Document:

Exhibit
4.16

 

AIRNET
SYSTEMS, INC.

Loan and
Security Agreement

 

Loan Number: 1000119771

 

This Agreement is dated
as of July 12, 2004 and is executed by and between BANC ONE LEASING CORPORATION
(“Lender”), with Lender’s principal office located at 1111 Polaris Parkway,
Suite A3 (OH1-1085), Columbus, Ohio 43240 and the borrower identified below (“Borrower”):

 

Borrower: JETRIDE, INC.
dba AIRNET PRIVATE CHARTERS

 

Borrower’s Address: 3939
International Gateway, Columbus, Ohio 43219

 

1.  GRANT OF SECURITY INTEREST. 
Borrower grants, pledges and assigns to Lender a security interest in
all of Borrower’s respective right, title and interest in and to the property
described on the attached Schedule A-1,
now or hereafter arising or acquired, wherever located, together with any and
all additions, accessions, parts, accessories, substitutions and replacements
thereof, now or hereafter installed in, affixed to or used in connection with
said property (the “Equipment”), in all proceeds thereof, cash and non-cash,
including, but not limited to, proceeds of notes, checks, instruments,
indemnity proceeds, or any insurance on such and any refund or rebate of
premiums on such (“Collateral”).  This
Agreement secures the prompt payment and complete performance in full when due,
whether at the stated maturity, by acceleration or otherwise, of all payment
and other obligations of Borrower under or in connection with this Agreement,
and the Business Purpose Promissory Note executed in connection with the Loan
Number referenced above with the Borrower as the maker (the “Note”), and any
and all renewals, extensions or substitutions therefor (“Obligations”).  Borrower is and will continue to be (or, with
respect to after acquired property that constitutes Equipment under this
Agreement, will be when acquired) the legal and beneficial owner of the
Collateral free and clear of any Lien except for the security interest created
by this Agreement and/or any other prior security agreement delivered by
Borrower to Lender.  Except as previously
disclosed to Lender in writing, no effective Uniform Commercial Code (“UCC”)
financing statement or other instrument covering all or any part of the
Collateral is on file in any recording office, except those in favor of
Lender.  At its sole expense, Borrower
shall protect and defend Lender’s first priority security interest in the
Collateral against all claims and demands whatsoever.

 

2.  MAINTENANCE AND USE. 
At its sole expense, Borrower shall (a) repair and maintain the
Equipment in good condition and working order and supply and install all
replacement parts or other devices when required to so maintain the Equipment
or when required by applicable law or regulation, which parts or devices shall
automatically become part of the Equipment; (b) use and operate the Equipment
in a careful manner in the normal course of its business and only for the
purposes for which it was designed in accordance with the manufacturer’s
warranty requirements, and comply with all laws and regulations relating to the
Equipment, and obtain all permits or licenses necessary to install, use or
operate the Equipment;  (c) except as
provided in clause (d) below, make no alterations, additions, subtractions,
upgrades or improvements to the Equipment without Lender’s prior written consent,
which consent will not be unreasonably withheld, but any such alterations,
additions, upgrades or improvements shall automatically become part of the
Equipment; (d) maintain, inspect, service and repair, overhaul and test the
Equipment in accordance with the FAA approved maintenance program, manufacturer’s
approved maintenance program, FAA airworthiness directives, and the
manufacturer’s alert bulletins and urgently recommended service bulletins and
procedures, and perform all duties and tasks which would be required to
maintain the Equipment, including the engines, in full compliance with the
manufacturer’s specification (i) so as to keep the Equipment in as good
operating condition as when delivered to the Borrower hereunder, ordinary wear
and tear excepted, and (ii) so as to keep the Equipment in such operating
condition as may be necessary to enable the airworthiness certification of such
Equipment to be maintained in good standing at all times under the Act (as
defined in Section 20 hereof); and (e) maintain all records, logs and other
materials required by the FAA to be maintained in respect of the Equipment. The
Equipment will not be based outside of the United States, provided, however,
that the Equipment shall not be outside of the United States for more than
ninety (90) days in any calendar year. 
The Equipment shall not be operated within, over or into any
jurisdiction not covered by the insurance policies required herein nor shall
the Equipment be operated in any jurisdiction that does not have diplomatic
relations with the United States.  Lender
has the right upon reasonable notice to Borrower to inspect the Equipment
wherever located.  The Equipment shall be
based at the location specified on Schedule A-1.  The Equipment may be repositioned by Borrower,
from time to time, to other locations within the United States in the normal
course of the Borrower’s business. 
Borrower shall notify Lender in writing of any new location where the
Equipment is based within five (5) days of any repositioning of the Equipment.

 

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3.  INSURANCE.  At its sole
expense, Borrower at all times shall keep each item of Equipment insured
against all risks of loss or damage from every cause whatsoever for an amount
not less than the greater of the full replacement value or the Financed Amount
(as defined in Section 20 hereof).  All
insurers shall be reasonably satisfactory to Lender.  Borrower shall deliver to Lender satisfactory
evidence of such coverage.  Proceeds of
any insurance covering damage or loss of the Equipment in excess of $250,000.00
shall be payable to Lender as loss payee and shall, at Lender’s option, be
applied toward (a) the replacement, restoration or repair of the Equipment, or
(b) payment of the obligations of Borrower under this Agreement.   If an event of default occurs and is
continuing, then Borrower automatically appoints Lender as Borrower’s
attorney-in-fact with full power and authority in the place of Borrower and in
the name of Borrower or Lender to make claim for, receive payment of, and sign
and endorse all documents, checks or drafts for loss or damage under any such
policy.  Each insurance policy will
require that the insurer give Lender at least 30 days prior written notice of
any cancellation of such policy and will require that Lender’s interests remain
insured regardless of any act, error, omission, neglect or misrepresentation of
Borrower, and will contain those other requirements outlined in Schedule 3
hereof.  The insurance maintained by Borrower
shall be primary without any right of contribution from insurance which may be
maintained by Lender.

 

4.  LOSS OR DAMAGE. 
Borrower bears the entire risk of loss, theft, damage or destruction of
Equipment in whole or in part from any reason whatsoever (“Casualty Loss”).  No Casualty Loss to Equipment shall relieve
Borrower from the obligation to pay the installment payments or from any other
obligation under this Agreement.  In the
event of Casualty Loss to any item of Equipment, Borrower shall immediately
notify Lender of the same and Borrower shall, if so directed by Lender,
immediately repair the same.  If Lender
determines that any item of Equipment has suffered a Casualty Loss beyond
repair (“Lost Equipment”), then Borrower, at the option of Lender, shall:  (1) upon receipt of any insurance proceeds
for the Lost Equipment replace the Lost Equipment with similar equipment in
good repair, condition and working order free and clear of any Liens and
deliver to Lender a bill of sale covering the replacement equipment, in which
event such replacement equipment shall automatically be Equipment under this
Agreement; or (2) upon receipt of any insurance proceeds for the Lost Equipment
but no more than 180 days after the date of the Casualty Loss, pay to Lender
all amounts then due and payable by Borrower under this Agreement for the Lost
Equipment plus the remaining principal balance for such Lost Equipment as of
the date of the Casualty Loss as determined by Lender’s records.  Upon payment by Borrower of all amounts due
under the above clause (2), the security interest of the Lender in the Lost
Equipment will terminate.

 

5.  TAXES.  Borrower will
pay promptly when due all taxes, assessments and governmental charges upon or
against Borrower, the Collateral or the property or operations of Borrower, in
each case before same becomes delinquent and before penalties accrue thereon,
unless and to the extent that same are being contested in good faith by
appropriate proceedings.

 

6.  GENERAL INDEMNITY. 
Borrower assumes all risk and liability for, and shall defend, indemnify
and keep Lender harmless on an after-tax basis from, any and all liabilities,
obligations, losses, damages, penalties, claims, actions, suits, costs and
expenses, including reasonable attorney fees and expenses, of whatsoever kind
and nature imposed on, incurred by or asserted against Lender, in any way
relating to or arising out of the manufacture, purchase, acceptance, rejection,
ownership, possession, use, selection, delivery,  operation, condition, sale, return or other
disposition of the Equipment or any part thereof (including, without
limitation, any claim for latent or other defects, whether or not discoverable
by Borrower or any other person, any claim for negligence, tort or strict liability,
any claim under any environmental protection or hazardous waste law and any
claim for patent, trademark or copyright infringement).  Borrower will not indemnify Lender under this
section for loss or liability caused directly and solely by the negligence or
willful misconduct of Lender.  In this
section, “Lender” also includes any director, officer, employee, agent,
successor or assign of Lender.  Borrower’s
obligations under this section shall survive the expiration, cancellation or
termination of this Agreement.

 

7.  PERSONAL PROPERTY. 
Borrower represents and agrees that the Equipment is, and shall at all
times remain, separately identifiable personal property.  Upon Lender’s request, Borrower shall use
commercially reasonable efforts to furnish Lender a landlord’s and/or mortgagee’s
waiver and consent to remove all Equipment. Lender may display notice of its
interest in the Equipment by any reasonable identification.  Borrower shall not alter or deface any such
indicia of Lender’s interest.

 

8.  FINANCIAL REPORTS. 
Borrower agrees to furnish to Lender: 
(a) annual financial statements setting forth the financial condition
and results of operation of Borrower (financial statements shall include
balance sheet, income statement and changes in financial position and all notes
thereto) within 120 days of the end of each fiscal year of Borrower; (b)
quarterly financial statements setting forth the financial condition and
results of operation of Borrower within 60 days of the end of each of the first
three fiscal quarters of Borrower; and (c) such other financial information as
Lender may from time to time reasonably request including, without limitation,
financial reports filed by Borrower with federal or state regulatory agencies
to the extent Borrower may disclose such other financial information without
violating the Securities Exchange Act of 1934 or any rule or regulation of the
Securities and

 

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Exchange Commission.  All such financial information shall be
prepared in accordance with generally accepted accounting principles.  If Borrower fails to furnish the annual
financial statements to Lender within 30 days of Lender’s written request, then
Lender may, at its option, charge Borrower a non-performance fee equal to all
the installment payments due under this Agreement for the then current month
(unless otherwise prohibited by law) and such fees shall be payable by Borrower
on demand.

 

9.  NO CHANGES IN BORROWER. 
Borrower shall not:  (a)
liquidate, dissolve or suspend business; (b) sell, transfer or otherwise
dispose of all or a majority of its assets, except that Borrower may sell its
inventory in the ordinary course of its business; (c) enter into any merger,
consolidation or similar reorganization unless it is the surviving corporation;
(d) transfer all, or any substantial part of, its operations or assets outside
of the United States of America; or (e) without 15 days advance written notice
to Lender, change its name or chief place of business.

 

10.  REPRESENTATIONS. 
Borrower represents and warrants that: 
(a) Borrower is organized, validly existing, and in good standing under
the laws of one of the states of the United States; (b) Borrower is qualified
to do business in, and is in good standing under the laws of, each other state
in which it conducts its business and in which the Equipment is located, except
to the extent such failure would not have a material adverse effect on the
Borrower’s business or the Collateral; (c) Borrower has the power, and is duly
authorized to enter into, this Agreement and the Note and to execute and
deliver to Lender, now and from time to time hereafter, additional instruments,
resolutions, agreements and other instruments or documents relating to the
Obligation owed to Lender; (d) Borrower has, by proper action, authorized and
empowered those persons whose signatures appear in this Agreement, the Note,
and any instruments, documents and exhibits that have been delivered in
connection herewith, to execute the same for and on its behalf; (e)  this Agreement, the Note, and each related
document constitute a legal, valid, and binding obligation of Borrower
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally and general principles of equity; (f) this
Agreement and the Note evidence a loan made primarily for business, commercial
or agricultural purposes and not primarily for personal, family, or household purposes;
(g) the Equipment is not, and will not, be registered under the laws of any
foreign country; (h) the Equipment is, and shall remain at all times, eligible
for registration under the Act (as defined in Section 20 hereof); (i) the
Equipment shall be based in, and primarily used in, the United States all as
required by the Act; and (j) the Equipment will not be used in violation of any
law, regulation, ordinance or policy of insurance affecting the maintenance,
use or flight of the Equipment; and (k) Borrower qualifies as a citizen of the
United States as defined in the Act and will continue to qualify as a United
States citizen in all respects.

 

11.  OTHER DOCUMENTS; EXPENSES; APPOINTMENT OF
ATTORNEY-IN-FACT.  Borrower hereby irrevocably appoints Lender
or its designee as Borrower’s attorney in fact, with full authority in the
place instead of Borrower, from time to time in Lender’s discretion upon,
during, and after an event of default, to take any action and to execute any
instrument which Lender may deem necessary or advisable to accomplish the
purposes of this Agreement, including without limitation, (a) to perfect and
continue to perfect the security interests created by this Agreement, including
without limitation to prepare, sign, amend, file, or record a Uniform
Commercial Code financing statement in the place of Borrower and in the name of
Borrower; (b) to ask, demand, collect or sue for, recover, compound, receive
and give acquittance in receipts for any monies due or become due under or in respect
for any Collateral; (c) to receive, endorse and collect any drafts or other
instruments, documents and chattel paper, in connection with the Collateral;
and (d) to file any claims or take any action or institute any proceeding which
Lender may deem necessary or desirable for the collection of any Collateral or
otherwise to enforce the rights of Lender in the Collateral.  Borrower agrees to sign and deliver to Lender
any additional documents deemed desirable by Lender to effect the perfection of
Lender’s security interest in the Collateral. 
Borrower shall pay upon Lender’s request any out-of-pocket costs and
expense paid or incurred by Lender in connection with the above terms of this
Agreement or the funding and closing of this Agreement.

 

12.   EVENTS OF DEFAULT.  Each of the following events shall constitute
an event of default under this Agreement and the Note:  (a) Borrower fails to pay any installment
payment or other amount due under this Agreement or the Note within ten days of
its due date; or (b) Borrower fails to perform or observe any of its
obligations in Sections 3, 9, or 18 hereof; or (c) Borrower fails to perform or
observe any of its other obligations in this Agreement or the Note within 30
days after Lender notifies Borrower of such failure; or (d) any statement,
representation or warranty made by Borrower in this Agreement or in any
document, certificate or financial statement in connection with this Agreement
proves at any time to have been untrue or misleading in any material respect as
of the time when made; or (e) Borrower becomes insolvent or bankrupt, or
Borrower admits its inability to pay its debts as they mature, or Borrower
makes an assignment for the benefit of creditors, or Borrower applies for,
institutes or consents to the appointment of a receiver, trustee or similar
official for Borrower or any substantial part of its property or any such
official is appointed without Borrower’s consent, or Borrower applies for,
institutes or consents to any bankruptcy, insolvency, reorganization, debt
moratorium, liquidation or similar proceeding relating to Borrower or any
substantial part of its property under the laws of any jurisdiction or any such
proceeding is instituted against Borrower without stay or dismissal for more
than 60 days, or Borrower commences a winding up of its affairs, or

 

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Borrower ceases to do business as a going
concern; or (f) with respect to any guaranty, letter of credit, pledge
agreement, security agreement, mortgage, deed of trust, debt subordination
agreement or other credit enhancement or credit support agreement (whether now
existing or hereafter arising) signed or issued by any party in connection with
all or any part of Borrower’s obligations under this Agreement, the party
signing or issuing any such agreement defaults in its obligations thereunder or
any such agreement shall cease to be in full force and effect or shall be
declared to be null, void, invalid or unenforceable by the party signing or
issuing it.

 

As used in this section
12, the term “Borrower” also includes any guarantor (whether now existing or
hereafter arising) of all or any part of Borrower’s obligations under this
Agreement and/or any issuer of a letter of credit (whether now existing or hereafter
arising) relating to all or any part of Borrower’s obligations under this
Agreement, and the term “Agreement” also includes any guaranty or letter of
credit (whether now existing or hereafter arising) relating to all or any part
of Borrower’s obligations under this Agreement.

 

13.   RIGHTS UPON DEFAULT.  If any event of default exists, Lender may
exercise in any order one or more of the remedies described in the lettered
subparagraphs of this section, and Borrower shall perform its obligations imposed
thereby:

 

(a)  Lender may require Borrower to turnover any
and all Collateral to Lender.

 

(b)  Lender or its agent may repossess any or all
Collateral wherever found, may enter the premises where the Collateral is
located and disconnect, render unusable and remove it, and may use such
premises without charge to store or show the Collateral for sale.

 

(c)  Lender may sell any or all Collateral at
public or private sale, with or without advertisement or publication, may lease
or otherwise dispose of it or may use, hold or keep it.

 

(d)  Lender may require Borrower to pay to Lender
on a date specified by Lender,  (i) all
accrued and unpaid interest, late charges and other amounts due under the Note
or this Agreement as of such date, plus (ii) the remaining principal balance of
the Note as of such date, plus (iii) interest at the Overdue Rate on the total
of the foregoing (“Overdue Rate” means an interest rate per annum equal to the
higher of 12% or 2% over the Prime Rate, but not to exceed the highest rate permitted
by applicable law).  If an event of
default under section 12(f) of this Agreement exists, then Borrower will be
automatically liable to pay Lender the foregoing amounts as of the next
installment payment date under the Note unless Lender otherwise elects in
writing.

 

(e)  Borrower shall pay all reasonable costs,
expenses and damages incurred by Lender because of the event of default or its
actions under this section, including, without limitation any collection agency
and/or attorney fees and expenses, any costs related to the repossession,
safekeeping, storage, repair, reconditioning or disposition of the Collateral.

 

(f)  Lender may sue to enforce Borrower’s
performance of its obligations under the Note and this Agreement and/or may
exercise any other right or remedy then available to Lender at law or in
equity.

 

Lender is not required to
take any legal process or give Borrower any notice before exercising any of the
above remedies.  If Lender is required to
give notice, 10 calendar days advanced notice is reasonable notification.  None of the above remedies is exclusive, but
each is cumulative and in addition to any other remedy available to
Lender.  Lender’s exercise of one or more
remedies shall not preclude its exercise of any other remedy.  No action taken by Lender shall release
Borrower from any of its obligations to Lender. 
No delay or failure on the part of Lender to exercise any right
hereunder shall operate as a waiver thereof nor as an acquiescence in any
default, nor shall any single or partial exercise of any right preclude any
other exercise thereof or the exercise of any other right.  After any default, Lender’s acceptance of any
payment by Borrower under the Note or this Agreement shall not constitute a
waiver by Lender of such default, regardless of Lender’s knowledge or lack of
knowledge at the time of such payment, and shall not constitute a reinstatement
of the Note or this Agreement if this Agreement has been declared in default by
Lender, unless Lender has agreed in writing to reinstate this Agreement and to
waive the default. With respect to any Collateral or any Obligation, Borrower
assents to all extensions or postponements to the time of payment thereof or
any other indulgence in connection therewith, to each substitution, exchange or
release of Collateral, to the release of any party primarily or secondarily
liable, to the acceptance of partial payment thereof or to the settlement or
compromise thereof, all in such matter and such time or times as Lender may
deem advisable.

 

If Lender actually
repossesses any Collateral, then it will use commercially reasonable efforts
under the then current circumstances to attempt to mitigate its damages;
provided, that Lender shall not be required to sell, lease or otherwise dispose
of any Collateral prior to Lender enforcing any of the remedies described
above.  Lender may sell or lease the
Collateral in any manner it chooses, free and clear of any claims or rights of
Borrower and without any duty to account to Borrower with respect thereto except
as provided below.  If Lender actually
sells or

 

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leases the Collateral, it will credit the net
proceeds of any sale of the Collateral, or the net present value (discounted at
the then current Prime Rate) of the rents payable under any new lease of the
Collateral, against the amounts Borrower owes Lender.  The term “net” as used above shall mean such
amount after deducting the costs and expenses described in clause (e) above of
this section. Borrower shall remain liable for any deficiency if the net
proceeds are insufficient to pay all amounts to which Lender is entitled
hereunder.

 

14.  LATE CHARGES.  If any
installment payment or other amount payable under the Note or this Agreement is
not paid when due, then as compensation for the administration and enforcement
of Borrower’s obligation to make timely payments, Borrower shall pay with
respect to each overdue payment on demand an amount equal to the greater of
fifteen dollars ($15.00) or five percent (5%) of the each overdue payment (but
not to exceed the highest late charge permitted by applicable law) plus any
collection agency fees and expenses.

 

15.  LENDER’S RIGHT TO PERFORM. 
If Borrower fails to make any payment under this Agreement or fails to perform
any of its other obligations in this Agreement (including, without limitation,
its agreement to provide insurance coverage), Lender may itself make such
payment or perform such obligation, and the amount of such payment and the
amount of the expenses of Lender incurred in connection with such payment or
performance shall be deemed to be additional principal under the Note which is
payable by Borrower on demand.

 

16.   NOTICES; POWER OF ATTORNEY.  (a) Service of all notices under this
Agreement shall be sufficient if given personally or couriered or mailed to the
party involved at its respective address set forth herein or at such other
address as such party may provide in writing from time to time.  Any such notice mailed to such address shall
be effective three days after deposit in the United States mail with postage
prepaid.  (b) With respect to any power
of attorney covered by this Agreement, the powers conferred on Lender thereby:  are powers coupled with an interest; are
irrevocable; are solely to protect Lender’s interests under this Agreement; and
do not impose any duty on Lender to exercise such powers.  Lender shall be accountable solely for
amounts it actually receives as a result of its exercise of such powers.

 

17.  ASSIGNMENT BY LENDER.  Lender and any assignee of Lender,  may,
upon ten (10) days’ prior written notice to Borrower, with or without consent
of Borrower, sell, assign, transfer or grant a security interest in all or any
part of Lender’s rights, obligations, title or interest in the Collateral, the
Note, this Agreement, or the amounts payable under the Note or this Agreement
to any entity (“transferee”).  The
transferee shall succeed to all of Lender’s rights in respect to this Agreement
(including, without limitation, all rights to insurance and indemnity
protection described in this Agreement). 
Borrower agrees to sign any acknowledgment and other documents
reasonably requested by Lender or the transferee in connection with any such
transfer transaction.  Borrower, upon
receiving notice of any such transfer transaction, shall comply with the terms
and conditions thereof.  Borrower agrees
that it shall not assert against any transferee any claim, defense, setoff,
deduction or counterclaim which Borrower may now or hereafter be entitled to
assert against Lender.

 

18.  NO ASSIGNMENT OR LEASING BY BORROWER.  BORROWER SHALL NOT, DIRECTLY OR INDIRECTLY, (a)
MORTGAGE, ASSIGN, SELL, TRANSFER, OR OTHERWISE DISPOSE OF INTEREST IN THIS
AGREEMENT OR THE COLLATERAL OR ANY PART THEREOF, OR (b) LEASE, RENT, LEND OR
TRANSFER POSSESSION OR USE (OTHER THAN USE IN THE ORDINARY COURSE OF BORROWER’S
BUSINESS) OF THE EQUIPMENT OR ANY PART THEREOF TO ANY PARTY, OR (c) CREATE,
INCUR, GRANT, ASSUME OR ALLOW TO EXIST ANY LIEN ON ITS INTEREST IN THIS
AGREEMENT, THE COLLATERAL OR ANY PART THEREOF.

 

19.  TERMINATION.
This Agreement shall continue in effect until the Obligations have been
indefeasibly paid and performed in full. 
Upon termination of this Agreement, Lender shall, at Borrower’s expense,
take such actions and file such documents as may be necessary or desirable to
release the Collateral from this Agreement.

 

20.  CERTAIN DEFINITIONS.  “Act” means subtitle VII of Title 49 of the United
States Code. “Financed Amount” for any item of Equipment shall mean the amount
set forth on the Schedule A-1 that corresponds to that item of Equipment.  “Lien” means any security interest, lien,
mortgage, pledge, encumbrance, judgment, execution, attachment, warrant, writ,
levy, other judicial process or claim of any nature whatsoever by or of any
person.  “Prime Rate” means the prime
rate of interest announced from time to time as the prime rate by Bank One, NA
(or its successors or assigns); provided, that the parties acknowledge that the
Prime Rate is not intended to be the lowest rate of interest charged by said
bank in connection with extensions of credit. 
All terms defined herein are equally applicable to both the singular and
plural form of such terms.

 

21.  CONDITIONS. 
Lender is
not obligated to make any loan or disburse any principal hereunder unless:
(a)  Lender has received the Note signed
by the Borrower; (b) Lender has received evidence of all required insurance;
(c) in Lender’s sole judgment, there has been no material adverse change in the
financial condition or

 

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business of Borrower or any guarantor; (d)
Borrower has signed and delivered to Lender this Agreement and Lender has
signed and accepted this Agreement; (e) Lender has received the documents and
instruments and evidence as to satisfaction of the matters specified in any Schedule 2 which may be attached
hereto, each of which shall be satisfactory to Lender in form and substance and
each document or instrument to be duly authorized, executed and delivered and
in full force and effect;  (f) Lender has
received, in form and substance satisfactory to Lender, such other documents
and information as Lender shall reasonably request; and (g)  Borrower has satisfied all other reasonable
conditions established by Lender.

 

22.  USURY.  It is not the
intention of the parties to this Agreement to make an agreement violative of
the laws of any applicable jurisdiction relating to usury (“Usury Laws”).  Regardless of any provision in this
Agreement, the Note, or any document in connection therewith, Lender shall not
be entitled to receive, collect or apply, as interest on any Obligation, any
amount in excess of the Maximum Amount (the “Excess”).  As used herein, “Maximum Amount” shall mean
the maximum amount of interest which would have accrued if the unpaid principal
amount of the Obligation outstanding from time to time had borne interest each
day at the maximum amount of interest which lender is permitted to charge on
the Obligation under the Usury Laws.  If
Lender ever receives, collects or applies as interest any Excess, such Excess
shall be deemed a partial repayment of principal and treated hereunder as such;
and if principal is paid in full, any remaining Excess shall be paid to
Borrower.  In determining whether or not
the interest paid or payable under any specific contingency exceeds the Maximum
Amount, Borrower and Lender shall, to the maximum extent permitted under the
Usury Laws, (a) characterize any nonprincipal payment as an expense, fee or
premium rather than as interest, (b) exclude voluntary prepayments and the
effect thereof, and (c) amortize, prorate, allocate and spread in equal parts,
the total amount of interest throughout the entire contemplated term of the
Obligation so that the interest rate is uniform throughout the entire term of
the Obligation; provided that if the Obligation is paid and performed in full
prior to the full contemplated term thereof, and if the interest received for
the actual period of existence thereof exceeds the Maximum Amount, Lender shall
refund to Borrower the Excess, and, such event shall not be subject to any
penalties provided by the Usury Laws.

 

23.  GOVERNING LAW.  THE
INTERPRETATION, CONSTRUCTION AND VALIDITY OF THIS AGREEMENT AND THE NOTE SHALL
BE GOVERNED BY THE LAWS OF THE STATE OF OHIO.

 

24.  MISCELLANEOUS.  (a) Subject to the limitations herein, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective heirs, administrators, successors and assigns.  (b) This Agreement may be executed in any
number of counterparts, which together shall constitute a single
instrument.  (c) Section and paragraph
headings in this Agreement are for convenience only and have no independent
meaning.  (d) The terms of this Agreement
shall be severable and if any term thereof is declared unconscionable, invalid,
illegal or void, in whole or in part, the decision so holding shall not be
construed as impairing the other terms of this Agreement and this Agreement
shall continue in full force and effect as if such invalid, illegal, void or
unconscionable term were not originally included herein.  (e) All indemnity obligations of Borrower
under this Agreement and all rights, benefits and protections provided to Lender
by warranty disclaimers shall survive the cancellation, expiration or
termination of this Agreement.  (f)
Lender shall not be liable to Borrower for any indirect, consequential or
special damages for any reason whatsoever. 
(g) This Agreement may be amended, but only by a written amendment
signed by Lender and Borrower.  (h) If
this Agreement is signed by more than one Borrower, each of such Borrowers
shall be jointly and severally liable for payment and performance of all of
Borrower’s obligations under this Agreement. (i) This Agreement represents the
final, complete and entire agreement between the parties hereto, and there are
no oral or unwritten agreements or understandings affecting this Agreement or
the Collateral.  (j) Borrower agrees that
Lender is not the agent of any manufacturer or supplier, that no manufacturer
or supplier is an agent of Lender, and that any representation, warranty or
agreement made by manufacturer, supplier or by their employees, sales
representatives or agents shall not be binding on Lender.

 

25.  GOVERNMENT REGULATION.  
Borrower shall not (a) be or become subject, at any time, to any law,
regulation, or list of any government agency (including, without limitation,
the U.S. Office of Foreign Asset Control list) that prohibits or limits Lender
from making any advance or extension of credit to Borrower or from otherwise
conducting business with Borrower or (b) fail to provide documentary and other
evidence of Borrower’s identity as may be requested by Lender at any time to
enable Lender to verify Borrower’s identity or to comply with any applicable
law or regulation, including, without limitation, Section 326 of the USA
Patriot Act of 2001, 31 U.S.C. Section 5318.

 

26. USA PATRIOT ACT
NOTIFICATION.  The following
notification is provided to Borrower pursuant to Section 326 of the USA Patriot
Act of 2001, 31 U.S.C. Section 5318:

 

IMPORTANT INFORMATION
ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight the
funding of terrorism and money laundering activities, Federal law requires all
financial institutions to obtain, verify, and record information that
identifies each person or entity that opens an account, including any deposit
account, treasury management account, loan, other extension of credit, or

 

6

 

other financial services
product. What this means for Borrower: When Borrower opens an account, if
Borrower is an individual, Lender will ask for Borrower’s name, tax payer
identification number, residential address, date of birth, and other information
that will allow Lender to identify Borrower, and if Borrower is not an
individual, Lender will ask for Borrower’s name, taxpayer identification
number, business address, and other information that will allow Lender to
identify Borrower.  Lender may also ask,
if Borrower is an individual, to see Borrower’s driver’s license or other
identifying documents, and if Borrower is not an individual, to see Borrower’s
legal organizational documents or other identifying documents.

 

 

ALL PARTIES TO THIS AGREEMENT,
INCLUDING LENDER AND THE UNDERSIGNED, IRREVOCABLY CONSENT TO THE JURISDICTION
AND VENUE OF ANY STATE OR FEDERAL COURT IN OHIO, AND WAIVE ALL RIGHTS TO TRIAL
BY JURY, IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY AGAINST
ANY OTHER PARTY ON ANY MATTER WHATSOEVER ARISING OUT OF, IN CONNECTION WITH OR
IN ANY WAY RELATED TO THE NOTE OR THIS AGREEMENT.

 

	
  JETRIDE, INC. dba AIRNET
  PRIVATE CHARTERS

  	
   

  	
  Accepted By:

  
	
  (Borrower)

  	
  BANC ONE LEASING
  CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/ Jaqueline
  M. Walls

  	
   

  
	
  By:

  	
  /s/ Gary W. Qualmann

  	
   

  	
   

  
	
   

  	
  Title:

  	
    Financing
  Manager

  	
   

  
	
  Title:

  	
  CFO

  	
   

  	
   

  
	
   

  	
  Acceptance Date:

  	
  July 12, 2004

  	
   

  
	
  Witness:

  	
  /s/ John Gordon

  	
   

  	
   

  
															

 

7

 

SCHEDULE A-1

 

Loan No. 1000119771

 

Financed Amount:
$5,000,000.00

 

DESCRIPTION OF EQUIPMENT

 

	
  Airframe Make/Model:

  	
  LEARJET INC. MODEL 60

  
	
   

  	
   

  
	
  Airframe Serial No.:

  	
  127

  
	
   

  	
   

  
	
  U.S. Identification
  No.:

  	
  N460AN

  
	
   

  	
   

  
	
  Engine
  Quantity/Make/Model:

  	
  2 PRATT & WHITNEY
  305A

  
	
   

  	
   

  
	
  Engine Serial No(s).:

  	
  CA0185 AND CA0056

  
			

 

Together with all
engines, propellers, avionics, communication equipment, navigation equipment,
instruments, accessories, attachments, parts, appurtenances, accessions,
furnishings and other equipment attached to, installed in or relating to any of
the foregoing property and all maintenance and service logs and records
relating to the foregoing property.

 

Each engine has 750 or
more rated takeoff horsepower or the equivalent of such horsepower.

 

The Equipment shall be
based at the following location:

 

Dallas Love Airport, 8008 Cedar Springs Road LB
16, Dallas, Dallas, Texas 75235

Name of Airport and
Street Address                            
City                  County      State

 

This Schedule A-1 is
attached to, and made a part of, the Loan and Security Agreement with the Loan
Number referenced above and contains a true and accurate description of the
Equipment.

 

	
  JETRIDE,
  INC. dba AIRNET PRIVATE CHARTERS

  	
   

  
	
  (Borrower)

  
	
   

  
	
  By:

  	
    /s/ Gary W. Qualmann

  	
   

  
	
   

  
	
  Title:

  	
    CFO

  	
   

  
						

 

8

 

SCHEDULE 2

 

Attached to Loan and Security Agreement for Loan No. 1000119771

 

 

ADDITIONAL CONDITIONS TO FUNDING THE LOAN*

 

 

1.                                       Airnet Systems, Inc. shall execute and deliver to Lender an
absolute and unconditional guarantee of all obligations of Borrower under the
Loan and Security Agreement and the Note.

 

2.                                       Lender shall receive and find acceptable
the maintenance and service logs and records relating to the Collateral.

 

3.                                       Lender shall receive terminations or
releases of liens in a form recordable with the Federal Aviation Administration
from all creditors with a lien on any part of the Collateral as shown in the
FAA lien records.

 

4.                                       Lender shall receive UCC-3 terminations
or release of liens in recordable form from all creditors with a lien on any
part of the Collateral as shown in state or local lien records.

 

 

* The inclusion of
additional funding conditions in this Schedule 2 shall not limit the generality
of the conditions set forth in the Agreement.

 

 

	
  JETRIDE,
  INC. dba AIRNET PRIVATE CHARTERS

  	
   

  
	
  (Borrower)

  
	
   

  
	
  By:

  	
    /s/ Gary W. Qualmann

  	
   

  
	
   

  
	
  Title:

  	
    CFO

  	
   

  
						

 

9

 

SCHEDULE 3

AIRCRAFT  LOAN  INSURANCE REQUEST LETTER

 

	
   

  	
   

  
	
  (Date)

  	
   

  
	
   

  	
   

  
	
  (Agent)

  	
   

  
	
   

  	
   

  
	
  (Street Address)

  	
   

  
	
   

  	
   

  
	
  (City, State, Zip)

  	
   

  
	
   

  	
   

  
	
  (Telephone Number)

  	
   

  

 

Dear Agent:

 

Banc
One Leasing Corporation (“BOLC”) requires proof of acceptable insurance
coverage before the loan transaction can close. 
The requirements identified below must stay in full effect throughout
the term of the transaction.

 

1.               The certificate of insurance must be issued
directly to Banc One Leasing Corporation and shall be issued by a company
having an A.M. Best Rating of at least A with a Financial Size Category of at
least VII.

2.               The certificate of insurance must be
executed.

3.               The insurance must be primary and any
insurance maintained by BOLC or any other loss payee will be in excess and
non-contributory.

4.               Policies must include a Waiver of
Subrogation in favor of “Banc One Leasing Corporation, its parent and
affiliates, successors or assigns”.

5.               Policies must include a thirty (30) day
prior written Notice of Cancellation to the Certificate Holder.  Such notice must be directed by certified
mail to: Banc One Leasing Corporation, 1111 Polaris Parkway, Suite A3,
Columbus, Ohio 43240, Attn:  Insurance
Dept.

6.               PHYSICAL DAMAGE

a.               Replacement cost coverage for the
equipment identified on the attached Schedule A-1, which is estimated to be $5,000,000.00.

b.              “Banc One Leasing Corporation, its parent
and affiliates, successors or assigns” shall be named as Loss Payee.

c.               Breach of Warranty in favor “Banc One
Leasing Corporation, its parent and affiliates, successors or assigns”.

d.              War Risk Endorsement, which shall include
hijacking and terrorism, in favor of “Banc One Leasing Corporation, its parent
and affiliates, successors or assigns” for the amount identified in 6a.

7.  The certificate of insurance shall evidence
liability coverage in the minimum amount of $50 million.

 

Please immediately send
proof of the above insurance requirements VIA FACSIMILE TRANSMITTAL
614-213-0748.

 

PLEASE
REFERENCE THE COMPLETE LOAN NUMBER AS LISTED BELOW FOR TRACKING PURPOSES.

THANK
YOU.

 

	
  Sincerely,

  
	
  JETRIDE, INC. dba AIRNET
  PRIVATE CHARTERS

  	
   

  
	
   

  
	
  /s/ Gary W. Qualmann

  	
   

  
	
  (By)

  
	
  1000119771

  	
   

  
	
  (Loan Number)

  
				

 

10Exhibit 4.17

 

AIRNET SYSTEMS, INC.

Business Purpose Promissory Note

 

Loan Number: 1000119771

 

	
  Amount
  $5,000,000.00

  	
  Date: July 12, 2004

  

 

This
Note is executed together with the Loan and Security Agreement dated as of July
12, 2004  (the “Loan Agreement”) and is
executed at Columbus, Ohio.

	
  (City)

  	
  (State)

  

 

For
value received, receipt of which is hereby acknowledged, the undersigned  (“Borrower”) promises to pay to the order of BANC ONE
LEASING CORPORATION (“Lender”) at its principal office or at such other place
as Lender may designate from time to time in lawful money of the United States
of America, the principal sum of Five Million
and 00/100ths Dollars ($5,000,000.00), or such lesser portion
thereof as may have from time to time been disbursed to, or for the benefit of
Borrower, and as remains unpaid pursuant to the books or records of Lender,
together with interest at the Interest Rate set forth below on the unpaid
balance of principal advanced from the date(s) of disbursement until paid in
full as set forth below.  Principal
sums(s) disbursed and repaid will not be available for redisbursement.  Interest shall be calculated on a 360 day
year basis with each month consisting of 30 days.

 

Interest Rate: Six and Fifty Hundredths percent (6.50%) per annum.

 

1.  The
term of this Note consists of the Interim Term plus the Base Term.  The Interim Term begins on the Acceptance
Date and continues up to the Commencement Date of the Base Term.  The Acceptance Date is the date that Lender
accepts this Note by initially disbursing principal hereunder.  If the Acceptance Date is on or after the
first (1st) day of the month and up to the fifteenth (15th) day of the month,
then the Commencement Date shall be the fifteenth (15th) day of such month; and
if the Acceptance Date is on or after the sixteenth (16th) day of the month and
up to the last day of the month, then the Commencement Date shall be first
(1st) day of the month following the Acceptance Date.  The Base Term begins on the Commencement Date
and continues for the number of months after the Commencement Date as stated in
Section 3 below.

 

2.  If the Acceptance Date is before the
Commencement Date, then on the Commencement Date of the Base Term, Borrower
shall pay one installment of interest only based upon the number of days in the
Interim Term.

 

3.  During the Base Term, Borrower shall pay
installments of principal and interest in the amounts and on the dates stated
below:

 

(a)  Base Term: 84 months

 

(b)  Amount of each installment payment due during
the Base Term (includes principal and interest):

 

	
  83 Monthly Payments @ $50,665.26

  
	
  1 Monthly Payment @ $2,550,665.26

  

 

(c)  The first installment payment during the Base
Term shall be paid one month
after the Commencement Date and all subsequent installment payments shall be
paid on the same day of each month
thereafter until paid in full.

 

4.  On or before the date of this Note, Borrower
shall pay a set-up/filing fee in the amount of $0.00.

 

5. 
Payments shall be allocated between principal, interest and fees, if
any, in the discretion of Lender.  Except
as provided in the Prepayment and Substitution Addendum, Borrower may not
prepay the principal sum.  Borrower’s
obligation to pay all installment payments and all other amounts payable

 

1

 

under this Note is absolute and unconditional
under any and all circumstances and shall not be affected by any circumstances
of any character including, without limitation, 
(a) any setoff, claim, counterclaim, defense or reduction which Borrower
may have at any time against Lender or any other party for any reason, or (b)
any defect in the condition, design or operation of, any lack of fitness for
use of, any damage to or loss of, or any lack of maintenance or service for any
of the Equipment (as defined in the Loan Agreement).

 

6.  This
Note is entitled to the benefits, and is subject to the terms and requirements
of, the Loan Agreement executed by Borrower and Lender, which Loan Agreement,
among other things, (a) provides for the making of the loan evidenced hereby,
and (b) provides for events of default, acceleration and other remedies.  Borrower waives presentment, demand, protest
or notice of any kind in connection with this Note.

 

7.
LENDER AND BORROWER IRREVOCABLY CONSENT TO THE
JURISDICTION AND VENUE OF ANY STATE OR FEDERAL COURT IN OHIO, AND WAIVE ALL
RIGHTS TO TRIAL BY JURY, IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY
ANY PARTY AGAINST ANY OTHER PARTY ON ANY MATTER WHATSOEVER ARISING OUT OF, IN
CONNECTION WITH OR IN ANY WAY RELATED TO THIS INSTRUMENT.

 

	
  JETRIDE, INC. dba AIRNET PRIVATE CHARTERS

  	
   

  	
  /s/
  John Gordon

  	
   

  
	
  (“Borrower”)

  	
  Witness
  as to Borrower’s signature

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Gary W. Qualmann

  	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
  CFO

  	
   

  	
   

  
								

 

2

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