Document:

Exhibit 10.25

 

 

Equipment Finance

PO
Box 230789

Portland.
OR 97281-0789

 

October 16, 2008

 

Alfons Theeuwes

Stellaris LLC

26000 Commercentre Drive

Lake Forest, CA 92630

 

RE: Stellaris LLC

944835

 

Dear Alfons Theeuwes:

 

A recent review of our files indicates that there needs to be an
amendment to the Aircraft Security Agreement dated October 14, 2008 and
all ancillary documents associated with the above-referenced loan. We will
require your acknowledgement of the following change(s):

 

The signature block on all documents is amended to read as follows:

 

Stellaris LLC

By: Premoris Services Corporation, its Member

 

	
  By:

  	
  /s/Alfons Theeuwes

  	
   

  
	
  Alfons Theeuwes

  	
   

  
	
  Senior Vice President of Finance

  	
   

  

 

All other terms of the affected document(s) remain in full force
and effect.

 

Please return this signed acknowledgement to my attention as soon as
possible. Should you have any questions, please do not hesitate to contact me
at (800) 253-3468 Ext. 464.

 

	
  Very truly yours,

  	
  Correction or Change
  Acknowledged & Agreed

  
	
   

  	
  Stellaris LLC

  
	
   

  	
  By: Premoris Services Corporation, its Member

  
	
   

  	
   

  
	
   

  	
   

  
	
  Gloria Brogan

  	
  By:

  	
  /s/Alfons Theeuwes

  
	
  Documentation Specialist

  	
  Alfons Theeuwes

  
	
   

  	
  Senior Vice President of Finance

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
  10/16/08

  
				

 

APPROVED:  
ORIGINAL GUARANTOR(S) HEREBY ACKNOWLEDGE THAT THEIR GUARANTIES REMAIN IN
FULL EFFECT.

 

	
  ARB, Inc.

  	
   

  
	
   

  
	
  BY:

  	
  /s/ Brian B. Pratt

  	
   

  
	
  Brian B. Pratt

  	
   

  
	
  President

  	
   

  
			

 

 

 

Equipment Finance

PO
Box 230789

Portland,
OR 97281-0789

 

October 21,
2008

 

Alfons
Theeuwes

Stellans
LLC

26000
Commercentre Drive

Lake
Forest, CA 92630

 

RE:
Stellaris LLC

944835-AFS

 

Dear
Alfons Theeuwes:

 

A
recent review of our files indicates that there needs to be an amendment to the
Promissory Note dated October 14, 2008 associated with the
above-referenced Schedule. We will require your acknowledgement of the
following change(s):

 

Paragraph
2 - Fifty Nine (59) installments in the amount of $43,230.10 each, followed by
One (1) installment in the amount of $2,145,402.92 have been amended to
Fifty Nine (59) installments in the amount of $43,026.83 each, followed by One
(1) installment in the amount of $2,145,402.92.

 

Paragraph
3 - the rate of 5.958 percent per annum has been amended to 5.88 percent per
annum

 

Paragraph
6 has been amended to read as follows:

Debtor
may not prepay this Schedule for the first two (2) years, thereafter
Debtor may prepay this Schedule in whole or in part, without paying any
premium.

 

All
other terms of the affected document(s) remain in full force and effect.

 

Please
return this signed acknowledgement to my attention as soon as possible. Should
you have any questions, please do not hesitate to contact me at (800) 253-3468
Ext. 464.

 

	
  Very
  truly yours,

  	
  Correction or Change Acknowledged & Agreed

  
	
   

  	
  Stellaris LLC

  
	
   

  	
  By: Premoris Services Corporation, its Member

  
	
   

  	
   

  
	
   

  	
   

  
	
  Gloria
  Brogan

  	
  By:

  	
  /s/Alfons Theeuwes

  
	
  Documentation
  Specialist

  	
  Alfons Theeuwes

  
	
   

  	
  Senior Vice President of Finance

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Dated:

  	
   

  
	
   

  	
   

  
	
  cc:
  Erica Holbrook

  	
   

  
	
   

  	
   

  
	
  9/06

  	
   

  
				

 

 

	
  

  	
  PROMISSORY NOTE

  

 

Equipment Finance

 

Stellaris LLC

26000 Commercentre Drive

Lake Forest, CA 92630

 

	
  $3,800,000.00

  	
   

  	
  Effective
  Date 10/17/08

  	
   

  	
  Schedule Number 944835-AFS

  

 

1.    This Promissory Note (“Note,” also known as
“Schedule”) is made between Stellaris LLC
(“Debtor”), and U.S. Bancorp  Equipment
Finance, Inc. (which, together with its successors and assigns,
shall be called the “Secured Party”). This Note is secured by an assignment of
and security interest in certain Collateral, as defined in an Aircraft Security
Agreement (“Security Agreement”) executed contemporaneously herewith between Debtor
and Secured Party, which Security Agreement is incorporated by reference
herein. Capitalized terms used in this Note which are not otherwise defined
herein shall have the meanings given in the Security Agreement.

 

2.    For value received, Debtor hereby promises
to pay to the order of Secured Party the principal amount of Three Million
Eight Hundred Thousand and no/100 Dollars ($3,800,000.00) with interest on any
outstanding principal balance at the rate(s) specified herein from the
Effective Date hereof until this Schedule shall have been paid in full in
accordance with the following payment schedule: Fifty Nine (59) installments in
the amount of $43,230.10 each, followed by One (1) installment in the
amount of $2,145,402.92 including the entire amount of interest accrued on this
Schedule at the time of payment of each installment. The first payment shall be
due November 10, 2008 and a like payment shall be due on the same day of
each succeeding month thereafter until the entire principal and interest have been
paid. At the time of the final installment hereon, all unpaid principal and
interest shall be due and owing. Each payment shall be applied first to accrued
and unpaid interest, and the balance to the outstanding principal hereof. As a
result, such final installment may be substantially more or substantially less
than the installments specified herein.

 

3.    Debtor promises to pay interest on the
principal balance outstanding at a rate of 5.958 percent per annum.

 

4.    Interest shall be calculated on the basis of
a 360-day year. In no event shall this Note be enforced in any way which
permits Secured Party to collect interest in excess of the maximum lawful rate.
Should interest collected exceed such rate, Secured Party shall refund such
excess interest to the Debtor. In such event, the Debtor agrees that Secured
Party shall not be subject to any penalties provided by law for contracting for
or collecting interest in excess of the maximum lawful rate.

 

5.    PAYMENT ADJUSTMENT.
In the event that a forward rate lock agreement has not been executed, on the
date of funding (the ‘Adjustment Date’) the interest rate set forth herein and
the installments due hereunder shall be recalculated based upon changes in the
spot rate of 60-month U. S. Bancorp’s Funds Transfer Pricing Rate/Cost of Funds
(the “Spot Rate”) from September 17, 2008 until the Adjustment Date. If,
on the Adjustment Date, the Spot Rate is greater or less than 4.48%, then such
interest rate and installments shall be adjusted accordingly to reflect the actual
rate. Thereafter, the interest rate and installments shall remain fixed during
the Term hereof.

 

6.    Debtor may prepay this Schedule, in whole or
in part, by paying simultaneously with and in addition to the prepayment, a
premium for such prepayment privilege equal to the greater of: (1) 3% of
the amount prepaid during months one (1) to twelve (12), 1% of the amount
prepaid during months thirteen (13) to thirty-six (36), 0% of the amount
prepaid during months thirty-seven (37) to sixty (60), or (2) an amount
calculated as follows: the maximum of: (a) zero, or (b) that amount
which is derived by subtracting: (i) the Net Present Value of the
remaining payments discounted at the Initial Rate from (ii) the Net
Present Value of the remaining payments discounted at the Rate at Prepayment.

 

Net Present Value
shall mean the amount which is derived by summing the present values of each
prospective payment of principal and interest which, without such full or
partial prepayment, could otherwise have been received by Secured Party over
the shorter of the remaining term of the Schedule or until the next repricing
date.

 

 

Initial Rate
shall mean the rate per annum, determined solely by Secured Party, on the first
day of the term of this Schedule or the most recent repricing date, as the rate
at which Secured Party would be able to borrow funds in Money Markets for the
amount of this Schedule and for a like maturity.

 

Rate at Prepayment shall mean that zero-coupon rate, calculated on the date of prepayment,
and determined solely by Secured Party, as the rate at which Secured Party
would be able to borrow funds in Money Markets for the prepayment amount
matching the maturity of the remaining term of the Schedule.

 

Money Markets
shall mean one or more wholesale funding mechanisms available to Secured Party,
including negotiable certificates of deposit, eurodollar deposits, bank notes,
fed funds, interest rate swaps, or others.

 

If
Debtor fails to pay any prepayment premium when due, the amount of such premium
shall thereafter bear interest until paid at the default rate specified in this
Schedule. Any prepayment of principal shall be accompanied by a payment of
interest accrued thereon to date; and the prepayment shall be applied to the
principal installments in the inverse order of their maturities. Except in the
event of a casualty loss, all prepayments shall be in an amount of at least
$100,000 or, if less, the remaining entire principal balance of the loan.
Notwithstanding the foregoing, payments made within 30 days of the date an
installment is due which do not exceed the scheduled amount of such installment
shall not be considered prepayments.

 

7.    All payments on this Note shall be made in
lawful money of the United States at such address as Secured Party may
designate to Debtor in writing from time to time.

 

8.    Any notices or demands required to be given
herein shall be given to the parties in writing by facsimile transmission, or
by overnight courier or United States mail (first class, express, certified or
otherwise) at the addresses set forth in the Security Agreement or to such
other addresses as the parties may hereafter substitute by written notice given
in the manner prescribed in this paragraph. If Debtor consists of more than one
person, notification of any of said persons shall be complete notification of
all. Notice may be given either before or reasonably soon after the effective
date of each change.

 

9.    If any of the obligations hereunder remains
overdue for more than ten (10) days, Debtor hereby agrees to pay on
demand, as a late charge, an amount equal to the lesser of (i) five
percent (5%) of each such overdue amount; or (ii) the maximum percentage
of any such overdue amount permitted by applicable law as a late charge. Debtor
agrees that the amount of such late charge represents a reasonable estimate of
the cost to Secured Party of processing a delinquent payment and that the
acceptance of any late charge shall not constitute a waiver of default with
respect to the overdue amount or prevent Secured Party from exercising any
other available rights and remedies.

 

10.  Upon the happening of any Event of Default
which is not cured within ten (10) days or at any time thereafter, all
liabilities of Debtor shall, at the option of Secured Party, become immediately
due and payable and Secured Party shall have and may exercise any and all of
the rights and remedies granted in the Security Agreement.

 

11.  Unless expressly provided otherwise in this
Note, the Security Agreement and Note are non-cancelable and may not be prepaid.
The waiver by Secured Party of any default hereunder or of any provisions
hereof shall not discharge any party hereto from liability hereunder and such
waiver shall be limited to the particular Event of Default and shall not
operate as a waiver of any other or subsequent default. No modification of this
Note or waiver of any right of Secured Party hereunder shall be valid unless in
writing and signed by an authorized officer of Secured Party. No failure on the
part of Secured Party to exercise, or delay in exercising, any right or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any right or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right or remedy. The provisions
of this Note and the rights and remedies granted to Secured Party herein shall
be in addition to, and not in limitation of those of any other agreement with
Secured Party or any other evidence of any liability held by Secured Party or
under any applicable law or in equity. The Security Agreement and Note embody
the entire agreement between the parties and supersede all prior agreements and
understandings relating to the same subject matter. The rights and liabilities
of the parties under this Note shall be governed by applicable federal law and
the laws of the state of Oregon. The Debtor, if more than one, agree to be
jointly and severally liable on this Note, and that the term “Debtor,” as used
herein, means any one or more of them. References herein to the “Security
Agreement” and the “Note” shall mean the Security Agreement and Note as each
may respectively be amended from time to time.

 

12.  Each of the Debtors, if more than one, and all
other parties who at any time may be liable hereon in any capacity, hereby
jointly and severally waive diligence, demand, presentment, presentment for
payment, protest, notice of protest and notice of dishonor of this Note, and
authorize Secured Party, without notice, to grant extensions in the time of
payment of and reductions in the rate of interest on any monies owing on this
Note. It is hereby certified and recited that all acts, conditions and things
necessary to be done precedent to and in

 

 

the
issuance of this Note, in order to make it a legal, valid and binding
obligation of Debtor, have happened and have been done and performed in regular
and due form as required by law.

 

13.  Debtor hereby appoints Secured Party as its
Attorney-in-Fact to insert in this Note the Effective Date in accordance with
the Equipment Acceptance and Authorization to Pay Proceeds form executed by
Debtor in connection herewith.

 

IN WITNESS WHEREOF, Debtor has executed this Note as of this 14  day of October, 2008

 

	
   

  	
  Stellaris
  LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Alfons
  Theeuwes

  
	
   

  	
  Alfons
  Theeuwes

  
	
   

  	
  Senior
  Vice President of Finance

  

 

8/05

 

ADDRESS FOR ALL NOTICES:

PO Box 230789

Portland, OR 97281-0789

 

 

	
  

  	
  EQUIPMENT ACCEPTANCE AND

  AUTHORIZATION TO PAY PROCEEDS

  AND LOAN AMENDMENT

  

 

Equipment Finance

 

Schedule Number 944835-AFS

 

To:         U.S.
Bancorp Equipment Finance, Inc.

 

Re:          Promissory Note and Aircraft Security Agreement dated as of October 14, 2008 (the “Agreements”) between U.S.  Bancorp
Equipment Finance, Inc., as Secured Party, and Stellaris LLC, Debtor.

 

YOU ARE HEREBY AUTHORIZED to disburse the proceeds of the loan evidenced
by the above Agreements as follows for the purchase of the personal property
specified (the “Collateral”):

 

	
  $3,800,000.00

  	
   

  	
  Stellaris LLC

  

 

One (1) Cessna Citation Bravo Model 550 , serial #  550-0971,
Federal Aviation Registration Number N717GK, equipped with Two (2) Pratt &
Whitney Canada PW530A serial #’s PCE-DA0355 and PCE-DA0352 each in excess of
550 S.H.P.;

 

including, but not limited to: (i) all avionics,
accessories, improvements, components, instruments, furnishings, substitutions,
additions, replacements, parts, tools and equipment now or hereafter affixed to
or used in connection with such airframe, engines and/or propellers, together
with all products and proceeds thereof, including but not limited to all leased
and/or chartered income and all insurance recoveries; and (ii) all
maintenance, support, supply, warranty, and/or service rights relating to such
airframe, engines, and/or propellers, and any claims thereunder, including but
not limited to rights and claims under any maintenance, support, supply and/or
service plans or contracts.

 

The above aircraft is complete as equipped.

 

	
  TOTAL AMOUNT TO BE DISBURSED

  	
   

  	
  $3,800,000.00

  

 

YOU ARE HEREBY FURTHER AUTHORIZED to insert in the Agreement the date of disbursement of funds under this Authorization as the Effective
Date of the Agreement.

 

WE HEREBY CERTIFY AND ACKNOWLEDGE FOR THE BENEFIT OF SECURED
PARTY THAT: a) the
Collateral has been delivered to us; b) any necessary installation of the
Collateral has been fully and satisfactorily performed; c) after full
inspection thereof, we have accepted the Collateral for all purposes as of the
date hereof; d) upon the disbursement of the proceeds of the loan as set forth
above, the Secured Party will have fully and satisfactorily satisfied all its
obligations under the Agreements; e) any and all conditions to the effectiveness of the Agreements or to our obligations
under the Agreements have been satisfied; f) we have no defenses, set-offs or
counterclaims to any such obligations; and, g) the Agreements are in full force
and effect.

 

WE HEREBY REPRESENT AND WARRANT FOR THE BENEFIT OF SECURED
PARTY THAT: a) any
right we may have now or in the future to reject the Collateral or to revoke
our acceptance thereof has terminated as of the date of hereof; b) we hereby
waive any such right; c) the date of this Authorization is the earliest date
upon which the certifications, acknowledgments, representations and warranties
made herein could be correctly and properly made. We hereby acknowledge that the
Secured Party is relying on this Authorization as a condition to disbursing the
proceeds of the loan as set forth above.

 

IN WITNESS WHEREOF, we have executed this Certificate as of the 14 day of October, 2008.

 

	
  Please
  sign, date and return to:

  	
  Stellaris LLC

  
	
   

  	
   

  
	
  U.S.  Bancorp
  Equipment Finance, Inc.

  	
  By:

  	
  /s/ Alfons Theeuwes

  
	
  13010 S. W. 68th Parkway

  	
  Alfons
  Theeuwes

  
	
  Portland, OR 97223

  	
  Senior
  Vice President of Finance

  

 

6/04

 

 

	
  

  	
  ASSIGNMENT FOR SECURITY PURPOSES

  (Rental and Lease Agreements)

  

 

Equipment
Finance

 

Schedule Number 944835-AFS

 

For
valuable consideration, Stellaris LLC
(“Assignor”), intending to be legally bound, in order to secure all obligations
owing now or hereafter by Assignor to U.S. Bancorp Equipment
Finance, Inc. and its successors and assigns (“Assignee”),
hereby grants a security interest in and assigns to Assignee certain chattel
paper, consisting of any and all now-existing or hereafter-arising rental and
lease agreements and all income, rents, accounts, payment intangibles, and
monies arising now or hereafter thereunder and all proceeds of any of the
foregoing (the “Leases”) between Assignor, as Lessor, and any respective
renters and sub-users (“Lessees”), relating to the equipment and/or inventory
described on Exhibit A attached hereto, and all rights, powers, and
remedies in the Leases, including the right, after a default by Assignor under
any transaction with Assignee, to collect all rents, income, and sums due or to
become due thereon and on any notes, contracts of guaranty or surety and
collateral of any kind or nature which Assignor has or may have, now or
hereafter, and any and all proceeds of all of the foregoing (all the property
assigned being called the “Assigned Property”), and the right, either in
Assignee’s own name, or in Assignor’s name, to take such actions as Assignor
might have taken save for this assignment.

 

Assignor
guarantees the payment when due of each sum payable under the Leases
(regardless of any right of Lessees to abatement or adjustment) and the payment
upon demand of the entire unpaid balance in the event of any default under the
Leases, without first requiring Assignee to proceed against Lessees. Assignor
has retained, and does not assign to Assignee, any of Assignor’s obligations,
representations or warranties under the Leases, and Assignor shall fully
perform all such obligations thereunder. ASSIGNEE SHALL HAVE NO OBLIGATIONS FOR
MAINTENANCE, SERVICE, SECURITY, INDEMNITY, LICENSING AND OBTAINING PERMITS,
FURNISHING OF FUEL, PARTS, ACCESSORIES OR REPLACEMENTS, OR ANY OTHER
OBLIGATIONS OR WARRANTIES OF ASSIGNOR UNDER THE LEASES.

 

Assignor
further represents and covenants that Assignor has not assigned and will not
assign the Leases and its rights thereunder to anyone other than Assignee and
Assignee shall have a first-priority perfected security interest therein; there
is and shall be only one counterpart of the Leases; Assignor is the lawful
holder of the Leases; if Assignee requests, the original Leases and related
documents have been or will be delivered by Assignor to Assignee. Assignor will
reimburse Assignee for all expenses of collection, repossession, and sale
incurred by Assignee in connection with enforcing its rights hereunder,
including but not limited to, attorney’s fees and court costs. Assignor agrees
that Assignee may audit Assignor’s books and records relating to the Assigned
Property and agrees that, without notice to or assent by Assignor, and without
releasing the liability of Assignor hereunder, Assignee may: (i) take any
action under the provisions of the Leases, (ii) release any rights
against, grant extensions of time to, and compromise claims with, Lessees, and
(iii) repossess and resell or release any or all of the Assigned Property.
Assignor waives any surety defenses. This Assignment shall be binding upon, and
inure to the benefit of the parties hereto and their respective successors and
assigns, and shall be governed by the laws of the state of Oregon. The parties
each submit to the jurisdiction of any state or federal court sitting in
Portland, Oregon over all claims in any action or proceeding arising from or
relating to this Assignment. THE PARTIES EACH IRREVOCABLY WAIVE ALL RIGHTS TO
TRIAL BY JURY IN ANY LITIGATION ARISING FROM OR RELATING TO THIS ASSIGNMENT.
Assignor hereby authorizes Assignee to file and amend, as Assignee may deem
necessary, financing statements regarding the Assigned Property. In any effort
to enforce this Assignment, the prevailing party shall be entitled to an award
of its reasonable attorney fees, including any incurred before suit is
commenced, prior to or at trial, in any appeal and in any other proceeding.

 

IN WITNESS WHEREOF, the parties hereto have caused this Assignment for Security Purposes to
be duly executed as of October, 2008.

 

	
  U.S. Bancorp Equipment Finance, Inc.

  	
   

  	
  Stellaris LLC, Assignor

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ [Illegible] 

  	
   

  	
  By:

  	
  /s/Alfons
  Theeuwes

  
	
  An Authorized Officer Thereof

  	
   

  	
  Alfons
  Theeuwes

  
	
   

  	
   

  	
  Senior
  Vice President of Finance

  
					

 

1/07

 

ADDRESS FOR ALL NOTICES TO ASSIGNEE:

PO Box 230789

Portland, OR 97281-0789

 

 

	
  

  	
  EXHIBIT “A”

  

 

Equipment Finance

 

Schedule Number 944835-AFS

 

The
Assigned Collateral (as defined and used in the Assignment for Security
Purposes) includes the following:

 

One
(1) Cessna (described as CESSNA on the International Registry drop down menu)
Model 550, serial # 550-0971, Federal Aviation Registration Number N717GK,
equipped with Two (2) Pratt & Whitney Canada model PW530A engine
serial #’s PCE-DA0355 and PCE-DA0352 (described on the International Registry
drop down menu as PRATT & WHITNEY CANADA model PW500 SERIES with
serial numbers DA0355 and DA0352, respectively) each in excess of 550 shp;

 

including,
but not limited to: (i) all avionics, accessories, improvements,
components, instruments, furnishings, substitutions, additions, replacements,
parts, tools and equipment now or hereafter affixed to or used in connection
with such airframe, engines and/or propellers, together with all products and
proceeds thereof, including but not limited to all leased and/or chartered
income and all insurance recoveries; and (ii) all maintenance, support,
supply, warranty, and/or service rights relating to such airframe, engines,
and/or propellers, and any claims thereunder, including but not limited to
rights and claims under any maintenance, support, supply and/or service plans
or contracts.

 

The
above Aircraft is type certified by the Federal Aviation Administration to
transport at least eight persons including crew or goods weighing in excess of
2,750 kilograms.

 

The
above Engines are powered by jet propulsion and each has at least 1,750 pounds
of thrust or its equivalent.

 

The
above aircraft is complete as equipped.

 

Plus

 

Certain
chattel paper, consisting of any and all now existing or hereafter arising
rental and lease agreements and all rents, income, accounts, payment
intangibles, and sums due arising now or hereafter thereunder and all proceeds
of any of the foregoing (each an “Agreement” and collectively the “Agreements”)
between Assignor and its sub-users, and relating to the equipment and/or inventory
that is the subject of such Agreements and is described above. Any purchase of
an Agreement, or perfection of a security interest therein by possession or
other control of the Agreement, violates the rights of U.S. Bancorp
Equipment Finance, Inc. (and its successors and assigns).

 

	
  U.S.
  Bancorp Equipment Finance, Inc.

  	
   

  	
  Stellaris
  LLC

  
	
  [Assignee]

  	
   

  	
  [Lessor]

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ [Illegible] 

  	
   

  	
  By:

  	
  /s/Alfons
  Theeuwes

  
	
  An
  authorized officer thereof

  	
   

  	
  Alfons
  Theeuwes

  
	
   

  	
   

  	
  Senior
  Vice President of Finance

  
					

 

 

	
  

  	
  AIRCRAFT
  SECURITY AGREEMENT

  

 

Equipment
Finance

 

Schedule Number 944835-AFS

 

1.0  PARTIES,
COLLATERAL AND OBLIGATIONS

 

1.1   For valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Stellaris
LLC (hereinafter called “Debtor”) with offices at 26000 Commercentre
Drive, Lake Forest, CA 92630 intending to be legally bound, hereby grants a
first priority security interest in and assigns, transfers and sets over to U.S. Bancorp Equipment Finance, Inc., an Oregon
corporation having offices at PO Box 230789, Portland, OR 97281-0789
(hereinafter called “Secured Party”), and to the successors and assigns
thereof, the property specified in Section 7.0 wherever located, any and
all proceeds thereof, Associated Rights (as defined below), insurance
recoveries, and all replacements, additions, accessions, accessories and
substitutions thereto or therefor, and all logs, manuals, records and documents
issued for and reflecting the use thereof (hereinafter called the “Aircraft”).
The security interest granted hereby is to secure the payment and performance
of the Promissory Note of even date herewith (the “Note”), as well as any and
all liabilities or obligations of Debtor to the Secured Party, matured or
unmatured, direct or indirect, absolute or contingent, heretofore arising, now
existing or hereafter arising, and whether under this Agreement or under any other
writing between Debtor and Secured Party (all hereinafter called the “obligations”
and/or the “liabilities”). In the event there is more than one Debtor, all
obligations shall be joint and several obligations of all Debtors regardless of
the source of Collateral (as hereinafter defined) or the particular Debtor with
which the obligation originated, and each Debtor waives any surety defenses
that it might raise with respect to any other Debtor. For the purposes of this
Agreement, (a) the term “Associated Rights” and certain other terms used
but not defined in this Agreement, or by reference to any other source, shall
have the meaning provided for that term in the Cape Town Convention; and (b) the
term “Cape Town Convention” shall mean and include, collectively, the official
English language texts of Convention on International Interests in Mobile
Equipment (the “Convention”) and the Protocol to the Convention on
International Interests in Mobile Equipment on Matters Specific to Aircraft
Equipment (the “Aircraft Protocol”), each adopted on 16 November 2001 at a
diplomatic conference held in Cape Town, South Africa, together with all
regulations and procedures promulgated pursuant thereto (the “International
Registry Regulations and Procedures”), as the same may be amended or modified
from time to time.

 

1.2   Assignment
and Security Interest. Debtor hereby grants a first priority security interest
in and assigns, transfers and sets over to Secured Party, and Secured Party
hereby accepts collateral assignment of, any and all leases and charter
agreements relating to the Aircraft and any proceeds thereof (each a “Lease”,
and collectively, the “Leases”) and all of Debtor’s right, title and interest
in and to the property leased pursuant to the Leases and all rights, powers and
remedies therein, to further secure the payment and performance by Debtor of
the obligations; provided that Debtor shall not enter into any Lease without
Secured Party’s prior written consent in accordance with Section 6.2 of
this Agreement. Each lessee who is a party to each such Lease shall be referred
to herein as a “Lessee.” Debtor shall deliver to Secured Party all original(s) of
any Leases. The Leases and Aircraft shall be collectively referred to herein as
the “Collateral.” Debtor hereby consents to the registration of such security
interest granted to Secured Party in any such Lease with the international
registry established pursuant to the Cape Town Convention and located in
Dublin, Ireland (the “International Registry”) and shall, at closing, authorize
its Professional User Entity to consent to the registrations of the
International Interests (as defined in the Cape Town Convention) therein. Any
such Lease shall be expressly subject and subordinate to this Agreement. Should
an Event of Default (as defined herein) occur and continue, Secured Party shall
have the right, either in its own name, or in Debtor’s name, to notify each
Lessee that Secured Party should thereafter be regarded by such Lessee as
Secured Party under each Lease and that Debtor shall no longer have any right,
title or interest in or to such Lease. Thereafter, Secured Party may take any
action under the provisions of the Leases as assignee of the Debtor’s interest
in such Leases in accordance with the terms thereof, and may release any rights
against, grant extensions of time to, and compromise claims with, each Lessee
and may repossess and resell or re-lease the property which is the subject
thereof. Debtor shall reimburse Secured Party for all expenses of collection
and repossession incurred by Secured Party in connection with enforcing its
rights under the Leases, including but not limited to, reasonable attorney’s
fees, court costs, expenses of repossession and sale and interest on overdue
payments. Debtor agrees that Secured Party may, upon reasonable prior notice
and at a reasonable time, audit Debtor’s books and records relating to the
Leases. Each Lease shall be filed with the U.S. Federal Aviation Administration
(“FAA”), with a copy of this Agreement attached, and any International Interest
(as defined in the Cape Town Convention) created in favor of Debtor thereby
shall be registered with the International Registry and assigned to Secured
Party. Each lessee under any Lease shall be a Transacting User Entity (as
defined below), shall appoint a Professional User Entity and shall consent to
the registration of any International Interest upon the closing of such Lease.

 

2.0   WARRANTIES AND COVENANTS OF DEBTOR: Debtor hereby represents, warrants and covenants that:

 

2.1   Business Organization, Status and Authority. (i) Debtor
is duly organized, validly existing and in good standing under the laws of the
state of its organization and is qualified to do business in all states and
countries in which such qualification is necessary; (ii) Debtor has the
lawful power and authority to own its assets and to conduct the business in
which it is engaged; and to execute and comply with the provisions of this
Agreement, the Note and any related documents (collectively, the “Financing
Documents”); (iii) the

 

 

execution
and delivery of the Financing Documents have been duly authorized by all
necessary action, and the Financing Documents constitute valid, legal and
binding agreements, enforceable in accordance with their terms; (iv) no
authorization, consent, approval, license or exemption of, or filing or
registration with, any or all of the owners of Debtor or any governmental
entity was, is or will be necessary to the valid execution, delivery,
performance or full enforceability of the Financing Documents; (v) except
as specifically disclosed to Secured Party, Debtor utilizes no trade names in
the conduct of its business and/or has not changed its name within the past
five years; (vi) Debtor is and shall continue to be a “citizen of the
United States”, within the meaning of the Transportation Code (Title 49,
Subtitle VII of the United States Code), as amended, and the regulations
thereunder (collectively, the “Transportation Code”) and is “situated” in a
country that is a party to the Cape Town Convention within the meaning of Article 4
of the Convention so long as any of the obligations remain due; (vii) any
Lessee is and shall be in good standing under the laws of the state of its
organization and is duly qualified to do business in all required
jurisdictions; and (viii) the Aircraft has not been registered in any
jurisdiction other than the United States. Debtor shall not change its state of
organization, headquarters or residence without providing prior written notice
to Secured Party. Debtor shall give written notice to Secured Party within 30
days of any termination or revocation of Debtor’s existence by its state of
organization.

 

2.2   Merger; Transfer of Assets. Debtor shall not consolidate or merge with
or into any other entity, liquidate or dissolve, distribute, sell, lease,
transfer or dispose of all of its ownership interests, properties or assets or
any substantial portion thereof other than in the ordinary course of its
business, unless the Secured Party shall give its prior written consent, and
the surviving, or successor entity or the transferee of such assets, as the
case may be, shall assume, by a written instrument which is legal, valid and
enforceable against such surviving or successor entity or transferee, all of
the obligations of Debtor to Secured Party or any affiliate of Secured Party.

 

2.3   No Violation of Covenants or Laws. Debtor is not party to any agreement
or subject to any restriction which materially and adversely affects its
ability to perform its obligations under the Financing Documents. The execution
of and compliance with the terms of the Financing Documents does not and will
not (i) violate any provision of law, or (ii) conflict with or result
in a breach of any order, injunction, or decree of any court or governmental
authority or the formation documents of Debtor, or (iii) constitute or
result in a default under any agreement, bond or indenture by which Debtor is
bound or to which any of its property is subject, or (iv) result in the
imposition of any lien or encumbrance upon any of Debtor’s assets, except for
any liens created under the Financing Documents.

 

2.4   Accurate Information. All financial information submitted to the Secured
Party in regard to Debtor or any shareholder, officer, director, member, or
partner thereof, or any guarantor of any of the obligations thereof, was
prepared in accordance with generally accepted accounting principles,
consistently applied, and fairly and accurately depicts the financial position
and results of operations of Debtor or such other person, as of the respective
dates or for the respective periods, to which such information pertains. Debtor
had good, valid and marketable title to all the properties and assets reflected
as being owned by it on any balance sheet of Debtor submitted to Secured Party
as of the date thereof.

 

2.5   Judgments; Pending Legal Action. There are no judgments outstanding
against Debtor, and there are no actions or proceedings pending or, to the best
knowledge of Debtor, threatened against or affecting Debtor or any of its
properties in any court or before any governmental entity which, if determined
adversely to Debtor, would result in any material adverse change in the
business, properties or assets, or in the condition, financial or otherwise, of
Debtor or would materially and adversely affect the ability of Debtor to
satisfy its obligations under the Financing Documents.

 

2.6   No Breach of Other Agreements; Compliance with Applicable Laws. Debtor
is not in breach of or in default under any loan agreement, indenture, bond,
note or other evidence of indebtedness, or any other material agreement or any
court order, injunction or decree or any lien, statute, rule or
regulation. The operations of Debtor comply with all laws, ordinances and
governmental rules and regulations applicable to them. Debtor has filed
all federal, state and municipal income tax returns which are required to be
filed and has paid all taxes as shown on said returns and on all assessments
billed to it to the extent that such taxes or assessments have become due.
Debtor does not know of any other proposed tax assessment against it or of any
basis for one.

 

2.7   Sale
or Pledge Prohibited. Debtor shall not sell, dispose of or offer to sell or
otherwise transfer the Collateral or any interest therein without the prior
written consent of Secured Party. Debtor shall not grant any security interest
in or pledge any of the Collateral to any party other than Secured Party. If
Secured Party is requested to give consent to any sublease of any of the
Collateral by any Lessee, such consent shall be conditioned on, among other
things, any sublessee’s interest under any sublease being subordinate to Debtor’s
interest under the related Lease.

 

2.8   Location
of the Aircraft. The home airport(s) of the Aircraft shall be at:

 

18601 Airport Way, Santa Ana, CA 92707 County: Orange

 

Debtor
shall not change the principal domicile of the Aircraft from said location(s) without
the prior written consent of Secured Party.

 

2.9   Cape
Town Convention Matters. Debtor hereby makes the following representations and
warranties, and undertakes the following obligations:   (i)  
there are no International Interests registered with the International
Registry (as defined below) with

 

 

respect
to the Collateral or this Agreement, and Debtor will not permit any
International Interests to be filed with the International Registry except (A) for
the sale of the Aircraft by the seller thereof to Debtor, (B) Debtor’s
International Interest with respect to any Lease (which interest shall be
assigned to Secured Party), (C) with respect to Secured Party’s interest
in the Collateral or (D) as otherwise consented to in writing by Secured
Party; (ii) Debtor is a Transacting User Entity, has appointed an
Administrator and has designated a Professional User Entity (as defined in the
International Registry Regulations and Procedures, which Professional User
Entity shall be McAfee & Taft, A Professional Corporation (as such
terms are defined in the International Registry Regulations and Procedures)
acceptable to Secured Party; (iii) Debtor has paid all required fees and
taken all actions necessary to enable Secured Party to register any
International Interest in the Collateral with the International Registry; (iv) Debtor
has the power to grant any security interests described herein, lease the
aircraft pursuant to a Lease and assign any International Interests in any
Lease(s), each within the meaning of Article 7(b) of the Convention; (v) Debtor
shall not discharge nor allow to be discharged any International Interest
created in favor of or assigned to Secured Party without Secured Party’s prior
written consent; (vi) Debtor shall promptly cause any non-consensual lien
that is registered with the International Registry to be discharged; (vii) Debtor
hereby consents to the registration of any International Interest arising in
connection with this Agreement and/or any Financing Document in favor of
Secured Party and hereby authorizes its Professional User Entity to consent to
the registration (including all related Final Consents, as defined in the
International Registry Regulations and Procedures) of any International
Interest with the International Registry upon Secured Party’s request; (viii) at
closing, Debtor hereby agrees to authorize its Professional User Entity to
consent to the registration(s) of any International Interest(s); (ix) each
of the engines of the Aircraft has at least 1,750 pounds of thrust or its
equivalent; (x) the airframe comprising the Aircraft is type certified by
the FAA to transport at least eight people (including crew) or goods in excess
of 2,750 kilograms; and (xi) the Irrevocable De-Registration and Export Request
Authorization, which shall be substantially in the form of Exhibit A
hereto (the “IDERA”) has been duly executed and delivered by an authorized
representative of Debtor.

 

2.10   Perfection
of Security Interest. Except for (i) the security interest and
International Interest granted hereby and (ii) any other security interest
previously disclosed by Debtor to Secured Party in writing, Debtor is the owner
of the Collateral free from any adverse lien, security interest, International
Interest or encumbrance. Debtor shall defend the Collateral against all claims
and demands of all persons at any time claiming any interest therein. At the
request of Secured Party, Debtor shall execute, acknowledge and deliver to
Secured Party any document or instrument, in form satisfactory to Secured
Party, required by Secured Party to further the purposes of the Financing
Documents. Debtor hereby authorizes Secured Party to file any financing
statement(s) and to be named as lienholder or creditor on any registration(s) and
other filings needed to perfect Secured Party’s interest in the Collateral,
including, without limitation: (a) any registrations and filings with the
FAA; (b) any registrations and filings pursuant to the Cape Town
Convention; and (c) any financing statements, amendments and continuation
statements thereto pursuant to the Uniform Commercial Code. All such
registrations, filings and financing statements shall be in form satisfactory
to Secured Party, and Debtor shall pay the cost of filing the same in all
public offices where filing is deemed by Secured Party to be necessary or
desirable. In addition to the foregoing, Debtor shall take such further action
at its own cost as Secured Party may request to establish, maintain and protect
Secured Party’s rights and interests in the Collateral and the Financing
Documents under the Cape Town Convention and the Transportation Code, as
applicable.

 

2.11   Insurance.
Unless otherwise agreed, Debtor, at its own expense, shall have and maintain insurance
from financially sound carriers at all times with respect to all Collateral
against loss, damage, or destruction, including hull insurance, including
all-risk ground, taxiing, and flight coverage of the Aircraft and all-risk
coverage of all engines and parts, all for the full insurable value thereof,
plus breach of warranty insurance, liability insurance, and coverage of such
other risks as Secured Party may require, containing such terms, in such form,
for such periods and written by such companies as may be satisfactory to
Secured Party. Each insurance policy shall name Secured Party as lender’s loss
payee and shall be payable to Secured Party and Debtor as their interests may
appear; all policies of insurance shall provide for not less than thirty (30)
days’ written cancellation notice to Secured Party; Debtor shall furnish
Secured Party with certificates or other evidence satisfactory to Secured Party
of compliance with the foregoing insurance provisions. As to Secured Party’s
interest in such policies, no act or omission of Debtor or any of its officers,
agents, employees or representatives shall affect the obligations of the
insurer to pay the full amount of any loss. Debtor hereby assigns to Secured
Party any monies which may become payable, including returned and unearned
premiums, under any insurance on the Collateral.

 

2.12   Use,
Operation, Maintenance and Repair of the Aircraft.

 

(a)Debtor
shall (or cause each Lessee to) use, operate, maintain, and store the Aircraft,
and every part thereof, carefully and in compliance with all applicable
statutes, ordinances, and regulations of all jurisdictions in which the
Aircraft is used, and with all applicable insurance policies, manufacturer’s
recommendations and operating and maintenance manuals, including, without
limitation FAR 121 or 135 as may be applicable, and all applicable maintenance,
service, repair and overhaul manuals and service bulletins published by the
manufacturers of the Aircraft or of the accessories, equipment and parts
installed on the Aircraft. Without limitation of the foregoing, the Aircraft
shall be continuously maintained on an external engine maintenance service
insurance plan (the “Program”) satisfactory to Secured Party. At or prior to
the time the Note is funded, Debtor shall provide to Secured Party a copy of
the Program. Secured Party shall be given an interest in the Program, and the
Program shall provide that Secured Party shall be given thirty (30) days’
notice of Debtor’s default, with an ability for Secured Party to cure such
default. Debtor shall keep complete and continuing records and documents
regarding the performance of all maintenance under the Program, and shall
provide copies of all such records and documents to Secured Party upon request.
In the event of any default under the Financing Documents, Secured Party

 

 

shall
have the right, but not the obligation, to continue the Program at Debtor’s
sole cost and expense. Debtor shall use the Aircraft primarily for business
purposes. Debtor shall not base, or permit the Aircraft to be based, outside
the continental limits of the United States of America. Debtor shall not operate
or locate the Aircraft, or permit the Aircraft to be operated or located or
permitted to go over or into (i) any country or jurisdiction that does not
maintain full diplomatic relations with the United States, (ii) any area
of hostilities, (iii) any geographic area which is not covered by the required
insurance policies, or (iv) any country or jurisdiction for which exports
or transactions are subject to specific restrictions under any law or directive
of the United States or of the United Nations Security Council, including
without limitation. The Trading With the Enemy Act, 50 U.S.C. App. Section 1
et seq., the International Emergency Economic Powers Act, 50 U.S.C. App. Section 1701
et seq. and the United States Export Administration Act, 50 U.S.C. App. Section 2401
et seq., nor shall the Debtor violate or permit the violation of such laws.
Debtor shall adhere to reasonable practices for Debtor’s industry and the type
of Aircraft, for security against terrorism and other risks At its own risk,
Debtor shall use or permit the use of the Aircraft only by entities which are
duly organized and in good standing in the jurisdictions in which such entities
are formed. Debtor shall not loan, lease, rent (except pursuant to the Leases),
or otherwise dispose of the Aircraft, without Secured Party’s prior written
consent. Debtor shall not use or permit the use of the Aircraft in any
unintended, injurious or unlawful manner and shall not change or alter or
permit the change or alteration of the Aircraft (except pursuant to the Leases)
without Secured Party’s written consent. In the event that laws or regulations
require the alteration of the Aircraft, Debtor shall conform or obtain
conformance therewith at no expense of Secured Party. No technical or
non-substantial non-compliance with the provisions of this paragraph shall be
deemed a material breach if Debtor shall have obtained from the appropriate authorities
permissions, extensions or continuances.

 

(b)The
Aircraft shall be operated at all times by a currently-certificated pilot
having the minimum total pilot hours and pilot-in-command hours required by FAA
rules or regulations and applicable insurance policies. Debtor shall pay
for all expenses, including storage, fuel, lubricants, service, inspections,
overhauls, replacements, and repairs.

 

(c) Debtor
shall keep the Aircraft free from any adverse lien, International Interest or
encumbrance (and shall promptly notify Secured Party of any attachment of any
such lien or any seizure or levy) and in airworthy condition, good working
order and repair and shall not waste or destroy the Aircraft or any part
thereof. Debtor shall furnish all required parts and servicing (including any
contract service necessary to maintain the benefit of any warranty of the
manufacturer). Debtor shall maintain (or cause each Lessee to maintain) all
records, logs and other materials required by the aeronautics authority to be maintained
in respect to the Aircraft, regardless of upon whom such requirements are, by
their terms, normally imposed. Secured Party may examine and inspect the
Aircraft and any and all books and records of Debtor during business hours at
any time; such right of inspection shall include the right to copy Debtor’s
books and records and to converse with Debtor’s officers, employees, agents,
and independent accountants. Debtor shall promptly reimburse Secured Party for
any costs incurred by Secured Party for such inspections, including but not
limited to consultants’ fees and expenses.

 

2.13   Taxes and Assessments. Debtor shall pay
promptly when due all taxes, assessments, levies, imposts, duties and charges,
of any kind or nature, imposed upon the Collateral or for its use or operation
or upon this Agreement or upon any instruments evidencing the obligations.

 

2.14   Financial Statements. Within thirty (30) days
after Secured Party’s request, Debtor shall deliver all information requested
by Secured Party which Secured Party deems reasonably necessary to determine
Debtor’s current financial condition. Each financial statement submitted by
Debtor to Secured Party shall be prepared in accordance with generally accepted
accounting principles consistently applied and shall fairly and accurately
present the Debtor’s financial condition and results of operations for the
period to which it pertains.

 

2.15   Enforceability of Leases. All Leases have been
or shall be duly executed by Debtor and the respective Lessee and shall
constitute the legal, valid and binding obligations of all parties thereto,
enforceable against the Lessees.

 

3.0   EVENTS OF DEFAULT

 

3.1   Each of the following shall be considered an
Event of Default: (i) failure on the part of Debtor to promptly perform in
complete accordance with its representations, warranties and covenants made in
this Agreement or in any other agreement with Secured Party, including, but not
limited to, the payment of any liability, with interest, when due or default by
Debtor under the provisions of any other material agreement to which Debtor is
party; (ii) the death of Debtor if an individual or the dissolution of
Debtor if a business organization; (iii) the filing of any petition or
complaint under the federal Bankruptcy Code or other federal or state acts of
similar nature, by or against Debtor; or an assignment for the benefit of
creditors by Debtor; (iv) an application for or the appointment of a
receiver, trustee or conservator, voluntary or involuntary, by or against Debtor
or for any substantial assets of Debtor; (v) insolvency of Debtor under
either federal or state law or applicable principles of equity; (vi) entry
of judgment, issuance of any garnishment or attachment, or filing of any lien,
claim or government attachment against the Collateral or which, in Secured
Party’s sole discretion, might impair the Collateral; (vii) the
determination by Secured Party that a material misrepresentation of fact has
been made by Debtor in this Agreement or in any writing supplementary or
ancillary hereto; (viii) a determination by Secured Party that Debtor has
suffered a material adverse change in its financial condition, business or
operations from the date of this Agreement; (ix) bankruptcy,

 

 

insolvency,
termination, death, dissolution or default of any guarantor for Debtor; (x) any
actual or anticipated (in Secured Party’s reasonable discretion) unauthorized
revocation, nonrenewal or termination of a letter of credit, surety bond or
other instrument issued for the benefit of Secured Party as additional security
for the obligations of Debtor hereunder; or (xi) any unauthorized filing by
Debtor of a termination for or discharge of any financing statement or
registration (including, without limitation, any registration of any International
Interest) filed by, assigned to or in favor of Secured Party. A default
hereunder constitutes a default as contemplated under the Cape Town Convention.

 

4.0   REMEDIES

 

4.1   Upon the happening of any Event of Default which is not cured within ten
(10) days or at any time thereafter: (i) all liabilities of Debtor
shall, at the option of Secured Party, become immediately due and payable; (ii) Secured
Party shall have and may exercise all of the rights and remedies granted to a
secured party under the Uniform Commercial Code and, in addition thereto and
without limitation thereof, all of the rights and remedies (including, without
limitation, interim remedies) granted to a creditor under the Cape Town
Convention; (iii) Secured Party
shall have the right, immediately, and without notice or other action, to
set-off against any of Debtor’s liabilities to Secured Party any money owed by
Secured Party in any capacity to Debtor, whether or not due; (iv) Secured
Party may proceed with or without judicial process to take possession of all or
any part of the Collateral; Debtor agrees that upon receipt of notice of
Secured Party’s intention to take possession of all or any part of said
Collateral, Debtor shall do everything necessary to make same available to Secured
Party (including, without limitation, assembling the Collateral and making it
available to Secured Party at a place designated by Secured Party which is
reasonably convenient to Debtor and Secured Party); and so long as Secured Party
acts in a commercially reasonable manner, Debtor agrees to assign, transfer and
deliver at any time the whole or any portion of the Collateral or any rights or
interest therein in accordance with the Uniform Commercial Code and/or the Cape
Town Convention, and without limiting the scope of Secured Party’s rights
thereunder; (v) Secured Party may sell the Collateral at public or private
sale or in any other commercially reasonable manner and, at the option of
Secured Party, in bulk or in parcels and with or without having the Collateral
at the sale or other disposition, and Debtor agrees that in case of sale or
other disposition of the Collateral, or any portion thereof, Secured Party
shall apply all proceeds first to all costs and expenses of disposition,
including attorneys’ fees, and then to Debtor’s obligations to Secured Party; (vi) Secured
Party may elect to accept the Collateral or any part thereof in satisfaction of
all sums due from Debtor; and (vii) Secured Party may procure the
de-registration and export of the Aircraft pursuant to the IDERA. All remedies
provided in this paragraph shall be cumulative. Secured Party may exercise any
one or more of such remedies in addition to any and all other remedies Secured
Party may have under any applicable law or in equity, including, without
limitation, under the Uniform Commercial Code and/or the Cape Town Convention.

 

4.2   Expenses; Disposition. Any notification of a sale or other disposition
of Collateral or of other action by Secured Party required to be given by
Secured Party, will be sufficient and deemed reasonable if given personally,
mailed, or delivered by facsimile transmission or overnight carrier not less
than ten (10) days prior to the day on which such sale or other
disposition will be made or action taken. Upon default, any amounts due and to
become due hereunder shall, without notice, bear interest, from the date such
amounts are due until paid, at a rate (the “Default Rate”) which is the lesser
of: (i) the maximum rate per annum which Secured Party is permitted by law
to charge, or (ii) the greater of: (y) eighteen percent (18%) per
annum, or (z) five percent (5%) per annum over the prime rate which is
announced from time to time by U.S. Bank National Association to be its prime
rate. Debtor shall pay all reasonable expenses of realizing upon the Collateral
hereunder and collecting all liabilities of Debtor to Secured Party, including
any collection agency fee. In any interpretation or enforcement of the
Financing Documents or any dispute related thereto or to the relationship
between the parties. Debtor shall pay Secured Party’s legal expenses and
reasonable attorneys’ fees, including any incurred before and at trial, on
appeal, in any other proceeding or without any litigation being filed.

 

5.0   MISCELLANEOUS

 

5.1   No Implied Waivers; Entire Agreement. Unless expressly provided
otherwise in the Note, this Agreement and the Note are non-cancelable and may
not be prepaid. The waiver by Secured Party of any default hereunder or of any
provisions hereof shall not discharge any party hereto from liability hereunder
and such waiver shall be limited to the particular Event of Default and shall
not operate as a waiver of any other or subsequent default. No modification of
this Agreement or waiver of any right of Secured Party hereunder shall be valid
unless in writing and signed by an authorized officer of Secured Party. No
failure on the part of Secured Party to exercise, or delay in exercising, any
right or remedy hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right or remedy. The
provisions of this Agreement and the rights and remedies granted to Secured
Party herein shall be in addition to, and not in limitation of those of any
other agreement with Secured Party or any other evidence of any liability held
by Secured Party. The Financing Documents embody the entire agreement between
the parties and supersede all prior agreements and understandings relating to
the same subject matter. If any of the Financing Documents are delivered to
Secured Party by facsimile transmission, such documents (and signatures
thereon) shall be treated as, and have the same force and effect as, originals.
References herein to the “Agreement” and the “Note” shall mean the Agreement
and Note as each may respectively be amended from time to time.

 

5.2   Choice of Law; Waiver of Jury. The Financing Documents and the rights
and liabilities of the parties shall be governed by applicable federal law and
the laws of the state of Oregon. Any legal action or proceeding with respect to
the Financing Documents shall be brought in state court sitting in Portland,
Oregon, and, by execution and delivery of the Financing Documents, each of the

 

 

parties
consents to the jurisdiction of such court and waives any defense of lack of
jurisdiction or inconvenient forum. Service of process by overnight courier
will be sufficient to confer personal jurisdiction over the Debtor. SECURED
PARTY AND DEBTOR EACH IRREVOCABLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY
LITIGATION ARISING FROM OR RELATED TO ANY OF THE FINANCING DOCUMENTS.
Notwithstanding anything in the foregoing to the contrary, Secured Party may
bring a judicial proceeding involving the Registrar of the International
Registry in the Republic of Ireland, as and to the extent Secured Party deems
it necessary in connection with its exercise of its rights and remedies under
the Financing Documents.

 

5.3   Late
Charge. If any of the obligations remains overdue for more than ten (10) days,
Debtor hereby agrees to pay on demand, as a
late charge, an amount equal to the lesser of (i) five percent (5%) of
each such overdue amount; or (ii) the maximum percentage of any such overdue
amount permitted by applicable law as a late charge. Debtor agrees that the
amount of such late charge represents a reasonable estimate of the cost to
Secured Party of processing a delinquent payment and that the acceptance of any
late charge shall not constitute a waiver of default with respect to the
overdue amount or prevent Secured Party from exercising any other available
rights and remedies.

 

5.4   Protection of the Collateral. At its option, Secured Party may discharge
taxes, liens or other encumbrances at any time levied or placed on the
Collateral, may pay for insurance on the Collateral and may pay for the
maintenance and preservation of the Collateral. Debtor agrees to reimburse
Secured Party on demand for any payment made or any expense incurred by Secured
Party pursuant to the foregoing authorization and to pay a fee for additional
monitoring incurred by Secured Party for Debtor’s failure to maintain coverage
or protection as provided herein. Any payments made by Secured Party shall be
immediately due and payable by Debtor and shall bear interest at the Default
Rate. Until default, Debtor may retain possession of the Collateral and use it
in any lawful manner not inconsistent with the provisions of this Agreement and
any other agreement between Debtor and Secured Party and not inconsistent with
any policy of insurance thereon.

 

5.5   Binding Agreement; Time of the Essence. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto, their respective
heirs, executors, administrators, successors, and assigns. Time is of the
essence with respect to the performance of Debtor’s obligations under this
Agreement and any other agreement between Debtor and Secured Party.

 

5.6   Enforceability. Any term, clause or provision of this Agreement or of
any evidence of indebtedness from Debtor to Secured Party which is
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective only to the extent of such prohibition or unenforceability without
invalidating the remaining terms or clauses of such provision or the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such term, clause or
provision in any other jurisdiction.

 

5.7   Notices. Any notices or demands required to be given herein shall be
given to the parties in writing by facsimile transmission, or by overnight
courier or United States mail (first class, express, certified or otherwise) at
the addresses set forth on page 1 of this Agreement or to such other
addresses as the parties may hereafter substitute by written notice given in
the manner prescribed in this paragraph.

 

5.8   Additional Security. If there shall be any other collateral for any of
the obligations, or for the obligations of any guarantor thereof, Secured Party
may proceed against and/or enforce any or all of the Collateral and such
collateral in whatever order it may, in its sole discretion, deem appropriate.
Any amount(s) received by Secured Party from whatever source and applied by it
to any of the obligations shall be applied in such order of application as
Secured Party shall from time to time, in its sole discretion, elect.

 

6.0   ASSIGNMENT

 

6.1   SECURED PARTY MAY SELL OR ASSIGN ANY AND ALL RIGHT, TITLE AND
INTEREST IT HAS IN THE COLLATERAL, ANY ASSOCIATED RIGHTS AND/OR ARISING UNDER
THIS AGREEMENT. DEBTOR HERBY CONSENTS TO ANY SUCH SALE OR ASSIGNMENT BY SECURED
PARTY, INCLUDING, WITHOUT LIMITATION, FOR PURPOSES OF THE CAPE TOWN CONVENTION.
DEBTOR SHALL, UPON THE DIRECTION OF SECURED PARTY: 1) EXECUTE ALL DOCUMENTS
NECESSARY TO EFFECTUATE SUCH ASSIGNMENT (INCLUDING, WITHOUT LIMITATION,
INTERNATIONAL REGISTRY FILINGS (AND ANY NECESSARY CONSENTS THERETO, AS WELL AS
ANY RENEWAL OF ANY AUTHORIZATIONS REQUIRED BY THE INTERNATIONAL REGISTRY IN
CONNECTION WITH SUCH FILING, SUCH AS RENEWING DEBTOR’S TRANSACTING USER ENTITY
STATUS AND RE-DESIGNATING A PROFESSIONAL USER ENTITY, IF NECESSARY IN SECURED
PARTY’S JUDGMENT)) AND, 2) PAY DIRECTLY AND PROMPTLY TO SECURED PARTY’S
ASSIGNEE WITHOUT ABATEMENT, DEDUCTION OR SET-OFF, ALL AMOUNTS WHICH HAVE BECOME
DUE UNDER THE ASSIGNED AGREEMENTS. SECURED PARTY’S ASSIGNEE SHALL HAVE ANY AND
ALL RIGHTS, IMMUNITIES AND DISCRETION OF SECURED PARTY HEREUNDER AND SHALL BE
ENTITLED TO EXERCISE ANY REMEDIES OF SECURED PARTY HEREUNDER. ALL REFERENCES
HEREIN TO SECURED PARTY SHALL INCLUDE SECURED PARTY’S ASSIGNEE (EXCEPT THAT
SAID ASSIGNEE SHALL NOT BE CHARGEABLE WITH ANY OBLIGATIONS OR LIABILITIES
HEREUNDER OR IN RESPECT HEREOF). DEBTOR SHALL NOT ASSERT AGAINST SECURED PARTY’S
ASSIGNEE ANY DEFENSE, COUNTERCLAIM OR SET-OFF WHICH DEBTOR MAY HAVE
AGAINST SECURED PARTY.

 

 

6.2   DEBTOR SHALL NOT ASSIGN OR IN ANY WAY DISPOSE OF ALL OR ANY OF ITS
RIGHTS, ASSOCIATED RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT OR ENTER INTO ANY
AGREEMENT REGARDING ALL OR ANY PART OF THE COLLATERAL AND/OR ANY
ASSOCIATED RIGHTS WITHOUT THE PRIOR WRITTEN CONSENT OF SECURED PARTY. IN
CONNECTION WITH THE GRANTING OF SUCH CONSENT AND THE PREPARATION OF NECESSARY
DOCUMENTATION (INCLUDING, WITHOUT LIMITATION, SATISFACTION OF ALL REQUIREMENTS
OF THE CAPE TOWN CONVENTION WITH RESPECT TO SUCH ASSIGNMENT), A FEE SHALL BE
ASSESSED EQUAL TO ONE PERCENT (1%) OF THE TOTAL REMAINING BALANCE THEN DUE
HEREUNDER.

 

7.0   SCHEDULE
OF AIRCRAFT

 

One
(1) Cessna (described as CESSNA on the International Registry drop down
menu) Model 550, serial # 550-0971,
Federal Aviation Registration Number N717GK, equipped with Two (2) Pratt &
Whitney Canada model PW530A engine serial #’s  PCE-DA0355 and
PCE-DA0352 (described on the International Registry drop down menu as PRATT &
WHITNEY CANADA model PW500 SERIES with serial numbers DA0355 and DA0352,
respectively) each in excess of 550 shp;

 

including,
but not limited to: (i) all avionics, accessories, improvements,
components, instruments, furnishings, substitutions, additions, replacements,
parts, tools and equipment now or hereafter affixed to or used in connection
with such airframe, engines and/or propellers, together with all products and
proceeds thereof, including but not limited to all leased and/or chartered
income and all insurance recoveries; and (ii) all maintenance, support,
supply, warranty, and/or service rights relating to such airframe, engines,
and/or propellers, and any claims thereunder, including but not limited to
rights and claims under any maintenance, support, supply and/or service plans
or contracts.

 

The
above Aircraft is type certified by the Federal Aviation Administration to
transport at least eight persons including crew or goods weighing in excess of
2,750 kilograms.

 

The
above Engines are powered by jet propulsion and each has at least 1,750 pounds
of thrust or its equivalent.

 

The
above aircraft is complete as equipped.

Plus

 

Certain
chattel paper, consisting of any and all now existing or hereafter arising
rental and lease agreements and all rents, income, accounts, payment
intangibles, and sums due arising now or hereafter thereunder and all proceeds
of any of the foregoing (each an “Agreement” and collectively the “Agreements”)
between Assignor and its sub-users, and relating to the equipment and/or
inventory that is the subject of such Agreements and is described above. Any
purchase of an Agreement, or perfection of a security interest therein by
possession or other control of the Agreement, violates the rights of U.S. Bancorp Equipment Finance, Inc. (and its
successors and assigns).

 

Debtor
represents and warrants that the information contained in this Section 7.0
(including the registration number of the airframe, the serial numbers of the
airframe and engines, and the manufacturer and model numbers of the airframe
and engines) is true and accurate in all respects.

 

8.0   POWER OF ATTORNEY

 

8.1   Debtor
hereby appoints Secured Party as its attorney-in-fact to sign Debtor’s name and
to make non-material amendments (including completing and conforming the
description of the Collateral) on any document in connection with this
Agreement, including any document necessary for processing aircraft
registration(s), and to obtain, adjust and settle any insurance required by
this Agreement and to endorse any drafts in connection with such insurance.

 

9.0   NOTICE

 

9.1   Under
Oregon law, most agreements, promises and commitments made by Secured Party
concerning loans and other credit extensions must be in writing, express
consideration and be signed by Secured Party to be enforceable.

 

This
instrument may be executed in separate counterparts, each of which when
executed and delivered shall be deemed an original, but all such counterparts
shall together constitute but one and the same instrument.

 

 

In Witness Whereof, the
parties hereto have caused this Agreement to be duly executed the 14 day of October, 2008.

 

	
  Stellaris LLC

  	
  U.S.
  Bancorp Equipment Finance, Inc.

  
	
  [Debtor]

  	
  [Secured
  Party]

  

 

 

	
  By:

  	
  /s/ Alfons Theeuwes

  	
   

  	
  By:

  	
   

  
	
  Alfons
  Theeuwes

  	
   

  	
  An
  authorized officer thereof

  
	
  Senior
  Vice President of Finance

  	
   

  	
   

  
	
  9/06

  	
   

  	
   

  

 

ADDRESS FOR NOTICES TO SECURED
PARTY:

PO Box 230789

Portland, OR 97281-0789

 

 

In Witness Whereof, the parties hereto have caused
this Agreement to be duly executed the    day of          , 20  .

 

	
  Stellaris
  LLC

  	
  U.S.
  Bancorp Equipment Finance, Inc.

  
	
  [Debtor]

  	
  [Secured
  Party]

  

 

	
  By:

  	
   

  	
   

  	
  By:

  	
  /s/ [Illegible] 

  
	
  Alfons
  Theeuwes

  	
   

  	
  An authorized officer
  thereof

  
	
  Senior
  Vice President of Finance

  	
   

  	
   

  
	
  9/06

  	
   

  	
   

  

 

ADDRESS FOR NOTICES TO SECURED
PARTY:

PO Box 230789

Portland, OR 97281-0789

 

 

EXHIBIT A TO AIRCRAFT SECURITY
AGREEMENT

 

FORM OF IRREVOCABLE DE-REGISTRATION AND
EXPORT REQUEST AUTHORIZATION

 

October 14, 2008

 

To:
Federal Aviation Administration, Civil Aircraft Registry

 

Re:
Irrevocable De-Registration and Export Request Authorization(1)

 

The undersigned is the
registered owner of the Cessna (described as CESSNA model 550 on the
International Registry drop down menu) model 550 bearing manufacturer’s serial number 550-0971 and registration
number N717GK; including two (2) Pratt & Whitney Canada model
PW530A aircraft engines bearing manufacturer’s serial numbers PCE-DA0352 and
PCE-DA0355 (described as PRATT & WHITNEY CANADA model PW500 SERIES aircraft
engines serial numbers DA0355 and DA0352 on the International Registry drop
down menu) (together with all installed, incorporated or attached accessories,
parts and equipment, the “aircraft”).

 

This
instrument is an irrevocable de-registration and export request authorization
issued by the undersigned in favor of U.S. Bancorp Equipment Finance, Inc.
(“the authorized party”) under the authority of Article XIII of the
Protocol to the Convention on International Interests in Mobile Equipment on
Matters specific to Aircraft Equipment. In accordance with that Article, the
undersigned hereby requests:

 

(i) recognition that the authorized party or the
person it certifies as its designee is the sole person entitled to:

 

(a) procure the de-registration of the aircraft from the Civil Aircraft
Registry maintained by the Federal Aviation Administration for the purposes of
Chapter III of the Convention on International Civil Aviation, signed at
Chicago, on 7 December 1944, and

 

(b) procure the export and physical transfer of the aircraft from the
United States of America; and

 

(ii) confirmation that the authorized party or
the person it certifies as its designee may take the action specified in clause
(i) above on written demand without the consent of the undersigned and
that, upon such demand, the authorities in the United States of America shall
co-operate with the authorized party with a view to the speedy completion of
such action.

 

The rights in favor of the authorized party established by this
instrument may not be revoked by the undersigned without the written consent of
the authorized party.

 

[SIGNATURE PAGE FOLLOWS]

 

3/06

 

(1) Filed in connection with and made a part
of the Aircraft Security Agreement dated as
of                    ,
2008, between Stellaris, LLC, as Debtor, and U.S. Bancorp Equipment Finance, Inc.,
as secured party, filed with the FAA simultaneously herewith.

 

 

Please
acknowledge your agreement to this request and its terms by appropriate
notation in the space provided below and lodging this instrument in Civil
Aviation Registry of the Federal Aviation Administration.

 

Agreed to and lodged this l4 day of October,
2008.

 

Stellaris LLC

[Debtor]

 

 

	
  By:

  	
  /s/ Alfons Theeuwes

  	
   

  
	
  Alfons
  Theeuwes

  	
   

  
	
  Senior
  Vice President of Finance

  	
   

  

 

 

	
   

  	
  CERTIFICATE OF AUTHORITY

  (LEASE/LOAN)

  

 

Equipment Finance

 

I/WE HEREBY CERTIFY to U.S. Bancorp Equipment Finance, Inc.
(the “Creditor”) that: a) I/we am/are the person(s) authorized to certify on
behalf of Stellaris LLC, a business entity (the “Company”)
organized and maintaining good standing under the laws of the State of Nevada; b) the following is a true and correct copy of
certain Resolutions duly adopted or voted by the Board of Directors, Members or
Managers, as appropriate, of the Company; c) I/we have placed a copy of such
Resolutions in the official records of the Company; d) such Resolutions have
not been rescinded, amended, or otherwise altered or repealed; and e) such
Resolutions are now in full force and effect and are in full compliance with
the formation documents of the Company, as such may have been amended. The
Company has resolved the following:

 

1)  That the Company from time to
time leases personal property and/or borrows money or otherwise obtains credit
from Creditor and that the entire amount of leasing, borrowing or credit under
this resolution at any one time, whether direct or indirect, absolute or
contingent, shall be unlimited;

 

2)  That any one of the officers,
agents, members, or managers designated below is hereby authorized to borrow
money and to obtain credit and other financial accommodations (including the
leasing of personal property) for the Company; and to execute and deliver on
behalf of the Company any and all documentation required in connection
therewith in such form and containing such terms and conditions as the person(s) executing
such documents shall approve as being advisable and proper and in the best
interests of the Company; and that the execution thereof by such person(s) shall
be conclusive evidence of such approval; and, as security for the Company’s
obligations to Creditor to pledge, assign, transfer, mortgage, grant a security
interest in, hypothecate, or otherwise encumber any and all property of the
Company, whether tangible or intangible; and to execute and deliver all
instruments of assignment and transfer;

 

3)  That any officer, member,
manager, agent or employee of the Company is hereby further authorized to take
any and all such other actions as may be necessary to carry out the intent and
purposes of these Resolutions, and that any and all actions taken by such
person(s) to carry out such intent and purposes prior to the adoption of
these Resolutions are hereby ratified and confirmed by, and adopted as the
action of, the managers of the Company; and

 

4)  That these Resolutions shall
constitute a continuing authority to the designated person or persons to act on
behalf of the Company, and the powers and authority granted herein shall
continue until revoked by the Company and formal written notice of such
revocation shall have been given to Creditor. These Resolutions do not
supersede similar prior resolutions given to Creditor.

 

I/WE HEREBY FURTHER CERTIFY that pursuant to the formation documents and any other appropriate
documents of the Company as may be necessary, the following named person(s) have
been properly designated and appointed to the position(s)/office(s) indicated
below, that such person(s) continue to hold such position(s)/office(s) at
the time of execution of the documentation for the transaction(s) with
Creditor, and that the signature(s) of such person(s) shown below are
genuine.

 

	
  OFFICE

  	
  NAME

  	
  SIGNATURE

  
	
   

  	
   

  	
   

  
	
  Senior Vice President of Finance

  	
  Alfons Theeuwes

  	
  /s/ Alfons Theeuwes

  

 

I/WE HEREBY FURTHER CERTIFY that, pursuant to the formation documents of the Company, and any other
appropriate documents of the Company as may be necessary, I/we have the power
and authority to execute this Certificate on behalf of the Company, and that I/we
have so executed this Certificate on the 14 day of October, 2008. A copy of this Certificate, which is
duly signed and which is received by facsimile transmission (“fax”), shall be
deemed to be of the same force and effect as the original.

 

	
   

  	
  By:

  	
  /s/ John Schauerman

  
	
   

  	
  John
  Schauerman

  
	
   

  	
  CFO

  
	
   

  	
   

  	
  (Must be certified by another officer or director

  other than the above authorized signer)

  
				

 

6/02

 

ADDRESS FOR ALL NOTICES

PO Box 230789

Portland, OR 97281-0789

 

 

	
  

  	
  CERTIFICATE OF AUTHORITY

  (GUARANTY AND/OR PLEDGE)

  

 

Equipment Finance

 

I/WE HEREBY CERTIFY to U.S. Bancorp Equipment Finance, Inc.
(the “Creditor”) that: a) I/we am/are the person(s) authorized to certify
on behalf of ARB, Inc., a business entity
(the “Company”) organized and maintaining good standing under the laws of the
State of California; b) the following is a true and correct copy of certain
Resolutions duly adopted by the Board of Directors, Members, or Managers, as
appropriate, of the Company; c) I/we have placed a copy of such Resolutions in
the official records of the Company; d) such Resolutions have not been rescinded,
amended, or otherwise altered or repealed; and e) such Resolutions are now in
full force and effect and are in full compliance with the formation documents
of the Company, as such may have been amended. The Company has resolved the
following:

 

1)  That it is to the benefit of the Company that Stellaris LLC, (“Customer”) from time to time leases
personal property, borrows money or otherwise obtains credit from Creditor, (“Transaction(s)”);
and, whereas Creditor is unwilling to enter into the Transaction(s) unless
the Company shall execute and deliver that certain continuing Guaranty of the
Customer’s obligations to Creditor (the “Guaranty”) and/or any pledge or
security agreement, securing the Customer’s obligations to Creditor (the “Agreement”);
and, that the Company shall execute and deliver such Guaranty and/or Agreement;

 

2)  That any one of the officers, agents, members or managers
of the Company is hereby authorized to execute and deliver on behalf of the
Company the Guaranty and/or Agreement together with any and all other
documentation required in connection therewith in such form and containing such
terms and conditions as the person(s) executing such documents shall
approve as being advisable and proper and in the best interests of the Company;
and that the execution thereof by such person(s) shall be conclusive
evidence of such approval;

 

3)  That any officer, member, manager, agent, or employee of
the Company is hereby authorized to take any and all such other actions as may
be necessary to carry out the intent and purposes of these Resolutions, and
that any and all actions taken by such person(s) to carry out such intent
and purposes prior to the adoption of these Resolutions are hereby ratified and
confirmed by, and adopted as the action of the Company; and

 

4)  That these Resolutions shall constitute a continuing
authority to the designated person or persons to act on behalf of the Company,
and the powers and authority granted herein shall continue until revoked by the
Company and formal written notice of such revocation shall have been given to
Creditor. These Resolutions do not supersede similar prior resolutions given to
Creditor.

 

I/WE HEREBY FURTHER CERTIFY that pursuant to the formation documents of the Company, and any other
appropriate documents of the Company as may be necessary, the following named
person(s) have been properly designated and appointed to the
position(s)/office(s) indicated below, that such person(s) continue
to hold such position(s)/office(s) at the time of execution of the
Guaranty and/or Agreement and that the signature(s) of such person(s) shown
below are genuine.

 

	
  OFFICE

  	
  NAME

  	
  SIGNATURE

  
	
   

  	
   

  	
   

  
	
  CFO

  	
  Alfons
  Theeuwes

  	
  /s/ Alfons Theeuwes

  

 

I/WE HEREBY FURTHER CERTIFY that, pursuant to the formation documents of the Company, and any other
appropriate documents of the Company as may be necessary, I/we have the power
and authority to execute this Certificate on behalf of the Company, and that
I/we have so executed this Certificate on the 14 day of October, 20  . A copy of this Certificate, which is
duly signed and which is received by facsimile transmission (“fax”), shall be
deemed to be of the same force and effect as the original.

 

	
   

  	
  By:

  	
  /s/ John Perisich

  
	
   

  	
  John Perisich

  
	
   

  	
  Sr.
  Vice President /General Counsel

  

 

7/02

 

ADDRESS FOR ALL NOTICES:

PO Box 230789

Portland, OR 97281-0789

 

 

	
   

  	
  GUARANTY

  

 

Equipment
Finance

 

1.  In order to
induce U.S. Bancorp Equipment Finance, Inc.
(“Creditor”) and any entity affiliated with or related to Creditor to enter
into one or more financing arrangements (“Transaction”) with, or otherwise
directly or indirectly make financing or property available to Stellaris LLC (the “Obligor”),
and/or to induce Creditor to grant to Obligor such renewals, extensions,
forbearances, releases of collateral or other relinquishments of rights,
whether in connection with the Transaction(s) or otherwise, as Creditor may in
its sole discretion deem advisable, and in consideration of any agreements
heretofore or hereafter entered into between Creditor and Obligor (any and all
such leases, loan agreements, notes, security agreements, pledges, and
assignments, together with any and all schedules and riders thereto and any and
all other agreements executed and delivered by Obligor in connection therewith,
being hereinafter called the “Agreements”), and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
THE UNDERSIGNED (“GUARANTOR”), INTENDING TO BE LEGALLY BOUND, HEREBY JOINTLY
AND SEVERALLY GUARANTEES THE FULL, PROMPT, COMPLETE AND FINAL PAYMENT AND
PERFORMANCE OF ALL THE OBLIGOR’S OBLIGATIONS PURSUANT TO THE AGREEMENTS OR IN
ANY WAY ARISING THEREFROM AND ANY AND ALL OTHER OBLIGATIONS AND LIABILITIES OF
OBLIGOR TO CREDITOR, WHETHER NOW IN EXISTENCE OR ARISING HEREAFTER, DIRECT OR
INDIRECT, CONTINGENT OR ABSOLUTE, MATURED OR UNMATURED, SECURED OR UNSECURED,
AND HOWEVER CONTRACTED OR ARISING (ALL SUCH OBLIGATIONS AND LIABILITIES BEING
HEREINAFTER CALLED THE “OBLIGATIONS”)

 

2.  Guarantor hereby promises to pay Creditor when due, on
demand, all indebtedness of any kind or nature emanating from the Agreements
(including, without limitation, if an event of default shall occur under the
Agreements, payment on demand of all unpaid sums to become due under the
defaulted Agreements for the entire term thereof), whether now or hereafter
arising; and Guarantor agrees to indemnify and hold Creditor harmless from and
against any and all losses, liabilities and costs caused by or arising from (in
any way, directly or indirectly) any failure of Obligor to fully, promptly and
completely satisfy the Obligations. “Losses, liabilities and costs” shall
include (without limitation) all obligations, claims, demands, judgments, costs
and expenses of whatever kind or nature (including, without limitation,
attorneys’ fees). Time is of the essence with regard to the performance of
Guarantor’s obligations hereunder

 

3.  In enforcing this Guaranty, Creditor shall not be required
to (i) present for payment any evidence of the Obligations (known as “presentment”
or “presentment for payment”); (ii) give notice that amounts due have not
been paid (known as “notice of dishonor”), or (iii) obtain an official
certification of nonpayment (known as “protest”) or give Guarantor notice of
any such “protest;” and Guarantor hereby waives presentment, presentment for
payment, notice of dishonor, protest and notice of protest, and notice of
acceptance hereof.

 

4.  Guarantor hereby consents and agrees that without any
further notice to, or assent by Guarantor, the liability of Obligor or any
other guarantor of the Obligations may from time to time, in whole or in part,
be amended, including, without limitation, extended, renewed, accelerated,
supplemented, settled, assigned, assumed or released, in Creditor’s sole
discretion, and that any collateral for any of the Obligations or for any
guaranty thereof (including this Guaranty) may from time to time, in whole or
part, be exchanged, sold, released or surrendered in Creditor’s sole discretion.
No such amendment, exchange, sale, release or surrender shall in any way
impair, affect or release the liability of Guarantor or constitute a waiver of
any of Creditor’s rights hereunder.

 

5.  This Guaranty is unlimited, absolute, irrevocable and
unconditional and shall continue in full force and effect until all the
Obligations shall have been fully, completely and finally satisfied and paid.
The obligations of Guarantor hereunder shall continue and survive the
repossession of any property leased pursuant to the Agreements, or any property
in which Creditor has a security interest securing any of the Obligations,
whether or not any such repossession constitutes an “election of remedies”
against the Obligor or any other person. Guarantor agrees to be obligated
hereunder notwithstanding any termination of the Agreements in whole or part by
operation of law or any unenforceability or invalidity of the Agreements for
any reason whatsoever. The obligations of the Guarantor shall not be subject to
any abatement, setoff, defense or counterclaim for any cause whatsoever
Guarantor’s liability hereunder is joint and several with any other guarantor
of the Obligations, whether such guarantor executes this document or any other
guaranty document. This Guaranty is in addition to, and not in limitation or
derogation of, any and all other guaranties of the Obligations executed by any
guarantor. In the event of any conflict between the provisions of this Guaranty
and those of any other guaranty, the provisions of this Guaranty shall govern.

 

6.  Creditor may proceed directly and in the first instance
against any Guarantor or combination of Guarantors and have its remedy
hereunder without first being obliged to resort to any other right or remedy of
security for any of the Obligations. If there shall be any securities for any
of the Obligations, or for the obligations of Guarantor hereunder, or for the
obligations of any other guarantor of any of the Obligations, Creditor may
proceed against and/or enforce any or all of such securities in whatever order
it may, in its sole discretion, deem appropriate. Any amount(s) received
by Creditor from whatever source and applied by it to any of the Obligations
shall be applied in such order of application as Creditor shall, in its sole
discretion, elect.

 

7.  Notwithstanding any provision hereof or any provision of
any of the Agreements, or any presumption of applicable law or principle of
legal construction to the contrary: (i) nothing shall discharge or satisfy
Guarantor’s obligations hereunder except full, complete and final payment and
satisfaction of all the Obligations and all indebtedness and indemnities owed
hereunder; and (ii) Guarantor hereby waives any and all defenses to its
obligations hereunder including, without limitation, any defense arising by
reason of any cessation of the Obligor’s business or any bankruptcy, insolvency
or business failure of the Obligor or any other person. Each and every waiver
made herein by Guarantor is and shall be construed as an absolute, irrevocable
and unconditional waiver of the right waived. Payments received by Creditor
from or on behalf of Obligor shall be solely for the benefit of Creditor and
shall not benefit Guarantor in any way, Guarantor acknowledges that Guarantor
is not and shall not be construed as a “Creditor” of Obligor by virtue of this
Guaranty.

 

8.  Within 120 days after the close of each fiscal year of
Guarantor, Guarantor shall deliver to Creditor true and complete copies of its
work in process and backlog reports and its financial statements (including,
without limitation, a balance sheet, a statement of income, a statement of cash
flow, a statement of changes in equity, and notes to financial statements) for
the immediately preceding fiscal year, setting forth the corresponding figures
for the prior fiscal year in comparative form, all in reasonable detail without
any qualification or exception deemed material by Creditor. Such financial
statements shall be audited by Guarantor’s independent certified public
accountants and shall be certified by such accountants. Guarantor shall also
furnish Creditor, upon request, with any other financial information (including
tax returns and copies of its quarterly management-prepared financial
statements) deemed reasonably necessary by Creditor. Each financial statement
submitted by Guarantor to Creditor shall be prepared in accordance with
generally accepted accounting principles consistently applied and shall fairly
and accurately present the Guarantor’s financial condition and results of
operations for the period to which it pertains.

 

9.  Guarantor hereby represents and warrants to Creditor that
all information concerning such Guarantor, including (without limitation)
financial statements and other financial information furnished to Creditor in
connection with the Agreements, was true, complete and accurate as of the date
of delivery thereof to Creditor, and all such information remains true,
complete and accurate, and there has been no material adverse change in
Guarantor’s financial condition as of the date of the most recently delivered
financial data. In the event of any breach of Guarantor’s representations and
warranties herein or any material adverse change in the financial condition of
Guarantor, upon the request of Creditor. Guarantor shall promptly furnish to
Creditor such additional security for the performance of Guarantor’s
obligations hereunder as Creditor may reasonably request. Guarantor shall not
transfer all or substantially all of its assets without the prior written
consent of Creditor. A default hereunder shall be a default under the
Agreements.

 

 

10.  No notice of termination of this Guaranty shall be
effective unless and until such notice shall be in writing and executed by
Guarantor and shall have been received by Creditor, provided, however, that in
the event of such notice, this Guaranty shall continue in full force and effect
with regard to all Obligations created, existing or arising prior to the date
of such receipt. No modification hereof or amendment hereto and no waiver of
any term or provision hereof shall be valid unless in writing and signed by an
authorized officer of Creditor. No delay or failure on the part of Creditor in
the exercise of any right or remedy shall operate as a waiver thereof, and no
single or partial exercise by Creditor of any right or remedy shall preclude
any other or further exercise thereof or the exercise of any other right or
remedy. No action of Creditor permitted hereunder shall invalidate or in any
way impair this Guaranty. No waiver of any right or remedy hereunder shall
constitute a waiver of any other or further right or remedy hereunder.

 

11.  Without any further notice to, or assent by Guarantor,
this Guaranty may be assigned by Creditor and reassigned, in the sole
discretion of Creditor or its assignee. As used herein, the term “Creditor”
includes Creditor and any successor or assign of Creditor. Guarantor may not
assign Guarantor’s obligations hereunder, without the prior written consent of
Creditor. Nevertheless, this Guaranty shall be binding upon Guarantor’s heirs,
successors, representatives, and assigns.

 

12.  Guarantor represents and warrants that this Guaranty is
intended to be legal, valid, binding and enforceable in accordance with its
terms. Whenever possible, each term and provision of this Guaranty shall be
interpreted so as to be effective and to effectuate its intent under applicable
law. If any of the provisions of this Guaranty are contrary to, prohibited by,
or held invalid under applicable laws, regulations or public policy of any
jurisdiction in which it is sought to be enforced, then that provision shall be
considered inapplicable and omitted but shall not invalidate the remaining
provisions. If this executed Guaranty is delivered to Creditor by facsimile
transmission, such document (and any signature thereon) shall be treated as,
and have the same force and effect as, an original.

 

13.  In any dispute arising hereunder, Guarantor shall pay
Creditor’s costs and expenses, including reasonable attorneys’ fees and costs
incurred in connection herewith and/or arising under the Agreements, including
any incurred prior to commencement of a suit, prior to or at trial, on appeal
or in any other proceeding. This Guaranty shall be governed by and construed in
accordance with the laws of the State of Oregon, and service of process by
certified mail, return receipt requested, or overnight courier will be
sufficient to confer personal jurisdiction over Guarantor for purposes of
litigating any actions arising hereunder. Venue shall be in Portland, Oregon,
at Creditor’s option. This Guaranty shall take effect as a sealed instrument.
GUARANTOR AND CREDITOR EACH IRREVOCABLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN
ANY LITIGATION ARISING FROM OR RELATED TO THIS GUARANTY.

 

14.  In
connection with this Guaranty and the Transaction(s) with the Obligor, any
Guarantor who is an individual confirms his/her instruction that Creditor
obtain a credit report on him/her self, and further authorizes Creditor to
obtain such a credit report for purposes of reviewing and/or considering additional
financing arrangements with the Obligor.

 

IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly executed and
delivered as of October 08, 2008.

 

	
   

  	
  ARB, lnc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Alfons theeuwes

  
	
   

  	
  Alfons
  theeuwes

  
	
   

  	
  CFO

  
	
   

  	
   

  
	
   

  	
  26000
  Commercentre Drive Lake Forest, CA 92630

  

 

 

 

09/08

 

ADDRESS FOR ALL NOTICES TO CREDITOR:

PO Box 230789

Portland, OR 97281-0789Exhibit 10.1(e)

 

December 2, 2002

 

Mr. Chris
Hickok, CCIM 

United
Properties 

3500
west 80th Street

Minneapolis,
MN 55431

 

Re:          Renewal Proposal:

 

	
  LANDLORD:

  	
   

  	
  St
  Paul Properties

  
	
   

  	
   

  	
   

  
	
  TENANT:

  	
   

  	
  Sauer-Danfoss
  (US) Company

  
	
   

  	
   

  	
   

  
	
  BUILDING:

  	
   

  	
  3500
  Annapolis Lane North 

  Plymouth, Minnesota

  
	
   

  	
   

  	
   

  
	
  USE:

  	
   

  	
  Office/
  Warehouse

  
	
   

  	
   

  	
   

  
	
  TERM:

  	
   

  	
  Five
  (5) Years – with two termination options as outlined in this proposal.

  
	
   

  	
   

  	
   

  
	
  PREMISES:

  	
   

  	
  22,719
  square feet of office space 

  51,260 square feet of warehouse space 

  73, 979 total square footage

  
	
   

  	
   

  	
   

  
	
  COMMENCEMENT DATE:

  	
   

  	
  March 1,
  2003

  
	
   

  	
   

  	
   

  
	
  NET RENTAL RATE:

  	
   

  	
  Months
  1-12: $6.44 per square foot(current rate) 

  Months 13-36 $6.57 per square foot 

  Months 37-60 $6.75 per square foot

  
	
   

  	
   

  	
   

  
	
  OPERATING EXPENSES:

  	
   

  	
  The
  Tenant will pay its proportionate share of operating expenses, including
  common area maintenance, insurance, management fees and real estate taxes.
  The 2003 estimate of these costs is $3.51 per square, down from $3.60 psf in
  2002.

  
	
   

  	
   

  	
   

  
	
  UTILITIES:

  	
   

  	
  The
  Premises is separately metered and billed directly to the Tenant.

  

 

 

	
  TERMINATION OPTION:

  	
   

  	
  The lease may be terminated between months 36 and
  44 of the lease
  term by providing 6 months advance written notice and payment of 6 months
  gross rent The lease may be terminated between months 45 and 50 by providing
  6 months notice and payment of 3 months gross rent.

  
	
   

  	
   

  	
   

  
	
  PARKING:

  	
   

  	
  The landlord will at its cost add additional parking
  during the first
  two years of the lease term. The additional parking is contingent on the city
  approval if this added parking. The general area for this will be the South
  East corner of the existing lot.

  
	
   

  	
   

  	
   

  
	
  CONTINGENCY:

  	
   

  	
  This offer is non-binding and contingent upon a
  mutually executed
  renewal agreement between Landlord and Tenant.

  

 

Nothing contained herein shall be binding upon either party until such
documents are fully executed by both parties. The terms of this proposal will
remain in effect until December 6th,
2002.

 

 

Regards,

 

 

David Gawthrop

Mobile Electronics Controller

Sauer-Danfoss (US) Company

763-509-2018

 

 

AMENDMENT NO. 1 TO LEASE

 

THIS AMENDMENT NO. 1 TO LEASE (“Amendment”) made as
of the 9th day of December, 2002, by and between ST. PAUL PROPERTIES, INC., a
Delaware corporation (“Landlord”) and SAUER-DANFOSS US COMPANY, a Delaware
corporation (“Tenant”).

 

WITNESSETH:

 

WHEREAS, Landlord and Sauer-Sundstrand Company (“Sauer”)
were the parties to a certain Lease Agreement dated September 17, 1997
(the “Lease”), for premises described therein (the “Premises”); and

 

WHEREAS, Tenant is the successor by merger to Sauer; and

 

WHEREAS, Landlord and Tenant wish to amend the Lease
to reflect certain additional agreements between them.

 

NOW, THEREFORE, in consideration of the Premises and
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as set forth below.

 

1.             Defined Terms. Unless otherwise indicated, capitalized
terms shall be defined in the manner set forth in the Lease.

 

2.             Extension of Term. The Term of the Lease is hereby extended
for a period of sixty (60) months commencing March 1, 2003 (the “Extension
Commencement Date”) and ending on February 29, 2008 (such period the “Extension
Term”).

 

3.             Base Rent. During the Extension Term, Tenant shall pay base rent for the
Premises in the amount of:

 

(a)            for the period beginning on the Extension
Commencement Date and ending on the last day of the twelfth calendar month of
the Extension Term, Four Hundred Seventy Six Thousand Four Hundred Twenty Four
and 76/100ths Dollars ($476,424.76) per annum, ($39,702.06 per month); and

 

(b)            for the period beginning on the first day of
the thirteenth full calendar month of the Extension Term and ending on the last
day of the Extension Term, Five Hundred Five Thousand Two Hundred Seventy Six
and 57/100ths Dollars ($505,276.57) per annum ($42,106.38 per month,

 

without
deduction or setoff therefrom, payable at the time and in the manner set forth
in the Lease for the payment of base rent.

 

4.             Right
of Termination. Tenant shall
have two options to terminate the Lease as provided in this Paragraph 4. The
first option shall allow Tenant to terminate the Lease effective as of the last
day of the thirty-sixth full calendar month of the Extension Term (the “First
Option

 

1

 

Termination
Date”) by giving written notice thereof (the “First Option Termination Notice”)
to Landlord not later than the last day of the twenty-seventh full calendar
month of the Extension Term; provided however, it shall be a condition
precedent to the exercise of such option that, simultaneously with the delivery
of the First Option Termination Notice, Tenant delivers to Landlord a
termination fee in the amount of $410,558.36 by wire transfer or by cashier’s
check payable to Landlord’s order, which fee represents the sum of (a) six
(6) months base rent and Operating Costs; plus (b) unamortized
leasing commissions paid by Landlord in connection with extension of the term
contemplated by this Amendment. The second option shall allow Tenant to
terminate the Lease effective as of the last day of the fiftieth full calendar
month of the Extension Term (the “Second Option Termination Date”) by giving
written notice thereof (the “Second Option Termination Notice”) to Landlord not
later than the last day of the forty-fourth full calendar month of the
Extension Term; provided however, it shall be a condition precedent to the
exercise of such option that, simultaneously with the delivery of the Second
Option Termination Notice, Tenant delivers to Landlord a termination fee in the
amount of $203,621.65 by wire transfer or by cashier’s check payable to
Landlord’s order, which fee represents the sum of (x) three (3) months
base rent and Operating Costs; plus (y) unamortized leasing commissions
paid by Landlord in connection with extension of the term contemplated by this
Amendment. In addition to the foregoing, the following shall be conditions
precedent to the exercise of either termination option granted by this
Paragraph: (r) Tenant shall not be in default under any of the terms and
conditions of the Lease as of the date of the First Option Termination Notice
or the Second Option Termination Notice or as of the First Option Termination
Date or the Second Option Termination Date; and (s) in each of the First
Option Termination Notice or the Second Option Termination Notice, as the case
may be, Tenant shall include a representation that the reason for termination
of the Lease is Tenant’s requirement for premises in excess of 74,000
contiguous rentable square feet in which to conduct its business. If Tenant
satisfies all of the foregoing conditions, base rent, Operating Costs and other
expenses due and payable by Tenant under the Lease shall be paid through and
apportioned as of the First Option Termination Date or the Second Option Termination
Date, as applicable, and neither Landlord nor Tenant shall have any rights,
estates, liabilities or obligations accruing under the Lease after the First
Option Termination Date or the Second Option Termination Date, as applicable,
except such rights and obligations which, by the terms of the Lease, expressly
survive the expiration or termination of the Lease. The right to terminate
granted herein shall be personal to Tenant and shall not accrue to any
assignee, sublessee or successor to the interest of Tenant under the Lease.

 

5.             Parking.    At any time between
the Extension Term Commencement Date and the last day of the thirty-sixth full
calendar month of the Extension Term, by written request to Landlord, Tenant
shall have the right to request that Landlord provide not more than twenty-five
additional surface parking spaces for use by Tenant, Tenant’s employees and
invitees, which surface parking shall be in the area shown on Exhibit A
attached to this Amendment and made a part hereof (the “Surface Parking”). Upon
such request, and, at all times subject to consent to the construction of the
Surface Parking by the City of Plymouth, Landlord, at Landlord’s sole cost and
expense, will construct the Surface Parking; provided however that (a) Landlord
shall have the sole right to seek the consent of the City of Plymouth to
construct the Surface Parking; and (b) notwithstanding when the consent of
the City of Plymouth is received, Landlord shall be obligated to commence
construction of the Surface Parking in any year only if such construction can
be commenced and completed from the period from April 15 to October 15
of the year in which the construction is to be performed. Notwithstanding
anything in this Paragraph 5 to the

 

2

 

contrary,
Tenant shall not have the right to request that Landlord construct the Surface
Parking if Tenant is then in default under the Lease.

 

6.             Miscellaneous.

 

(a)           On the Extension Term Commencement Date, Tenant shall take the Premises
in their then AS-IS, WHERE-IS AND WITH ALL FAULTS CONDITION.

 

(b)           The extension of the term contemplated by this Amendment constitutes
the renewal of lease described in Paragraph 29, and Tenant agrees that it has
no further rights to extend the Lease or renew the term.

 

(c)           The parties agree that, except for United Properties, LLC, neither
party has been represented by any broker, agent or other person in connection
with this transaction contemplated by this Amendment and each party agrees to
defend, indemnify and hold the other party harmless from and against any claims
by any other broker, agent or other person claiming a commission or other form
of compensation by virtue of having dealt with either party with regard to the
transaction contemplated by this Amendment. Landlord agrees that, subject to
the provisions of Paragraph 4 hereof regarding the payment of unamortized
leasing commissions, Landlord shall be solely responsible for any payment due
to United Properties, LLC, arising from this transaction.

 

7.             Reference to and Effect on the Lease.

 

(a)           Upon the effectiveness of this Amendment, each reference in the Lease
to “this Lease”, “hereunder”, “hereof, “herein” or words of like import
referring to the Lease shall mean and be a reference to the Lease as amended
hereby.

 

(b)           Except as specifically set forth above, the Lease remains in full force
and effect and is hereby ratified and confirmed; provided, however, that the
parties agree that the rights and obligations of each of them occurring prior
to the Extension Commencement Date shall survive the execution and delivery of
this Amendment.

 

(c)           Wherever there exists a conflict between this Amendment and the Lease,
the provisions of this Amendment shall control.

 

8.              Governing
Law. This Amendment shall be
governed by and construed in accordance with the laws of the State of
Minnesota.

 

9.              Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose.

 

10.            Time
of Essence. Time shall be of
the essence as to each and every term and provision of this Amendment and the
Lease.

 

3

 

IN WITNESS WHEREOF, this Amendment has been executed as of the date
first written above.

 

	
  ST.
  PAUL PROPERTIES, INC.

  	
   

  	
  SAUER-DANFOSS
  US COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Michael D. Elnicky

  	
   

  	
  By:

  	
  /s/
  Karl Schmidt

  
	
   

  	
  Its:

  	
  MICHAEL D. ELNICKY

  	
   

  	
   

  	
  Its:

  	
  EVP
  & CFO

  
	
   

  	
   

  	
  ASSET MANAGER

  	
   

  	
   

  	
   

  

 

4

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