Document:

securityagreementwithair

EXECUTION VERSION  1894320.v3  SECURITY AGREEMENT  (Grantor)  This SECURITY AGREEMENT is made as of December 11, 2020 (the  “Agreement”), by AIRCO 1, LLC, a Delaware limited liability company, with its chief  executive office at 5930 Balsam Ridge Road, Denver, NC 28037 (“Grantor”), in favor of  PARK STATE BANK, a Minnesota state-chartered bank, with an office at 331 N. Central  Avenue, Duluth, Minnesota 55807 (“Secured Party”).  In consideration of Secured Party's extension of new financial accommodations to  Grantor pursuant to that certain Main Street Priority Loan Facility Term Loan Agreement  between Secured Party and Grantor, dated as of December 11, 2020 (the “Loan Agreement”)  and other valuable consideration, the receipt and adequacy of which are hereby  acknowledged, Grantor agrees as follows:  ARTICLE I  DEFINITIONS    As used herein, the following terms shall have the meanings set forth in this Section:   “Accounts” shall have the meaning provided in the UCC.  “Chattel Paper” shall have the meaning provided in the UCC and shall include, without  limitation, all Electronic Chattel Paper and Tangible Chattel Paper.  “Collateral” shall mean all property in which a security interest is granted hereunder.   “Commercial Tort Claim” shall have the meaning provided in the UCC.  “Controlled Property” shall mean property of every kind and description in which Grantor  has or may acquire any interest, now or hereafter at any time in the possession or control of  Secured Party for any reason and all dividends and distributions on or other rights in  connection with such property.  “Data Processing Records and Systems” shall mean all of Grantor's now existing or hereafter  acquired electronic data processing and computer records, software (including, without  limitation, all “Software” as defined in the UCC), systems, manuals, procedures, disks, tapes  and all other storage media and memory.  “Default” shall mean any event which if it continued uncured would, with notice or lapse of  time or both, constitute an Event of Default.  “Deposit Accounts” shall have the meaning provided in the UCC and shall include, without  limitation, any demand, time, savings, passbook or similar account maintained with a bank.  “Document” shall have the meaning provided in the UCC.  

 

2  1894320.v3  “Electronic Chattel Paper” shall have the meaning provided in the UCC.  “Equipment” shall have the meaning provided in the UCC.  “Event of Default” shall have the meaning specified in Article VI hereof.  “Fixtures” shall have the meaning provided in the UCC.  “General Intangibles” shall have the meaning provided in the UCC and shall include, without  limitation, all Payment Intangibles.  “Goods” shall have the meaning provided in the UCC and shall include, without limitation,  embedded “Software” to the extent included in “Goods” as defined in the UCC.  “Grantor” shall have the meaning provided in the preamble hereto. “Instruments” shall have  the meaning provided in the UCC.  “Insurance Proceeds” shall mean all proceeds of any and all insurance policies payable to  Grantor with respect to any Collateral, or on behalf of any Collateral, whether or not such  policies are issued to or owned by Grantor.  “Inventory” shall have the meaning provided in the UCC.  “Investment Property” shall have the meaning provided in the UCC. “Letter-of-Credit  Rights” shall have the meaning provided in the UCC. “Loan Agreement” shall have the  meaning provided in the recitals hereto.   “Motor Vehicles” shall mean all vehicles (including, without limitation all tractors and  trailers) for which the title to such vehicle is governed by a certificate of title or ownership.  “Payment Intangibles” shall have the meaning provided in the UCC. “Proceeds” shall have  the meaning provided in the UCC.  “Products” shall mean any goods now or hereafter manufactured, processed or assembled  with any of the Collateral.  “Secured Party” shall have the meaning provided in the preamble hereto. “Supporting  Obligations” shall have the meaning provided in the UCC. “Tangible Chattel Paper” shall  have the meaning provided in the UCC.  “UCC” shall mean the Uniform Commercial Code as enacted in the State of Minnesota, as  amended from time to time; provided, however, that: (a) to the extent that the UCC is used to  define any term herein, and such term is defined differently in different Articles of the UCC,  the definition of such term contained in Article 9 shall govern; and (b) if, by reason of  mandatory provisions of law, any or all of the attachment, perfection or priority of, or  remedies with respect to, the Secured Party's security interest in any Collateral is governed  by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the  State of Minnesota, the term “UCC” shall mean the Uniform Commercial Code as enacted  and in effect in such other jurisdiction solely for purposes of the provisions thereof relating  

 

3  1894320.v3  to such attachment, perfection or priority of, or remedies with respect to, the Secured Party's  security interest and for purposes of definitions related to such provisions.  Other terms defined herein shall have the meanings ascribed to them herein. All capitalized  terms used herein, not specifically defined herein, shall have the meaning ascribed to them in  the Loan Agreement.  ARTICLE II  SECURITY INTERESTS    As security for the payment of all Obligations, Grantor hereby grants to Secured Party  a security interest in all of Grantor's right, title and interest in and to the following, whether  now owned or existing or hereafter acquired or arising:  Accounts;  Chattel Paper;  Commercial Tort Claims, if any, described on Exhibit B attached hereto and  incorporated herein by reference;  Controlled Property;  Deposit Accounts;  Documents;  Equipment and Fixtures;  General Intangibles;  Goods;  Instruments;  Inventory;  Investment Property;  Letter-of-Credit Rights;  Proceeds (whether cash or non-cash Proceeds), including Insurance Proceeds  and  non-cash Proceeds of all types);  Products of all the foregoing; and  Supporting Obligations.    ARTICLE III  REPRESENTATIONS AND COVENANTS OF GRANTOR    Grantor represents, warrants and covenants that:   3.1 Authorization. The execution and performance of this Agreement have been  duly authorized by all necessary action and do not and will not: (a) require any consent or  approval of the members or stockholders of any entity, or the consent of any governmental  entity, which in each case has not been obtained; or (b) violate any provision of any indenture,  contract, agreement or instrument to which it is a party or by which it is bound.   3.2 Title to Collateral. Grantor has good and marketable title to all of the  Collateral and none of the Collateral is subject to any security interest except for the security  

 

4  1894320.v3  interest created pursuant to this Agreement or other security interests permitted by the Loan  Agreement (such other security interests being “Permitted Liens”).   3.3 Disposition or Encumbrance of Collateral. Grantor will not encumber, sell or  otherwise transfer or dispose of the Collateral without the prior written consent of Secured  Party except as provided in this Section or for Permitted Liens. Until a Default or Event of  Default has occurred and is continuing, Grantor may sell Collateral consisting of: (a)  Inventory in the ordinary course of business provided that Grantor receives as consideration  for such sale an amount not less than the fair market value of the Inventory at the time of such  sale; and (b) Equipment and Fixtures which in the judgment of Grantor have become obsolete  or unusable in the ordinary course of business, provided that all net Proceeds of such sales of  Equipment and Fixtures are (i) used to acquire replacement Equipment or Fixtures or (ii)  delivered directly to Secured Party for application to the Obligations in such order as the  Secured Party may elect.   3.4 Validity of Accounts. Grantor warrants that all Collateral consisting of  Accounts, Chattel Paper and Instruments included in Grantor's schedules, financial  statements or books and records are bona fide existing obligations created by the sale and  actual delivery of Inventory or the rendition of services to customers in the ordinary course  of business, which Grantor then owns free and clear of any security interest other than the  security interest created by this Agreement or other Permitted Liens, and which are then  unconditionally owing to Grantor without defenses, offset or counterclaim except those  arising in the ordinary course of business that are immaterial in the aggregate and that the  unpaid principal amount of any such Chattel Paper or Instrument and any security therefor is  and will be as represented to Secured Party on the date of the delivery thereof to Secured  Party.   3.5 Maintenance of Tangible Collateral. Grantor will maintain the tangible  Collateral in good condition and repair (reasonable wear and tear excepted). At the time of  attachment and perfection of the security interest granted pursuant hereto and thereafter, all  tangible Collateral will be located and will be maintained only at the locations set forth on  Exhibit A hereto. Except as otherwise permitted by Section 3.3, Grantor will not remove such  Collateral from such locations unless, prior to any such removal, Grantor has given written  notice to Secured Party of the location or locations to which Grantor desires to remove the  Collateral, Secured Party has given its written consent to such removal, and Grantor has  delivered to Secured Party acknowledgment copies of financing statements filed where  appropriate to continue the perfection of Secured Party's security interest as a first priority  security interest on such Collateral. Secured Party's security interest attaches to all of the  Collateral wherever located and Grantor's failure to inform Secured Party of the location of  any item or items of Collateral shall not impair Secured Party's security interest thereon.   3.6 Notation on Chattel Paper. For purposes of the security interest granted  pursuant to this Agreement, Secured Party has been granted a direct security interest in all  Chattel Paper constituting part of the Collateral, and such Chattel Paper is not claimed merely  as Proceeds of Inventory. Upon Secured Party's request, Grantor will deliver to Secured Party  the original of all Chattel Paper. Grantor will not execute any copies of such Chattel Paper  constituting part of the Collateral other than those which are clearly marked as a copy.  

 

5  1894320.v3  Secured Party may stamp any such Chattel Paper with a legend reflecting Secured Party's  security interest therein.   3.7 Instruments as Proceeds: Deposit Accounts. Notwithstanding any other  provision in this Agreement concerning Instruments, Grantor covenants that Instruments  constituting cash Proceeds (for example, money and checks) shall be deposited in Deposit  Accounts with the Secured Party. Grantor has granted to the Secured Party a direct security  interest in all Deposit Accounts constituting part of the Collateral and such Deposit Accounts  are not claimed merely as Proceeds of other Collateral.   3.8 Protection of Collateral. All expenses of protecting, storing, warehousing,  insuring, handling and shipping of the Collateral, all costs of keeping the Collateral free of  any liens, encumbrances and security interests prohibited by this Agreement and of removing  the same if they should arise, and any and all excise, property, sales and use taxes imposed  by any state, federal or local authority on any of the Collateral or in respect of the sale thereof,  shall be borne and paid by Grantor and if Grantor fails to promptly pay any thereof when due,  Secured Party may, at its option, but shall not be required to pay the same whereupon the  same shall constitute Obligations and shall bear interest at the Default Rate specified in the  Note and shall be secured by the security interest granted hereunder.   3.9 Insurance. Grantor will procure and maintain, or cause to be procured and  maintained, insurance issued by responsible insurance companies insuring the Collateral  against damage and loss by theft, fire, collision (in the case of Motor Vehicles), and such  other risks as are usually carried by owners of similar properties or as may be requested by  Secured Party in an amount equal to the replacement value thereof, and, in any event, in an  amount sufficient to avoid the application of any co-insurance provisions and payable, in the  case of any loss in excess of $50,000.00, to Grantor and Secured Party jointly. All such  insurance shall contain an agreement by the insurer to endeavor to provide Secured Party with  30 days' prior notice of cancellation and an agreement that the interest of Secured Party shall  not be impaired or invalidated by any act or neglect of Grantor nor by the occupation of the  premises wherein such Collateral is located for purposes more hazardous than are permitted  by said policy. Grantor will maintain, with financially sound and reputable insurers, insurance  with respect to its properties and business against such casualties and contingencies of such  types (which may include, without limitation, public and product liability, larceny,  embezzlement, business interruption or other criminal misappropriation insurance) and in  such amounts as may from time to time be required by Secured Party. Grantor will deliver  evidence of such insurance and the policies of insurance or copies thereof to Secured Party  upon request.  3.10 Compliance with Law. Grantor will not use the Collateral, or knowingly permit  the Collateral to be used, for any unlawful purpose or in violation of any federal, state or  municipal law.  3.11 Books and Records; Access.  (a) Grantor will permit Secured Party and its representatives to examine Grantor's  books and records (including Data Processing Records and Systems) with respect to the  Collateral and make extracts therefrom and copies thereof at any time and from time to time,  

 

6  1894320.v3  and Grantor will furnish such information and reports to Secured Party and its representatives  regarding the Collateral as Secured Party and its representatives may from time to time  request. Grantor will also permit Secured Party and its representatives to inspect the  Collateral at any time and from time to time as Secured Party and its representatives may  request.  (b)   Secured Party shall have authority, at any time, to place, or require Grantor to  place, upon Grantor's books and records relating to Accounts, Chattel Paper and other rights  to payment covered by the security interest granted hereby a notation or legend stating that  such Accounts, Chattel Paper and other rights to payment are subject to Secured Party's  security interest.  3.12 Notice of Default. Immediately upon any officer of Grantor becoming aware of  the existence of any Default or Event of Default, Grantor will give notice to Secured Party  that such Default or Event of Default exists, stating the nature thereof, the period of existence  thereof, and what action Grantor proposes to take with respect thereto.  3.13 Additional Documentation. Grantor will execute, from time to time, and  authorizes Secured Party to execute from time to time as Grantor's attorney-in-fact and/or  file, such financing statements, assignments, and other documents covering the Collateral,  including Proceeds, as Secured Party may request in order to create, evidence, perfect,  maintain or continue its security interest in the Collateral (including additional Collateral  acquired by Grantor after the date hereof), and Grantor will pay the cost of filing the same in  all public offices in which Secured Party may deem filing to be appropriate and will notify  Secured Party promptly upon acquiring any additional Collateral that may require an  additional filing. Upon request, Grantor will deliver to Secured Party all Grantor's  Documents, Chattel Paper and Instruments constituting part of the Collateral.  3.14 Chief Executive Office: State of Organization. The location of the chief  executive office of Grantor is located in the State set forth in the preamble hereto and will not  be changed from such state without 30 days' prior written notice to Secured Party. Grantor  warrants that its books and records concerning Accounts and Chattel Paper constituting part  of the Collateral are located at its chief executive office. Grantor's State of organization is the  State set forth in the• preamble hereto, and such State has been its State of organization since  the date of Grantor's organization. Grantor will not change its State of organization from such  State without 30 days' prior written notice to Secured Party, and without Secured Party's  written consent to such change, and without delivering to Secured Party acknowledgment  copies of financing statements filed where appropriate to continue the perfection of Secured  Party's security interest as a first priority security interest therein.  3.15 Name of Grantor. Grantor's exact legal name and type of legal entity is as set  forth in the preamble hereto. Grantor will not further change its legal name without 30 days'  prior written notice to the Secured Party, and without Secured Party's written consent to such  change, and without delivering to the Secured Party acknowledgment copies of financing  statements filed where appropriate to continue the perfection of the Secured Party's security  interest as a first priority security interest in the Collateral. Grantor has not used any other  name within the past five years except those described on Exhibit A attached hereto. Neither  

 

7  1894320.v3  Grantor nor, to Grantor's knowledge, any predecessor in title to any of the Collateral has  executed any financing statements or security agreements presently effective as to the  Collateral except those described on Exhibit A attached hereto.  3.16 Disputes, Etc. Grantor shall advise Secured Party promptly of Inventory in  excess of $50,000.00 for arty one customer in any fiscal year or in excess of $100,000.00 in  the aggregate for all customers in any fiscal year which are returned by a customer(s) or  otherwise recovered from such customer(s) and unless instructed to deliver such Inventory to  Secured Party, Grantor shall resell such Inventory for Secured Party and assign or deliver to  Secured Party the resulting Accounts or other Proceeds. Grantor shall also advise Secured  Party promptly of all disputes and claims in excess of $50,000.00 for any one obligor on the  Collateral in any fiscal year or in excess of $100,000.00 in the aggregate for all obligors in  any fiscal year and settle or adjust them at no expense to Secured Party. After the occurrence  and during the continuance of an Event of Default, Secured Party may at all times settle or  adjust such disputes and claims directly with the customers for amounts and upon terms  which Secured Party considers commercially reasonable. No discount, credit, allowance,  adjustment or return shall be granted by Grantor to any customer without Secured Party's  written consent other than discounts, credits, allowances, adjustments and returns made or  granted by Grantor in the ordinary course of business prior to the occurrence and during the  continuance of an Event of Default.  3.17 Power of Attorney. Grantor appoints Secured Party or any other person whom  Secured Party may from time to time designate, as Grantor's attorney in fact, with power to:  (a) endorse Grantor's name on any checks, notes, acceptances, drafts or other forms of  payment or security evidencing or relating to any Collateral that may come into Secured  Party's possession; (b) sign Grantor's name on any invoice or bill of lading relating to any  Collateral, on drafts against customers, on schedules and confirmatory assignments of  Accounts, Chattel Paper, Documents or other Collateral, on notices of assignment, financing  statements under the UCC and other public records, on verifications of accounts and on  notices to customers; (c) notify the post office authorities to change the address for delivery  of Grantor's mail to an address designated by Secured Party; (d) receive and open all mail  addressed to Grantor; (e) send requests for verification of Accounts, Chattel Paper,  Instruments or other Collateral to customers; and (f) do all things necessary to carry out this  Agreement; provided, however, that so long as no Event of Default has occurred and is  continuing, Lender: (x) shall not exercise the powers granted pursuant to Section 3.17(c) or  (d); (y) shall exercise the power granted by Section 3.17(e) through Secured Party's trade  accounting firm name and not in any name identifying the verifying party as a bank, lender  or other financial institution; and (z) shall exercise the powers granted by Section 3.17 only  upon Grantor's failure to take action requested by Secured Party within five (5) Business Days  after the Lender has requested that Borrower take the requested action. Grantor ratifies and  approves all acts of the attorney taken within the scope of the authority granted. Neither  Secured Party nor the attorney will be liable for any acts of commission or omission, or for  any error in judgment or mistake of fact or law. This power, being coupled with an interest,  is irrevocable so long as any Obligation remains unpaid. Grantor waives presentment and  protest of all instruments and notice thereof, notice of default and dishonor and all other  notices to which Grantor may otherwise be entitled.  

 

8  1894320.v3  3.18 Patents and Trademarks. Etc. Grantor agrees with Secured Party that, until the  security interest granted by this Agreement has been terminated in accordance with the terms  hereof:  (a) Grantor will perform all acts and execute all documents including, without  limitation, grants of security interest, in form suitable for filing with the United States  Patent and Trademark Office, reasonably requested by Secured Party at any time to  evidence, perfect, maintain, record and enforce Secured Party's interest in the  Collateral comprised of patents (collectively the “Patents”), patent applications  (collectively the “Patent Applications”), trademarks or service marks (collectively the  “Trademarks”) or of any 'applications therefor (collectively the “Trademark  Applications”) or otherwise in furtherance of the provisions of this Agreement;  (b) Except to the extent that Secured Party shall consent in writing, Grantor (either  itself or through licensees) will, unless Grantor shall reasonably determine that a  Trademark (or the use of a Trademark in connection with a particular class of goods  or products) is not of material economic value to Grantor: (i) continue to use each  Trademark on each and every trademark class of goods in order to maintain each  Trademark in full force free from any claim of abandonment for non-use; (ii) maintain  as in the past the quality of products and services offered under each Trademark; (iii)  employ each Trademark with the appropriate notice of application or registration to  the extent required by applicable law to maintain such Trademark; (iv) not use any  Trademark except for the uses for which registration or application for registration of  such Trademark has been made, unless such use is otherwise lawful; and (v) not (and  not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do  any act whereby any Trademark may become invalidated;  (c) Except to the extent that Secured Party shall consent in writing, Grantor will  not, unless Grantor shall reasonably determine that a Patent is not of material  economic value to Grantor, do any act, or not to do any act, whereby any Patent may  become abandoned or dedicated;  (d) Unless Grantor shall reasonably determine that a Patent, Patent Application,  Trademark or Trademark Application is not of material economic value to Grantor,  Grantor shall notify Secured Party immediately if it knows, or has reason to know, of  any reason that any Patent, Patent Application, Trademark or Trademark Application  may become abandoned or dedicated, or of any adverse determination or development  (including, without limitation, the institution of, or any such determination or  development in, any proceeding in the United States Patent and Trademark Office or  with Section 7.7. Until such paymentship of any Patent or Trademark, its rights to  register the same, or to keep and maintain the same;  (e) If Grantor, either itself or through any agent, employee, licensee or designee,  shall file a Patent Application or Trademark Application for the registration of any  Trademark with the United States Patent and Trademark Office, or any similar office  or agency in any other country or any political subdivision thereof, Grantor shall  promptly inform Secured Party, and, upon request of Secured Party, shall promptly  

 

9  1894320.v3  execute and deliver any and all agreements, instruments, documents and papers as  Secured Party may reasonably request to evidence Secured Party's security interest in  such Patent or Trademark and the goodwill and general intangibles of Grantor relating  thereto or represented thereby;  (f) Unless Grantor shall reasonably determine that a Patent Application or  Trademark Application is not of material economic value to Grantor, Grantor will  take all necessary steps, including, without limitation, in any proceeding before the  United States Patent and Trademark Office, or any similar office or agency in any  other country or any political subdivision thereof, to maintain and pursue each Patent  Application and Trademark Application (and to obtain the relevant registration) and  to maintain each registration of the Patents and Trademarks, including, without  limitation, filing of applications for renewal and affidavits of use;  (g) Unless Grantor shall reasonably determine that a Patent or Trademark is not  of material economic value to Grantor, Grantor shall promptly notify Secured Party  if any Patent or Trademark is infringed, misappropriated or diluted by a third party  and either shall promptly sue for infringement, misappropriation or dilution and to  recover any and all damages for such infringement, misappropriation or dilution, or  take such other actions as Grantor shall reasonably deem appropriate under the  circumstances to protect such Patent or Trademark; and  (h) Grantor agrees that it will not enter into any agreement (for example, a license  agreement) which is inconsistent with Grantor's obligations under this Agreement.  3.19 Copyrights. Grantor agrees with Secured Party that, until the security interest  granted by this Agreement has been terminated in accordance with the terms hereof:  (a) Grantor will perform all acts and execute all documents including, without  limitation, grants of security interest, in form suitable for filing with the United States  Copyright Office, reasonably requested by Secured Party at any time to evidence,  perfect, maintain, record and enforce Secured Party's interest in the Collateral  comprised of copyrights or copyright applications (collectively the “Copyrights”) or  otherwise in furtherance of the provisions of this Agreement;  (b) Except to the extent that the Secured Party shall consent in writing, Grantor  (either itself or through licensees) will, unless Grantor shall reasonably determine  that a Copyright is not of material economic value to Grantor, publish the materials  for which a Copyright has been obtained (the “Works”) with any notice of copyright  registration required by applicable law to preserve the Copyright;  (c) Unless Grantor shall reasonably determine that a Copyright is not of material  economic value to Grantor, Grantor shall notify the Secured Party immediately if it  knows, or has reason to know, of any reason that any application or registration  relating to any Copyright may become abandoned or dedicated or of any adverse  determination or development (including, without limitation, the institution of, or  any such determination or development in, any proceeding in the United States  

 

10  1894320.v3  Copyright Office or any court) regarding Grantor's ownership of any Copyright, its  right to register the same, or to keep and maintain the same;  (d) If Grantor, either itself or through any agent, employee, licensee or designee,  shall file an application for the registration of any Copyright with the United States  Copyright Office or any similar office or agency in any other country or any political  subdivision thereof, Grantor shall promptly inform Secured Party, and, upon request  of Secured Party, execute and deliver any and all agreements, instruments,  documents and papers as Secured Party may request to evidence Secured Party's  security interest, in such Copyright and the Works relating thereto or represented  thereby;  (e) Unless Grantor shall reasonably determine that a Copyright is not of material  economic value to Grantor, Grantor will take all commercially reasonable steps,  including, without limitation, in any proceeding before the United States Copyright  Office or any similar office or agency in any other country or any political  subdivision thereof, to maintain and pursue each application (and to obtain the  relevant registration) and to maintain each registration of the Copyrights;  (f) In the event that any Copyright is infringed by a third party, Grantor shall  promptly notify Secured Party and shall, unless Grantor shall reasonably determine  that such Copyright is not of material economic value to Grantor, promptly sue to  recover any and all damages or take such other actions as Grantor shall reasonably  deem appropriate under the circumstances to protect such Copyright; and  (g) Grantor agrees that it will not enter into any agreement (for example, a license  agreement) which is inconsistent with Grantor's obligations under this Agreement.  3.20 Control. Grantor will cooperate with Secured Party in obtaining control with  respect to Collateral consisting of Deposit Accounts, Investment Property, Letter-of-Credit  Rights, and Electronic Chattel Paper. Without limiting the foregoing, if Grantor becomes a  beneficiary of a letter of credit, then Grantor shall promptly notify the Secured Party thereof  and, if then requested by Secured Party, enter into a tri-party agreement with the Secured  Party and the issuer and/or confirmation bank with respect to such letter of credit assigning  the Letter-of-Credit Rights to the Secured Party and directing all payments thereunder to the  Secured Party, all in form and substance reasonably satisfactory to the Secured Party.  3.21 Further Acts. Where Collateral is in the possession of a third party, Grantor  will join with Secured Party in notifying such third party of Secured Party's security interest  and in obtaining an acknowledgment from such third party that it is holding such Collateral  for the benefit of the Secured Party.  3.22 Commercial Tort Claims. Grantor shall promptly notify the Secured Party of any  Commercial Tort Claim acquired by it and, unless otherwise consented to by the Secured  Party, Grantor shall promptly enter into a supplement to this Agreement granting to the  Secured Party a security interest in such Commercial Tort Claim.  3.23  Motor Vehicles  

 

11  1894320.v3  (a) Grantor shall maintain all vehicle titles at its chief executive office.  (b) Grantor shall promptly, but in any event no later than 10 days after the Secured  Party's written request (the date on which the Grantor receives such request being the  “Titles Request Date”), deliver to the Secured Party originals of the certificates of  title or ownership for the Motor Vehicles owned by it together with appropriate grant  forms executed in favor of the Secured Party.  (c) Upon the acquisition after the Titles Request Date by Grantor of any Motor  Vehicle, Grantor shall deliver to the Secured Party originals of the certificates of title  or ownership for such Motor Vehicle, together with the manufacturer's statement of  origin, with the Secured Party listed as lienholder.  (d) Grantor hereby appoints the Secured Party as its attorney-in-fact, effective the  date hereof and terminating upon the termination of this Agreement, for the purpose  of (i) executing on behalf of Grantor title or ownership applications for filing with  appropriate state agencies to enable Motor Vehicles now owned or hereafter acquired  by Grantor to be retitled and the Secured Party listed as lienholder thereof, (ii) filing  such applications with such state agencies, and (iii) executing such other documents  and instruments on behalf of, and taking such other action in the name of, Grantor as  the Secured Party may deem necessary or advisable to accomplish the purposes  hereof (including, without limitation, for the purpose of creating in favor of the  Secured Party a perfected Lien on the Motor Vehicles and exercising the rights and  remedies of the Secured Party hereunder). This appointment as attorney-in-fact is  coupled with an interest and is irrevocable until all of the Obligations are paid in full  after the termination of the Loan Agreement and the other Loan Documents.  (e) Any certificates of title or ownership delivered pursuant to the terms hereof  shall be accompanied by odometer statements for each Motor Vehicle covered  thereby.  (f) So long as no Event of Default shall have occurred and be continuing, upon  the request of Grantor, the Secured Party shall execute and deliver to Grantor such  instruments as Grantor shall reasonably request to remove the notation of the Secured  Party as lienholder on any certificate of title for any Motor Vehicle; provided that  any such instruments shall be delivered, and the release effective, only upon receipt  by the Secured Party of a certificate from Grantor, stating that the Motor Vehicle,  the Lien on which is to be released, is to be sold or has suffered a casualty loss (with  title thereto passing to the casualty insurance company therefor in settlement of the  claim for such loss), the amount that Grantor will receive as sale Proceeds or  insurance Proceeds, and any Proceeds of such sale or casualty loss shall be paid to  the Secured Party hereunder to be applied to the Obligations then outstanding.  ARTICLE IV  COLLECTIONS    Except as otherwise provided in this Article IV, Grantor shall continue to collect, at  its own expense, all amounts due or to become due to Grantor under the Accounts constituting  

 

12  1894320.v3  part of the Collateral and all other Collateral. In connection with such collections, Grantor  may take (and, at Secured Party's direction given after the occurrence and during the  continuance of an Event of Default, shall take) such action as Grantor or Secured Party may  deem necessary or advisable to enforce collection of the Accounts and such other Collateral;  provided, however, that Secured Party shall have the right at any time, without giving written  notice to Grantor of Secured Party's intention to do so, to notify the account debtors under  any Accounts or obligors with respect to such other Collateral of the assignment of such  Accounts and such other Collateral to Secured Party and to direct such account debtors or  obligors to make payment of all amounts due or to become due to Grantor thereunder directly  to Secured Party and, upon such notification and at the expense of Grantor, to enforce  collection of any such Accounts or other Collateral, and to adjust, settle or compromise the  amount or payment thereof in the same manner and to the same extent as Grantor might have  done, but unless and until Secured Party does so or gives Grantor other instructions, Grantor  shall make all collections for Secured Party. In addition to its rights under the preceding  sentence to this Section, Secured Party, at any time after the occurrence of an Event of Default  may require that Grantor instruct all current and future account debtors and obligors on other  Collateral to make all payments directly to a lockbox (the “Lockbox”) controlled by Secured  Party. All payments received in the Lockbox shall be transferred to a special bank account  (the “Collateral Account”) maintained for the benefit of Secured Party subject to withdrawal  by Secured Party only. After the earliest to occur of an Event of Default, Secured Party's  exercise of its right to direct account debtors or other obligors on any Collateral to make  payments directly to Secured Party or to require Grantor to establish a Lockbox, Grantor shall  immediately deliver all full and partial payments on any Collateral received by Grantor to  Secured Party in their original form, except for endorsements where necessary. Secured Party,  at its sole discretion, may hold any collections on the Collateral delivered to it or deposited  in the Collateral Account as cash collateral or may apply such collections to the payment of  the Obligations in such order as Secured Party may elect; provided, however, that after an  Event of Default has occurred and is continuing, Secured Party shall apply all collections in  accordance with Section 7.7. Until such payments are so delivered to Secured Party, such  payments shall be held in trust by Grantor for and as Secured Party's property, and shall not  be commingled with any funds of Grantor. Any application of any collection to the payment  of any Obligation is conditioned upon final payment of any check or other instrument.  ARTICLE V  ASSIGNMENT OF INSURANCE    Grantor hereby assigns to Secured Party, as additional security for payment of the  Obligations, any and all monies due or to become due under, and any and all other rights of  Grantor with respect to, any and all policies of insurance covering the Collateral. So long as  no Default or Event of Default has occurred and is continuing, Grantor may itself adjust and  collect for any losses of up to an aggregate amount of $50,000.00 for all occurrences during  any of Grantor's fiscal years and Grantor may use the resulting Insurance Proceeds for the  replacement, restoration or repair of the Collateral. After the occurrence and during the  continuance of a Default or an Event of Default, or after the aggregate amount of losses  arising out of all occurrences during any of Grantor's fiscal years exceeds $50,000.00,  Secured Party may (but need not) in its own name or in Grantor's name execute and deliver  proofs of claim, receive such monies, and settle or litigate any claim against the issuer of any  

 

13  1894320.v3  such policy and Grantor directs the issuer to pay any such monies directly to Secured Party  and Secured Party, at its sole discretion and regardless of whether Secured Party exercises its  right to collect Insurance Proceeds under this Section, may apply any Insurance Proceeds to  the payment of the Obligations, whether due or not, in such order and manner as Secured  Party may elect or may permit Grantor to use such Insurance Proceeds for the replacement,  restoration or repair of the Collateral.  ARTICLE VI  EVENTS OF DEFAULT    The occurrence of any Event of Default as defined in the Loan Agreement shall  constitute an Event of Default hereunder (“Event of Default”).  ARTICLE VII  RIGHTS AND REMEDIES ON DEFAULT    Upon the occurrence of an Event of Default, and at any time thereafter until such  Event of Default is cured to the satisfaction of Secured Party, and in addition to the rights  granted to Secured Party under Articles IV and V hereof, Secured Party may exercise any  one or more of the following rights and remedies:   7.1 Acceleration of Obligations. Declare any and all Obligations to be  immediately due and payable, and the same shall thereupon become immediately due and  payable without further notice or demand.   7.2 Right of Offset. Offset any deposits, including unmatured time deposits, then  maintained by Grantor with Secured Party, whether or not then due, against any indebtedness  then owed by Grantor to Secured Party whether or not then due.   7.3 Deal with Collateral. In the name of Grantor or otherwise, demand, collect,  receive and give receipt for, compound, compromise, settle and give acquittance for and  prosecute and discontinue any suits or proceedings in respect of any or all of the Collateral.   7.4 Realize on Collateral. Take any action which Secured Party may deem  reasonably necessary or desirable in order to realize on the Collateral, including, without  limitation, the power to perform any contract, to endorse in the name of Grantor any checks,  drafts, notes, or other instruments or documents received in payment of or on account of the  Collateral. Secured Party may comply with any applicable state or federal law requirements  in connection with a disposition of the Collateral and compliance will not be considered  adversely to affect the commercial reasonableness of any sale of the Collateral. Secured Party  may sell the Collateral without giving any warranties as to the Collateral. Secured Party may  specifically disclaim any warranties of title or the like. This procedure will not be considered  adversely to affect the commercial reasonableness of any sale of the Collateral.   7.5 Access to Property. Enter upon and into and take possession of all or such part  or parts of the properties of Grantor, including lands, plants, buildings, machinery,  equipment, Data Processing Records and Systems and other property as may be necessary or  appropriate in the reasonable judgment of Secured Party, to permit or enable Secured Party  

 

14  1894320.v3  to store, lease, sell or otherwise dispose of or collect all or any part of the Collateral, and use  and operate said properties for such purposes and for such length of time as Secured Party  may deem necessary or appropriate for said purposes without the payment of any  compensation to Grantor therefor. Grantor shall provide Secured Party with all information  and assistance requested by Secured Party to facilitate the storage, leasing, sale or other  disposition or collection of the Collateral after an Event of Default has occurred and is  continuing.   7.6 Other Rights. Exercise any and all other rights and remedies available to it by  law or by agreement, including rights and remedies under the UCC as adopted in the relevant  jurisdiction or' any other applicable law, or under the Loan Agreement and, in connection  therewith, Secured Party may require Grantor to assemble the Collateral and make it available  to Secured Party at a place to be designated by Secured Party, and any notice of intended  disposition of any of the Collateral required by law shall be deemed reasonable if such notice  is mailed or delivered to Grantor at its address as shown on Secured Party's records at least  10 days before the date of such disposition.   7.7 Application of Proceeds. All Proceeds of Collateral shall be applied in  accordance with the UCC, and such Proceeds applied toward the Obligations shall be applied  in such order as Secured Party may elect.   7.8 Patents and Trademarks. Upon the occurrence and during the continuance of  an Event of Default:  (a) Secured Party may, at any time and from time to time, upon thirty (30) days'  prior notice to Grantor, license or, to the extent permitted by an applicable license,  sublicense, whether general, special or otherwise, and whether on an exclusive or non- exclusive basis, any Patent or Trademark, throughout the world for such term or  terms, on such conditions, and in such manner, as Secured Party shall in its sole  discretion determine;  (b) Secured Party may (without assuming any obligations or liability thereunder),  at any time enforce (and shall have the exclusive right to enforce) against any licensor,  licensee or sublicensee all rights and remedies of Grantor in, to and under any one or  more license or other agreements with respect to any Patent or Trademark and take or  refrain from taking any action under any such license or other agreement, and Grantor  hereby releases Secured Party from, and agrees to hold Secured Party free and  harmless from and against, any claims arising out of, any action taken or omitted to  be taken with respect to any such license or agreement;  (c) Any and all payments received by Secured Party under or in respect of any  Patent or Trademark (whether from Grantor or otherwise), or received by Secured  Party by virtue of the exercise of the license granted to Secured Party by subsection  (g) below, shall be applied to the Obligations in accordance with Section 7.7 hereof;  (d) Secured Party may exercise in respect of the Patents and Trademarks, in  addition to other rights and remedies provided for herein or otherwise available to it,  all the rights and remedies of a secured party on default under the UCC;  

 

15  1894320.v3  (e) In order to implement the sale, lease, assignment, license, sublicense or other  disposition of any of the Patents and Trademarks pursuant to this Section 7.8, Secured  Party may, at any time, execute and deliver on behalf of Grantor one or more  instruments of assignment of the Patents and Trademarks (or any application or  registration thereof), in form suitable for filing, recording or registration in any  country. Grantor agrees to pay when due all reasonable costs incurred in any such  transfer of the Patents and Trademarks, including any taxes, fees and reasonable  attorneys' fees;  (f) In the event of any sale, lease, assignment, license, sublicense or other  disposition of any of the Patents or Trademarks pursuant to this Section, Grantor shall  supply to Secured Party or its designee its know-how and expertise relating to the  manufacture and sale of the products relating to any Patent or Trademark subject to  such disposition, and its customer lists and other records relating to such Patents or  Trademarks and to the distribution of said products; and  (g) For the purpose of enabling Secured Party to exercise rights and remedies  under this Agreement at such time as Secured Party shall be lawfully entitled to  exercise such rights and remedies, and for no other purpose, Grantor hereby grants to  Secured Party, an irrevocable, non-exclusive license (exercisable without payment of  royalty or other compensation to Grantor) to use, license or sublicense at such time  any Patent or Trademark, now owned or hereafter acquired by Grantor, and wherever  the same may be located, and including in such license reasonable access to all media  in which any of the licensed items may be recorded or stored and to all computer and  automatic machinery software and programs used for the compilation or printout  thereof.  7.9 Copyrights. Upon the occurrence and during the continuance of an Event of  Default:  (a) Secured Party may, at any time and from time to time, upon thirty (30) days'  prior notice to Grantor, license or, to the extent permitted by an applicable license,  sublicense, whether general, special or otherwise, and whether on an exclusive or  non-exclusive basis, any Copyright, for such term or terms, on such conditions, and  in such manner, as Secured Party shall in its sole discretion determine;  (b) Secured Party may (without assuming any obligations or liability thereunder),  at any time, enforce (and shall have the exclusive right to enforce) against any  licensor, licensee or sublicensee all rights and remedies of Grantor in, to and under  any one or more license or other agreements with respect to any Copyright and take  or refrain from taking any action under any such license or other agreement and  Grantor hereby 'releases Secured Party from, and agrees to hold Secured Party free  and harmless from and against, any claims arising out of, any action taken or omitted  to be taken with respect to any such license or agreement;  (c) Any and all payments received by Secured Party under or in respect of any  Copyright (whether from Grantor or otherwise), or received by Secured Party by  

 

16  1894320.v3  virtue of the exercise of the license granted to Secured Party by subsection (f) below,  shall be applied to the Obligations in accordance with Section 7.7;  (d) Secured Party may exercise in respect of the Copyrights, in addition to other  rights and remedies provided for herein or otherwise available to it, all the rights and  remedies of a secured party on default under the UCC;  (e) In order to implement the sale, lease, assignment, license, sublicense or other  disposition of any of the Copyrights pursuant to this Section 7.9, Secured Party may,  at any time, execute and deliver on behalf of Grantor one or more instruments of  assignment of the Copyrights (or any application or registration thereof), in form  suitable for filing, recording or registration in the Copyright Office or any country  where the relevant Copyright is of material economic value to Grantor. Grantor  agrees to pay when due all reasonable costs incurred in any such transfer of the  Copyrights, including any taxes, fees and reasonable attorneys' fees; and  (f) For the purpose of enabling Secured Party to exercise rights and remedies  under this Agreement at such time as Secured Party shall be lawfully entitled to  exercise such rights and remedies, and for no other purpose, Grantor hereby grants  to Secured Party an irrevocable, non-exclusive license (exercisable without payment  of royalty or other compensation to Grantor) to use, license or sublicense any  Copyright, now owned or hereafter acquired by Grantor, and wherever the same may  be located, and including in such license reasonable access to all media in which any  of the licensed items may be recorded or stored and to all computer and automatic  machinery software and programs used for the compilation or printout thereof.  ARTICLE VIII  MISCELLANEOUS    8.1 No Liability on Collateral. It is understood that Secured Party does not in any  way assume any of Grantor's obligations under any of the Collateral. Grantor hereby agrees  to indemnify Secured Party against all liability arising in connection with or on account of  any of the Collateral, except for any such liabilities arising on account of Secured Party's  negligence or willful misconduct.   8.2 No Waiver. Secured Party shall not be deemed to have waived any of its rights  hereunder or under any other agreement, instrument or paper signed by Grantor unless such  waiver is in writing and signed by Secured Party. No delay or omission on the part of Secured  Party in exercising any right shall operate as a waiver of such right or any other right. A  waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy  on any future occasion.   8.3 Remedies Cumulative. All rights and remedies of Secured Party shall be  cumulative and may be exercised singularly or concurrently, at their option, and the exercise  or enforcement of any one such right or remedy shall not bar or be a condition to the exercise  or enforcement of any other.  

 

17  1894320.v3   8.4 Governing Law, This Agreement shall be construed and enforced in  accordance with, and the rights of the parties shall be governed by, the laws of the State of  Minnesota, except to the extent that the perfection of the security interest hereunder, or the  enforcement of any remedies hereunder, with respect to any particular Collateral shall be  governed by the laws of a jurisdiction other than the State of Minnesota.   8.5 Expenses. Grantor agrees to pay the reasonable attorneys' fees and legal  expenses incurred by Secured Party in the exercise of any right or remedy available to it under  this Agreement, whether or not suit is commenced, including, without limitation, attorneys'  fees and legal expenses incurred in connection with any appeal of a lower court's order or  judgment.   8.6 Successors and Assigns. This Agreement shall be binding upon and inure to  the benefit of the successors and assigns of Grantor and Secured Party.   8.7 Recitals. The above Recitals are true and correct as of the date hereof and  constitute a part of this Agreement.   8.8 Severability. Wherever 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 to the extent of such prohibition or invalidity, without invalidating the  remainder of such provision or the remaining provisions of this Agreement.   8.9 Reinstatement. This Agreement shall remain in full force and effect and  continue to be effective should any petition be filed by or against Grantor for liquidation or  reorganization, should Grantor become insolvent or make an assignment for the benefit of  creditors or should a receiver or trustee be appointed for all or any significant part of Grantor's  assets, and shall continue to be effective or be reinstated, as the case may be, if at any time  payment and performance of the Obligations, or any part thereof, is, pursuant to applicable  law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee  of the Obligations, whether as a “voidable preference”, “fraudulent conveyance”, or  otherwise, all as though such payment or performance had not been made. In the event that  any payment, or any part thereof, is rescinded, reduced, restored or returned, the Obligations  shall be reinstated and deemed reduced only by such amount paid and not so rescinded,  reduced, restored or returned.  8.10 No Obligation to Pursue Others. Secured Party has no obligation to attempt to  satisfy the Obligations by collecting them from any other person liable for them and Secured  Party may release, modify or waive any Collateral provided by any other person to secure  any of the Obligations, all without affecting Secured Party's rights against Grantor. Grantor  waives any right it may have to require Secured Party to pursue any third person for any of  the Obligations.  8.11 Waiver of Jury Trial. GRANTOR HEREBY EXPRESSLY WAIVE(S) ANY  RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR  DEFEND ANY RIGHTS (a) UNDER THIS AGREEMENT OR UNDER ANY  AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR  

 

18  1894320.v3  WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH, OR  (b) ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS  AGREEMENT, AND AGREE(S) THAT ANY SUCH ACTION OR PROCEEDING  SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.  8.12 Counterparts. This Agreement may be executed in counterparts (and by different  parties hereto in different counterparts), each of which shall constitute an original, but all of  which when taken together shall constitute a single contract. Delivery of an executed  counterpart of a signature page of this Agreement by telecopy or .pdf file shall be effective  as delivery of a manually executed counterpart of this Agreement, but the party delivering a  facsimile, pdf or other digital copy shall deliver an original copy of this Agreement as soon  as possible after delivering the facsimile or other digital copy.     

 

[Signature Page to Security Agreement]  IN WITNESS WHEREOF, the undersigned parties have executed this Agreement to be effective as of the  date and year first above written.  AIRCO 1, LLC a Delaware limited liability company  By:_________________________  Name: Mark Harris  Its: Chief Executive Officer  PARK STATE BANK, a Minnesota state-chartered bank   By:__________________________  Name: David Saber  Its: President  /:4<3769"09=58:;5"2/+"&-.%)1./#,(-)#&1-.#-'0-#$*1.))/-&%$*pledgeagreementwithairco

EXECUTION VERSION  1894316.v3  PLEDGE AGREEMENT  THIS PLEDGE AGREEMENT (the “Pledge Agreement”), dated as of December 11,  2020, (the “Effective Date”), is entered into by and between AIRCO, LLC, a North Carolina  limited liability company (the “Pledgor”), and PARK STATE BANK, a Minnesota state- chartered bank (the “Lender”). Capitalized terms used herein and not otherwise defined herein  shall have the respective meanings ascribed to such terms in the Loan Agreement (hereinafter  defined).  WHEREAS, Lender and Borrower have entered into that certain Main Street Priority  Loan Facility Term Loan Agreement dated as of December 11, 2020 (such Loan Agreement,  as amended, modified, supplemented, extended, replaced or restated from time to time being  referred to herein as, the “Loan Agreement”), pursuant to which Lender has agreed, subject to  the terms and conditions set forth therein, to provided a credit facility to Borrower in the  original principal amount of up to $6,200,000.00;  WHEREAS, Lender has required, as a condition to entering into the Loan Agreement,  that Pledgor execute and deliver this Pledge Agreement (the “ Pledge Agreement”), pursuant  to which Pledgor pledges to Lender one hundred percent (100%) of the issued limited liability  company membership interests (collectively, the “Pledgor Interests”), in the Borrower;  WHEREAS, as set forth on Schedule I, as of the Effective Date, Pledgor owns one  hundred percent (100%) of the issued limited liability company membership interests  (collectively, the “Pledgor Interests”), in Borrower;  NOW, THEREFORE, for and in consideration of the foregoing, and for other good and  valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Pledgor  and Lender hereby agree as follows:  Section 1. Pledge. Pledgor hereby pledges and grants to Lender a security interest  in the collateral described in Sections 1.1 and 1.2 below (collectively, the “Pledged  Collateral”):  1.1 Pledged Interest.  (a) The Pledgor Interests (such membership interests being identified on Schedule  I attached hereto and referred to as the “Pledged Interests”) of Borrower, for which Pledgor  shall deliver to Lender stock powers in the form of Exhibit A attached hereto and made a part  hereof (the “Powers”) duly executed in blank, and all distributions, cash, instruments,  investment property and other property from time to time received, receivable or otherwise  distributed in respect of, or in exchange for, any or all of the Pledged Interests.  (b) All additional membership interests of Borrower described in Section 1.1(a)  above from time to time acquired by Pledgor in any manner (any such additional membership  interests shall constitute part of the Pledged Interests and Lender is irrevocably authorized to  unilaterally amend Schedule I hereto to reflect such additional membership interests and  Pledgor shall promptly deliver to Lender an executed Power with respect to the additional  

 

2  1894316.v3  membership interests), and all purchase options, distributions, cash, instruments, investment  property and other rights and options from time to time received, receivable or otherwise  distributed in respect of or in exchange for any or all of such membership interests.  1.2 Proceeds. All proceeds of the Pledged Collateral described in Section 1.1 above.  Section 2. Security for Obligations. The Pledged Collateral secures the prompt  payment and performance of all Obligations under the Loan Documents.  Section 3. Pledged Collateral Adjustments. If, during the term of this Pledge  Agreement:  (a) Any distribution, reclassification, readjustment or other change is declared or  made in the capital structure of Borrower, or any option included within the Pledged Collateral  is exercised, or both, or  (b) Any rights or options shall be issued in connection with the Pledged Collateral,  then One Hundred Percent (100%) of all new, substituted and additional, membership interests,  rights, options, investment property or other securities, issued to Pledgor by reason of any of  the foregoing, shall be immediately delivered to and held by Lender under the terms of this  Pledge Agreement and shall constitute Pledged Collateral hereunder; provided, however, that  nothing contained in this Section 3 shall be deemed to permit any distribution, or membership  interests, rights or options, reclassification, readjustment or other change in the capital structure  of Borrower which is not expressly permitted by the Loan Agreement. Pledger shall promptly  deliver an executed Power to Lender with respect to any new membership interest obtained by  Pledgor.  Section 4. Subsequent Changes Affecting Pledged Collateral. Pledgor represents  and warrants that it has made its own arrangements for keeping itself informed of changes or  potential changes affecting the Pledged Collateral (including, but not limited to, rights to  convert, rights to subscribe, payment of cash distributions or other distributions, reorganization  or other exchanges, tender offers and voting rights), and Pledgor agrees that Lender shall not  have any obligation to inform Pledger of any such changes or potential changes or to take any  action or omit to take any action with respect thereto. Lender may, during the continuance of  an Event of Default, in connection with the exercise of its remedies hereunder, without notice  and at its option, transfer or register the Pledged Collateral or any part thereof into its or its  nominee's name with or without any indication that such Pledged Collateral is subject to the  security interest hereunder.  Section 5. Representations and Warranties. Pledgor represents and warrants as  follows as of the Effective Date and as of each date on which representations and warranties  under the Loan Agreement shall be made:  (a) Pledgor is the sole legal and beneficial owner of the membership interests of  Borrower, as set forth on Schedule I hereto, and the Pledged Interests comprise one hundred  percent (100%) of the limited liability membership interests of Borrower;  

 

3  1894316.v3  (b) Pledger has full limited liability company power and authority to enter into this  Pledge Agreement;  (c) There are no restrictions upon the voting rights associated with, or upon the  transfer of, any of the Pledged Collateral;  (d) Pledgor has the right to vote, pledge and grant a security interest in or otherwise  transfer such Pledged Collateral free of any Liens, except for any Liens permitted hereunder  or under the terms of the Loan Agreement, and the Liens created by this Pledge Agreement;  (e) Pledgor owns the Pledged Collateral free and clear of any pledge, mortgage,  hypothecation, lien, charge, encumbrance or any security interest therein, except for the pledge  and security interest granted to Lender hereunder;  (f) The pledge of the Pledged Collateral does not violate (1) the Articles of  Organization or Limited Liability Agreement of Borrower, or any indenture, mortgage, bank  loan or credit agreement to which Pledgor or Borrower is a party or by which any of their  respective properties or assets may be bound; or (2) any restriction on such transfer or  encumbrance of such Pledged Collateral;  (g) Pledgor hereby authorizes Lender to file financing statements pursuant to the  UCC as Lender may request to perfect the security interest granted hereby;  (h) No authorization, approval, or other action by, and no notice to or filing with,  any governmental authority or regulatory body that has not been obtained is required either (i)  for the pledge of the Pledged Collateral pursuant to this Pledge Agreement or for the execution,  delivery or performance of this Pledge Agreement by Pledgor or (ii) for the exercise by Lender  of the voting or other rights provided for in this Pledge Agreement or the remedies in respect  of the Pledged Collateral pursuant to this Pledge Agreement (except as may be required in  connection with such disposition by laws affecting the offering and sale of securities generally  or other applicable law);  (i) Upon the taking of possession of the Pledged Collateral or the filing of the  appropriate UCC filing statements, the pledge of the Pledged Collateral pursuant to this Pledge  Agreement will create a valid and perfected first priority security interest in the Pledged  Collateral, in favor of Lender for the benefit of Lender, securing the payment and performance  of Pledgor's obligations under the Loan Documents;  (j) The Powers are duly executed and to Pledgor's knowledge, give Lender the  authority they purport to confer;  (k) Pledgor has no obligation to make further capital contributions or make any  other payments to Borrower with respect to its interest therein other than as specifically set  forth in the Borrower Formation Documents (as defined in the Loan Agreement);  (l) The Pledged Interests have been validly issued, are fully paid and non- assessable;  

 

4  1894316.v3  (m) Borrower owns all right, title and interest in and to the Collateral (as defined in  the Security Agreement); and  (n) The Acknowledgment and Consent (in the form attached hereto as Exhibit B)  has been duly executed by Borrower.  Section 6. Voting Rights. During the term of this Pledge Agreement, and except as  provided in this Section 6 below, Pledgor shall have the right to vote the Pledged interests on  all governing questions in a manner not inconsistent with the terms of this Pledge Agreement,  the Loan Agreement and any other agreement, instrument or document executed pursuant  thereto or in connection therewith. During the continuation of an Event of Default, Lender or  Lender's nominee may, at Lender's or such nominee's option and following written notice from  Lender to Pledgor, exercise all voting powers pertaining to the Pledged Collateral, including,  if allowed by the terms of the Borrower Formation Documents, the right to take action by  written consent, and as such (x) exercise, or direct Pledgor as to the exercise of all voting,  consent, managerial, election and other rights to the applicable Pledged Collateral and (y)  exercise, or direct Pledgor as to the exercise of any and all rights of conversion, exchange,  subscription or any other rights, privileges or options pertaining to the applicable Pledged  Collateral, as if Lender were the absolute owner thereof, all without liability except to account  for property actually received by it, but Lender shall have no duty to exercise any of the  aforesaid rights, privileges or options and shall not be responsible for any failure so to do or  delay in so doing. Such authorization shall constitute an irrevocable voting proxy, coupled with  an interest, from Pledgor to Lender or, at Lender's option, to Lender's nominee.  Section 7. Distributions.   (a) So long as no Event of Default shall have occurred and is continuing:   (i) Pledgor shall be entitled to receive and retain any and all distributions and  interest paid in respect of the Pledged Collateral to the extent such distributions are not  prohibited by the Loan Agreement, provided, however, that any and all  (A) distributions and interest paid or payable other than in cash with  respect to, and instruments and other property received, receivable or  otherwise distributed with respect to, or in exchange for, any of the Pledged  Collateral;  (B) distributions paid or payable in cash with respect to any of the  Pledged Collateral on account of a partial or total liquidation or dissolution or  in connection with a reduction of capital, capital surplus or paid-in surplus;  and  (C) cash paid, payable or otherwise distributed with respect to  principal of, or in redemption of, or in exchange for, any of the Pledged  Collateral;  

 

5  1894316.v3  shall be Pledged Collateral, and shall be forthwith delivered to Lender to hold as Pledged  Collateral and shall, if received by Pledgor, be received in trust for Lender, be segregated from  the other property or funds of Pledgor, and be delivered immediately to Lender as Pledged  Collateral in the same form as so received (with any necessary endorsement); and  (b) Upon the occurrence and during the continuance of an Event of Default:  (i) All rights of Pledgor to receive the distributions and interest payments  which it would otherwise be authorized to receive and retain pursuant to Section 7(a)(i) hereof  shall cease, and all such rights shall thereupon become vested in Lender, which shall thereupon  have the sole right to receive and hold as Pledged Collateral such distributions and interest  payments;  (ii) All distributions and interest payments which are received by Pledgor  contrary to the provisions of clause (i) of this Section 7(b) shall be received in trust for Lender,  shall be segregated from other funds of Pledgor and shall be paid over immediately to Lender  as Pledged Collateral in the same form as so received (with any necessary endorsements);  (iii) Pledgor shall, upon the request of Lender, at Pledgor's expense, execute  and deliver all such instruments and documents, and do or cause to be done all such other acts  and things, as may be necessary or, in the reasonable opinion of Lender, Pledgor or their  respective counsel, advisable to register the applicable Pledged Collateral under the provisions  of the Securities Act of 1933, as amended (the “Securities Act”) and to exercise its best efforts  to cause the registration statement relating thereto to become effective and to remain effective  for such period as prospectuses are required by law to be furnished, and to make all  amendments and supplements thereto and to the related prospectus which, in the opinion of  Lender, Pledgor or their respective counsel, are necessary or advisable, all in conformity with  the requirements of the Securities Act and the rules and regulations of the Securities and  Exchange Commission applicable thereto;  (iv) Pledgor shall, upon the request of Lender, at Pledgor's expense, use its  reasonable efforts to qualify the Pledged Collateral under state securities or “Blue Sky” laws  and to obtain all necessary governmental approvals for the sale of the Pledged Collateral, as  requested by Lender;  (v) Pledgor shall, upon the request of Lender, at Pledgor's expense, cause  the Borrower to make available to the holders of its securities, as soon as practicable, earnings  statements which will satisfy the provisions of Section 11(a) of the Securities Act to the extent  such provisions are applicable to the Borrower; and  (vi) Pledgor shall, upon the request of Lender, at Pledgor's expense, do or  cause to be done all such other reasonable acts and things as may be necessary to make such  sale of the Pledged Collateral or any part thereof valid and binding and in compliance with  applicable law.  Pledgor will reimburse Lender for all reasonable expenses incurred by Lender,  including, without limitation, reasonable attorneys' and accountants' fees and expenses in  

 

6  1894316.v3  connection with the foregoing. Upon or at any time after the occurrence of an Event of Default,  if Lender determines that, prior to any public offering of any securities constituting part of the  Pledged Collateral, such securities should be registered under the Securities Act and/or  registered or qualified under any other federal or state law and such registration and/or  qualification is not practicable, then Pledgor agrees that it will be commercially reasonable if  a private sale, upon at least five (5) Business Days' notice to Pledgor, is arranged so as to avoid  a public offering, even though the sales price established and/or obtained at such private sale  may be substantially less than prices which could have been obtained for such security on any  market or exchange or in any other public sale. Pledgor hereby indemnifies Lender for any and  all liabilities incurred by Lender as a result of becoming a member of the Borrower, except to  the extent caused by Lender's gross negligence or willful misconduct.  Section 8. Transfers and Other Liens; Issuance. Pledgor agrees that it will not (i)  sell or otherwise dispose of, or grant any option with respect to, any of the Pledged Collateral  without the prior written consent of Lender, except as permitted under the Loan Agreement,  (ii) create or permit to exist any Lien upon or with respect to any of the Pledged Collateral,  except for the security interest under this Pledge Agreement, and except for any Permitted  Lien, or (iii) issue or permit the issuance or grant of any membership interests not currently  issued in the Borrower.  Section 9. Remedies.   (a) Lender shall have, in addition to any other rights given under this Pledge  Agreement or by applicable law, all of the rights and remedies with respect to the Pledged  Collateral of a secured party under the Uniform Commercial Code of the State of Minnesota.  Lender (personally or through an agent) is hereby authorized and empowered to transfer and  register in its name or in the name of its nominee the whole or any part of the Pledged Collateral  for the purpose of exercise of rights and remedies available hereunder and under applicable  law, to exercise all voting rights with respect thereto, to collect and receive all cash  distributions and other distributions made thereon, and to otherwise act with respect to the  Pledged Collateral as though Lender were the outright owner thereof, Pledgor hereby  irrevocably constituting and appointing Lender as the proxy and attorney-in-fact of Pledgor,  with full power of substitution to do so; provided, however, that Lender shall have no duty to  exercise any such right or to preserve the same and shall not be liable for any failure to do so  or for any delay in doing so; provided, further, however, that Lender agrees to exercise such  proxy and other rights and remedies described in this sentence only so long as an Event of  Default shall have occurred and is continuing and following written notice thereof to Pledgor.  In addition, after the occurrence of an Event of Default and during the continuation thereof,  Lender shall have such powers of sale and other powers as may be conferred by applicable  law. With respect to the Pledged Collateral or any part thereof which shall then be in or shall  thereafter come into the possession or custody of Lender or which Lender shall otherwise have  the ability to transfer under this Pledge Agreement and applicable law, Lender may, in its sole  discretion, without notice except as specified herein or by applicable law, upon the occurrence  and during the continuation of an Event of Default, sell or cause the same to be sold in  accordance with applicable law at any exchange, broker's board or at public or private sale, in  one or more sales or lots, at such price as Lender may deem best, for cash or on credit on  commercially reasonable terms or for future delivery, without assumption of any credit risk,  

 

7  1894316.v3  and the purchaser of any or all of the Pledged Collateral so sold shall thereafter own the same,  absolutely free from any claim, encumbrance or right of any kind whatsoever. Lender may, in  its own name, or in the name of a designee or nominee, buy the Pledged Collateral at any public  sale and, if permitted by applicable law, buy the Pledged Collateral at any private sale. Pledgor  will pay to Lender all reasonable expenses (including, without limitation, court costs and  reasonable attorneys' and paralegals' fees and expenses) of, or incidental to, the enforcement  of any of the provisions hereof. Lender agrees to distribute any proceeds of the sale of the  Pledged Collateral in accordance with the Loan Agreement and applicable law and Pledgor  shall remain liable for any deficiency and shall be entitled to any surplus following the sale of  the Pledged Collateral.  (b) Unless any of the Pledged Collateral threatens to decline speedily in value or is  or becomes of a type sold on a recognized market, Lender will give Pledgor reasonable notice  of the time and place of any public sale thereof, or of the time after which any private sale or  other intended disposition is to be made. Any sale of the Pledged Collateral conducted in  conformity with reasonable commercial practices of banks, commercial finance companies,  insurance companies or other financial institutions disposing of property similar to the Pledged  Collateral shall be deemed to be commercially reasonable. Notwithstanding any provision to  the contrary contained herein, Pledgor agrees that any requirements of reasonable notice shall  be met if such notice is received by Pledgor as provided in Section 19 below at least ten (10)  Business Days before the time of the sale or disposition; provided, however, that Lender may  give any shorter notice that is commercially reasonable under the circumstances. Any other  requirement of notice, demand or advertisement for sale is waived, to the extent permitted by  law.  (c) In view of the fact that federal and state securities laws may impose certain  restrictions on the method by which a sale of the Pledged Collateral may be effected after an  Event of Default, Pledgor agrees that after the occurrence and during the continuation of an  Event of Default, Lender may, from time to time, attempt to sell all or any part of the Pledged  Collateral by means of a private placement restricting the bidders and prospective purchasers  to those who are qualified and will represent and agree that they are purchasing for investment  only and not for distribution. If it elects to sell the Pledged Collateral by means of a private  placement, Lender shall offer to sell or solicit offers to buy, and shall sell and transfer, the  Pledged Collateral, or any part of it, in accordance with applicable law including without  limitation to a limited number of sophisticated investors qualified to purchase the Pledged  Collateral. If Lender solicits such offers from not less than four (4) such investors, then the  acceptance by Lender of the highest offer obtained therefrom shall be deemed to be a  commercially reasonable method of disposing of such Pledged Collateral; provided, however,  that this Section does not impose a requirement that Lender solicit offers from four or more  investors in order for the sale to be commercially reasonable.  Section 10. Lender Appointed Attorney-in-Fact.  (a) Pledgor hereby appoints Lender its attorney-in-fact, coupled with an interest,  with full authority, in the name of Pledgor or otherwise, from time to time in Lender's sole  discretion, to take any action and to execute any instrument which Lender may deem necessary  or advisable to accomplish the purposes of this Pledge Agreement, including, without  

 

8  1894316.v3  limitation, to receive, endorse and collect all instruments made payable to Pledgor representing  any distribution, interest payment or other distribution in respect of the Pledged Collateral or  any part thereof and to give full discharge for the same and to arrange for the transfer of all or  any part of the Pledged Collateral on the books of the Borrower to the name of Lender or  Lender's nominee; provided, however., that Lender agrees to exercise such powers only so  long as an Event of Default shall have occurred and is continuing.  (b) Upon the indefeasible payment in full of all Obligations in cash and the  termination of any commitment on the part of Lender to lend to Borrower, all Pledged  Collateral (and all stock or other powers delivered in connection therewith) shall be returned  to Pledgor and all rights with respect to the Pledged Collateral or the Borrower vested in Lender  pursuant to this Pledged Agreement shall expire, terminate and be of no further effect  whatsoever and Lender shall provide any release or other instruments required to effect such  release or as reasonably requested by Pledgor to evidence such release.  Section 11. Waivers.   (a) Pledgor waives presentment and demand for payment of any of Pledgor's  obligations under the Loan Documents, protest and notice of dishonor or Event of Default with  respect to any of Pledgor's obligations under the Loan Documents and all other notices to which  Pledgor might otherwise be entitled except as otherwise expressly provided herein or in the  Loan Agreement except to the extent that applicable law shall prohibit such waiver, protest or  notice.  (b) Pledgor understands and agrees that its obligations and liabilities under this  Pledge Agreement shall remain in full force and effect, notwithstanding foreclosure of any  property securing all or any part of the Obligations under the Loan Documents by trustee sale  or any other reason impairing the right of Pledgor or Lender to proceed against the Borrower,  any other guarantor or the Borrower's or such guarantor's property. Pledgor agrees that all of  its obligations under this Pledge Agreement shall remain in full force and effect without  defense, offset or counterclaim of any kind, notwithstanding that Pledgor's rights against the  Borrower may be impaired, destroyed or otherwise affected by reason of any action or  omission on the part of Lender other than actions or omissions that are determined to constitute  gross negligence or willful misconduct on the part of Lender.  (c) Pledgor hereby expressly waives the benefits of any law in any jurisdiction  purporting to allow a guarantor or pledgor to revoke a continuing guaranty or pledge with  respect to any transactions occurring after the date of the guaranty or pledge.  Section 12. Term. This Pledge Agreement shall remain in full force and effect until  all Obligations under the Loan Documents have been fully and indefeasibly paid in cash and  any commitment on the part of Lender to provide credit has been terminated.  Section 13. Definitions. The singular shall include the plural and vice versa and any  gender shall include any other gender as the context may require.  

 

9  1894316.v3  Section 14. Successors and Assigns. This Pledge Agreement shall be binding upon  and inure to the benefit of Pledgor, Lender, and their respective successors and assigns.  Pledgor's successors and assigns shall include, without limitation, a receiver, trustee or debtor- in-possession of or for Pledgor.  Section 15. GOVERNING LAW. ANY DISPUTE BETWEEN PLEDGOR AND  LENDER OR ANY OTHER HOLDER OF SECURED OBLIGATIONS ARISING OUT OF,  CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP  ESTABLISHED BETWEEN THEM IN CONNECTION WITH, THIS PLEDGE  AGREEMENT, OR ANY OF THE OTHER LOAN DOCUMENTS, SHALL BE RESOLVED  IN ACCORDANCE WITH THE INTERNAL LAWS (WITHOUT REGARD TO THE  CONFLICTS OF LAWS PROVISIONS) OF THE STATE OF MINNESOTA, WHERE  APPLICABLE, (EXCEPT TO THE EXTENT THAT THE UCC PROVIDES FOR THE  APPLICATION OF LAWS OF ANOTHER STATE). THE PARTIES TO THIS PLEDGE  AGREEMENT HAVE VOLUNTARILY ELECTED THAT THIS PLEDGE AGREEMENT,  THE OTHER LOAN DOCUMENTS AND ALL LOANS SHALL BE GOVERNED BY THE  LAWS OF THE STATE OF MINNESOTA.  Section 16. CONSENT TO JURISDICTION: SERVICE OF PROCESS; JURY  TRIAL.  (A) NON-EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN  SUBSECTION (B), EACH OF THE PARTIES HERETO AGREES AND ACCEPTS FOR  ALL DISPUTES AMONG THEM ARISING OUT OF, CONNECTED WITH, RELATED  TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN  CONNECTION WITH, THIS PLEDGE AGREEMENT OR ANY OF THE OTHER LOAN  DOCUMENTS THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE  STATE OF MINNESOTA SITTING IN THE COUNTY OF HENNEPIN AND OF THE  UNITED STATES DISTRICT COURT OF THE DISTRICT OF MINNESOTA, AND ANY  APPELLATE COURT FROM ANY THEREOF. EACH OF THE PARTIES HERETO  WAIVES IN ALL DISPUTES BROUGHT PURSUANT TO THIS SUBSECTION (A) ANY  OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT  CONSIDERING THE DISPUTE.  (B) OTHER JURISDICTIONS. PLEDGOR AGREES THAT LENDER, OR ANY  HOLDER OF SECURED OBLIGATIONS SHALL HAVE THE RIGHT TO PROCEED  AGAINST PLEDGOR OR ITS RESPECTIVE PROPERTY IN A COURT IN ANY  LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION  OVER PLEDGOR OR (2) REALIZE ON THE COLLATERAL OR ANY OTHER  SECURITY FOR THE SECURED OBLIGATIONS OR (3) IN ORDER TO ENFORCE A  JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PERSON.  PLEDGOR AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE  COUNTERCLAIMS IN ANY PROCEEDING THAT IS SEPARATE FROM ANY  PROCEEDING BROUGHT UNDER CLAUSE (A) ABOVE AND THAT IS BROUGHT BY  SUCH PERSON SOLELY TO REALIZE ON ANY SECURITY FOR THE OBLIGATIONS  OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF SUCH  PERSON. PLEDGOR WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE  

 

10  1894316.v3  LOCATION OF THE COURT IN WHICH SUCH PERSON HAS COMMENCED A  PROCEEDING DESCRIBED IN THIS SUBSECTION (13).  (C) SERVICE OF PROCESS. NOTHING HEREIN SHALL IN ANY WAY BE  DEEMED TO LIMIT THE ABILITY OF LENDER TO SERVE ANY WRITS, SERVICE OF  PROCESS OR SUMMONSES IN ANY SUIT, ACTION OR PROCEEDING ISSUED BY  ANY COURT REFERRED TO IN THIS SECTION 16 IN ANY MANNER PERMITTED BY  APPLICABLE LAW.  (D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO  IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN  RESOLVING ANY DISPUTE, ARISING OUT OF, CONNECTED WITH, RELATED  TO OR INCIDENTAL TO THIS PLEDGE AGREEMENT OR ANY OTHER  INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN  CONNECTION HEREWITH. EACH OF THE PARTIES HERETO AGREES AND  CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF  ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT  ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY  OF THIS PLEDGE AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE  OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR  RIGHT TO TRIAL BY JURY.  Section 17. Further Assurances. Pledger agrees that it will cooperate with Lender  and will execute and deliver, or cause to be executed and delivered, all such other stock powers,  proxies, instruments and documents, and will take all such other actions, including, without  limitation, the authorization and filing of financing statements, as Lender may reasonably  request from time to time in order to carry out the provisions and purposes of this Pledge  Agreement.  Section 18. Lender's Duty of Care. Lender shall not be liable for any acts, omissions,  errors of judgment or mistakes of fact or law including, without limitation, acts, omissions,  errors or mistakes with respect to the Pledged Collateral, except for those arising out of or in  connection with Lender's (i) gross negligence or willful misconduct, (ii) failure to use  reasonable care with respect to the safe custody of the Pledged Collateral in Lender's  possession or (iii) breach of its express obligations under this Pledge Agreement. Without  limiting the generality of the foregoing, Lender shall be under no obligation to take any steps  necessary to preserve rights in the Pledged Collateral against any other parties but may do so  at its option. All reasonable expenses incurred in connection therewith shall be for the sole  account of Pledger, and shall constitute part of Pledgor's obligations under the Loan  Documents secured hereby.  Section 19. Notices. Any notices or demands required or contemplated hereunder  shall be written and shall be effective two days after the placing thereof in the United States  mails postage prepaid or with a nationally-recognized courier service such as Federal Express,  addressed to the relevant party at its address set forth on the signature page below.  

 

11  1894316.v3  Section 20. Amendments, Waivers and Consents. No amendment or waiver of any  provision of this Pledge Agreement nor consent to any departure by Pledger herefrom, shall in  any event be effective unless the same shall be in writing and signed by Lender pursuant to the  terms of the Loan Agreement, and then such amendment, waiver or consent shall be effective  only in the specific instance and for the specific purpose for which given.  Section 21. Section Headings. The section headings herein are for convenience of  reference only, and shall not affect in any way the interpretation of any of the provisions hereof.  Section 22. Execution in Counterparts. This Pledge Agreement may be executed in  any number of counterparts, each of which shall be an original, but all of which shall together  constitute one and the same agreement.  Section 23. Merger. This Pledge Agreement and the other Loan Documents embody  the final and entire agreement and understanding among Pledgor and Lender and supersede all  prior agreements and understandings among Pledgor and Lender relating to the subject matter  thereof. This Pledge Agreement and the other Loan Documents 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 hereto.  Section 24. Irrevocable Proxy. Solely with respect to Article 8 Matters, Pledgor  hereby irrevocably grants and appoints Lender, from the date of this Agreement until the  termination of this Agreement in accordance with its terms, as Pledgor's true and lawful proxy,  for and in Pledgor's name, place and stead to vote the Pledged Interest in the Borrower by  Pledgor, whether directly or indirectly, beneficially or of record, now owned or hereafter  acquired, with respect to such Article 8 Matters. The proxy granted and appointed in this  Section 24 shall include the right to sign Pledgor's name (as a member of the Borrower) to any  consent, certificate or other document relating to an Article 8 Matter and the Pledged Interests  that applicable law may permit or require, to cause the Pledged Interest to be voted in  accordance with the preceding sentence. Pledgor hereby represents and warrants that there are  no other proxies and powers of attorney with respect to an Article 8 Matter and the Pledged  Interest that Pledgor may have granted or appointed. Pledgor will not give a subsequent proxy  or power of attorney or enter into any other voting agreement with respect to the Pledged  Interest with respect to any Article 8 Matter and any attempt to do so with respect to an Article  8 Matter shall be void and of no effect.  As used herein, “Article 8 Matter” means any action, decision, determination or  election by the Borrower or its members that their membership interests or other equity  interests, or any of them, be, or cease to be, a “security” as defined in and governed by Article  8 of the Uniform Commercial Code, and all other matters related to any such action, decision,  determination or election.  The proxies and powers granted by the Pledgor pursuant to this Agreement are coupled  with an interest and are given to secure the performance of the Pledgor's obligations.   (Signature Page Follows) 

 

[Signature Page to Pledge Agreement]  IN WITNESS WHEREOF, Pledgor and Lender have executed this Pledge Agreement as of the date set  forth above.  AIRCO, LLC  A North Carolina limited liability company  By:_____________________________  Name: Mark Harris  Its: Chief Executive Officer  Address for Notices:  AirCo, LLC  2995 Lone Oak Circle  Eagan, MN 55121  Attention: Mark Harris   With a copy to (which draft shall not constitute notice or service of process):  Air T, Inc.  5000 W. 36th St., Suite 200  Minneapolis, MN 55416  Attention: Mark Jundt, General Counsel  /:4<3769"09=58:;5"2/+"&-.%)1./#,(-)#&1-.#-'0-#$*1.))/-&%$* 

 

 

 

1894316.v3  Schedule I to Pledge Agreement  Dated as of December 11, 2020  Pledge Subsidiaries    Name Membership Interests of Pledgor Subject to Pledge  AIRCO 1, LLC 100%                 

 

Stock Power  FOR VALUE RECEIVED, the undersigned does hereby sell, assign and transfer to  _________________________one hundred percent (100%) of the limited liability company membership interests  of AIRCO I, LLC, a Delaware limited liability company (the “Membership Interests”), standing in the name of  the undersigned on the books of said limited liability company and does hereby irrevocably constitute and appoint  ______________as the undersigned's true and lawful attorney, for it and in its name and stead, to sell, assign and  transfer all or any of the Membership Interests, and for that purpose to make and execute all necessary acts of  assignment and transfer thereof; and to substitute one or more persons with like full power, hereby ratifying and  confirming all that said attorney or substitute or substitutes shall lawfully do by virtue hereof.    Dated: ________________________    AIRCO, LLC  a North Carolina limited liability company  By: ______________________  Name: Mark Harris  Its: Chief Executive Officer  DocuSign Envelope ID: A1AFBC35-A4D8-4BBD-8EB7-78A3BC8C13E4 

 

  Acknowledgment and Consent  The undersigned hereby acknowledges receipt of a copy of the Pledge Agreement dated as of December 11, 2020,  made by AIRCO, LLC, a North Carolina limited liability company (“Borrower”) for the benefit of PARK STATE  BANK, a Minnesota state state-chartered bank, as Lender (the “Pledge Agreement”). The undersigned agrees for  the benefit of Lender that:  1. The undersigned will be bound by the terms of the Pledge Agreement and will comply with such terms  insofar as such terms are applicable to the undersigned.    2. The undersigned will notify Lender promptly in writing of the occurrence of any events which may result  in Borrower receiving any of the interests or rights described in Section 1.1(b) of the Pledge Agreement.    3. The terms of Section 7(b)(vi) of the Pledge Agreement shall apply to it, mutatis mutandis, with respect to  all actions that may be required of it under or pursuant to or arising out of Section 7 of the Pledge  Agreement,    4. This Acknowledgement and Consent shall be considered the written approval of the undersigned, if  required by its articles of organization, operating agreement or similar document, for all matters referred  to in the Pledge Agreement that may require the consent of the undersigned.      AIRCO 1, LLC  a Delaware limited liability company  By: ______________________  Name: Mark Harris  Its: Chief Executive Officer    DocuSign Envelope ID: A1AFBC35-A4D8-4BBD-8EB7-78A3BC8C13E4

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