Document:

termloanagreementformain

EXECUTION VERSION    1894311.v9                    MAIN STREET PRIORITY LOAN FACILITY  TERM LOAN AGREEMENT      DATED AS OF DECEMBER 11, 2020      BY AND BETWEEN    AIRCO 1, LLC    AND    PARK STATE BANK 

 

   i  1894311.v9  TABLE OF CONTENTS    1. DEFINITIONS .............................................................................................................................. 1  2. LOAN .......................................................................................................................................... 10  3. INTEREST; PAYMENTS & PREPAYMENTS ......................................................................... 11  4. EFFECT OF BENCHMARK TRANSITION EVENT ............................................................... 12  5. CONDITIONS OF LENDING .................................................................................................... 13  6. CROSS-REFERENCES .............................................................................................................. 15  7. USE OF PROCEEDS .................................................................................................................. 16  8. REPRESENTATIONS AND WARRANTIES ........................................................................... 16  9. COVENANTS ............................................................................................................................. 20  10. EVENTS OF DEFAULT ......................................................................................................... 28  11. DEFAULT REMEDIES ........................................................................................................... 31  12. OBLIGATIONS UNCONDITIONAL; WAIVER OF DEFENSES ........................................ 31  13. ARM’S LENGTH TRANSACTIONS ..................................................................................... 32  14. NO INTEREST OVER LEGAL RATE ................................................................................... 33  15. PAYMENTS, ETC ................................................................................................................... 34  16. SETOFF ................................................................................................................................... 34  17. NOTICES ................................................................................................................................. 34  18. MISCELLANEOUS ................................................................................................................. 35  19. NO PUNITIVE DAMAGES .................................................................................................... 35  20. TELEPHONIC INSTRUCTIONS; AUTHORIZATION TO RECORD PHONE CALLS ..... 35  21. ANTI-TERRORISM LAW ...................................................................................................... 36  22. JURISDICTION AND VENUE ............................................................................................... 36  23. WAIVER OF JURY TRIAL .................................................................................................... 36          

 

   1  1894311.v9  MAIN STREET PRIORITY LOAN FACILITY   TERM LOAN AGREEMENT   PREAMBLE  This Main Street Priority Loan Facility Term Loan Agreement (as modified from time to time,  this “Agreement”), dated as of December 11, 2020, is by and between Airco 1, LLC, a Delaware  limited liability company (“Borrower”), with its address at 5930 Balsam Ridge Road, Denver, North  Carolina 28037; and Park State Bank, a Minnesota state-chartered bank  (“Lender”), with an office  at 331 N. Central Avenue, Duluth, Minnesota 55807.    RECITALS  This Agreement is being entered into in connection with the Main Street Priority Loan  Facility, as may be amended from time to time (the “MSPLF”), which has been authorized under  Section 13(3) of the Federal Reserve Act.    For value received, the receipt and adequacy of which are hereby acknowledged by Lender  and Borrower, the parties agree as follows:  1. DEFINITIONS.  (a) As used in this Agreement the following terms shall have the indicated  meanings:   “Agreement” has the meaning set forth in the Preamble.  “Airco” means Airco, LLC, a North Carolina limited liability company.  “Air T” means Air T, Inc., a Delaware corporation.  The term “applicable law” as used herein shall mean the laws of the State of Minnesota  or the laws of the United States, including, for the avoidance of doubt, the CARES Act  and related laws and regulations governing the MSPLF, as such laws now exist or may  be changed or amended or come into effect in the future.  When such term is used in  relation to interest rates the “applicable law” shall be whichever of such laws allow  the greater rate of interest.  “Assignment Agreement” means the Assignment and Assumption for the Main Street  Lending Program issued on July 31, 2020, as may be amended from time to time.  For  the avoidance of doubt when such term is used in this Agreement it shall be understood  to refer to the current version of this document that is in place at the time of this  Agreement.  “Bailee Agreements” means the (i) Bailee Agreement, by and among Airco, Borrower  and Lender, dated as of December 11, 2020, and (ii) Bailee Agreement, by and among  Jet Yard, Borrower and Lender, dated as of December 11, 2020.  “Benchmark” means, initially, Three-Month LIBOR; provided that if a Benchmark  Transition Event and its related Benchmark Replacement Date have occurred with  

 

 2  1894311.v9  respect to Three-Month LIBOR or the then-current Benchmark, then “Benchmark”  means the applicable Benchmark Replacement.  “Benchmark Replacement” means, initially Three-Month Term SOFR, and thereafter  upon a subsequent Benchmark Transition Event and its related Benchmark  Replacement Date, the Interpolated Benchmark with respect to the then-current  Benchmark, plus the Benchmark Replacement Adjustment for such Benchmark;  provided that if (a) the Lender cannot determine the Interpolated Benchmark as of the  Benchmark Replacement Date or (b) the then-current Benchmark is Three-Month  Term SOFR and a Benchmark Transition Event and its related Benchmark  Replacement Date have occurred with respect to Three-Month Term SOFR (in which  event no Interpolated Benchmark with respect to Three-Month Term SOFR shall be  determined), then “Benchmark Replacement” means the first alternative set forth in  the order below that can be determined by the Lender, as of the Benchmark  Replacement Date:  (i) Compounded SOFR;  (ii) the sum of: (a) the alternate rate of interest that has been selected or  recommended by the Relevant Governmental Body as the replacement  for the then-current Benchmark for the applicable Corresponding  Tenor and (b) the Benchmark Replacement Adjustment;  (iii) the sum of: (a) the ISDA Fallback Rate and (b) the Benchmark  Replacement Adjustment;  (iv) the sum of: (a) the alternate rate of interest that has been selected by the  Lender as the replacement for the then-current Benchmark for the  applicable Corresponding Tenor giving due consideration to any  industry-accepted rate of interest as a replacement for the then-current  Benchmark for U.S. dollar denominated term notes at such time and (b)  the Benchmark Replacement Adjustment.  “Benchmark Replacement Adjustment” means the first alternative set forth in the  order below that can be determined by the Lender, as of the Benchmark Replacement  Date:  (i) the spread adjustment, or method for calculating or determining such  spread adjustment, (which may be a positive or negative value or zero)  that has been selected or recommended by the Relevant Governmental  Body for the applicable Unadjusted Benchmark Replacement;  (ii) if the applicable Unadjusted Benchmark Replacement is equivalent to  the ISDA Fallback Rate, then the ISDA Fallback Adjustment;  (iii) the spread adjustment (which may be a positive or negative value or  zero) that has been selected by the Lender giving due consideration to  any industry-accepted spread adjustment, or method for calculating or  determining such spread adjustment, for the replacement of the then- 

 

 3  1894311.v9  current Benchmark with the applicable Unadjusted Benchmark  Replacement for U.S. dollar denominated floating rate notes at such  time.  “Benchmark Replacement Conforming Changes” means, with respect to any  Benchmark Replacement, any technical, administrative or operational changes  (including changes to the definition of “Interest Period,” timing and frequency of  determining rates with respect to each Interest Period and making payments of interest,  rounding of amounts or tenors and other administrative matters) that the Lender  decides may be appropriate to reflect the adoption of such Benchmark Replacement in  a manner substantially consistent with market practice (or, if the Lender decides that  adoption of any portion of such market practice is not administratively feasible or if  the Lender determines that no market practice for use of the Benchmark Replacement  exists, in such other manner as the Lender determines is reasonably necessary).  “Benchmark Replacement Date” means the earliest to occur of the following events  with respect to the then-current Benchmark:  (i) in the case of clause (a) of the definition of “Benchmark Transition  Event,” the relevant Reference Time in respect of any determination;  (ii) in the case of clause (b) or (c) of the definition of “Benchmark  Transition Event,” the later of (x) the date of the public statement or  publication of information referenced therein and (y) the date on which  the administrator of the Benchmark permanently or indefinitely ceases  to provide the Benchmark; or  (iii) in the case of clause (iv) of the definition of “Benchmark Transition  Event,” the date of such public statement or publication of information  referenced therein.  For the avoidance of doubt, if the event giving rise to the Benchmark Replacement  Date occurs on the same day as, but earlier than, the Reference Time in respect of any  determination, the Benchmark Replacement Date will be deemed to have occurred  prior to the Reference Time for purposes of such determination.  “Benchmark Transition Event” means the occurrence of one or more of the following  events with respect to the then-current Benchmark:  (i) if the Benchmark is Three-Month Term SOFR, (a) the Relevant  Governmental Body has not selected or recommended a forward- looking term rate for a tenor of three months based on SOFR, (b) the  development of a forward-looking term rate for a tenor of three months  based on SOFR that has been recommended or selected by the Relevant  Governmental Body is not complete or (c) the Lender determines that  the use of a forward-looking rate for a tenor of three months based on  SOFR is not administratively feasible;  

 

 4  1894311.v9  (ii) a public statement or publication of information by or on behalf of the  administrator of the Benchmark announcing that such administrator has  ceased or will cease to provide the Benchmark, permanently or  indefinitely, provided that, at the time of such statement or publication,  there is no successor administrator that will continue to provide the  Benchmark;  (iii) a public statement or publication of information by the regulatory  supervisor for the administrator of the Benchmark, the central bank for  the currency of the Benchmark, an insolvency official with jurisdiction  over the administrator for the Benchmark, a resolution authority with  jurisdiction over the administrator for the Benchmark or a court or an  entity with similar insolvency or resolution authority over the  administrator for the Benchmark, which states that the administrator of  the Benchmark has ceased or will cease to provide the Benchmark  permanently or indefinitely, provided that, at the time of such statement  or publication, there is no successor administrator that will continue to  provide the Benchmark; or  (iv) a public statement or publication of information by the regulatory  supervisor for the administrator of the Benchmark announcing that the  Benchmark is no longer representative.  “Borrower” has the meaning set forth in the Recitals.  If Borrower constitutes more  than one entity, “Borrower” refers to each of them individually and some or all of them  collectively, and their obligations hereunder shall be joint and several.  “Business Day(s)” means any day that is not a Saturday, Sunday or other day on which  banks in the State of Minnesota are required or authorized by applicable law to be  closed.  “CARES Act” means the Coronavirus Aid, Relief, and Economic Security Act.  “Co-Lender Agreement” means Co-Lender Agreement under the Main Street Lending  Program Transaction Specific Terms issued on July 31, 2020, as may be amended from  time to time.  For the avoidance of doubt when such term is used in this Agreement it  shall be understood to refer to the current version of this document that is in place at  the time of this Agreement.  “Collateral Coverage Ratio” means (a) the aggregate value of any relevant collateral  security, including the pro rata value of any shared collateral, divided by (b) the  outstanding aggregate principal amount of the relevant debt.  “Compounded SOFR” means the compounded average of SOFRs for the applicable  Corresponding Tenor, with the rate, or methodology for this rate, and conventions for  this rate (which will be compounded in arrears with a lookback and/or suspension  period as a mechanism to determine the interest amount payable prior to the end of  each Interest Period) being established by the Lender in accordance with:  

 

 5  1894311.v9  (i) the rate, or methodology for this rate, and conventions for this rate  selected or recommended by the Relevant Governmental Body for  determining compounded SOFR; provided that:  (ii) if, and to the extent that, the Lender determines that Compounded  SOFR cannot be determined in accordance with clause (i) above, then  the rate, or methodology for this rate, and conventions for this rate that  have been selected by the Lender or its designee giving due  consideration to any industry-accepted market practice for U.S. dollar  denominated term notes at such time.  For the avoidance of doubt, the calculation of Compounded SOFR will exclude the  Benchmark Replacement Adjustment.  “Constituent Documents” means the articles or certificate of incorporation, by-laws,  partnership agreement, certificate of limited partnership, limited liability company  operating agreement, limited liability company articles of organization or certificate  of formation, trust agreement, and all other documents and instruments pertaining to  the formation and ongoing existence of any person or entity which is not a natural  person.  “Corresponding Tenor” with respect to a Benchmark Replacement means a tenor  (including overnight) having approximately the same length (disregarding business  day adjustment) as the applicable tenor for the then-current Benchmark.  “Credit Support Party” means any person, or any persons severally, other than  Borrower, who now or hereafter guarantees payment or collection of all or any part of  the Loan or provides any collateral for the Loan.   “Dollar” and “$” means lawful money of the United States of America, unless  otherwise specified.  “EBITDA” means for any period Borrower’s consolidated net earnings for such period  before interest expense, tax expense, depreciation and amortization.  “Equity Holder(s)” means any and all partners, members and/or shareholders (as  applicable according to whether Borrower is a partnership (limited or general), limited  liability company or corporation) holding equity interests in Borrower.  “ERISA” means the Employee Retirement Income Security Act of 1974, as amended,  and the rules and regulations thereunder.  “ERISA Affiliate” means any member of a group which is under common control with  Borrower (within the meaning of Section 414 of the IRC or Section 4001(a)(14) or  4001(b) of ERISA).  “Event of Default” has the meaning set forth in Section 10.  “Executive Order No. 13224” means Executive Order No. 13224 on Terrorist  Financing, effective September 24, 2001.  

 

 6  1894311.v9  “FRBNY” means the Federal Reserve Bank of New York.  “FRBNY’s Website” means the website of the FRBNY at http://www.newyorkfed.org  or any successor source.  The term “indebtedness” shall mean all debt for borrowed money and any obligations  evidenced by a bond, debenture, note, loan agreement or other similar instrument, and  any guarantee of any of the foregoing.  “Interest Deferral Period” has the meaning set forth in Section 3.   “Interest Rate” has the meaning set forth in Section 3.  “Interest Determination Date” means, in the event of a Benchmark Transition Event,  the date upon which the Benchmark Replacement and subsequent Interest Rate is  determined by the Lender; provided that if the then current Benchmark is Three-Month  Term SOFR, then such Benchmark Replacement and subsequent Interest Rate shall be  determined by the Lender pursuant to the Three-Month Term SOFR Conventions.  “Interpolated Benchmark” with respect to the Benchmark means the rate determined  for the Corresponding Tenor by interpolating on a linear basis between: (i) the  Benchmark for the longest period (for which the Benchmark is available) that is  shorter than the Corresponding Tenor and (ii) the Benchmark for the shortest period  (for which the Benchmark is available) that is longer than the Corresponding Tenor.  “ISDA” means the International Swaps and Derivatives Association, Inc. or any  successor thereto.  “ISDA Definitions” means the 2006 ISDA Definitions published by the ISDA or any  successor thereto, as amended or supplemented from time to time, or any successor  definitional booklet for interest rate derivatives published from time to time.  “ISDA Fallback Adjustment” means the spread adjustment (which may be a positive  or negative value or zero) that would apply for derivatives transactions referencing the  ISDA Definitions to be determined upon the occurrence of an index cessation event  with respect to the Benchmark for the applicable tenor.  “ISDA Fallback Rate” means the rate that would apply for derivatives transactions  referencing the ISDA Definitions to be effective upon the occurrence of an index  cessation date with respect to the Benchmark for the applicable tenor excluding the  applicable ISDA Fallback Adjustment.  “Jet Yard” means Jet Yard, LLC, an Arizona limited liability company.  “Lender” has the meaning set forth in the Recitals.  “Lender Affiliate” means Park Financial Group, Inc. or any direct or indirect  subsidiary of Park Financial Group, Inc. (other than Lender itself).   

 

 7  1894311.v9  “Liabilities” means any and all obligations of Borrower to Lender hereunder or in  connection herewith, now existing or hereafter arising, including: principal and  interest on the Loan; commitment, late or other fees (if applicable).  Unless otherwise  provided herein or in a Related Document, each of the Liabilities shall be due and  payable upon Lender’s request.  “Loan” has the meaning set forth in Section 2.  “Loan Origination Fee” means one percent (1.00%) of the principal amount of the  Loan at the time of origination.  The term “margin stock” shall have the same meaning herein as in Federal Reserve  Board Regulation U, or any successor regulation, as and if modified from time to time.   The verbs “purchase” and “carry” when used with respect to margin stock shall have  the same meaning as in such Regulation or successor and applicable authorities  thereunder.  “Maximum Orderly Liquidation Value Ratio” shall mean one and thirty hundredths  (1.30) to one (1).  “Minimum Collateral FMV” shall mean two hundred percent (200%) of the fair  market value of the collateral securing the Loan.  “Mortgage Debt” means (i) debt secured solely by real property at the time of the  Loan’s origination; and (ii) limited recourse equipment financings (including  equipment capital or finance leasing and purchase money equipment loans) secured  only by the acquired equipment.  “MSPLF” has the meaning set forth in the Recitals.  “MSPLF Borrower Certifications and Covenants” means the Main Street Priority  Loan Facility Borrower Certifications and Covenants Instructions and Guidance  issued on June 11, 2020 by the Federal Reserve Bank of Boston, as may be amended  from time to time, which each Borrower under the MSPLF must submit in connection  with obtaining a loan under the program.  For the avoidance of doubt when such term  is used in this Agreement it shall be understood to refer to the current version of this  document that is in place at the time of this Agreement.  “MSPLF Commitment Letter” has the meaning set forth in Section 2(a).  “MSPLF FAQ” means the Main Street Lending Program For-Profit Businesses  Frequently Asked Questions effective as of November 25, 2020, as may be amended  from time to time.  For the avoidance of doubt when such term is used in this  Agreement it shall be understood to refer to the current version of this document that  is in place at the time of this Agreement.  “MSPLF Term Sheet” means the term sheet for the MSPLF issued by the Federal  Reserve Bank of Boston and effective as of October 30, 2020, as may be amended  from time to time.  For the avoidance of doubt when such term is used in this  

 

 8  1894311.v9  Agreement it shall be understood to refer to the current version of the term sheet that  is in place at the time of this Agreement.  “Note” has the meaning set forth in Section 2.  “Permitted Tax Distribution” has the meaning set forth in Section 9(g).  The term “person” means any individual, corporation, company, limited liability  company, voluntary association, partnership, trust, estate, unincorporated  organization, other entity, or government (or any agency, instrumentality, or political  subdivision thereof).  “Plan” means any employee benefit plan which is a defined benefit plan under ERISA.  “Pledge Agreement” means the Pledge Agreement, by and between Airco and Lender,  dated as of December 11, 2020.  “Reference Time” with respect to any determination of a Benchmark means (i) if the  Benchmark is Three-Month Term SOFR, the time determined by the Lender after  giving effect to the Three-Month Term SOFR Conventions, and (ii) if the Benchmark  is not Three-Month Term SOFR, the time determined by the Lender after giving effect  to the Benchmark Replacement Conforming Changes.  “Related Document(s)” means this Agreement, the Note, the Bailee Agreements, the  Pledge Agreement, the Security Agreement, the Subordination Agreement and any  other agreement, guaranty, document or instrument, including with respect to any  collateral, previously, now or hereafter delivered to Lender in connection with this  Agreement.  For the avoidance of doubt, as used herein, this term shall also refers to  any documents required to be executed and/or delivered by Borrower and/or Lender  in connection with the MSPLF.  “Related Party(ies)” means any Credit Support Party, any Subsidiary, and, to the  extent applicable, any general or limited partner, controlling shareholder, joint  venturer, member or manager, of Borrower.  “Relevant Governmental Body” means the Federal Reserve Board and/or the FRBNY,  or a committee officially endorsed or convened by the Federal Reserve Board and/or  the FRBNY or any successor thereto.  “Scheduled Maturity Date” has the meaning set forth in Section 2.  “SEC” means the United States Securities and Exchange Commission.  “Security Agreement” means the Security Agreement, by and between the Borrower  and Lender, dated as of December 11, 2020.  “SOFR” means the daily Secured Overnight Financing Rate provided by the FRBNY,  as the administrator of the benchmark (or a successor administrator), on the FRBNY’s  Website.  

 

 9  1894311.v9  “Stratus” means Stratus Aero Partners LLC, a Delaware limited liability company.  “Subordination Agreement” means the Subordination Agreement, by and among Air  T, Borrower and Lender, dated as of December 11, 2020.  “Subsidiary” means any corporation, partnership, limited liability company, joint  venture, trust, or other legal entity of which Borrower owns directly or indirectly fifty  percent (50.00%) or more of the outstanding voting stock or interest, or of which  Borrower has effective control, by contract or otherwise.  “Term SOFR” means the forward-looking term rate based on SOFR that has been  selected or recommended by the Relevant Governmental Body.  “Term SOFR Administrator” means any entity designated by the Relevant  Governmental Body as the administrator of Term SOFR (or a successor administrator).  “Three-Month LIBOR” means the sum of: (i) the fixed rate of interest per year for  deposits with maturity periods of ninety (90) days in United States dollars offered to  Lender in or through the London or another offshore interbank market, as determined  by Lender in its sole discretion for or as of the borrowing, maintenance or conversion  date requested by Borrower; plus (ii) three percent (3.00%).  The determination of  “Three-Month LIBOR” for purposes of determining the Interest Rate hereunder shall  be made on the tenth (10th) day of each month after the Loan is funded and during  which amounts remain outstanding hereunder, beginning on January 10, 2021.  “Three-Month Term SOFR” means the rate for Term SOFR for a tenor of three months  that is published by the Term SOFR Administrator at the Reference Time for any  Interest Period, as determined by the Lender after giving effect to the Three-Month  Term SOFR Conventions plus three percent (3.00%).  “Three-Month Term SOFR Conventions” means any determination, decision or  election by the Lender with respect to any technical, administrative or operational  matter (including with respect to the manner and timing of the publication of Three- Month Term SOFR, or changes to the definition of “Interest Period”, timing and  frequency of determining Three-Month Term SOFR with respect to each Interest  Period and making payments of interest, rounding of amounts or tenors, and other  administrative matters) that the Lender decides may be appropriate to reflect the use  of Three-Month Term SOFR as the Benchmark in a manner substantially consistent  with market practice (or, if the Lender decides that adoption of any portion of such  market practice is not administratively feasible or if the Lender determines that no  market practice for the use of Three-Month Term SOFR exists, in such other manner  as the Lender determines is reasonably necessary).  “Transaction Fee” means one percent (1.00%) of the principal amount of the Loan at  the time of origination.  “Trigger Date” means that date on which the Board of Governors of the Federal  Reserve System or a designee thereof has, after consultation with the Lender, notified  the Lender in writing that the Borrower has materially breached, made a material  

 

 10  1894311.v9  misrepresentation with respect to or otherwise failed to comply with certifications in  Section 2 (CARES Act Borrower Eligibility Certifications and Covenants) or Section  3 (FRA and Regulation A Borrower Eligibility Certifications) of the MSPLF Borrower  Certifications and Covenants in any material respect or that any such certification has  failed to be true and correct in any material respect.  “UCC” means the Uniform Commercial Code of the State of Minnesota, as may be  amended from time to time.  “Unadjusted Benchmark Replacement” means the Benchmark Replacement excluding  the Benchmark Replacement Adjustment.  “Unmatured Event of Default” means any event or condition that would become an  Event of Default with notice or the passage of time or both.  “USA Patriot Act” means the “Uniting and Strengthening America by Providing  Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001” (Public  Law 107-56, signed into law on October 26, 2001), as amended from time to time.  (b) As used in this Agreement, unless otherwise specified: the term “including”  means “including without limitation;” the term “days” means “calendar days”;  and terms such as “herein,” “hereof” and words of similar import refer to this  Agreement as a whole.  Unless otherwise defined herein or the context requires  otherwise, all terms (including those not capitalized) that are defined in the  UCC shall have the same meanings herein as in the UCC; provided, however,  no amendment to the UCC after the date hereof shall limit any rights of Lender  hereunder or in connection herewith. Unless the context requires otherwise,  wherever used herein the singular shall include the plural and vice versa, and  the use of one gender shall also denote the others.  Captions herein are for  convenience of reference only and shall not define or limit any of the terms or  provisions hereof; references herein to sections or provisions without reference  to the document in which they are contained are references to this Agreement.  2. LOAN.  (a) Subject to the terms and conditions of this Agreement, Lender agrees to make  a term loan (together with portions thereof from time to time outstanding  hereunder, the “Loan”) to Borrower in the principal amount of $6,200,000, on  or before the third (3rd) Business Day following the receipt of a commitment  letter from MS Facilities LLC that it will purchase a participation interest in  95% of the aggregate principal amount of the loan under the Main Street  Lending Program (the “MSPLF Commitment Letter”).  (b) The Loan shall be evidenced by a Term Note dated the date of the Loan,  payable to the order of  Lender, in the original principal amount of the Loan  (the “Note”) substantially in the form of Exhibit A attached hereto.  The Loan  principal shall be payable in accordance with the following, provided that in  any event all such principal shall be paid on or before December 11, 2025 (the  “Scheduled Maturity Date”):  

 

 11  1894311.v9  (i) Principal shall be deferred for the first two (2) years of the Loan (i.e.,  until December 11, 2022);  (ii) Fifteen percent (15.00%) of the principal amount (including any  capitalized interest accrued thereon) shall be due on the third  anniversary of this Agreement (i.e., December 11, 2023);  (iii) Fifteen percent (15.00%) of the principal amount (including any  capitalized interest accrued thereon) shall be due on the fourth  anniversary of this Agreement (i.e., December 11, 2024); and  (iv) The remaining seventy percent (70.00%) of the principal amount  (including any capitalized interest accrued thereon) shall be due on the  Scheduled Maturity Date.  (c) Notwithstanding any other provision hereof to the contrary, if the interest rate  options hereunder include any pursuant to which a principal payment on the  Loan is due on a date other than the last day of an applicable interest period,  Borrower shall pay a prepayment breakage fee on the amount of such Loan  payment determined as if such Loan principal payment were a prepayment  made on a date other than the last day of such Interest Period.  For the  avoidance of doubt, this Section 2(c) shall prevail over Section 3 to the extent  of any conflict or inconsistency.  (d) If a payment hereunder (principal, interest or other) is fifteen (15) or more days  late, Borrower may be charged, and Borrower agrees to pay immediately, a late  fee of five percent (5.00%) of the unpaid portion of the payment.  3. INTEREST; PAYMENTS & PREPAYMENTS.   (a) Borrower agrees to pay interest on the unpaid principal amount from time to  time outstanding hereunder at the rate per year equal to the Benchmark, which,  for the avoidance of doubt, shall initially be Three-Month LIBOR (the “Interest  Rate”).  Notwithstanding the foregoing or any other provision hereof or of any  Related Document, in no event shall the Interest Rate hereunder exceed the  maximum interest rate allowed under applicable law.  (b) Borrower may prepay the Loan without penalty or premium at any time,  provided, however, that if a Trigger Date has occurred, then the Lender shall  promptly so notify the Borrower and the Borrower shall, no later than two (2)  Business Days after such Trigger Date, prepay the Loan in full, along with any  accrued and unpaid interest thereon. Any partial prepayments shall be applied  to the next scheduled principal payment owed by Borrower hereunder.  (c) Notwithstanding the foregoing, if an Event of Default has occurred and is  continuing, Borrower agrees to pay interest on the Loan at a rate per year equal  to five percent (5.00%) in addition to the rate otherwise applicable hereunder.   Notwithstanding the foregoing or any other provision hereof or of any Related  

 

 12  1894311.v9  Document, in no event shall the Interest Rate hereunder exceed the maximum  interest rate allowed under applicable law.  (d) Interest shall be computed for the actual number of days elapsed on the basis  of a year consisting of three hundred sixty (360) days and days elapsed,  including the date the Loan is made and excluding the date the Loan or any  portion thereof is paid or prepaid.  Calculating interest on the basis of a year  other than a calendar year may result in a higher effective interest rate  than any numeric rate stated in or determined pursuant hereto.  (e) Interest shall be payable on the Loan in accordance with the following:  (i) Interest on the Loan shall be deferred for one (1) year (the “Interest  Deferral Period”);  (ii) After the expiration of the Interest Deferral Period, Borrower agrees to  pay accrued interest monthly on the eleventh (11th) day of each calendar  month, beginning on January 11, 2022, with all accrued but unpaid  interest being due and payable in full on the Scheduled Maturity Date  (for avoidance of doubt, any interest accrued during the Interest  Deferral Period shall, following the Interest Deferral Period, be  capitalized and added to any outstanding amounts of principal due  hereunder); and  (iii) After the Scheduled Maturity Date, whether by acceleration or  otherwise, interest shall be payable on demand.  4. EFFECT OF BENCHMARK TRANSITION EVENT.    (a) If the Lender determines prior to the relevant Interest Determination Date that  a Benchmark Transition Event and its related Benchmark Replacement Date  have occurred with respect to Three-Month LIBOR, then the Lender shall  promptly provide notice of such determination to the Borrower and Section  4(d) will thereafter apply to all determinations, calculations and quotations  made or obtained for the purposes of calculating the Interest Rate payable on  the Loan during a relevant Interest Period.  (b) However, if the Lender determines that a Benchmark Transition Event and its  related Benchmark Replacement Date have occurred with respect to Three- Month LIBOR, but for any reason the Benchmark Replacement has not been  determined as of the relevant Interest Determination Date, the Interest Rate for  the applicable Interest Period will be equal to the Interest Rate on the last  Interest Determination Date for the Loan, as determined by the Lender.  (c) If the then-current Benchmark is Three-Month Term SOFR and any of the  foregoing provisions concerning the calculation of the Interest Rate and the  payment of interest during the Interest Rate Period are inconsistent with any of  the Three-Month Term SOFR Conventions determined by the Lender, then the  relevant Three-Month Term SOFR Conventions will apply.  

 

 13  1894311.v9  (d) Effect of Benchmark Transition Event.  (i) If the Lender determines that a Benchmark Transition Event and its  related Benchmark Replacement Date have occurred prior to the  Reference Time in respect of any determination of the Benchmark on  any date, the Benchmark Replacement will replace the then-current  Benchmark for all purposes relating to the Loan during the relevant  Interest Period in respect of such determination on such date and all  determinations on all subsequent dates.  (ii) In connection with the implementation of a Benchmark Replacement,  the Lender will have the right to make Benchmark Replacement  Conforming Changes from time to time.  (iii) Any determination, decision or election that may be made by the  Lender  pursuant to the Benchmark transition provisions set forth  herein, including any determination with respect to a tenor, rate or  adjustment or of the occurrence or non-occurrence of an event,  circumstance or date, and any decision to take or refrain from taking  any action or any selection:  A. will be conclusive and binding absent manifest error;  B. will be made in the Lender’s sole discretion; and  C. notwithstanding anything to the contrary in the Loan, shall become  effective without consent from the Borrower or any other party.  (iv) For the avoidance of doubt, after a Benchmark Transition Event and its  related Benchmark Replacement Date have occurred, interest payable  on the Loan for the applicable Interest Rate Period will be an annual  rate equal to the sum of the applicable Benchmark Replacement and  the spread specified on the face hereof.  5. CONDITIONS OF LENDING.  (a) Any obligation of Lender to make the Loan is subject to the following  conditions precedent:  (i) Documents.  Promptly following the execution and delivery hereof, and  in any event prior to the funding of the Loan, Lender shall have  received all of the following, each duly executed and dated the date  hereof (unless otherwise specified herein), in form and substance  satisfactory to Lender and its counsel, at the expense of Borrower, and  in such number of signed counterparts as Lender may request (except  for the Note, of which only the original will be signed):  A. Term Note.  The Note.  B. Related Documents.  This Agreement and all Related Documents.   

 

 14  1894311.v9  C. Collateral documents and searches.  Duly recorded copies of  mortgages, deeds of trust and financing statements, as well as lien  searches, title insurance commitments and policies, environmental  studies, and other documents as Lender may require, to confirm the  following to Lender’s satisfaction, subject only to such exceptions  as Lender may permit:  I. Lender has a first-priority, sole security interest in any and all  collateral for the Loan;   II. The Loan is senior or pari passu in ranking with any other  indebtedness, other than Mortgage Debt, of Borrower; and   III. Compliance with any applicable environmental and other laws  and regulations pertaining to any collateral.  D. Resolution; Certificate of Incumbency.  A copy of a resolution of  Borrower’s, Airco’s and Air T’s respective board of directors (if  Borrower, Airco or Air T, as applicable, is a corporation), members  and managers (if Borrower, Airco or Air T, as applicable, is a  limited liability company), limited and general partners (if  Borrower, Airco or Air T, as applicable, is a partnership),  authorizing or ratifying the execution, delivery and performance,  respectively, of this Agreement and all Related Documents to  which it or they are parties, certified by an appropriate officer,  member, manager or partner of Borrower, Airco and Air T, as  applicable, authorized to do so, as applicable, together with a  certificate of an appropriate officer, member, manager, or partner  of Borrower, Airco and Air T, as applicable, certifying the names  of the parties authorized to execute, deliver, and perform  Borrower’s, Airco’s and Air T’s, as applicable, obligations under,  this Agreement and the Related Documents to which it or they are  parties, together with a sample of the true signature of each such  person (Lender may rely without inquiry on such certificate until  formally advised by a like certificate of any changes thereto).  E. Governing Documents.  A copy of the Constituent Documents of  Borrower, Airco and Air T, certified by an appropriate officer,  member, manager or partner of Borrower, Airco and Air T,  respectively.  F. Good Standing Certificate.  A good standing certificate or the  equivalent for Borrower, Airco and Air T issued by the Secretary  of State or other appropriate agency of the state where Borrower  Airco and Air T, respectively, was organized, dated within thirty  (30) days prior to the date of this Agreement.  G. Transaction Fee.  Payment of the Transaction Fee to Lender.  

 

 15  1894311.v9  H. Loan Origination Fee.  Payment of the Loan Origination Fee to  Lender.  I. Payoff Letters.  Payoff letters from Minnesota Bank & Trust,  Borrower’s current Lender.  J. UCC-3 Termination Statements.  An agreement or  acknowledgement from Minnesota Bank & Trust to file or permit  filing of UCC-3 termination statements once the indebtedness held  by Minnesota Bank & Trust is paid in full.  K. Miscellaneous.  Such other documents and certificates as Lender  may reasonably request.  (ii) No Default, Etc.  At the time of the Loan, and after giving effect thereto:    A. Representations and Warranties True. Borrower’s representations  and warranties herein and in all Related Documents shall be true  and correct.  B. No Default.  No Event of Default or Unmatured Event of Default  shall have occurred and be continuing.  (b) The request or application for the Loan shall constitute a representation and  warranty by Borrower as of the date of such request or application that:   (i) no Event of Default or Unmatured Event of Default has occurred and  is continuing as of such date or will exist after the Loan is made; and   (ii) Borrower’s representations and warranties herein and in any Related  Document are true and correct, and will be true and correct after the  Loan is made.  (c) The Loan is being made pursuant to the MSPLF and must comply with the  terms thereof.    (d) Notwithstanding anything to the contrary contained herein, the funding of the  Loan shall be conditioned on the receipt of the MSPLF Commitment Letter.  6. CROSS-REFERENCES.  The Loan and other Liabilities are secured without limitation as provided herein and in the  following and all Related Documents, in each case as amended, modified, renewed, restated or  replaced from time to time:   (a) The MSPLF Borrower Certifications and Covenants executed and delivered by  Borrower pursuant to the MSPLF.  (b) The Assignment Agreement executed and delivered by Borrower and Lender  pursuant to the MSPLF.  

 

 16  1894311.v9  (c) The Co-Lender Agreement executed and delivered by Borrower and Lender  pursuant to the MSPLF.  (d) The Bailee Agreements executed and delivered by Airco and Jet Yard, as  applicable, Borrower and Lender.  (e) The Pledge Agreement executed and delivered by Airco and Lender.  (f) The Security Agreement executed and delivered by Borrower and Lender.  (g) The Subordination Agreement executed and delivered by Air T, Borrower and  Lender.  7. USE OF PROCEEDS.  (a) Borrower shall not use Loan proceeds for any purpose other than to refinance  existing indebtedness and for working capital and general corporate purposes.  (b) Borrower represents and warrants that the proceeds of the Loan will be used  solely for business purposes, and not for personal, family or household use,  within the meaning of Federal Truth-in-Lending and similar state laws and  regulations.  (c) Borrower agrees not to use the Loan or proceeds thereof, directly or indirectly,  to purchase or carry any margin stock unless on or prior to the date of this  Agreement (i) Borrower furnishes to Lender a signed Federal Reserve Form  U-1 indicating Borrower may do so, and (ii) Lender consents in writing to Loan  proceeds being so used.  Borrower agrees to comply with such Regulation U  and any related regulations in the manner deemed appropriate by Lender.  8. REPRESENTATIONS AND WARRANTIES.    The representations and warranties contained in this Section 8 and elsewhere in this  Agreement are made in addition to, and not in lieu of, the Borrower’s certifications and covenants  contained in the MSPLF Borrower Certifications and Covenants.  Borrower represents and warrants  to, and agrees in favor of Lender, that:   (a) Borrower Organization:  (i) Borrower is an entity of the type, and is organized under the laws of the  jurisdiction, specified in the preamble hereto.  Borrower’s name as  shown in the preamble hereto is the full exact name that appears in  Borrower’s organizational documents.  If Borrower is a registered  organization, Borrower’s name as shown in the preamble hereto is as  shown on the public organic record most recently filed with or issued  or enacted by Borrower’s jurisdiction of organization which purports  to state, amend, or restate Borrower’s name.  If Borrower is an  organization but not a registered organization, if it has only one place  of business that place of business is at Borrower’s address indicated in  

 

 17  1894311.v9  the preamble hereto, but if it has more than one place of business, its  chief executive office is at such address.   (ii) The representations and warranties made by Borrower in (i)-(ii) of this  Section 8(a), as applicable, would have been accurate at all times  during the five years and six months prior to the date hereof except as  and if Borrower has specifically notified Lender in writing prior to  Borrower’s execution of this Agreement.  (b) Borrower and any Subsidiary is duly organized, validly existing and in good  standing under the laws of the jurisdiction of its formation, and is duly qualified  as a foreign limited liability company or other entity, as applicable, and in good  standing under the laws of each jurisdiction where its ownership, lease or  operation of property or the conduct of its business requires such qualification  except to the extent that the failure to qualify in such jurisdiction could not  reasonably be expected to have a material adverse effect on Borrower’s or any  such Subsidiary’s financial condition, business, properties or assets.  (c) Borrower has full power and authority to enter into and to perform its  obligations under this Agreement and each Related Document to which it is a  party.  (d) This Agreement and each Related Document constitute the legal, valid, and  binding obligations of Borrower and each Related Party and are enforceable  against Borrower and each Related Party, as applicable, in accordance with  their respective terms subject only to bankruptcy, insolvency, reorganization,  moratorium or similar laws at the time in effect affecting the enforceability of  rights of creditors generally and by general equitable principles which may  limit the right to obtain equitable remedies.  (e) Borrower’s execution, delivery and performance of this Agreement and each  Related Document to which Borrower is a party have been duly authorized by  all necessary corporate or company action, do not require the consent or  approval of any person which has not been obtained, and do not conflict with  any agreement binding upon Borrower or any of Borrower’s property.  (f) There is no litigation, bankruptcy proceeding, arbitration or governmental  proceeding pending against Borrower or any Subsidiary or affecting the  business, property or operations of the Borrower or any such Subsidiary which,  if determined adversely to the Borrower or such Subsidiary, could reasonably  be expected to have a material adverse effect on Borrower’s or any such  Subsidiary’s financial condition, business, properties or assets.  (g) Neither Borrower nor any ERISA Affiliate has maintained, established,  sponsored or contributed to any Plan covered by Title IV of ERISA.  (h) The proceeds of the Loan will be used (i) to refinance existing indebtedness of  the Borrower held by Minnesota Bank & Trust, and (ii); no part of the proceeds  of the Loans will be used for any purpose which violates, or which is  

 

 18  1894311.v9  inconsistent with, any regulations promulgated by the Board of Governors of  the Federal Reserve System.  (i) (i) Borrower is in compliance in all material respects with all federal, state and  local laws, rules and regulations applicable to it including, without limitation,  all pollution control and environmental regulations in each jurisdiction where  Borrower is doing business; and (ii) Borrower does not have any material  liability for the release or threatened release of any toxic or hazardous waste,  substance or constituent into the environment.  (j) Borrower’s internally prepared financial statements for the fiscal quarter that  ended on September 30, 2020, copies of which have been furnished to the  Lender, have been prepared in accordance with GAAP (except for the absence  of footnotes and subject to customary year-end adjustments) and present fairly  the financial condition of Borrower as of such date and the result of its  operation for the periods then ended.  (k) Since the date on which the financial statements described in Section 8(j) were  prepared, there has not been any material adverse change in the business,  operations, prospects, assets, results of operations or condition (financial or  other) of Borrower that have not been otherwise reported to the Lender via  applicable regulatory filings, or subsequent month-end statements, copies of  which have been provided to Lender.  (l) Borrower has filed all federal and state income tax and other tax returns which  are required to be filed, and has paid all taxes as shown on said returns and all  assessments received by Borrower to the extent that such taxes have become  due, except to the extent that Borrower is disputing such taxes in good faith  and has established adequate reserves on its books.  (m) Borrower possesses adequate licenses, permits, franchises, patents, copyrights,  trademarks and trade names, or rights thereto, to conduct its business  substantially as now conducted and as presently proposed to be conducted.  (n) Borrower is not in default of a material provision under any material  agreement, instrument, decree or order to which it is a party or by which it or  its property is bound or affected and assuming that this Agreement had been  previously executed and delivered no Default or Event of Default has occurred  and is continuing thereunder or hereunder.  (o) Borrower has good title to all of its properties and assets, including, without  limitation, any collateral, free and clear of all mortgages, security interests,  liens and encumbrances, except as permitted by Section 9(o).  Neither  Borrower nor any Subsidiary of Borrower has acquired or agreed to acquire  any property or assets of any character under any conditional sale agreement  or other title retention agreement, except for:  (i) liens existing on the date of  this Agreement of which Lender has been advised by Borrower in writing  before this Agreement was signed; (ii) liens of landlords, contractors, laborers  or supplymen, tax liens, liens securing performance or appeal bonds, or other  

 

 19  1894311.v9  similar liens or charges arising out of Borrower’s or any Subsidiary’s business,  provided that tax liens are removed before related taxes become delinquent and  other liens are promptly removed, in either case unless contested in good faith  and by appropriate proceedings, and as to which adequate reserves have been  established and no foreclosure, sale or similar proceedings have commenced;  and (iii) liens in favor of Lender.  (p) Borrower is a wholly-owned subsidiary of Airco, which, in turn, is a wholly- owned subsidiary of Stratus which is a wholly-owned subsidiary of Air T. For  the avoidance of doubt, neither Stratus nor Air T are parties to this Agreement,  nor guarantors of the obligations created hereunder.  (q) Borrower is solvent after giving effect to the making of the Loan hereunder  and the granting of liens pursuant to this Agreement and the Related  Documents;  (r) (i) Borrower is not a party to any labor dispute; and (ii) there are no strikes or  walkouts relating to any labor contracts to which Borrower is subject.  (s) Borrower is not an “investment company” and is not “controlled” by an  “investment company” within the meaning of the Investment Company Act of  1940, as amended.  (t) Borrower is not a partner (limited or general) or joint venturer in any  partnerships or joint ventures.  (u) Borrower is not a “holding company” or a “subsidiary company” of a holding  company or an “affiliate” of a holding company or of a subsidiary company of  a holding company within the meaning of the Public Utility Holding Company  Act of 1935, as amended.  (v) Borrower is not subject to or in violation of any law or regulation, or listed on  any list of any government agency including, without limitation, the U.S.  Office of Foreign Asset Control list, Executive Order 13224 or the USA Patriot  Act that prohibits or limits the conduct of business with or receiving of funds,  goods or services to or for the benefit of certain Persons specified therein or  that prohibits or limits Lender from making the Loan or other extension of  credit to Borrower or from otherwise conducting business with Borrower.  (w) Neither the execution of this Agreement nor the use of the proceeds of the Loan  violates the Trading with the Enemy Act of 1917, as amended, nor any of the  foreign assets control regulations promulgated thereunder or under the  International Emergency Economic Powers Act or the U.N. Participation Act  of 1945; and (ii) neither the Borrower nor any Person who owns a controlling  interest in or otherwise controls the Borrower is listed on the Specially  Designated Nationals and Blocked Person List or other similar lists maintained  by the Office of Foreign Assets Control, the Department of the Treasury or  included in Executive Order No. 13224 on Terrorist Financing, effective  September 24, 2001.  

 

 20  1894311.v9  (x) Borrower is not engaged principally in, nor is one of the Borrower’s important  activities, the business of extending credit for the purpose of purchasing or  carrying margin stock.  Assets which constitute margin stock constitute less  than twenty-five percent (25.00%) by market value of all assets of Borrower.  (y) Attached hereto as Exhibit B is a correct and complete list of all Subsidiaries  of Borrower, indicating the exact name thereof, the type of entity and the  jurisdiction of formation or organization; if there are no Subsidiaries, Borrower  has indicated “None” or “N/A” on Exhibit B.   (z) The execution, delivery and performance of this Agreement and all Related  Documents are in Borrower’s best interest in its current and future operations  and will materially benefit Borrower.  Borrower has received adequate, fair  and valuable consideration, and at least reasonably equivalent value, to enter  into and perform this Agreement and all Related Documents. Borrower’s assets  at fair valuation exceed the sum of Borrower’s debts.  Borrower is able to pay  its debts as they become due.  Borrower does not have unreasonably small  capital with which to conduct its business.  (aa) Borrower is an “eligible borrower” as such term is defined in the MSPLF Term  Sheet for the MSPLF, and to Borrower’s knowledge no fact or circumstance  exists that, now or with the passage of time, would cause Borrower to be  ineligible to borrow under the terms of the MSPLF, including, for the  avoidance of doubt, meeting any EBITDA and related requirements for  eligibility under the MSPLF.  (bb) As of the date hereof (and as of the date of origination), Borrower does not  (and will not) have any secured debt other than Mortgage Debt that would  require utilization of the Collateral Coverage Ratio provided for in the MSPLF  FAQ in order for the parties to be in compliance with the terms of the MSPLF.   9. COVENANTS.  The covenants contained in this Section 9 and elsewhere in this Agreement are made in  addition to, and not in lieu of, the Borrower’s certifications and covenants contained in the MSPLF  Borrower Certifications and Covenants.  (a) Borrower Organizational Changes.  BORROWER AGREES TO NOTIFY  LENDER IN WRITING AT LEAST SIXTY (60) DAYS IN ADVANCE OF:   (i) ANY CHANGE WHATSOEVER IN THE NAME OF BORROWER; (ii)  ANY CHANGE WHATSOEVER IN THE STATE OR JURISDICTION IN  WHICH BORROWER IS ORGANIZED OR FORMED; (iii) ANY NEW  NAMES UNDER WHICH BORROWER INTENDS TO DO BUSINESS;  AND (iv) ANY NEW ADDRESSES AT OR FROM WHICH BORROWER  INTENDS TO DO BUSINESS.  IF BORROWER IS A REGISTERED  ORGANIZATION, SUCH AS A CORPORATION, LIMITED LIABILITY  COMPANY, OR LIMITED PARTNERSHIP, BORROWER AGREES TO  NOTIFY LENDER IMMEDIATELY IF BORROWER’S STATE OR  JURISDICTION OF ORGANIZATION DISSOLVES, SUSPENDS OR  

 

 21  1894311.v9  TERMINATES BORROWER’S EXISTENCE OR PRIVILEGES, OR  NOTIFIES BORROWER THAT IT IS NOT IN COMPLIANCE WITH ANY  REQUIREMENTS OF SUCH STATE OR OTHER JURISDICTION.  (b) Financial Reporting.  Borrower shall furnish (or cause to be furnished) to  Lender:   (i) As soon as available and in any event within thirty (30) days after the  end of each of fiscal quarter of Borrower’s fiscal year, a copy of  Borrower’s internally prepared financial statements consisting of a  balance sheet as of the close of such fiscal quarter and related income  statement and cash flow statement for such fiscal quarter and from the  beginning of such fiscal year to the end of such fiscal quarter.  To the  extent not included in the financial statements described in this Section  9(b)(i), Borrower shall also provide Lender, within the same time  period referenced above, the items required to be provided by Borrower  that are listed in Table II of Appendix C to the MSPLF FAQ, a copy of  which is attached hereto as Exhibit C and where applicable reasonably  detailed calculations of the required data, required by the MSPLF as of  the end of such quarter of the Borrower.  Such financial statements and  calculations, in each case, shall be true and accurate in all material  respects and, where applicable, present fairly in all material respects  the financial condition of the Borrower for the period covered thereby  in accordance with GAAP, consistently applied.  (ii) As soon as available, but in any event within ninety (90) days after the  end of each fiscal year of Borrower, a copy of the annual audit report  of Air T and its subsidiaries for such year including a copy of the  audited consolidated balance sheet of Air T and its subsidiaries as at  the end of such year and the related audited consolidated statements of  income and of cash flows for such year, setting forth in each case in  comparative form the figures for the previous year, together with an  opinion as to such audit report of Deloitte LLP or other independent  certified public accountants of nationally recognized standing which  does not contain a “going concern” or similar qualification or  exception, or qualification arising out of the scope of the audit, together  with related consolidating financial statements all prepared in  accordance with generally accepted auditing standards; provided that,  in the event of any change in generally accepted accounting principles  used in the preparation of such financial statements, Borrowers shall  also provide a reconciliation of such financial statements to GAAP.   Additionally, to the extent not included in the annual financial  statements referred to in elsewhere in this Section 9(b)(ii), Borrower  shall provide Lender with any information required to be provided by  Borrower listed in Table I of Appendix C to the MSPLF FAQ, a copy  of which is attached hereto as Exhibit C.  (iii) Within ninety (90) days after the end of each fiscal year of Borrower,  Borrower will provide a review of Borrower’s annual financial  

 

 22  1894311.v9  statements conducted by an independent third-party certified public  accounting firm, which will include a copy of such reviewed annual  financial statements of Borrower.  (iv) If Borrower files its own tax return, then within thirty (30) days after  the filing of Borrower’s annual tax return, a copy of such annual tax  return of Borrower.  (v) Within one hundred twenty (120) days after the end of each fiscal year  of Borrower, a copy of Borrower’s annual budget for the upcoming  fiscal year.  (vi) Each fiscal quarter, within fifteen (15) days of the month end for the  last month of such fiscal quarter, an inventory report of Borrower.  (vii) Not later than five (5) Business Days after becoming aware of any  Default or Event of Default, a notice describing the nature thereof and  what action Borrower proposes to take with respect thereto.  (viii) Not later than five (5) Business Days after becoming aware of the  institution of any litigation, arbitration or governmental proceeding  against Borrower which, if determined adversely to Borrower, could  reasonably be expected to have a material adverse effect on Borrower’s  financial condition, business, properties or assets, or the rendering of a  judgment or decision in such litigation or proceeding which could  reasonably be expected to have a material adverse effect on Borrower’s  financial condition, business, properties or assets, and the steps being  taken by Borrower with respect thereto.  (ix) Provide Lender with such other financial or other information or  certification as Lender may reasonably request.  (x) If securities issued by Borrower or any Subsidiary are traded on any  securities exchange or are registered with the SEC, copies of each filing  and report made by Borrower or any Subsidiary with or to any such  securities exchange or the SEC, except in respect of any single equity  holder, and of each communication from Borrower or any Subsidiary  to equity holders generally, promptly following the filing or making  thereof.    (c) Capital Structure and Dividends.  Borrower agrees, and agrees to cause any  Subsidiary, not to purchase or redeem, or obligate itself to purchase or redeem,  any equity interests in Borrower (including debt convertible into equity).  Borrower agrees not to declare or pay any distributions or dividend (other than  any such payable in its own common stock) or make any other distribution in  respect of such equity interests.  Borrower agrees to continue to own, directly  or indirectly, the same (or greater) percentage of the stock and other equity  interest of each Subsidiary that it holds on the date of this Agreement.   Borrower agrees to ensure that no Subsidiary issues any additional securities  

 

 23  1894311.v9  or other equity interests, options or warrants in respect thereof, or securities  convertible into such securities or interests, other than to Borrower.  In addition  to the foregoing, Borrower agrees that it will follow compensation, stock  repurchase, and capital distribution restrictions that apply to direct loan  programs under Section 4003(c)(3)(A)(ii) of the CARES Act.  (d) Existence, Mergers, Etc.  Borrower agrees to maintain and preserve its  existence as a limited liability company organized and in good standing under  the laws of the state of its organization and in each other jurisdiction in which  the character of the properties owned, leased or operated by it or the business  conducted by it makes such qualification necessary and where the failure to  qualify could have a material adverse effect on Borrower’s financial condition,  business, properties or assets.  Borrower agrees, and agrees to cause any  Subsidiary to: (i) lease, sell or otherwise convey all or any substantial portion  of its property and business to any other entity or entities, whether in one  transaction or a series of related transactions, except for sales of inventory in  the ordinary course of Borrower’s business (ii) consolidate with or merge into  or with any other entity or entities or liquidate, wind up or dissolve itself or  suffer any liquidation or dissolution; (iii) form or acquire any corporation or  company which would thereby become a subsidiary; or (iv) form or enter into  any partnership as a limited or general partner or form or enter into any joint  venture.    (e) Operation of Business.  Borrower agrees not to engage in any business other  than the business engaged in by Borrower on the date of this Agreement, or  make any material change in the nature of the business of Borrower as carried  on the date of this Agreement, including, but not limited to, (i) materially  changing its selling terms of payment on accounts receivable as in effect on  the date the Loan is funded; (ii) materially changing its selling terms of  payment on accounts as in effect on the date of this Agreement or provide  dating terms except on a basis consistent with past business practices of  Borrower; or (iii) changing Borrower’s fiscal year end to a date other than  March 31.  (f) Fiscal Year.  Borrower represents and warrants to Lender that its fiscal year  ends on March 31 of each year, and agrees that it will not change its fiscal year- end without Lender’s express prior written consent.  (g) Payments to Equity Holders. Borrower shall not declare or pay any cash  dividends, purchase, redeem, retire or otherwise acquire for value any of the  Borrower’s membership interest (or any warrant or option to purchase any such  membership interest) now or hereafter outstanding, or return any capital to its  Equity Holders.  Further, Borrower shall not either: (i) permit the direct or  indirect transfer, distribution or payment of any of its funds, assets or property  to any Related Party, except that the Borrower may pay: (A) bona fide  employee compensation (including benefits) to Related Parties for services  actually rendered to Borrower; (B) expenses incurred by an employee in the  ordinary course of business; (C) expenses or rents for services or property or  the use thereof allocated to Borrower; provided, however, that all such  

 

 24  1894311.v9  payments pursuant to subsections (i)(A), (B) and (C) in this Section 9(g) shall  not exceed the amount which would be payable in a comparable arm’s length  transaction with a third party who is not a Related Party; (ii) except as  otherwise permitted by Sections 9(r)(i) of this Agreement, lend or advance  money, credit or property to any Related Party; (iii) invest in (by capital  contribution or otherwise) or purchase or repurchase any stock or indebtedness,  or any assets or properties, of any Related Party; or (iv) guarantee, assume,  endorse or otherwise become responsible for, or enter into any agreement or  instrument for the purpose of discharging or assuming (directly or indirectly,  through the purchase of goods, supplies or services or otherwise) the  indebtedness, performance, capability, obligations, dividends or agreement for  the furnishing of funds of any Related Party or any officer, director or  employee.  Notwithstanding the foregoing, or anything to the contrary herein,  Borrower may pay dividends or distributions to its Equity Holders to the extent  necessary to permit such Equity Holders, to pay an amount reasonably  estimated as equal to the income tax (using the highest combined applicable  federal, state and local income tax rate, taking into account any applicable  federal deduction for state and local taxes) on the amount of taxable income or  net capital gain, as the case may be, of the Borrower allocable to such Equity  Holders for such year (or portion thereof) (a “Permitted Tax Distribution”);  provided, however, that any such Permitted Tax Distribution shall only be  allowed if, and only if, as of the date of such Permitted Tax Distribution: (i)  Borrower is in full compliance with all of its covenants contained herein (that  are required to be satisfied as of such date); (ii) all terms of this Agreement  required to be satisfied (as of such date) by Borrower have been satisfied; and  (iii) there is no Event of Default or Unmatured Event of Default existing  hereunder.  (h) Collateral Appraisals and Requirements.  Beginning on March 31, 2021,  and on each March 31 thereafter during the term of this Agreement, Borrower  shall obtain an appraisal of the collateral securing the Loan, in form and  substance reasonably acceptable to the Lender, and conducted by a nationally  recognized firm chosen by the Borrower and approved by Lender, which  approval shall not be unreasonably withheld.  Borrower shall deliver the results  of each such appraisal to Lender within two (2) Business Days of receipt  thereof.  Each such appraisal shall show that the fair market value of the  collateral, plus cash held in Borrower’s account with the Lender, is greater than  the Minimum Collateral FMV.  If the fair market value of the collateral, which  shall include cash held in Borrower’s account with Lender, is determined to be  less than or equal to the Minimum Collateral FMV, then Borrower shall pay  such portion of the then outstanding Loan amount that would allow it to meet  the Minimum Collateral FMV requirement hereunder.  Additionally, by March  31, 2023 the orderly liquidation value of the collateral as reflected on the  collateral appraisal for such period shall be less than the Maximum Orderly  Liquidation Value Ratio.  To the extent that the orderly liquidation value of the  collateral as of such date is equal to or greater than the Maximum Orderly  Liquidation Ratio, then Borrower shall pay such portion of the then outstanding  

 

 25  1894311.v9  Loan amount that would allow it to meet the Maximum Orderly Liquidation  Value requirement hereunder.  (i) Compliance Certificates.  Each fiscal quarter, within fifteen (15) days of the  month end for the last month of such fiscal quarter, Borrower shall deliver to  Lender a compliance certificate duly executed by the chief executive officer of  Borrower in the form of Exhibit D attached hereto certifying as to (i) its  compliance with the covenants contained in this Agreement; (ii) its compliance  with the terms of the MSPLF and the MSPLF Borrower Certifications and  Covenants; and (iii) that no Event of Default or Unmatured Event of Default  has occurred or is continuing.  (j) Deposit Accounts.  Borrower agrees maintain the Borrower’s primary  depository accounts with Lender.  (k) Inspection.  Borrower agrees, and agrees to cause any Related Party, permit  the Lender and its representatives at reasonable times and intervals and upon  reasonable notice to visit Borrower’s offices and the offices and locations of  each other person storing any collateral and inspect their respective books and  records including, without limitation, permitting the Lender to examine any  collateral securing the Loan and reimburse the Lender for all examination fees  and expenses incurred in connection with such examinations at its then current  rate for such services and for its out-of-pocket expenses incurred in connection  therewith.    (l) Indebtedness.  Borrower agrees, and agrees to cause any Subsidiary, not  create, incur, assume or suffer to exist any indebtedness except: (i) the  indebtedness under this Agreement or any other Related Document; (ii) current  liabilities (other than borrowed money) incurred in the ordinary course of  business; (iii) indebtedness in respect of hedge agreements, including hedge  agreements, entered into in the ordinary course of business to hedge or mitigate  risks to which Borrower is exposed in the conduct of its business or the  management of its liabilities and not for speculative purposes; (iv)  indebtedness in respect of taxes, assessments or government charges to the  extent that payment thereof shall not at the time be required to be made under  this Agreement; (v) indebtedness owing to Lender; or (vi) subordinated debt.   Borrower shall refrain from repaying the principal balance of, or paying any  interest on, any indebtedness other than the Loan, unless the debt or interest  payment is mandatory and due.  Additionally, Borrower shall neither (x)  assume, guarantee, endorse or otherwise become liable upon the obligation of  any person, firm or corporation except pursuant to this Agreement and the  Related Documents or by endorsement of negotiable instruments for deposit  or collection in the ordinary course of business, nor (y) sell any notes or  accounts receivable with or without recourse.  (m) Subordinated Debt.  Except as permitted by the subordination agreement  pertaining to an item of subordinated debt, Borrower shall not: (i) make any  payment of, or purchase, redeem, or acquire, any subordinated debt; (ii) give  security for all or any part of any subordinated debt; (iii) take or omit to take  

 

 26  1894311.v9  any action whereby the subordination of any subordinated debt or any part  thereof to the obligations might be terminated, impaired or adversely affected;  (iv) settle, compromise, discharge or otherwise reduce the outstanding  principal amount of any subordinated debt or exercise any right to convert the  subordinated debt to equity; or (v) omit to give Lender prompt written notice  of any default or event which, with the giving of notice or lapse of time, would  constitute a default under any other agreement or instrument relating to any  subordinated creditor.  (n) Ranking.  Borrower agrees to take any action necessary to ensure that the Loan  is senior or pari passu in ranking with any other indebtedness, other than  Mortgage Debt, of Borrower.  (o) Negative Pledge on Assets.  Borrower agrees, and agreed to cause any  Subsidiary, not to, create, incur or suffer to exist any liens encumbering any of  its assets, including without limitation any real or personal property owned by  Borrower, other than the following: (i) liens securing obligations under the  Loan; (ii) any other liens in favor of the Lender; (iii) liens on real property in  connection with loans with respect to which substantially all of the proceeds  were used for acquisition, construction, fitout, and/or renovation of the  property; (iv) junior liens securing permitted indebtedness; or (v) liens on  receivables assets and related assets incurred in connection with a receivables  facility, provided that such debt is secured only by the newly acquired property.   (p) Taxes.  Borrower agrees, and agrees to cause any Subsidiary, file all federal  and state income tax and other tax returns (including, without limitation,  withholding tax returns) which are required and make payments as required of  such taxes; provided, however, that: (i) Borrower shall not be required to pay  any such tax so long as the validity thereof is being contested in good faith by  appropriate proceedings, Borrower’s title to its property is not materially  adversely affected, its use of such property in the ordinary course of its  business is not materially interfered with and adequate reserves with respect  thereto have been set aside on Borrower’s books in accordance with GAAP;  and (ii) in all events, Borrower shall pay, or cause to be paid, all such taxes  forthwith upon the commencement of foreclosure of any lien which may have  attached as security therefor.    (q) Guaranties & Keep Well Agreements.  Borrower agrees, and agrees to cause  any Subsidiary, not to assume, guarantee, indorse or otherwise become or be  responsible in any manner (whether by agreement to purchase any obligations,  stock, assets, goods or services, or to supply or advance any funds, assets,  goods or services, or otherwise) with respect to the obligations of any other  person or entity, except by the indorsement of negotiable instruments for  deposit or collection in the ordinary course of business and except as and if  permitted by this Agreement.    (r) Investments and Loans by Borrower. Borrower agrees, and agrees to cause  any Subsidiary, not to acquire, make or hold any investment in any other  person, except that Borrower and any Subsidiary may:   

 

 27  1894311.v9  (i) Make loans or advances to officers and employees of Borrower to  finance travel, entertainment and relocation expenses and other  ordinary business purposes in the ordinary course of business as  presently conducted; provided, however, that the aggregate outstanding  principal amount of all loans and advances permitted pursuant to this  clause shall not exceed $50,000 at any one time;  (ii) Make extensions of credit in the nature of accounts or notes receivable  arising from the sale of goods and services in the ordinary course of  business;  (iii) Receive and hold shares of stock, obligations or other securities  received in settlement of claims arising in the ordinary course of  business; and  (iv) Make investments in hedge agreements and other hedging agreements  permitted by Section 9(l).  (s) Maintenance of Properties.  Borrower agrees, and agrees to cause any  Subsidiary, to maintain, or cause to be maintained, in good repair, working  order and condition, all their properties (whether owned or held under lease),  ordinary wear and tear excepted, and to make, or cause to be made, all needed  and appropriate repairs, renewals, replacements, additions, and improvements  thereto.  (t) Maintenance of Licenses.  Borrower agrees to maintain in full force and effect  all of Borrower’s material rights, licenses, certifications, franchises and to  comply with all applicable laws and regulations necessary to enable it to  conduct its business.  (u) Insurance.  Borrower agrees, and agrees to cause any Subsidiary, maintain  insurance of such types and in such amounts as are maintained by companies  of similar size engaged in the same or similar businesses and as may be  required by any Loan Document; provided that, each policy insuring any  collateral securing the Loan shall name the Lender as the lender loss payee and  each policy of the liability insurance shall name the Lender as an additional  insured party.  (v) Regulation U.  Borrower agrees not to be engaged principally in, nor to have  as one of Borrower’s important activities, the business of extending credit for  the purpose of purchasing or carrying margin stock.  Borrower agrees to ensure  that assets which are margin stock at all times constitute less than twenty-five  percent (25.00%) by market value of all assets of Borrower.  (w) Employees and Benefit Plans.  Borrower shall make commercially  reasonable efforts to maintain its payroll and retain its employees during the  time that the Loan is outstanding.  Borrower shall not maintain, establish,  sponsor or contribute to any Plan which is a defined benefit plan and shall not  permit any of its ERISA Affiliates to do so.  

 

 28  1894311.v9  (x) Related Party Transactions.  During the term of the Loan, neither Borrower  nor any Related Party shall engage in any transactions with any Related Party  (in the case of Borrower) or Borrower (in the case of any Related Party) with  respect to consignment sales and payouts, except in the ordinary course of  business and consistent with past practice. Borrower shall not make any loan  to, or otherwise extend any credit to, Borrower’s officers, directors, Equity  Holders, partners, members, managers or Related Parties or to any member of  any such person’s immediate family, except for loans expressly permitted by  Section 9(r)(i).  (y) Freight Charges and Fees.  Borrower shall pay in a timely manner all  applicable duties, freight, charges and like fees and charges of shippers, freight  forwarders, carriers and warehousemen.  (z) FAA Certificates.  Borrower shall deliver a copy of the FAA  decommissioning certificate for each airframe to the Lender by not later than  two (2) months after the date such airframe is acquired by Borrower.  (aa) Other Fees and Expenses.  Borrower agrees to reimburse Lender for  reasonable expenses, fees and disbursements (including, without limitation,  reasonable attorneys’ fees and legal expenses), incurred in connection with the  preparation or administration of this Agreement or any Related Document or  the Lender’s enforcement of the obligations of the Borrower under this  Agreement or any Related Document, whether or not suit is commenced,  which attorneys’ fees and legal expenses shall include, but not be limited to,  any attorneys’ fees and legal expenses incurred in connection with any appeal  of a lower court’s judgment or order.  10. EVENTS OF DEFAULT.    Each of the following shall constitute an “Event of Default”:   (a) (i) failure to pay, when and as due, any principal payable on any of the  Liabilities; (ii) failure to pay, within five (5) days of when and as due, any  interest or other amounts payable on any of the Liabilities; provided, however,  that any such payment described in this clause (ii) that is late but paid within  such five (5) day period shall be subject to the late fee described in Section  2(d); or (iii) failure to comply with or perform any agreement or covenant of  Borrower contained herein or in any Related Document, which failure does not  otherwise constitute an Event of Default, subject to any applicable notice,  grace or cure period; or   (b) any default, event of default, or similar event shall occur or continue under any  Related Document, and shall continue beyond any applicable notice, grace or  cure period set forth in such Related Document; or   (c) (i) the Borrower or any Subsidiary shall fail to make any payment when due  (whether by scheduled maturity, required prepayment, acceleration, demand,  or otherwise) in respect of any indebtedness (other than indebtedness under  

 

 29  1894311.v9  this Agreement or any Related Document) owing to the Lender or any Lender  Affiliate, in each case beyond the applicable grace period with respect thereto,  if any; or (ii) the Borrower or any Subsidiary shall fail to observe or perform  any other agreement or condition relating to any such indebtedness or  contained in any instrument or agreement evidencing, securing or relating  thereto, or any other event occurs, the effect of which failure to make a  payment, default or other event described in clause (i) or (ii) is to cause such  indebtedness to become due or to be repurchased, prepaid, defeased or  redeemed (automatically or otherwise), or an offer to repurchase, prepay,  defease or redeem such indebtedness to be made, prior to its stated maturity,  provided that clause (ii) shall not apply to secured indebtedness that becomes  due as a result of the voluntary sale or transfer of the property or assets securing  such indebtedness, if such sale or transfer is permitted hereunder and under the  documents providing for such indebtedness and such indebtedness is repaid  when required under the documents providing for such indebtedness.  (d) there shall occur any default or event of default, any similar event, any event  that requires the prepayment of borrowed money or permits the acceleration of  the maturity thereof, or any event or condition that might become any of the  foregoing with notice or the passage of time or both, under the terms of any  evidence of indebtedness or other agreement issued or assumed or entered into  by Borrower or any Related Party, including, without limitation, any  agreement under the MSPLF, or under the terms of any document or  instrument under which any such evidence of indebtedness or other agreement  is issued, assumed, secured, or guaranteed, and such event shall continue  beyond any applicable notice, grace or cure period; or   (e) any representation, warranty, certificate, financial statement, report, notice, or  other writing furnished by or on behalf of Borrower or any Related Party to  Lender is false or misleading in any material respect on the date as of which  the facts therein set forth are stated or certified; or   (f) this Agreement or any Related Document, including any guaranty of or pledge  of collateral security for the Liabilities, shall be repudiated or shall become  unenforceable or incapable of performance in accord with its terms; or   (g) Borrower or any Related Party shall fail to maintain their existence in good  standing in their state of organization or formation or shall fail to be duly  qualified, in good standing and authorized to do business in each jurisdiction  where failure to do so would reasonably be expected to have a material adverse  impact on the assets, condition or business prospects of Borrower or any  Related Party; or   (h) Borrower or any Related Party shall dissolve, liquidate, merge, consolidate, or  cease to be in existence, or if a natural person shall die or be declared legally  incompetent, for any reason; or, if Borrower is a partnership or joint venture,  any general or limited partner or joint venturer of Borrower shall withdraw  from Borrower, or any general partner shall become a limited partner; or   

 

 30  1894311.v9  (i) any person presently not in control of a Borrower or Related Party which is not  a natural person shall obtain control directly or indirectly of such a Borrower  or Related Party, whether by purchase or gift of stock or assets, by contract, or  otherwise; or   (j) any proceeding (judicial or administrative) shall be commenced against  Borrower or any Related Party, or with respect to any of their assets, which  would reasonably be expected to have a material and adverse effect on the  ability of Borrower to repay the Liabilities; or a judgment or settlement shall  be entered or agreed to in any such proceeding which would reasonably be  expected to have a material and adverse effect on the ability of Borrower to  repay the Liabilities; or any garnishment, summons, writ of attachment,  citation, levy or the like is issued against or served upon Lender for the  attachment of any property of Borrower or any Related Party in Lender’s  possession or control; or  (k) Borrower shall grant or any person (other than Lender) shall obtain or perfect  a security interest in, or file any financing statement covering, any assets  constituting security for the Liabilities; Lender shall not have a security interest  in any assets constituting security for the Liabilities, of first-priority and  enforceable in accord with any Related Document or other collateral  document; or any notice of a federal tax lien against Borrower or any Related  Party shall be filed with any public recorder; or   (l) there shall be any material loss or depreciation in the value of any assets  constituting security for the Liabilities for any reason (except that the  preceding part of this Section 10(l) shall not apply if Borrower and any Related  Party are in compliance under all Related Documents); or Lender shall  otherwise reasonably deem itself insecure; or, unless expressly permitted by  this Agreement or the Related Documents, all or any part of any assets  constituting security for the Liabilities, or any direct, indirect, legal, equitable  or beneficial interest therein, is assigned, transferred or sold without Lender’s  prior written consent; or   (m) any bankruptcy, insolvency, reorganization, arrangement, readjustment,  liquidation, dissolution, or similar proceeding, domestic or foreign, is instituted  by or against Borrower or any Related Party, and, if instituted against Borrower  or any Related Party, shall not be dismissed or vacated within sixty (60) days  after the filing or other institution thereof; or   (n) Borrower or any Related Party shall become insolvent, generally shall fail or  be unable to pay its debts as they mature, shall admit in writing its inability to  pay its debts as they mature, shall make a general assignment for the benefit of  its creditors, shall enter into any composition or similar agreement, or shall  suspend the transaction of all or a substantial portion of its usual business.    

 

 31  1894311.v9  11. DEFAULT REMEDIES.  (a) Upon the occurrence of any Event of Default specified in Sections 10(a)-10(l),  Lender at its option may declare the Liabilities (principal, interest and other  amounts) immediately due and payable without notice or demand of any kind,  ALL OF WHICH ARE HEREBY EXPRESSLY WAIVED BY  BORROWER (except as and if otherwise specifically set forth herein),  whereupon the entire unpaid principal balance of the Liabilities, all interest  accrued thereon, and any other Liabilities shall thereupon at once mature and  become due and payable. Upon the occurrence of any Event of Default  specified in Sections 10(m)-10(n), all Liabilities (principal, interest and other  amounts) shall be immediately and automatically due and payable without  notice, demand or other action of any kind, ALL OF WHICH ARE HEREBY  EXPRESSLY WAIVED BY BORROWER.  Upon the occurrence of any  Event of Default, Lender may exercise any rights and remedies under this  Agreement, any Related Document or other collateral document, and at law or  in equity.  The time of payment of the Liabilities is also subject to acceleration  if an Event of Default occurs.   (b) Lender may, by written notice to Borrower, at any time and from time to time,  waive any Event of Default or Unmatured Event of Default, which shall be for  such period and subject to such conditions as shall be specified in any such  notice.  In the case of any such waiver, Lender and Borrower shall be restored  to their former position and rights hereunder, and any Event of Default or  Unmatured Event of Default so waived shall be deemed to be cured and not  continuing; but no such waiver shall extend to or impair any subsequent or  other Event of Default or Unmatured Event of Default.  No failure to exercise,  and no delay in exercising, on the part of Lender of any right, power or  privilege hereunder shall preclude any other or further exercise thereof or the  exercise of any other right, power or privilege.  The rights and remedies of  Lender herein provided are cumulative and not exclusive of any rights or  remedies provided by law.   12. OBLIGATIONS UNCONDITIONAL; WAIVER OF DEFENSES.    No fact or circumstance whatsoever which might at law or in equity constitute a discharge or  release of, or defense to the obligations of, a co-signer, accommodation party, guarantor or surety  shall limit or affect any obligations of Borrower under this Agreement or any Related Document.   Without limiting the generality of the foregoing:   (a) Lender may at any time and from time to time, without notice to Borrower,  take any or all of the following actions without affecting or impairing the  liability of Borrower under this Agreement and any Related Document:   (i) renew or extend time of payment of the Liabilities;   (ii) accept, substitute, release or surrender any security for the Liabilities;  and   

 

 32  1894311.v9  (iii) release any person primarily or secondarily liable on the Liabilities  (including any Credit Support Party and any other Related Party).    (b) No delay in enforcing payment of the Liabilities, nor any amendment, waiver,  change, or modification of any terms of any Related Document, shall release  Borrower from any obligation hereunder.  The obligations of Borrower under  this Agreement are and shall be primary, continuing, unconditional and  absolute, irrespective of the value, genuineness, regularity, validity or  enforceability of any Related Documents.  In order to hold Borrower liable or  exercise rights or remedies hereunder, there shall be no obligation on the part  of Lender, at any time, to resort for payment to any Related Party or to any  security for the Liabilities.  Lender shall have the right to enforce this  Agreement irrespective of whether or not other proceedings or steps are being  taken against any property securing the Liabilities or any other party primarily  or secondarily liable on any of the Liabilities.    (c) Except as and if otherwise specifically set forth herein, Borrower irrevocably  waives presentment, protest, notice of protest, notice of intent to accelerate,  notice of acceleration, demand, diligence, grace, notice of dishonor or default,  notice of nonpayment, notice of acceptance, notice of any loans made,  extensions granted or other action taken in reliance hereon, and all other  demands and notices of any kind in connection with this Agreement or the  Liabilities.  13. ARM’S LENGTH TRANSACTIONS.    Borrower acknowledges and agrees that:  (a) The transactions contemplated hereby are being undertaken pursuant to the  MSPLF and the parties agree that they will (including after the date hereof)  undertake such actions, or make such amendments or modifications, as may be  required to comply with the MSPLF.  In addition, Borrower agrees to,  promptly, upon request by the Lender: (i) correct any defect or error that may  be discovered in this Agreement or any Related Document or in the execution,  acknowledgment or recordation thereof; and (ii) do, execute, acknowledge,  deliver, record, re-record, file, re-file, register and re-register, any and all  deeds, conveyances, mortgages, deeds of trust, trust deeds, assignments,  estoppel certificates, financing statements and continuations thereof, notices of  assignment, transfers, certificates, assurances and other instruments as the  Lender may reasonably require from time to time in order: (A) to carry out  more effectively the purposes of this Agreement and the Related Documents;  (B) to perfect and maintain the validity, effectiveness and priority of any liens  intended to be created by this Agreement and the Related Documents; and (C)  to better assure, convey, grant, assign, transfer, preserve, protect and confirm  unto the Lender the rights granted now or hereafter intended to be granted to  the Lender under this Agreement, the Related Documents or under any other  instrument executed in connection with this Agreement and the Related  Documents or that the Borrower may be or become bound to convey, mortgage  

 

 33  1894311.v9  or assign to the Lender in order to carry out the intention or facilitate the  performance of the provisions of this Agreement and the Related Documents.  (b) The transactions contemplated by the Related Documents are arm’s length  commercial transactions among Borrower, Lender and any other parties  thereto.  (c) In connection with such transactions, Lender is acting solely as a principal and  not as an agent or a fiduciary of Borrower or any Related Party.  (d) With respect to any advances of Liabilities or the process leading thereto  (whether or not Lender or any Lender Affiliate has advised or is currently  advising Borrower or any Related Party on other matters), Lender has not  assumed a fiduciary responsibility in favor of Borrower or any Related Party  or any other obligation of Borrower or any Related Party.  (e) Borrower and the Related Parties have consulted with their own legal and  financial advisors to the extent they deem appropriate in connection with the  transactions contemplated by the Related Documents.   14. NO INTEREST OVER LEGAL RATE.    It is the intent of Lender and Borrower in the execution of this Agreement and all Related  Documents to contract in strict compliance with applicable usury law.  In furtherance thereof, Lender  and Borrower stipulate and agree that none of the terms and provisions contained in the Related  Documents shall ever be construed to create a contract to pay for the use, forbearance or detention of  money, interest at a rate in excess of the maximum interest rate permitted to be charged by applicable  law; that neither Borrower nor any guarantors, endorsers or other parties now or hereafter becoming  liable for payment of the Loan  shall ever be obligated or required to pay interest on the Loan  at a  rate in excess of the maximum interest that may be lawfully charged under applicable law; and that  the provisions of this Section 14 shall control over all other provisions of the Related Documents  which may be in apparent conflict herewith.  Lender expressly disavows any intention to charge or  collect excessive unearned interest or finance charges in the event the maturity of the Loan is  accelerated.  If the maturity of the Loan shall be accelerated for any reason or if the principal of the  Loan is paid prior to the Scheduled Maturity Date, and as a result thereof the interest received for the  actual period of existence of the Loan exceeds the applicable maximum lawful rate, Lender shall, at  its option, either refund to Borrower the amount of such excess or credit the amount of such excess  against the principal balance of the Loan then outstanding and thereby shall render inapplicable any  and all penalties of any kind provided by applicable law as a result of such excess interest.  In the  event that Lender shall contract for, charge or receive any amount or amounts and/or any other thing  of value which are determined to constitute interest which would increase the effective interest rate  on the Loan to a rate in excess of that permitted to be charged by applicable law, an amount equal to  interest in excess of the lawful rate shall, upon such determination, at the option of Lender, be either  immediately returned to Borrower or credited against the principal balance of the Loan then  outstanding, in which event any and all penalties of any kind under applicable law as a result of such  excess interest shall be inapplicable.  Borrower acknowledges that it believes the Loan to be  non-usurious and agrees that if, at any time, Borrower should have reason to believe that the Loan is  in fact usurious, it will give Lender notice of such condition, and agrees that Lender shall have ninety  

 

 34  1894311.v9  (90) days in which to make appropriate refund or other adjustment in order to correct such condition  if in fact such condition exists.    15. PAYMENTS, ETC.    All payments hereunder shall be made in immediately available funds, and shall be applied  first to accrued interest and then to principal; provided, however, if an Event of Default occurs, Lender  may, in its sole discretion, and in such order as it may choose, apply any payment to interest, principal  and/or lawful charges and expenses then accrued.  Borrower shall receive immediate credit on  payments received during Lender’s normal banking hours if made in cash, immediately available  funds, or by debit to available balances in an account at Lender; otherwise payments shall be credited  after clearance through normal banking channels.  Borrower authorizes Lender to charge any account  of Borrower maintained with Lender for any amounts of principal, interest, taxes, duties, or other  charges or amounts due or payable hereunder or under any Related Document, with the amount of  such payment subject in Lender’s discretion to availability of collected balances.  Unless Borrower  instructs otherwise, the Loan shall be credited to an account(s) of Borrower with Lender.  All  payments shall be made without deduction for or on account of any present or future taxes, duties or  other charges levied or imposed on the Loan, the proceeds thereof, Lender, Borrower or any Related  Party by any government or political subdivision thereof.  Borrower shall upon request of Lender pay  all such taxes, duties or other charges in addition to principal and interest, including all documentary  stamp and intangible taxes, but excluding income taxes based solely on Lender’s income.    16. SETOFF.    If an Event of Default has occurred and is continuing, then, to the maximum extent permitted  by law, any account, deposit or other indebtedness owing by Lender to Borrower, and any securities  or other property of Borrower delivered to or left in the possession of Lender or any Lender Affiliate,  or its or their nominee or bailee, may (at any time and without notice of any kind) be set off against  and applied in payment of any obligation hereunder or under any Related Document.  17. NOTICES.    Except as and if otherwise provided herein, all notices, requests and demands to or upon the  respective parties pursuant hereto shall be in writing (which shall include electronic mail) and shall  be deemed to have been given or made five (5) Business Days after a record has been deposited in  the mail, postage prepaid, with a copy by email, or one (1) Business Day after a record has been  deposited with a recognized overnight courier, charges prepaid or to be billed to the sender, or on the  day of delivery if delivered manually with receipt acknowledged, or sent by electronic mail (with  confirmation) in each case addressed or delivered:  (a) if to Lender to Park State Bank, Attention: Loan Department, 331 N. Central  Avenue, Duluth, Minnesota 55807, and/or by email to  ehartman@parkstatebank.com; and   (b) if to Borrower to its address indicated in the preamble hereto and/or by email  to Mark Jundt at mjundt@airt.net and to Brian Ochocki at bochocki@airt.net,  or to such other address as may be hereafter designated in writing by the respective parties hereto by  a notice in accord with this Section 17.   

 

 35  1894311.v9  18. MISCELLANEOUS.    Except as and if otherwise specifically agreed in any Related Document, and to the extent, if  any, that the UCC or other law provides for the application of the law of a different state, this  Agreement and the Related Documents shall be:  (i) governed by and construed in accordance with  the internal law of the State of Minnesota; and (ii) deemed to have been executed in the State of  Minnesota.  This Agreement shall bind Borrower and its heirs, trustees (including successor and  replacement trustees), executors, personal representatives, successors and assigns, and shall inure to  the benefit of Lender, its successors and assigns, except that Borrower may not transfer or assign any  rights or obligations hereunder without the prior written consent of Lender.  If an Event of Default  has occurred and is continuing, Borrower agrees to pay upon demand all expenses (including  reasonable attorneys’ fees, legal costs and expenses, and time charges of attorneys who may be  employees of Lender, in each case whether in or out of court, in original or appellate proceedings or  in bankruptcy) incurred or paid by Lender in connection with the enforcement or preservation of its  rights hereunder or under any Related Document.  This Agreement may be executed in two or more  counterparts, and (if there is more than one party) by each party on separate counterparts, each of  which shall be deemed an original but which together shall constitute one and the same instrument.   Delivery of an executed counterpart of a signature page of this Agreement, whether with or  without the remainder hereof, by facsimile or in electronic (e.g., “pdf” or “tif”) format shall be  effective as delivery of a manually executed counterpart hereof.  Time is of the essence in the  performance of all obligations under this Agreement.  This Agreement is, and is intended to take  effect as, an instrument under seal.  Whenever possible, each provision of this Agreement shall be  interpreted in such manner as to be effective and valid under applicable law, but if any provision of  this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective  only to the extent and duration of such prohibition or invalidity without invalidating the remainder of  such provision, the applicability of such provision in any other instance, or the remaining provisions  of this Agreement.  To the maximum extent permitted by applicable law, Lender is hereby authorized  by Borrower without notice to Borrower to fill in any blank spaces and dates herein or in any Related  Document to conform to the terms of the transaction and/or understanding evidenced hereby.  This  Agreement may not be amended, waived or terminated without the prior written consent of Lender.   Lender may amend the terms of this Agreement and any Related Document as may be necessary to  comply with the terms of the MSPLF.  THIS AGREEMENT AND THE RELATED  DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AS TO  THE SUBJECT MATTER HEREOF AND THEREOF, AND MAY NOT BE  CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR  SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN  ORAL AGREEMENTS BETWEEN THE PARTIES.  19. NO PUNITIVE DAMAGES.    NO PARTY HERETO MAY SEEK OR RECOVER PUNITIVE DAMAGES IN ANY  PROCEEDING BROUGHT UNDER OR IN CONNECTION WITH THIS AGREEMENT OR  ANY RELATED DOCUMENT.  THIS PROVISION IS A MATERIAL INDUCEMENT TO  LENDER TO EXTEND CREDIT TO BORROWER PURSUANT TO THE TERMS OF THIS  AGREEMENT AND ANY RELATED DOCUMENT.  20. TELEPHONIC INSTRUCTIONS; AUTHORIZATION TO RECORD PHONE  CALLS.  

 

 36  1894311.v9  LENDER AT ITS OPTION MAY MAKE LOANS HEREUNDER UPON  TELEPHONIC INSTRUCTIONS AND IN SO DOING SHALL BE FULLY ENTITLED TO  RELY SOLELY UPON INSTRUCTIONS, INCLUDING INSTRUCTIONS TO MAKE  TRANSFERS TO THIRD PARTIES, REASONABLY BELIEVED BY LENDER TO HAVE  BEEN GIVEN BY AN AUTHORIZED PERSON, WITHOUT INDEPENDENT INQUIRY OF  ANY TYPE. FOR ITSELF AS WELL AS ANY RELATED PARTY AND ANY AGENT,  DIRECTOR, EMPLOYEE, MANAGER, MEMBER, OFFICER, OR PARTNER OF  BORROWER, AS APPLICABLE, BORROWER IRREVOCABLY CONSENTS TO  LENDER’S RECORDING OF ANY TELEPHONE CONVERSATION PERTAINING TO  THE LOAN HEREUNDER.   21. ANTI-TERRORISM LAW.    Lender hereby notifies Borrower and any Related Party that, pursuant to the  requirements of the USA Patriot Act, Lender may be required to obtain, verify and record  information that identifies Borrower and any Related Party, which information may include  the name and address of Borrower and any Related Party and other information that will allow  Lender to identify Borrower and any Related Party in accord with the USA Patriot Act.   Borrower hereby agrees to take any action necessary to enable Lender to comply with the  requirements of the USA Patriot Act.  22. JURISDICTION AND VENUE.    Except as and if otherwise specifically agreed in any Related Document, and only as to  suits, actions or other proceedings pertaining to such Related Document, Borrower and Lender:  (a) agree irrevocably that all suits, actions or other proceedings with respect  to, arising out of or in connection with this Agreement or any Related  Document shall be subject to litigation in courts having situs within or  jurisdiction over Hennepin County, State of Minnesota;  (b) consent and submit to the jurisdiction of any such court; and  (c) waive any right to transfer or change the venue of any suit, action or other  proceeding brought in accordance with this Section 22, or to claim that  any such proceeding has been brought in an inconvenient forum.   23. WAIVER OF JURY TRIAL.    TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER AND LENDER  VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE  ANY RIGHT THEY OR ANY OF THEM MAY HAVE TO HAVE A JURY PARTICIPATE  IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR  OTHERWISE) BETWEEN OR AMONG BORROWER AND LENDER ARISING OUT OF  OR IN ANY WAY RELATED TO THIS AGREEMENT, ANY OTHER RELATED  DOCUMENT, OR ANY RELATIONSHIP BETWEEN LENDER AND BORROWER.   [Remainder of Page Intentionally Blank – Signature Page Follows]  

 

 

 

 

 

A-1  1894311.v9  EXHIBIT A  FORM OF  MAIN STREET PRIORITY LOAN FACILITY TERM NOTE    Principal Amount: $6,200,000  Dated: December 11, 2020   FOR VALUE RECEIVED, on or before December 11, 2025 (the “Scheduled Maturity  Date”) Airco 1, LLC, a Delaware limited liability company (“Borrower”), promises to pay to the  order of Park State Bank, a Minnesota state-chartered bank (hereafter, together with any subsequent  holder hereof, called “Lender”), at its main banking office at 331 N. Central Avenue, Duluth,  Minnesota 55807, or at such other place as  Lender may direct, the aggregate unpaid principal amount  of $6,200,000 (the “Loan”).  This Note evidences indebtedness incurred under a Main Street Priority Loan Facility Term  Loan Agreement, dated as of December 11, 2020 (as amended, restated, renewed or replaced from  time to time, the “Loan Agreement”), between Borrower and Lender, to which Loan Agreement  reference is hereby made for a statement of its terms and provisions, including without limitation  those under which this Note may be paid prior to its due date or have its due date accelerated.   Capitalized terms used but not defined herein have the meanings given to them in the Loan  Agreement.  Borrower agrees to repay the Loan principal in accordance with the following, provided that  in any event all such principal shall be paid on or before the Scheduled Maturity Date:  (i) Principal shall be deferred for the first two (2) years of the Loan (i.e.,  until December 11, 2022);  (ii) Fifteen percent (15.00%) of the principal amount (including any  capitalized interest accrued thereon) shall be due on the third  anniversary of the Loan (i.e., December 11, 2023);  (iii) Fifteen percent (15.00%) of the principal amount (including any  capitalized interest accrued thereon) shall be due on the fourth  anniversary of the Loan (i.e., December 11, 2024); and  (iv) The remaining seventy percent (70.00%) of the principal amount  (including any capitalized interest accrued thereon) shall be due on the  Scheduled Maturity Date.  Borrower also agrees to pay interest on the unpaid principal amount from time to time  outstanding under this Note on the dates and at the rate(s) set forth in and determined pursuant to the  Loan Agreement.  Payments of both principal and interest are to be made in immediately available  funds in lawful money of the United States of America.  

 

A-2  1894311.v9  This Note shall be governed by and construed in accordance with the internal law of the State  of Minnesota.  This Note shall bind Borrower and its heirs, trustees (including without limitation  successor and replacement trustees), executors, personal representatives, successors and assigns, and  shall inure to the benefit of Lender, its successors and assigns, except that Borrower may not transfer  or assign any rights or obligations hereunder without the prior written consent of Lender.  TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER AND LENDER  VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE  ANY RIGHT THEY OR ANY OF THEM MAY HAVE TO HAVE A JURY PARTICIPATE  IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR  OTHERWISE) BETWEEN OR AMONG BORROWER AND LENDER ARISING OUT OF  OR IN ANY WAY RELATED TO THIS NOTE.   [Remainder of Page Intentionally Blank – Signature Page Follows]  

 

[Signature Page to Main Street Priority Loan Facility Term Note]  To the extent applicable under any state law, Borrower executed this Note as of the date stated at the top  of the first page, intending to create an instrument executed under seal.  BORROWER:  AIRCO 1, LLC  By:    Print Name:  Mark Harris  Title:  Chief Executive Officer  /:4<3769"09=58:;5"2/+"&-.%)1./#,(-)#&1-.#-'0-#$*1.))/-&%$* 

 

B-1  1894311.v9    EXHIBIT B  LIST OF ALL OF BORROWER’S SUBSIDIARIES  None.          

 

C-1  1894311.v9  EXHIBIT C   APPENDIX C TO MSPLF FAQ  (see attached)  

 

Effective:  November 25, 2020  96  Appendix C:  Required Financial Reporting  Each Main Street loan should contain a financial reporting covenant requiring the regular  delivery of certain financial information and calculations.  The items listed in Table I below must  be provided by each Main Street borrower to their Eligible Lender at least annually.  The items  listed in Table II must be provided by each Main Street borrower to their Eligible Lender at least  quarterly; the quarterly requirements vary based on the Main Street facility in which the  borrower is participating.  Eligible Lenders will specify the required reporting standards and  forms for each Eligible Borrower.41  Table I: Data Required Annually from All Main Street Borrowers  Required Data Definition  Total Assets The sum of current assets, fixed assets, and other non-current assets (including, but  not limited to, intangible assets, deferred items, investments, and advances).  Current Assets Cash, accounts receivable, inventory, and other short-term assets that are likely to be  converted into cash, used, sold, exchanged, or otherwise expensed in the normal  course of business within one year.  Cash & Marketable  Securities  Cash, depository accounts, and marketable securities that can be easily sold and  readily converted into cash.  Tangible Assets Assets having a physical existence, measured as total assets less intangible assets.  Tangible assets are distinguished from intangible assets, such as trademarks,  copyrights, and goodwill.   Total Liabilities The total amount of all outstanding obligations, both current and noncurrent.  Current Liabilities Short term debt, accounts payable, and other current liabilities that are due within  one year.  Total Debt (Incl. Undrawn  Available Lines of Credit)  Existing outstanding and committed debt (including any undrawn available amounts).  Total Equity Measured as total assets minus total liabilities.  Total Revenue Total income generated by the sale of goods or services from ongoing operations.   Total Revenue excludes any non-recurring sales or gains.  Net Income The income (or loss) after expenses and losses have been subtracted from all  revenues and gains for the fiscal period, including discontinued operations.  Unadjusted EBITDA Earnings before interest expense, income tax expense, depreciation expense, and  amortization expense.  The starting point is net income.  Adjusted EBITDA Unadjusted EBITDA adjusted for any non-recurring, one-time, or irregular items.  The  Adjusted EBITDA measurement should align with the relevant facility’s term sheet.  41  Under the Servicing Agreement, in the case of multi-borrower loans, this information must be entered into the  Portal “on a consolidated basis” (otherwise referred to in this document as on an “aggregated basis”).  Eligible  Lenders may elect to require reporting from the co-borrowers on an aggregated basis, or may aggregate such  information after requiring individual co-borrower financial statements.  If an Eligible Lender permits co-borrowers  to submit aggregated financial statements, the Eligible Lender should instruct the co-borrowers to use the Eligible  Lender’s typical practices to aggregate such information in a manner that accounts for transactions between the  co-borrowers and accurately reflects the financial position of the co-borrowers and their ability to repay the loan  (e.g., in a manner that avoids double counting of revenues, assets, or liabilities).    EXHIBIT C 

 

Effective:  November 25, 2020  97    Table I: Data Required Annually from All Main Street Borrowers  Required Data Definition   Depreciation Expense Non-cash expense measured based on the use of fixed assets, recognized over the  useful life of the fixed assets.  Amortization Expense Non-cash expense measured based on the use of intangible assets, recognized over  the life of the intangible asset.  Interest Expense The periodic finance expense of short term and long term debt.  Tax Expense Federal, state and local income tax expenses.  Rent Expense The contractual costs of occupying leased real estate.  Dividends / Equity  Distributions  Distributions to equity owners.  Accounts Receivable (net  of allowances)  Amounts owed to the borrower resulting from providing goods and/or services.   Accounts receivable will be net of any allowances for uncollectible amounts.  Inventory (net of  reserves)  Value of the raw materials, work in process, supplies used in operations, finished  goods, and merchandise bought which are intended to be sold in the ordinary course  of business.  Inventory should be net of reserves.   Fixed Assets, Gross Tangible property used in the business and not for resale, including buildings,  furniture, fixtures, equipment, and land. Report fixed assets gross of depreciation.  Accumulated  Depreciation  Cumulative depreciation of all fixed assets up to the Date of Financial Information.   Accounts Payable (A/P) The obligations owed to the borrower's creditors arising from the entity’s ongoing  operations, including the purchase of goods, materials, supplies, and services.  Accounts payable excludes short term and long term debt.  Short Term Debt Debt obligations of the borrower due with a term of less than one year, including the  current portion of any Long Term Debt.  Long Term Debt Debt obligations of the borrower that are due in one year or more, excluding the  current portion that is otherwise captured in Short Term Debt.  Description of EBITDA  Adjustments  Description of items that are added to Unadjusted EBITDA to determine Adjusted  EBITDA.  Total Expenses All money spent and costs incurred, both recurring and non-recurring, to generate  revenue.  Expenses exclude items capital in nature (i.e., expenses that are allowed to  be capitalized and included in the cost basis of a fixed asset).  Operating Expenses Money spent and costs incurred related to normal business operations including  selling, general & administrative expenses, depreciation, and amortization (i.e., total  expenses less non-recurring expenses).  Exclude capital expenditures.  Operating Income Profit (or loss) realized from continuing operations (i.e., revenue less operating  expenses).  Fixed Charges Expenses that recur on a regular basis, regardless of the volume of business (i.e.,  lease payments, rental payments, loan interest payments, or insurance payments).  Capitalized Expenditures Non-operating expenditures capitalized to fixed assets.  Guarantor Net Assets Total assets less total liabilities of the guarantor (also referred to as net worth).   Sr. Debt Balance Debt amount ranking senior to the Main Street loan.  Additional Pari Passu  Debt Balance  Debt amount ranking pari passu to the Main Street loan.  Collateral Type (Non-Real  Estate)  If the loan is secured by collateral that is not predominantly real estate, including if  the collateral provided is different types, report the predominant type of collateral  (e.g., inventory, receivables, securities, etc.) by aggregate value.  

 

Effective:  November 25, 2020  98    Table I: Data Required Annually from All Main Street Borrowers  Required Data Definition   Collateral Type (Real  Estate)  If the loan is secured by real estate collateral, indicate the property type (e.g., hotel,  multifamily, residential, industrial, etc.). If the loan is secured by multiple real estate  property types, report the predominant property type by aggregate value.  Collateral Value  Reporting  For loans that require ongoing or periodic valuation of the collateral, report the  market value of the collateral as of the reporting date.   Collateral Value Date Define the as-of date that corresponds with the Collateral Value Reporting field.  Covenant Status (Pass /  Fail)  Yes/no, indicating if the facility has satisfied covenant tests.  Date of Covenant Default If applicable, report the date when borrower defaulted covenants.  Nature of Covenant  Default  If applicable, describe the covenant default (i.e., missing financial statements, ratio  trigger).  Date of Covenant Cure If applicable, report the date when borrower cured previous defaults.    Table II: Data Required Quarterly from Main Street Borrowers by Main Street Facility  Required Data MSELF MSNLF MSPLF Definition  Total Assets Yes Yes Yes The sum of current assets, fixed assets, and other non- current assets (including, but not limited to, intangible  assets, deferred items, investments, and advances).  Current Assets Yes Yes Yes Cash, accounts receivable, inventory, and other short term  assets that are likely to be converted into cash, used, sold,  exchanged, or otherwise expensed in the normal course of  business within one year.  Cash & Marketable  Securities  Yes Yes Yes Cash, depository accounts, and marketable securities that  can be easily sold and readily converted into cash.  Tangible Assets Yes No No Assets having a physical existence measured as total assets  less intangible assets.  Tangible assets are distinguished  from intangible assets, such as trademarks, copyrights, and  goodwill.   Total Liabilities Yes Yes Yes The total amount of all outstanding obligations, both  current and noncurrent.  Current Liabilities Yes Yes Yes Short term debt, accounts payable, and other current  liabilities that are due within one year.  Total Debt (Incl.  Undrawn Available  Lines of Credit)  Yes Yes Yes Existing outstanding and committed debt (including any  undrawn available amounts).  Total Equity  Yes Yes Yes Measured as total assets minus total liabilities.  Total Revenue Yes Yes Yes Total income generated by the sale of goods or services  from ongoing operations.  Total Revenue excludes any non- recurring sales or gains.  Net Income Yes Yes Yes The income (or loss) after expenses and losses have been  subtracted from all revenues and gains for the fiscal period,  including discontinued operations.  Unadjusted EBITDA Yes Yes Yes Earnings before interest expense, income tax expense,  depreciation expense and amortization expense.  The  starting point is net income.  

 

Effective:  November 25, 2020  99    Table II: Data Required Quarterly from Main Street Borrowers by Main Street Facility  Required Data MSELF MSNLF MSPLF Definition  Adjusted EBITDA Yes Yes Yes Unadjusted EBITDA adjusted for any non-recurring, one- time or irregular items. The Adjusted EBITDA measurement  should align with the relevant facility’s term sheet.  Depreciation  Expense  Yes No No Non-cash expense measured based on the use of fixed  assets, recognized over the useful life of the fixed assets.  Amortization  Expense  Yes No No Non-cash expense measured based on the use of intangible  assets, recognized over the life of the intangible asset.  Interest Expense Yes Yes Yes The periodic finance expense of short term and long term  debt.  Tax Expense Yes No No Federal, state and local income tax expenses.  Rent Expense Yes No No The contractual costs of occupying leased real estate.  Dividends / Equity  Distributions  Yes Yes Yes Distributions to equity owners.  Accounts  Receivable (net of  allowances)  Yes No No Amounts owed to the borrower resulting from providing  goods and/or services.  Accounts receivable will be net of  any allowances for uncollectible amounts.  Inventory (net of  reserves)  Yes No No Value of the raw materials, work in process, supplies used in  operations, finished goods, and merchandise bought which  are intended to be sold in the ordinary course of business.   Inventory should be net of reserves.   Fixed Assets, Gross Yes No No Tangible property used in the business and not for resale,  including buildings, furniture, fixtures, equipment, and land.   Report fixed assets gross of depreciation.  Accumulated  Depreciation  Yes No No Cumulative depreciation of all fixed assets up to the Date of  Financial Information.   Accounts Payable  (A/P)  Yes No No The obligations owed to the borrower’s creditors arising  from the entity’s ongoing operations, including the  purchase of goods, materials, supplies, and services.   Accounts payable excludes short term and long term debt.  Short Term Debt Yes No No Debt obligations of the borrower due with a term of less  than one year, including the current portion of any Long  Term Debt.  Long Term Debt Yes No No Debt obligations of the borrower that are due in one year or  more, excluding the current portion that is otherwise  captured in Short Term Debt.  Description of  EBITDA  Adjustments  Yes No No Description of items that are added to Unadjusted EBITDA  to determine Adjusted EBITDA.  Total Expenses Yes No No All money spent and costs incurred, both recurring and non- recurring, to generate revenue.  Expenses exclude items  capital in nature (i.e., expenses that are allowed to be  capitalized and included in the cost basis of a fixed asset).  Operating  Expenses  Yes Yes Yes Money spent and costs incurred related to normal business  operations, including selling, general & administrative  expenses, depreciation, and amortization (i.e. total  expenses less non-recurring expenses).  Exclude capital  expenditures.  

 

Effective:  November 25, 2020  100    Table II: Data Required Quarterly from Main Street Borrowers by Main Street Facility  Required Data MSELF MSNLF MSPLF Definition  Operating Income Yes Yes Yes Profit (or loss) realized from continuing operations (i.e.,  revenue less operating expenses).  Fixed Charges Yes No No Expenses that recur on a regular basis, regardless of the  volume of business (i.e., lease payments, rental payments,  loan interest payments, or insurance payments).  Capitalized  Expenditures  Yes Yes Yes Non-operating expenditures capitalized to fixed assets.  Guarantor Net  Assets  Yes No No Total assets less total liabilities of the guarantor (also  referred to as net worth).   Sr. Debt Balance Yes Yes Yes Debt amount ranking senior to the Main Street loan.  Additional Pari  Passu Debt  Balance  Yes Yes Yes Debt amount ranking pari passu to the Main Street loan.  Collateral Type  (Non-Real Estate)  Yes No No If the loan is secured by collateral that is not predominantly  real estate, including if the collateral provided is different  types, report the predominant type of collateral (e.g.,  inventory, receivables, securities, etc.) by aggregate value.  Collateral Type  (Real Estate)  Yes No No If the loan is secured by real estate collateral, indicate the  property type (e.g., hotel, multifamily, residential,  industrial, etc.). If the loan is secured by multiple real estate  property types, report the predominant property type by  aggregate value.  Collateral Value  Reporting  Yes No No For loans that require ongoing or periodic valuation of the  collateral, report the market value of the collateral as of the  reporting date.   Collateral Value  Date  Yes No No Define the as-of date that corresponds with the Collateral  Value Reporting field.  Covenant Status  (Pass / Fail)  Yes Yes Yes Yes/no, indicating if the facility has satisfied covenant tests.  Date of Covenant  Default  Yes Yes Yes If applicable, report the date when borrower defaulted  covenants.  Nature of  Covenant Default  Yes Yes Yes If applicable, describe the covenant default (i.e., missing  financial statements, ratio trigger).  Date of Covenant  Cure  Yes Yes Yes If applicable, report the date when borrower cured previous  defaults.    

 

D-1  1894311.v9  EXHIBIT D  FORM OF  CERTIFICATE OF NO DEFAULT AND COMPLIANCE    As used herein, the “Loan Agreement” shall mean that certain Main Street Priority Loan Facility Term  Loan Agreement dated as of December 11, 2020, as amended from time to time, made by Airco 1, LLC  (“Borrower”) identified in the Loan Agreement, in favor of Park State Bank (“Lender”), as amended or  modified from time to time.  Capitalized terms used but not defined herein shall have the meanings ascribed to  them in the Loan Agreement.    Pursuant to Section 9(i) of the Loan Agreement, the Borrower does hereby certify to Lender that as of the  date hereof, to the best of its knowledge and belief, and based on the most recent collateral appraisal obtained in  connection with the Loan Agreement:    1. Borrower is in complete compliance with all of the covenants in Section 9 of the Loan Agreement that it  is required to be in compliance with as of the date hereof.    2. Borrower is in complete compliance with the MSPLF Borrower Certifications and Covenants and all  terms and conditions of the MSPLF it is required to be in compliance with as of the date hereof.    3. No “Event of Default” or “Unmatured Event of Default” (as defined in the Loan Agreement) has  occurred or is continuing.          Dated as of ___________________, 20__      BORROWER:     AIRCO 1, LLC      By:  _________________________  Print Name:  Mark Harris  Title:  Chief Executive Officertermnoteformainstreetpri

EXECUTION VERSION    1897745.v1  MAIN STREET PRIORITY LOAN FACILITY TERM NOTE    Principal Amount: $6,200,000  Dated: December 11, 2020   FOR VALUE RECEIVED, on or before December 11, 2025 (the “Scheduled Maturity  Date”) Airco 1, LLC, a Delaware limited liability company (“Borrower”), promises to pay to the  order of Park State Bank, a Minnesota state-chartered bank (hereafter, together with any subsequent  holder hereof, called “Lender”), at its main banking office at 331 N. Central Avenue, Duluth,  Minnesota 55807, or at such other place as  Lender may direct, the aggregate unpaid principal amount  of $6,200,000 (the “Loan”).  This Note evidences indebtedness incurred under a Main Street Priority Loan Facility Term  Loan Agreement, dated as of December 11, 2020 (as amended, restated, renewed or replaced from  time to time, the “Loan Agreement”), between Borrower and Lender, to which Loan Agreement  reference is hereby made for a statement of its terms and provisions, including without limitation  those under which this Note may be paid prior to its due date or have its due date accelerated.   Capitalized terms used but not defined herein have the meanings given to them in the Loan  Agreement.  Borrower agrees to repay the Loan principal in accordance with the following, provided that  in any event all such principal shall be paid on or before the Scheduled Maturity Date:  (i) Principal shall be deferred for the first two (2) years of the Loan (i.e.,  until December 11, 2022);  (ii) Fifteen percent (15.00%) of the principal amount (including any  capitalized interest accrued thereon) shall be due on the third  anniversary of the Loan (i.e., December 11, 2023);  (iii) Fifteen percent (15.00%) of the principal amount (including any  capitalized interest accrued thereon) shall be due on the fourth  anniversary of the Loan (i.e., December 11, 2024); and  (iv) The remaining seventy percent (70.00%) of the principal amount  (including any capitalized interest accrued thereon) shall be due on the  Scheduled Maturity Date.  Borrower also agrees to pay interest on the unpaid principal amount from time to time  outstanding under this Note on the dates and at the rate(s) set forth in and determined pursuant to the  Loan Agreement.  Payments of both principal and interest are to be made in immediately available  funds in lawful money of the United States of America.  This Note shall be governed by and construed in accordance with the internal law of the State  of Minnesota.  This Note shall bind Borrower and its heirs, trustees (including without limitation  successor and replacement trustees), executors, personal representatives, successors and assigns, and  

 

2  1897745.v1  shall inure to the benefit of Lender, its successors and assigns, except that Borrower may not transfer  or assign any rights or obligations hereunder without the prior written consent of Lender.  TO THE FULLEST EXTENT PERMITTED BY LAW, BORROWER AND LENDER  VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE  ANY RIGHT THEY OR ANY OF THEM MAY HAVE TO HAVE A JURY PARTICIPATE  IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR  OTHERWISE) BETWEEN OR AMONG BORROWER AND LENDER ARISING OUT OF  OR IN ANY WAY RELATED TO THIS NOTE.   [Remainder of Page Intentionally Blank – Signature Page Follows]  

 

[Signature Page to Main Street Priority Loan Facility Term Note]  To the extent applicable under any state law, Borrower executed this Note as of the date stated at the top  of the first page, intending to create an instrument executed under seal.  BORROWER:  AIRCO 1, LLC  By:    Print Name:  Mark Harris  Title:  Chief Executive Officer  /:4<3769"09=58:;5"2/+"&-.%)1./#,(-)#&1-.#-'0-#$*1.))/-&%$*

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