6

 

have

been duly authorized and are not in contravention of law or any terms of the

Company's certificate of incorporation or by-laws or of any law, order, judgment,

decree, contract or undertaking to which the Company is a party or by which it

or any of its properties is bound or affected, (b) this Agreement constitutes a

legal, valid and binding obligation of the Company, enforceable against the

Company in accordance with its terms, and (c) this Agreement grants to the Bank

a first-priority, enforceable and perfected security interest which is not void

or voidable in all of the Collateral.

 

SECTION 4.         Defaults, Enforcement and

Application of Proceeds

 

4.2           Events of Default.  The occurence of any one of the following

events or conditions shall be deemed an "Event of Default" hereunder:

(a) nonpayment of the Secured Obligations when due, (b) the failure of the

Company to perform or observe any term or covenant contained in this Security

Agreement, (c) any representation or warranty made by the Company in this

Security Agreement shall prove to have been false or misleading in any material

respect when made, (d) any proceeding in bankruptcy, insolvency or reorganization

shall instituted by or against the Company or (e) the occurence of any Event of

Default (as defined in the Loan Agreement) under the Loan Agreement.

 

4.2           Remedies.  Upon the occurrence of any Event of Default

the Bank shall have and may exercise any or all of the following rights and

remedies, without notice to the Company:

 

(a)           Proceed to

selectively and successively enforce and exercise any and all rights and

remedies which the Bank may have under this Agreement, any other applicable

agreement or applicable law including without limitation: (i) commencing one or

more actions against the Company and reducing the claims of the Bank against

the Company to judgment, (ii) foreclosure or other enforcement of the Bank's

security interest in the Collateral, or any portion thereof, or other

enforcement of the Bank's rights and remedies in respect of and to recover upon

the Collateral, through judicial action or otherwise, including without

limitation all available remedies under the applicable provisions of the

Uniform Commercial Code as enacted in Ohio, and (iii) payment or discharge of

any Lien, prior or subordinate, in respect of or affecting the Collateral.

 

(b)           Require the Company

to assemble the Collateral and make it available to the Bank at such airport

requested by the Bank.

 

(c)           Take possession of

and remove the Collateral wherever the same may be located, without demand or

notice, without any court order or other process of law and without incurring

any liability to the Company for any damages occasioned by such taking of

possession.

 

(d)           Sell, lease or

otherwise dispose of the Collateral at private or public sale, in bulk or in

parcels, and, where permitted by law, without having the Collateral present at

the place of sale.  The parties agree

that public sale of the Collateral by auction conducted in any county in which

the Bank or the Company does business, after advertisement of the time and

place thereof shall, among other manners of public and private sale, be deemed

to a commercially reasonable disposition of the Collateral.  Unless it appears that the value of the

Collateral will decline speedily or the Collateral is a type customarily sold

on a recognized market, or unless the Company has signed a statement (after

delivery of a notice of acceleration of the Indebtedness) renouncing or

modifying the Company's right to notice, the Bank will give the Company

reasonable notice of the time and place of any public sale or other disposition

thereof or the time after which any private sale or other disposition thereof

is to be made.  The requirements of

reasonable notice shall be met if such notice is given to the Company at least

five (5) days before the time of any such sale or disposition.  In addition, the Bank may execute and file

with the FAA for recordation such affidavits, certificates or other documents

as may be necessary or desirable to permit the Bank, their

 

7

 

assignees or nominees to become

the registered owner of the Aircraft or to transfer of record good title to the

Aircraft.  The Bank shall apply the net

proceeds of any such sale, lease or other disposition, after deducting all

reasonable costs and expenses of every kind incurred therein or incidental to

the care or safekeeping of any of the Collateral or in any way relating to the

Collateral or the rights of the Bank hereunder, including, without limitation,

reasonable attorneys' fees and disbursements, in accordance Section 4.5 hereof,

and only after such application and after the payment by any provision of law,

need the Bank account for the surplus, if any, to the Company.  To the extent permitted by applicable law,

the Company waives all claims, damages and demands against the Bank of any of

its rights hereunder.  The Company shall

remain liable for any deficiency remaining after disposition of the Collateral.

 

4.3           Application of Proceeds.  If a Default shall have occurred or be continuing, (a) all

Proceeds received by the Company shall be held by the Company in trust for the

Bank, segregated from other funds of the Company and shall, forthwith upon

receipt by the Company, be turned over to the Bank in the exact from received

by the Company (duly endorsed by the Company to the Bank, if required, or

accompanied by such documents of transfer to the Bank as the Bank may request),

and (b) any and all such Proceeds received by the Bank (whether from the

Company or otherwise) shall be applied by the Bank in accordance with Section

4.5 hereof.

 

4.4           Power of Attorney. 

For purposes of assisting the Bank in exercising its rights and remedies

provided to it under this Agreement, the Company, upon the occurrence and

during the continuance of an Event of Default, hereby irrevocably constitutes

and appoints the Bank its true and lawful attorney, for it and in its name,

place and stead, and irrevocably authorizes the Bank to do any and all acts

which the Company is obligated to do under this Agreement or under any Note

relative to the Collateral.

 

4.5           Application of Liquidation Proceeds.  All monies received by the Bank from its

exercise of remedies under this Agreement, the Note, any related loan document,

under applicable law or otherwise, shall, unless otherwise required by law, be

applied as follows:

 

(a)           First to the payment of all expenses

incurred by the Bank in connection with the exercise of such rights and

remedies, including all costs and expenses of collection, reasonable attorneys'

fees, court costs and expenses of foreclosing on the Collateral;

 

(b)           Next, to the payment of interest then

accrued on the Notes;

 

(c)           Next, to the payment of the principal

balance then owing on the Notes;

 

(d)           Next, to the payment of any other

Secured Obligations; and

 

(e)           Next, to the Company or such other

person and shall be legally entitled thereto.

 

SECTION 5.         Miscellaneous

 

5.1           Governing Law. 

This Agreement shall in all respects be governed by and construed in

accordance with the laws of the State of Ohio.

 

5.2           Successor and Assigns.  This Agreement shall be binding on the Company, the Bank and

their successors and assigns, and all rights and remedies hereunder shall inure

to the benefit of the Bank and its successors and assigns.

 

8

 

5.3           Waivers and Amendments.  None of the terms and provisions of this Agreement may be waived,

altered, modified or amended in any way except by an instrument in writing

executed by duly authorized officers of the Bank and the Company.

 

5.4           Notices. 

Any notice or other communication which by any provision of this

Agreement is required or provided to be given or served upon the Company shall

be deemed to have been duly given or served for all purposes if sent in writing

(including telecommunications) to the Company to the address or telex or

telecopy number set forth after the name of the Company below, or at such other

address or telex or telecopy number as the Company may hereafter specify to the

Bank in writing.  All mailed notices or

other communications shall be by registered or certified mail, postage prepaid,

with return receipt requested.  All

notices or other communications sent by means of telecopy, telex or other wire

transmission shall be made with request for assurance of receipt in a manner

typical with respect to communications of that type.  Written notices or other communications shall be deemed delivered

upon receipt if delivered by hand, three business days after mailing if mailed,

or one business day after deposit with an overnight courier service if

delivered by overnight courier.  Notices

or other communications provided by any of the other means referred to above

shall be deemed delivered upon receipt.

 

5.5           Severability. 

If any one or more provisions of this Agreement should be invalid,

illegal or unenforceable in any respect, the validity, legality and

enforceability of the remaining provisions contained herein shall not in any

way be affected, impaired, prejudiced or disturbed thereby.

 

5.6           Indemnification; Expenses.  (a) The Company hereby agrees to assume

liability and pay for, and does hereby agree to indemnify and hold harmless the

Bank and its successors, assigns, agents and employees, from and against, any

and all liabilities, damages, penalties, suits, costs, and expenses of any kind

and nature (including reasonable attorneys' fees and disbursements), imposed on,

incurred by or asserted against any of them, or any of their successors,

assigns, agents, or employees, in any way relating to or arising out of this

Agreement (including the administration and enforcement hereof), or the

purchase, acceptance, rejection, ownership, delivery, lease, possession, use,

operation, condition, sale, return or other disposition of any Collateral

(including, without limitation, latent and other defects, whether or not

discoverable by the Bank or the Company, any tort claim (whether in strict

liability or otherwise), and any claim for patent, trademark or copyright

infringement).

 

(b)           The Company will, upon demand, pay to

the Bank an amount of any and all reasonable expenses, including the reasonable

fees and disbursements of its counsel and of any experts and agents, which the

Bank may incur in connection with (i) the administration of this Security

Agreement, (ii) the custody, preservation, use or operation of, or the sale of,

collection from or other realization upon, any of the Collateral, (iii) the

exercise or enforcement of any of the rights of the Bank hereunder, or (iv) the

failure of the Company to perform or observe any of the provisions hereof.  The Company will reimburse the Bank for all

expenses, including attorney's fees and disbursements incurred by the Bank in

seeking to collect the Secured Obligations or any part thereof, in enforcing

performance of the Company's obligations under the Loan Agreement, the Notes,

this Security Agreement or any other agreements executed in connection with any

of the foregoing between the Bank and the Company in defending the Bank's

security interests and the priority thereof, or in pursuing any of the Bank's

rights or remedies hereunder or under the Loan Agreement, the Notes, this Security

Agreement or any other agreements between the Bank and the Company.

 

5.7           Consent to Jurisdiction.  Any suit, action or proceeding against the Company arising out of

or relating to this Agreement may be instituted in any court of competent

jurisdiction in the State of Ohio, and the Company hereby irrevocably waives

any objection which it may have or hereafter have to the laying of such venue

of any such suit, action or proceeding and any claim that any such suit, action

or proceeding has been brought in an inconvenient forum, and the Company hereby

irrevocably submits its

 

9

 

person and property to the

jurisdiction of any such court in any such suit, action or proceedings.  The Company hereby consents to the service

of process in any suit, action or proceeding of the nature referred to in this

paragraph by the mailing of a copy thereof registered or certified mail,

postage prepaid, or personally delivering a copy thereof, to the Company,

addressed to the address set forth after the name of the Company below, or at

such other address as the Company may hereafter specify to the Bank in

writing.  Nothing in this paragraph

shall affect the right of the Bank or any Bank to serve process in any other

manner permitted by law or limit the right of the Bank or any Bank to bring

proceedings against the Company or any of its property in the courts of any

other jurisdiction in which it is subject to service of process.

 

5.8           Survival of Representations and Warranties.  All representations and warranties of the

Company contained herein or made in writing by the Company in connection

herewith shall continue and shall survive the execution and delivery of this

Agreement.

 

5.9           No Waiver: Cumulative Remedies.  The Bank shall not by any act (except by a

written instrument pursuant to Section 5.4 hereof), delay, indulgence, omission

or otherwise be deemed to have waived any right or remedy hereunder or to have

acquiesced in any Default or Event of Default or in any breach of any of the

terms and conditions hereof.  No failure

to exercise, nor any delay in exercising, on the part of the Bank, any right,

power or privilege hereunder shall operate as a waiver thereof.  No single or partial exercise of any right,

power or privilege hereunder shall preclude any other or further exercise

thereof or the exercise any other right, power or privilege.  A waiver by the Bank of any right or remedy

hereunder on any one occasion shall not be construed as a bar to any right or

remedy which the Bank would otherwise have on any future occasion.  The rights and remedies herein provided are

cumulative, may be exercised singly or concurrently and are not exclusive of

any rights or remedies provided by law, by the Loan Agreement, by the Notes or

by any other agreement between the Bank and the Company, or between the Bank

and any guarantor of the Secured Obligations or any other party.

 

5.10         Descriptive Headings.  The descriptive headings of the several paragraphs of this

Agreement are inserted for convenience of reference only and shall in no way

modify any of the terms or provisions hereof.

 

5.11         Rights Not Construed as Duties.  The Bank neither assumes nor shall it have

any duty of performance or other responsibility under any contracts in which

the Bank has or obtains a security interest hereunder.  If the Company fails to perform any

agreement contained herein, the Bank may but is in no way obligated to itself

perform, or cause performance of, such agreement, and the expenses of the Bank

incurred in connection therewith shall be payable by the Company under Section

5.6 The powers conferred on the Bank hereunder are solely to protect its

interests in the Collateral and shall not impose any duty upon it to exercise

any such powers.  Except for the safe

custody of any Collateral in its possession and accounting for monies actually

received by it hereunder, the Bank shall have no duty as to any Collateral or

as to the taking of any necessary steps to preserve rights against prior

parties or any other rights pertaining to any Collateral.

 

5.12         Waiver of Jury Trial. The Bank and the Company, after

consulting or having had the opportunity to consult with counsel, knowingly,

voluntarily and intentionally waive any right either of them may have to a

trial by jury in any litigation based upon or arising out of this Security

Agreement or any related instrument or agreement or any of the transactions

contemplated by this Security Agreement or any course of conduct, dealing,

statements (whether oral or written) or actions of either of them.  Neither the Bank nor the Company shall seek

to consolidate, by counterclaim or otherwise, any such action in which a jury

trial has been waived with any other action in which a jury trial cannot be or

has not been waived.  These provisions

shall not be deemed to have modified in any respect or relinquished by either

the Bank or the Company except by a written instrument executed by both of

them.

 

10

 

IN WITNESS

WHEREOF, the parties hereto have caused this Agreement to be duly executed as

of the day and year first above written, which shall be the effective date

hereof.

 

	

   

  	

  AIRNET

  SYSTEMS, INC.

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

   

  	

  /s/ William

  R Sumser

  	

   

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Its:

  	

  CFO

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Address for

  Notices:

  	

   

  	

  William R

  Sumser Chief Financial Officer

  	

   

  
	

   

  	

   

  	

  AirNet

  Systems, Inc 3939 International Gateway Col

  DH 4321:

  	

   

  
	

   

  	

   

  	

  Telephone:

  	

  (614)

  236-3850

  	

   

  
	

   

  	

   

  	

  Telecopy:

  	

  (614)

  237-7876

  	

   

  
	

   

  	

   

  
	

  ACCEPTED AND

  AGREED TO BY:

  	

   

  
	

  BANK ONE, NA

  	

   

  
	

   

  	

   

  
	

  By:

  	

  /s/ [ILLEGIBLE]

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

  Its:

  	

  F.V.P.

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Bank One, NA

  Attn.  David Clark

  	

   

  	

   

  
	

  100 E Broad

  St

  	

   

  	

   

  
	

  Columbus, OH

  43215

  	

   

  	

   

  
	

  Telephone:

  	

  (614)

  248-9785

  	

   

  	

   

  
	

  Telecopy:

  	

  [ILLEGIBLE]

  	

   

  	

   

  
																

 

 

SCHEDULE A

 

SCHEDULE OF AIRFRAMES

 

	

   

  	

   

  	

   

  	

   

  	

  Manufacturer

  Serial Number

  	

   

  	

  FAA Registration

  Number

  
	

  Manufacturer

  	

   

  	

  Model

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Cessna

  	

   

  	

  2001 Caravan

  	

   

  	

  208B0918

  	

   

  	

  N104AN

  
	

   

  	

   

  	

  Super

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Cargomaster

  	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Learjet

  	

   

  	

  1978 Model

  35A

  	

   

  	

  35A-178

  	

   

  	

  N900JC

  

 

 

SCHEDULE B

 

AIRCRAFT ENGINES

 

The following

engines, each of which engine is 750 or more rated takeoff horsepower or the

equivalent thereof:

 

	

   

  	

   

  	

   

  	

   

  	

  Manufacturer

  	

   

  
	

  Manufacturer

  	

   

  	

  Model

  	

   

  	

  Serial

  Number

  	

   

  
	

   

  	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Garret

  	

   

  	

  TFE-731-2-2B

  	

   

  	

  P74906

  	

   

  
	

  Garret

  	

   

  	

  TFE-731-2-2B

  	

   

  	

  P74550

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00039-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00039-of-00352.parquet"}]]