Document:

KCL:  Security Agreement  for

Exhibit 4.5

 

 

	

  

  	

  C#: 44097

  L#: 44098

  Ls#: 8800021447

  

 

Security

Agreement

___________________________________________________________________________________________________________

 

THIS SECURITY AGREEMENT (this “Agreement”

or “Security Agreement”) dated as of January    , 2002 is

made by and between AIRNET SYSTEMS, INC., an Ohio corporation having its chief

executive office at 3939 INTERNATIONAL GATEWAY, COLUMBUS, OH 43219 (the

“Borrower”), and Key Equipment Finance, a Division of Key Corporate Capital Inc. and

assigns, having an office at 66 South Pearl Street, Post Office Box 1865,

Albany, NY 12207-1865 (“KEF”).

 

W  I  T  N  E  S

S  E  T  H:

 

1.             Grant of Security Interest in

the Equipment.  In

consideration of one or more loans, advances or other financial accommodations

at any time before, at or after the date hereof, made or extended by KEF to or

for the account of the Borrower, directly or indirectly, as principal,

guarantor or otherwise and to secure the prompt payment and performance in full

when due, whether by lapse of time, acceleration or otherwise, of the Secured

Obligations, the Borrower hereby pledges, assigns, transfers hypothecates to

KEF and grants to KEF a security interest in, and acknowledges and agrees that

this Agreement shall create a continuing security interest in, all of

Borrower’s right, title and interest in and to the Collateral.

 

The Secured Obligations of the Borrower are absolute,

irrevocable and unconditional under any and all circumstances whatsoever and

shall not be subject to any right of set-off, counterclaim, deduction, defense

or other right which the Borrower may have for any reason against any vendor,

supplier, manufacturer, KEF or any other party.  All obligations of Borrower hereunder shall survive the

expiration, cancellation or other termination of this Agreement.

 

2.             Definitions.  Unless

the context otherwise requires, as used in this Agreement, the following terms

shall have the respective meanings indicated below and shall be equally

applicable to both the singular and the plural forms thereof:

“Alteration” shall have the meaning

specified in Section 6 hereof.

“Applicable Law” shall mean all applicable

Federal, state, local and foreign laws, ordinances, judgments, decrees,

injunctions, writs, rules, regulations, orders, licenses and permits of any

Governmental Authority.

“Authorized Signer” shall mean any officer

of Borrower, set forth on an incumbency certificate (in form and substance

satisfactory to KEF) delivered by Borrower to KEF, who is authorized and

empowered to execute the Loan Documents.

“Certificate of Acceptance” shall mean a

certificate of acceptance, in form and substance satisfactory to KEF, executed

and delivered by Borrower in accordance with Section 3 hereof.

“Collateral” shall mean the Equipment and

any and all substitutions, replacements or exchanges therefor, and any and all

proceeds (both cash and non-cash) receivable or received from the sale, lease,

license, collection, use, exchange or other disposition of the Collateral,

including insurance proceeds, thereof (including, without limitation, claims of

the Borrower against third parties for Loss or Damage to any such collateral).

“Collateral Schedule” shall mean each

collateral schedule now or hereafter attached hereto and made a part hereof, in

substantially the form of Schedule 1 hereto.

“Default” shall mean any event or

condition which, with the passage of time or the giving of notice, or both,

would constitute an Event of Default.

“Default Rate” shall mean an annual

interest rate equal to the lesser of 18% or the maximum interest rate permitted

by Applicable Law.

“Equipment” shall mean an item or items of

personal property which are described on the Collateral Schedule, together with

all replacement parts, additions and accessories incorporated therein or

affixed thereto including,

 

 

without limitation, any software that is a

component or integral part of, or is included or used in connection with, any

Item of Equipment, but with respect to such software, only to the extent of

Borrower’s interest therein, if any.

“Equipment Location” shall mean the

location of the Equipment, as set forth on Schedule 1, or such other location

(approved in writing by KEF) as Borrower shall from time to time specify in

writing.

“Event of Default” shall have the meaning

specified in Section 16 hereof.

“GAAP” shall have the meaning specified in

Section 22(g) hereof.

“Governmental Action” shall mean all

authorizations, consents, approvals, waivers, filings and declarations of any

Governmental Authority, including, without limitation, those environmental and

operating permits required for the ownership, lease, use and operation of the

Equipment.

“Governmental Authority” shall mean any

foreign, Federal, state, county, municipal or other governmental authority,

agency, board or court.

“Guarantor” shall mean any guarantor of

the Secured Obligations.

“Installment(s)” shall mean the periodic

payments due to repay the Note, and, where the context hereof requires, all

such additional amounts as may from time to time be payable under any provision

of the Loan Documents.

“Item of Equipment” shall mean each item

of the Equipment.

“Liability” shall have the meaning set

forth in Section 18 hereof.

“Loan Documents” shall mean, collectively,

this Agreement, the Note, and all other documents prepared by KEF and now or

hereafter executed in connection therewith.

“Lien” shall mean all mortgages, pledges,

security interests, liens, encumbrances, claims or other charges of any kind

whatsoever, except the security interest of KEF created by this Agreement.

“Loss or Damage” shall mean any loss,

theft, destruction, disappearance or any condemnation, expropriation or

requisition of or damage to any Item of Equipment.

“Note” shall mean that certain Promissory

Note in the original principal amount of $1,720,000.00 executed in connection

herewith, together with any extensions, modifications, renewals, refinancings

or other restructurings thereof.

“Secured Obligations” means all of the

following obligations of Borrower, whether direct or indirect, absolute or

contingent, matured or unmatured, originally contracted with KEF or another

party, and now or hereafter owing to or acquired in any manner partially or

totally by KEF or in which KEF may have acquired a participation, contracted by

Borrower alone or jointly or severally: (a) any and all indebtedness,

obligations, liabilities, contracts, indentures, agreements, warranties,

covenants, guaranties, representations, provisions, terms, and conditions of

whatever kind, now existing or hereafter arising, and however evidenced, that

are now or hereafter owed, incurred or executed by Borrower to, in favor of, or

with KEF (including, without limitation, those as are set forth or contained

in, referred to, evidenced by, or executed with reference to the Loan Documents,

any letter of credit agreements, advance agreements, indemnity agreements,

guaranties, lines of credit, mortgage deeds, security agreements, assignments,

pledge agreements, hypothecation agreements, instruments, and acceptance

financing agreements), and including any partial or total extension,

restatement, renewal, amendment, and substitution thereof or therefor; (b) any

and all claims of whatever kind of KEF against Borrower, now existing or

hereafter arising, including, without limitation, any arising out of or in any

way connected with warranties made by Borrower to KEF in connection with any

instrument purchased by KEF; and (c) any and all of KEF’s fees, costs and

expenses related to the foregoing.

“Supplier” shall mean the manufacturer or

the vendor of the Equipment, as set forth on each Collateral Schedule.

“Term” shall mean the term of the Note.

“UCC” shall have the meaning set forth in

Section 16(b)(2) hereof.  Where

applicable and except as otherwise defined herein, terms used in this Agreement

shall have the meaning assigned to them in the UCC.

“Upgrade” shall have the meaning specified

in Section 8 hereof.

 

3.             Delivery

and Acceptance.  Concurrently with execution of the

Collateral Schedule hereunder, Borrower shall execute and deliver to KEF a Certificate

of Acceptance for the Equipment described on such Collateral Schedule.   KEF SHALL HAVE NO OBLIGATION TO ADVANCE ANY FUNDS TO

BORROWER UNLESS AND UNTIL KEF SHALL HAVE RECEIVED A CERTIFICATE OF ACCEPTANCE

RELATING TO THE EQUIPMENT EXECUTED BY BORROWER.  Such Certificate of Acceptance shall

constitute Borrower’s acknowledgment that such Equipment (a) was received by

Borrower, (b) is satisfactory to Borrower in all respects,

 

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(c) is suitable for Borrower’s purposes, (d) is

in good order, repair and condition, (e) has been installed and operates

properly, and (f) is subject to all of the terms and conditions of the Loan

Documents. Borrower’s execution and delivery of a Certificate of Acceptance shall

be conclusive evidence as between KEF and Borrower that the Items of Equipment

described therein are in all of the foregoing respects satisfactory to

Borrower, and Borrower shall not assert any claim of any nature whatsoever

against KEF based on any of the foregoing matters; provided, however,

that nothing contained herein shall in any way bar, reduce or defeat any claim

that Borrower may have against the Supplier or any other person (other than

KEF).

 

4.             Payments. 

Borrower shall pay the Note on the terms set forth therein.  All Installments shall be payable when due

whether or not Borrower has received any additional notice that such

Installments are due.  All Installments

shall be paid to KEF at 66 South Pearl Street, Post Office Box 1865, Albany, NY

12207-1865, or as otherwise directed by KEF in writing.

 

5.             Location;

Inspection; Labels.  The Equipment shall be delivered to the

Equipment Location and shall not be removed therefrom without KEF’s prior

written consent.  Borrower shall

maintain possession and control of the Equipment at all times. Borrower

will promptly give written notice to KEF of any change in the identity or

location of any Item of Equipment which might require new filings or other

action to assure continued perfection of the security interest of KEF granted

hereby.  The Borrower owns, and will

continue to own, all Equipment Locations except as otherwise indicated on

Schedule 1. KEF shall have the right to

enter upon the Equipment Location and inspect the Equipment at any reasonable

time.  At KEF’s request, Borrower shall

affix permanent labels evidencing KEF’s interest in the Equipment in a

prominent place on the Equipment and shall keep such labels in good repair and

condition.

 

6.             Use;

Alterations.  Borrower shall use the Equipment only in the

course of its business for commercial purposes (and shall not permanently

discontinue use of the Equipment), and in compliance with Applicable Law and

the requirements of any applicable insurance policies, and only in the manner

for which it was designed and intended and so as to subject it only to ordinary

wear and tear.  Borrower shall comply

with all Applicable Law with respect to the Equipment.  Borrower shall immediately notify KEF in

writing of any existing or threatened investigation, claim or action by any

Governmental Authority in connection with any Applicable Law or Governmental

Action which could adversely affect the value of the Equipment or the

perfection or priority of the security interest of KEF in the Collateral.

Borrower shall not make any material alterations, additions, modifications or

improvements (each, an “Alteration”) to the Equipment without KEF’s prior

written consent; provided that Borrower, at its own expense, shall make

Alterations as may be required from time to time to meet the requirements of

Applicable Law or Governmental Action. 

All such Alterations immediately, and without further act, shall be

deemed to constitute Items of Equipment and fully be subject to the security interest

granted to KEF hereunder.

 

7.             Repairs

and Maintenance.  Borrower, at Borrower’s own cost and

expense, shall (a) keep the Equipment in good repair, operating condition and

working order and in compliance with the manufacturer’s specifications and

Borrower’s standard practices (but with respect to the latter, in no event less

than industry practices) and (b) Maintain, service and repair the Equipment as

otherwise required herein.  Borrower, at

its own cost and expense and within a reasonable period of time, shall replace

any part of any Item of Equipment that is unfit or unavailable for use from any

cause with a replacement part of the same manufacture, value, remaining useful

life and utility as the replaced part immediately preceding the replacement

(assuming that such replaced part was in the condition required by this

Agreement).  Such replacement part shall

be free and clear of all Liens and upon installation, attachment or

incorporation in, on or into such Item of Equipment, such replacement part immediately,

and without further act, shall be deemed to constitute an Item of Equipment and

fully be subject to the security interest granted to KEF hereunder. If KEF

repossesses the Equipment pursuant to its rights under this Agreement and at

that time, in the opinion of KEF, any Item of Equipment fails to meet the

standards set forth above, Borrower agrees to pay on demand all costs and

expenses incurred in connection with repairing or restoring such Item of

Equipment so as to meet such standards and/or assembling and delivering such

Item of Equipment.

 

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8.             Equipment

Upgrades/Attachments.  In addition to the requirements of Section

6 hereof, Borrower, at its own expense, may from time to time add or

install upgrades or attachments (each, an “Upgrade”) to the Equipment; provided,

that such Upgrades are readily removable without causing material damage to the

Equipment, and do not materially adversely affect the fair market value of the

Equipment.  Any such Upgrades shall be

owned by Borrower, shall become subject to the security interest created by

this Agreement and shall be kept free and clear of all Liens so long as

attached to the Equipment.

 

9.             Lease

and Assignment.  (a)  WITHOUT

KEF’S PRIOR WRITTEN CONSENT, BORROWER SHALL NOT (1) ASSIGN, TRANSFER, PLEDGE,

HYPOTHECATE OR OTHERWISE DISPOSE OF, THE EQUIPMENT OR ANY INTEREST THEREIN, OR

ASSIGN OR DELEGATE ITS RIGHTS OR OBLIGATIONS UNDER THE LOAN DOCUMENTS, OR (2)

LEASE OR LEND THE EQUIPMENT TO, OR PERMIT THE EQUIPMENT TO BE USED BY, ANYONE

OTHER THAN BORROWER.

 

(b)  KEF, at any time with or without notice to Borrower, may sell,

transfer, grant participations in, assign and/or grant a security interest in

any or all of KEF’s right, title and interest in and to the Loan Documents, or

in KEF’s security interest in any Item of Equipment.  In any such event, any such purchaser, transferee, assignee or

secured party shall have and may exercise all of KEF’s rights hereunder or

thereunder, and BORROWER SHALL NOT ASSERT AGAINST ANY SUCH PURCHASER, TRANSFEREE,

ASSIGNEE OR SECURED PARTY ANY DEFENSE, COUNTERCLAIM OR OFFSET THAT BORROWER MAY

HAVE AGAINST KEF. Borrower agrees that upon written notice to

Borrower of any such sale, transfer, assignment and/or security interest,

Borrower shall acknowledge receipt thereof in writing and shall comply with the

reasonable directions and demands of such purchaser, transferee, assignee or

secured party.

 

(c)  Subject to the foregoing, all covenants and agreements contained

herein shall be binding upon, and inure to the benefit of, KEF and its

successors and permitted assigns and Borrower and its successors and permitted

assigns.

 

10.          Loss of

or Damage to Equipment.  (a) In the event of Loss or Damage to any

Item of Equipment, Borrower shall immediately notify KEF of same and, at the

option of Borrower, , Borrower shall within thirty (30) days, unless otherwise

agreed by KEF in writing, following such Loss or Damage: (1) place such Item of

Equipment in good condition and repair, in accordance with the terms hereof;

(2) replace such Item of Equipment with replacement equipment (acceptable to

KEF) in as good condition and repair, and with the same or better fair market

value as such replaced Item of Equipment immediately preceding the Loss or

Damage (assuming that such replaced Item of Equipment was in the condition

required by this Agreement), which replacement equipment shall immediately, and

without further act, be deemed to constitute Items of Equipment and be fully

subject to this Agreement and the security interest granted to KEF as if

originally pledged as Collateral hereunder and shall be free and clear of all

Liens; or (3)  pay to KEF any unpaid Installments and other charges

due prior to the payment date specified in such notice plus an amount, with

respect to an Item of Equipment, equal to the pro rata portion of the

Installments attributable to such Item of Equipment under the Loan Documents

after discounting such Installments to present worth as of the payment date

specified in such notice on the basis of a per annum rate of discount equal to

five percent (5%) from the respective dates upon which such Installments would

have been paid but for the operation of this clause.

 

(b) Upon KEF’s

receipt of the payment required under clause (3) above, KEF shall release its

security interest in such Item of Equipment. If Borrower fails to either

restore or replace the Item of Equipment pursuant to clauses (1) or (2) above,

respectively, Borrower shall make the payment under clause (3) above.

 

11.          Insurance. 

(a)  Borrower, at Borrower’s own

cost and expense, shall maintain (1) insurance against all risks of physical

loss or damage to the Equipment (which shall include theft and collision for

Equipment consisting of motor vehicles, and shall not exclude loss resulting

from flood or earthquake) in an amount not less than the full replacement value

thereof and (2) comprehensive public liability insurance including blanket

contractual liability for personal and bodily injury and property damage in an

amount satisfactory to KEF.

 

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(b)  All insurance policies required hereunder shall (1) require 30

days’ prior written notice to KEF of cancellation or material change in

coverage (any such cancellation or change, as applicable, not being effective

until the thirtieth (30th) day after the giving of such notice); (2) name

“KeyCorp and its subsidiaries and affiliated companies, including Key Equipment

Finance, a Division of Key Corporate Capital Inc., their successors and

assigns” as sole loss payee under the property insurance policies; (3) not

require contributions from other policies held by KEF; (4) waive any right of

subrogation against KEF; (5) in respect of any liability of KEF, except for the

insurers’ salvage rights in the event of a Loss or Damage, waive the right of

such insurers to set-off, to counterclaim or to any other deduction, whether by

attachment or otherwise, to the extent of any monies due KEF under such

policies; (6) not require that KEF pay or be liable for any premiums with respect

to such insurance covered thereby; (7) be in full force and effect  throughout any geographical areas at any

time traversed by any Item of Equipment; and (8) contain breach of warranty

provisions providing that, in respect of the interests of KEF in such policies,

the insurance shall not be invalidated by any action or inaction of Borrower or

any other person (other than KEF) and shall insure KEF regardless of any breach

or violation of any warranty, declaration or condition contained in such policies

by Borrower or by any other person (other than KEF).  Prior to funding the Note, and thereafter not less than 15 days

prior to the expiration dates of the expiring policies theretofore delivered

pursuant to this Section, Borrower shall deliver to KEF a duplicate original of

all policies (or in the case of blanket policies, certificates thereof issued

by the insurers thereunder) for the insurance maintained pursuant to this

Section.

 

(c)  Proceeds of insurance with respect to physical loss or damage to

the Equipment shall be applied, at the option of KEF, to repair or replace the

Equipment or to reduce or satisfy (as applicable) the Secured Obligations.

 

12.          Taxes. 

Borrower shall pay when due any and all taxes, fees, levies, imposts,

duties, assessments and public and private charges levied or assessed on or

with respect to the Equipment, on the use thereof, or on this Agreement or any

of the other Loan Documents.

 

13.          KEF’s

Right to Perform for Borrower.  If Borrower fails to perform

any of its obligations contained in the Loan Documents, KEF may (but shall not

be obligated to) itself perform such obligations, and the amount of the

reasonable costs and expenses of KEF incurred in connection with such

performance, together with interest on such amount from the date paid by KEF

until the date repaid by Borrower to KEF, at the Default Rate, shall be payable

by Borrower to KEF upon demand.  No such

performance by KEF shall be deemed a waiver of any rights or remedies of KEF,

or be deemed to cure the default of Borrower hereunder.  All such sums and amounts so expended

by KEF shall be repayable by the Borrower immediately without notice or demand,

shall constitute additional Secured Obligations and shall bear interest from

the date said amounts are expended at the Default Rate.

 

14.          Delinquent

Payments; Interest.  If Borrower fails to pay any of the

Installments on the date when the same becomes due, Borrower shall pay to KEF a

late charge equal to five percent (5%) of such delinquent amount.  Such late charge shall be payable by

Borrower upon demand by KEF and shall be deemed part of the Secured

Obligations.  In no event shall such

late charge exceed the maximum amounts permitted under Applicable Law.

 

15.          Personal

Property; Liens; Warranty of Title.  The Borrower is, and will

continue to be, the sole owner of the Equipment, free from any Lien.  KEF and Borrower hereby agree that the

Equipment is, and shall at all times remain, personal property notwithstanding

the fact that any Item of Equipment may now be, or hereafter become, in any

manner affixed or attached to real property or any improvements thereon.  Borrower shall at all times keep the

Equipment free and clear from all Liens, and the Borrower shall obtain and

deliver to KEF (to be recorded at the Borrower’s expense) from each person

having a Lien on any Equipment Location waivers of any Lien which such person

might have or hereafter obtain or claim with respect to the Equipment.  Borrower shall (a) give KEF immediate written

notice of any Lien on the Collateral, (b) promptly, at Borrower’s sole cost and

expense, take such action as may be necessary to discharge any such Lien, and

(c) indemnify and hold KEF, on an after-tax

 

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basis, harmless from and against any loss or

damage caused by any such Lien. Borrower warrants that it has good,

valid and marketable title to the Equipment, and that (1) the security interest

in the Collateral granted to KEF hereunder, when properly perfected by filing,

shall constitute a valid and perfected first priority security interest in the

Collateral and, (2) the Collateral is not subject to, and Borrower will not

grant or permit to exist, any Liens or claims on or against the Collateral,

whether senior, superior, junior, subordinate or equal to the security interest

granted to KEF hereby, or otherwise.

 

16.          Events

of Default; Remedies.  (a) 

As used herein, the term “Event of Default” shall mean any of the

following events:  (1) Borrower

fails to pay any Installment within ten (10) days after the same shall have

become due and payable; (2) Borrower or any

Guarantor becomes insolvent or makes an assignment for the benefit of its

creditors; (3) a receiver, trustee, conservator or liquidator of Borrower or

any Guarantor or of all or a substantial part of Borrower’s or such Guarantor’s

assets is appointed with or without the application or consent of Borrower or

such Guarantor, respectively; (4) a petition is filed by or against Borrower or

any Guarantor under any bankruptcy, insolvency or similar legislation; (5)

Borrower or any Guarantor violates or fails to perform any provision of either

the Loan Documents or any other loan, lease or credit agreement or any

acquisition or purchase agreement with KEF or any other party; (6) Borrower violates

or fails to perform any covenant or representation made by Borrower in the Loan

Documents; (7) any representation or warranty made herein or in any of the Loan

Documents, certificates, financial statements or other statements furnished to

KEF (or KEF’s parent, subsidiaries or affiliates) shall prove to be false or

misleading in any material respect as of the date on which the same was made;

(8) Borrower makes a bulk transfer of furniture, fixtures or other equipment or

inventory; (9) there is a material adverse change in Borrower’s or any

Guarantor’s financial condition; (10) Borrower merges or consolidates with any

other corporation or entity, or sells, leases or disposes of all or

substantially all of its assets without the prior written consent of KEF; (11)

without the written consent of KEF, which consent shall not be unreasonably

withheld, a change in control occurs in Borrower or any Guarantor; (12) the

death or dissolution of Borrower or any Guarantor; (13) any of the liens

created or granted hereby, or intended to be granted or created hereby, to KEF

shall fail to be valid, first priority perfected liens subject to no prior or

equal lien; or (14) an additional Lien attaches to the Equipment or the

Equipment becomes subject to risk of seizure or forfeiture.

 

(b)           (1) Upon the occurrence of an Event of Default,

KEF, at its option, may declare any or all of the Secured Obligations,

including, without limitation, the Note, to be immediately due and payable,

without demand or notice to Borrower or any Guarantor.  The obligations and liabilities accelerated

thereby shall bear interest (both before and after any judgment) until paid in

full at the Default Rate.  Should there

occur a Default and if a voluntary or involuntary petition under the United

States Bankruptcy Code is filed by or against Borrower while such Default

remains uncured, the Secured Obligations automatically shall be accelerated and

due and payable and interest thereon at the Default Rate automatically shall

apply as of the date of the first occurrence of the Default, without any

notice, demand or action of any type on the part of KEF (including any action

evidencing the acceleration or imposition of the Default Rate).  The fact that KEF has, prior to the filing

of the voluntary or involuntary petition under the United States Bankruptcy

Code, acted in a manner which is inconsistent with the acceleration and

imposition of the Default Rate shall not constitute a waiver of this provision

or estop KEF from asserting or enforcing KEF’s rights hereunder.

 

(2) Furthermore, upon the occurrence of an Event of

Default, KEF shall have, in addition to the rights and remedies provided

herein, in the other Loan Documents or by law, the rights and remedies of a

secured party under the Uniform Commercial Code under the laws of the State of

New York (the “UCC”) (regardless of whether the UCC is the law of the

jurisdiction where the rights and remedies are asserted and regardless of

whether the UCC applies to the affected Collateral), and further KEF may do any

one or more of the following as KEF in its sole discretion may elect, with or

without judicial process or the aid and assistance of others:  (a) enter and remain on any premises on

which any of the Equipment may be located and, without resistance or interference

by the Borrower, without liability to KEF by reason of such entry or taking

possession, take possession of the Equipment, (b)  prepare for sale and sell or otherwise dispose of any Equipment

on any such premises, (c) require the Borrower to assemble and make available

to KEF at Borrower’s expense any

 

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Equipment at any place and time designated by KEF, (d) remove any

Equipment from any such premises for the purpose of effecting sale or other

disposition thereof, (e) without demand and without advertisement, notice,

hearing or process of law, all of which the Borrower hereby waives, at any

place and time or times, sell and deliver any or all Equipment held by or for

it at public or private sale, by one or more contracts, in one or more parcels,

for cash, upon credit or otherwise, at such prices and upon such terms as KEF

deems advisable, in its sole discretion, or (f) lease all or any portion of the

Equipment on such terms and conditions as KEF in its sole discretion may

determine.  In addition to all other sums due KEF hereunder, the Borrower

shall pay KEF all reasonable costs and expenses incurred by KEF, including

reasonable attorneys’ fees and court costs, in obtaining or liquidating the Collateral,

in enforcing payment of Secured Obligations, or in the prosecution or defense

of any action or proceeding by or against KEF or the Borrower concerning any

matter arising out of or connected with the Loan Documents, the Collateral or

the Secured Obligations, including without limitation any of the foregoing

arising in, arising under or related to a case under the United States

Bankruptcy Code.

 

(3) Borrower’s waivers regarding disposition of the

equipment.  IF AN EVENT OF DEFAULT

OCCURS, BORROWER HEREBY WAIVES ANY DEFENSES, RIGHTS, OFFSETS OR CLAIMS AGAINST

KEF ARISING OUT OF THE REPOSSESSION, RETENTION, SALE, MANNER OR METHOD OF SALE

OR DISPOSITION OF ANY ITEMS OF EQUIPMENT. THE BORROWER AGREES THAT ANY

REQUIREMENT OF REASONABLE NOTICE SHALL BE MET IF SUCH NOTICE IS PERSONALLY

SERVED ON OR MAILED, POSTAGE PREPAID, TO THE BORROWER IN ACCORDANCE WITH THE

NOTICE PROVISIONS HEREOF AT LEAST 10 DAYS BEFORE THE TIME OF SALE OR OTHER

EVENT GIVING RISE TO THE REQUIREMENT OF SUCH NOTICE. KEF SHALL NOT BE OBLIGATED

TO MAKE ANY SALE OR OTHER DISPOSITION OF THE EQUIPMENT REGARDLESS OF NOTICE

HAVING BEEN GIVEN. KEF MAY BE THE PURCHASER AT ANY SUCH SALE. THE BORROWER

HEREBY WAIVES ALL OF ITS RIGHTS OF REDEMPTION FROM ANY SUCH SALE. KEF MAY

POSTPONE OR CAUSE THE POSTPONEMENT OF THE SALE OF ALL OR ANY PORTION OF THE

EQUIPMENT BY ANNOUNCEMENT AT THE TIME AND PLACE OF SUCH SALE, AND SUCH SALE

MAY, WITHOUT FURTHER NOTICE, BE MADE AT THE TIME AND PLACE TO WHICH THE SALE

WAS SCHEDULED. NONE OF KEF’S RIGHTS OR

REMEDIES HEREUNDER ARE INTENDED TO BE EXCLUSIVE OF, BUT EACH SHALL BE

CUMULATIVE AND IN ADDITION TO, ANY OTHER RIGHT OR REMEDY REFERRED TO HEREUNDER

OR OTHERWISE AVAILABLE TO KEF OR ITS ASSIGNS AT LAW OR IN EQUITY, AND MAY BE

PURSUED SINGLY, SUCCESSIVELY OR CONCURRENTLY AT THE SOLE DISCRETION OF LENDER

AND MAY BE EXERCISED AS OFTEN AS OCCASION THEREFOR SHALL OCCUR.  THE FAILURE TO EXERCISE, OR ANY DELAY IN THE

EXERCISE OF, ANY RIGHT OR REMEDY SHALL IN NO EVENT BE CONSTRUED AS A WAIVER, RELEASE

OR EXHAUSTION OF ANY SUCH REMEDIES.   NO

EXPRESS OR IMPLIED WAIVER BY KEF OF ANY EVENT OF DEFAULT SHALL CONSTITUTE A

WAIVER OF ANY OTHER EVENT OF DEFAULT OR A WAIVER OF ANY OF KEF’S RIGHTS UPON

THE REOCCURRENCE OF ANY SUCH EVENT OF DEFAULT.

 

(c)           The

Borrower hereby authorizes KEF, upon the occurrence and during the continuation

of any Event of Default hereunder, at KEF’s option to adjust, compromise and

settle any losses under any insurance afforded, and the Borrower does hereby

irrevocably constitute KEF and each of its designees, as its attorneys-in-fact,

with full power and authority, upon the occurrence and during the continuation

of any Event of Default hereunder, to effect such adjustment, compromise and/or

settlement and to endorse any drafts drawn by an insurer of the Equipment or any

part thereof and to do every­thing necessary to carry out such purposes and to

receive and receipt for any unearned premiums due under policies of such

insurance; but unless or until KEF elects to adjust, compromise or settle

losses as aforesaid, such insurance proceeds shall be subject to the lien and

security interest of KEF hereunder.

 

(d)           Upon

the occurrence, and during the continuance, of an Event of Default hereunder,

any payments in respect of the Secured Obligations and any proceeds of the

Collateral, when received by KEF in cash or its equivalent, will be applied

first to costs of collection and, thereafter, in reduction of the Secured

Obligations in such order and manner as KEF may direct in its sole discretion,

and the Borrower irrevocably waives the right to direct the application of such

payments and proceeds and acknowledges and agrees that KEF shall have the

 

7

 

continuing and exclusive right to apply any and all such payments and

proceeds in KEF’s sole discretion, notwithstanding any entry to the contrary

upon any of its books and records.  The

Borrower shall remain liable to KEF for any deficiency.  Any surplus remaining after the full payment

and satisfaction of the Secured Obligations shall be returned to the Borrower

or to whomsoever a court of competent jurisdiction shall determine to be

entitled thereto.

 

(e)           To

the extent that any of the Secured Obligations are now or hereafter secured by

property other than the Collateral, or by a guarantee, endorsement or property

of any other person, then KEF also shall have the right to proceed against such

other property, guarantee or endorsement upon the occurrence of a default

hereunder, and KEF shall have the right, in its sole discretion, to determine

which rights, liens, security interests or remedies KEF shall at any time

pursue, relinquish, subordinate or modify, without in any way affecting the

Secured Obligations or any of KEF’s rights under this Agreement.

 

17.          Notices.  All

notices and other communications hereunder shall be in writing and shall be

transmitted by hand, overnight courier or certified mail (return receipt

requested), postage prepaid.  Such

notices and other communications shall be addressed to the respective party at

the address set forth above or at such other address as any party may from time

to time designate by notice duly given in accordance with this Section.  Such notices and other communications shall

be effective upon the earlier of receipt or three (3) days after mailing if

mailed in accordance with the terms of this section.

 

18.          General

Indemnification.  Borrower shall pay, and shall indemnify and

hold KEF and its directors, officers, employees, counsel, agents and advisors

harmless on an after-tax basis from and against, any and all liabilities,

causes of action, claims, suits, penalties, damages, losses, costs or expenses

(including attorneys’ fees), obligations, liabilities, demands and judgments,

and Liens, of any nature whatsoever (collectively, a “Liability”) arising out

of or in any way related to: (a) the Loan Documents, (b) a failure to comply

fully with Applicable Law and (c) Borrower’s failure to perform any covenant,

or breach of any representation or warranty under the Loan Documents; provided,

that the foregoing indemnity shall not extend to the Liabilities to the extent

resulting solely from the gross negligence or willful misconduct of KEF.  Borrower shall promptly deliver to KEF

copies of any documents received from the United States Environmental Protection

Agency or to any state, county or municipal environmental or health agency

concerning the Equipment or its operation and copies of any documents submitted

by Borrower or any of its subsidiaries to the United States Environmental

Protection Agency or any state, county or municipal environmental or health

agency concerning the Equipment or its operation.  Borrower further agrees to indemnify KEF against and hold it

harmless from all present and future stamp, transfer, documentary and other

such taxes, levies, fees, assessments or other charges made by any jurisdiction

by reason of the execution, delivery, performance and enforcement of the Loan

Documents.

 

19.          Severability;

Captions.  Whenever possible, each provision of this

Agreement shall be interpreted in such manner as to be effective and valid

under Applicable Law.  If, however, any

provision of this Agreement or any of the Loan Documents shall be prohibited or

unenforceable in any jurisdiction, it shall, as to such jurisdiction, be deemed

modified to conform to the minimum requirements of such law, or if for any

reason it is not deemed so modified, it shall be ineffective only to the extent

of such prohibition or unenforceability without affecting the remaining

provisions hereof, and any such prohibition or unenforceability shall not

invalidate or render unenforceable such provision in any other

jurisdiction.  Captions are intended for

convenience or reference only, and shall not be construed to define, limit or

describe the scope or intent of any provisions hereof.

 

20.          Financial and Other Data.  During

the Term hereof, Borrower shall furnish KEF (a) as soon as available, and in

any event within 120 days after the last day of each fiscal year, financial

statements of Borrower and each Guarantor and (b) from time to time as KEF may

reasonably request, other financial reports, information or data (including

federal and state income tax returns) and quarterly or interim financial

statements of Borrower and each Guarantor. All such information shall be audited

(or if audited information is not available, compiled or reviewed) by an

independent certified public accountant.

 

8

 

21.          [RESERVED]

 

22.          Representations

and Warranties of Borrower.  Borrower represents and

warrants that: (a)  Borrower is a

corporation duly organized and validly existing in good standing under the laws

of the state of its incorporation; (b) 

the execution, delivery and performance of this Agreement and all

related instruments and documents:  (1)

have been duly authorized by all necessary corporate action on the part of

Borrower, (2) do not require the approval of any stockholder, partner, trustee,

or holder of any obligations of Borrower except such as have been duly

obtained, and (3) do not and will not contravene any law, governmental rule,

regulation or order now binding on Borrower, or the charter or by-laws of

Borrower, or contravene the provisions of, or constitute a default under, or

result in the creation of any lien or encumbrance upon the property of Borrower

under, any indenture, mortgage, contract or other agreement to which Borrower

is a party or by which it or its property is bound; (c) the Loan Documents, when entered into, will constitute legal,

valid and binding obligations of Borrower enforceable against Borrower in

accordance with the terms thereof; (d) there are no pending actions or

proceedings to which Borrower is a party, and there are no other pending or

threatened actions or proceedings of which Borrower has knowledge, before any

court, arbitrator or administrative agency, which, either individually or in

the aggregate, would adversely affect the financial condition of Borrower, or

the ability of Borrower to perform its obligations under the Loan Documents;

(e) Borrower is not in default under any obligation for the payment of borrowed

money, for the deferred purchase price of property or for the payment of any

installments under any lease agreement which, either individually or in the

aggregate, would have the same such effect; (f) under the laws of the state(s)

in which the Equipment is to be located, the Equipment consists solely of

personal property and not fixtures; (g) the financial statements of Borrower

(copies of which have been furnished to KEF) have been prepared in accordance

with generally accepted accounting principles consistently applied (“GAAP”),

and fairly present Borrower’s financial condition and the results of its

operations as of the date of and for the period covered by such statements, and

since the date of such statements there has been no material adverse change in

such conditions or operations; (h) the address stated above is the chief place

of business and chief executive office, or in the case of individuals, the

primary residence, of Borrower; (i) except as set forth on Collateral Schedule

1 attached hereto, Borrower does not conduct business under a trade, assumed or

fictitious name, except as set forth in Schedule 1; (j) this Agreement

creates a valid first priority security interest in the Collateral securing

payment and performance of the Secured Obligations and all filings and other

action necessary to perfect such security interest have been taken or shall be

promptly taken; (k)  Borrower has filed or

has caused to have been filed all Federal, state and local tax returns which,

to the knowledge of Borrower, are required to be filed, and has paid or caused

to have been paid all taxes as shown on such returns or on any assessment

received by it, to the extent that such taxes have become due, unless and to

the extent only that such taxes, assessments and governmental charges are

currently contested in good faith and by appropriate proceedings by Borrower

and adequate reserves therefor have been established as required under GAAP

and, to the extent Borrower believes it advisable to do so, Borrower has set up

reserves which are believed by Borrower to be adequate for the payment of

additional taxes for years which have not been audited by the respective tax

authorities; (l) except as previously disclosed

in writing to KEF, neither Borrower nor any of its officers or directors (if a

corporation), partners (if a partnership) or members or managers (if a limited

liability corporation) has, directly or indirectly, any financial interest in

the Supplier; and (m) Borrower is not in violation of any Applicable

Law, the violation of which would have a material adverse effect on the conduct

of its business, and Borrower has obtained any and all licenses, permits,

franchises or other governmental authorizations necessary for the ownership of

its properties and the conduct of its business; and (n) none of the proceeds of

the loan made by KEF will be used, directly or indirectly, by Borrower for the

purpose of purchasing or carrying, or for the purpose of reducing or retiring

any indebtedness which was originally incurred to purchase or carry any  “margin stock” within the meaning of

Regulation U (12 CFR Part 221), of the Board of Governors of the Federal

Reserve System (herein called “margin stock”) or for any other purpose which

might make the transactions contemplated herein a “purpose credit” within the

meaning of Regulation U, or cause this Agreement to violate any other

regulation of the Board of Governors of the Federal Reserve System or the

Securities Exchange Act of 1934 or the Small Business Investment Act of 1958,

as amended, or any rules or regulations promulgated under any of such statutes.

 

9

 

23.          Further

Covenants of Borrower.

The Borrower further covenants and agrees that it will not change its

legal name, be a party to a merger, consolidation or other change in structure

or use a trade name in its business without at least 30 days’ prior written

notice to KEF; and shall execute and deliver to KEF (to be filed at Borrower’s

expense) all UCC statements as may be required by KEF in connection with such

event.

 

24.          Miscellaneous.  Time is

of the essence with respect to this Agreement. 

ANY FAILURE OF KEF TO REQUIRE STRICT PERFORMANCE BY BORROWER OR ANY WAIVER

BY KEF OF ANY PROVISION HEREIN SHALL NOT BE CONSTRUED AS A CONSENT OR WAIVER OF

ANY PROVISION OF THIS AGREEMENT. 

None of the Loan Documents may be amended except by a writing signed by

KEF and Borrower. This Agreement will be binding upon KEF only if executed by a

duly authorized officer or representative of KEF at KEF’s principal place of

business as set forth above. This Agreement and all other Loan Documents shall

be executed on Borrower’s behalf by Authorized Signers of Borrower.  The Borrower hereby waives

presentment, notice of dishonor and protest of all instruments included in or

evidencing any Secured Obligations, and all other notices and demands

whatsoever (except as expressly provided herein).  THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW

YORK AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF

THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND

PERFORMANCE WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAWS

PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION)

THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE

STATE OF NEW YORK.

 

25.          Jury

Trial Waiver.  KEF AND BORROWER HEREBY EACH WAIVE THEIR RESPECTIVE

RIGHTS TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING

OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS OR THE

TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION OR PROCEEDING TO

WHICH KEF OR BORROWER MAY BE PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS,

TORT CLAIMS, OR OTHERWISE, INCLUDING WITHOUT LIMITATION ANY ACTION,

COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE

THE VALIDITY OR ENFORCEABILITY, OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS

OR ANY PROVISION HEREOF OR THEREOF. 

THIS WAIVER IS MADE KNOWINGLY, WILLINGLY AND VOLUNTARILY BY KEF AND THE

BORROWER WHO EACH ACKNOWLEDGE THAT NO REPRESENTATIONS HAVE BEEN MADE BY ANY

INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY

ITS EFFECT.  THIS WAIVER SHALL APPLY TO

ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS

AGREEMENT AND THE OTHER LOAN DOCUMENTS.

 

26.          More

than One Borrower.  If more than one person or entity executes

this Agreement, each of the other Loan Documents, and all addenda or other

documents executed in connection herewith or therewith, as “Borrower,” the

obligations of “Borrower” contained herein and therein shall be deemed joint

and several and all references to “Borrower” shall apply both individually and

jointly.

 

27.          Entire

Agreement.  This Agreement, together with the other Loan

Documents, collectively constitute the entire understanding or agreement

between KEF and Borrower with respect to the financing of the Equipment, and there

is no understanding or agreement, oral or written, which is not set forth

herein or therein.  This Agreement shall

not be modified except by the written agreement of KEF and Borrower.

 

28.         

Execution in Counterparts.  This Agreement may be

executed in any number of counterparts and by different parties hereto in

separate counterparts, each of which when so executed shall be deemed to be an

original and all of which taken together shall constitute but one and the same

instrument.

 

10

 

29.          Power

of Attorney; UCC Filings.  BORROWER SHALL EXECUTE AND DELIVER TO KEF CONCURRENTLY

WITH THE EXECUTION OF THIS AGREEMENT, AND AT ANY TIME FROM TIME TO TIME

THEREAFTER, ALL FINANCING STATEMENTS, AMENDMENTS TO FINANCING STATEMENTS,

CHATTEL MORTGAGES, ASSIGNMENTS, AND ALL OTHER INSTRUMENTS, IN FORM SATISFACTORY

TO KEF, AND TAKE ALL OTHER ACTION AS KEF MAY REASONABLY REQUIRE, TO PERFECT AND

CONTINUE PERFECTED, MAINTAIN THE PRIORITY OF OR PROVIDE NOTICE OF KEF’S

SECURITY IN THE COLLATERAL.  BORROWER

HEREBY APPOINTS KEF, OR ITS ASSIGNEE, AND ANY OF KEF’S OR ASSIGNEE’S OFFICERS

OR EMPLOYEES AS ITS TRUE AND LAWFUL ATTORNEY IN FACT, IRREVOCABLY AND COUPLED

WITH AN INTEREST, TO EXECUTE AND FILE ON BEHALF OF BORROWER ALL UCC FINANCING

STATEMENTS WHICH IN KEF’S SOLE DISCRETION ARE NECESSARY OR PROPER TO SECURE

KEF’S INTEREST IN THE EQUIPMENT IN ALL APPLICABLE JURISDICTIONS.  Borrower hereby ratifies, to the extent

permitted by law, all that KEF shall lawfully and in good faith do or cause to

be done by reason of and in compliance with this paragraph

 

	

  Lender:

  	

  Borrower:

  
	

   

  	

   

  
	

  Key Equipment Finance,

  a Division of Key Corporate Capital Inc.

  	

  AIRNET SYSTEMS, INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  X

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  Name:

  
	

  Name:

  	

  Title:

  
	

  Title:

  	

   

  
						

 

COUNTERPART

NO. 3 OF 3 SERIALLY NUMBERED MANUALLY EXECUTED COUNTERPARTS.  TO THE EXTENT THAT THIS DOCUMENT CONSTITUTES

CHATTEL PAPER UNDER THE UNIFORM COMMERCIAL CODE, NO SECURITY INTEREST MAY BE

CREATED THROUGH THE TRANSFER AND POSSESSION OF ANY COUNTERPART OTHER THAN

COUNTERPART NO. 1.

 

 

 

 

COLLATERAL SCHEDULE

 

Schedule 1

 

	

  BORROWER

  TRADE NAMES

  
	

   

  	

   

  	

   

  
	

  AIRNET EXPRESS

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  DESCRIPTION

  OF EQUIPMENT

  
	

   

  	

   

  	

   

  
	

  Airframe Make and

  Model:

  	

   

  	

  1978 Lear 35A

  
	

  United States

  Registration Number:

  	

   

  	

  N56EM

  
	

  Airframe Manufacturer’s

  Serial Number:

  	

   

  	

  144

  
	

  Engine Make and Model:

  	

   

  	

  TFE-731-2—2B (Garrett)

  {Over 750 Horsepower}

  
	

  Engine Manufacturer’s

  Serial Numbers:

  	

   

  	

  P74478 & P74315

  
	

   

  	

   

  	

   

  

 

11

 

	

  AVIONICS

  	

   

  	

   

  
	

   

  	

   

  	

   

  
	

  Trimble 2101 Approach Plus GPS Receiver

  	

   

  	

  COLLINS VHF-20A Com Transceiver

  
	

  ICARUS 3000C Altitude Serializer

  	

   

  	

  COLLINS VHF-20B Com Transceiver

  
	

  Dual JET VG-205 Vertical Gyro

  	

   

  	

  Dual COLLINS VIR-30A Nav. Transceiver

  
	

  Dual JET DG106 Dir Gyro

  	

   

  	

  Dual COLLINS ADF-60A ADF

  
	

  Dual JET DN-101 Directisyn

  	

   

  	

  Dual DMF-40 DME

  
	

  Dual JET RG-227 Rate Gyro

  	

   

  	

  COLLINS ALT-50A Radio Altimeter

  
	

  JET AD-102 Air Data Sensor

  	

   

  	

  Inter. Cont. Dynamics Radio Altimeter with V.T.A.

  (Pilot Side)

  
	

  COLLINS TDR-90 Transponder

  	

   

  	

  Collins 718U-5 HF

  
	

  Dual COLLINS 332C-10 RMI

  	

   

  	

  FAIRCHILD GA 100 CVR

  
	

  COLLINS FD 108Y Flight Director

  	

   

  	

  Cargo Door

  
	

  RCA Primus 400

  	

   

  	

   

  

 

12KCL:  Amendment to Security Agreement  for

Exhibit

4.6

 

 

	

  

  	

  C#: 44097

  L#: 44098

  Ls#: 8800021447

  

 

Amendment No. 01

To Security Agreement

___________________________________________________________________________________________________________

 

THIS AMENDMENT dated as

of May 10, 2002 amends that certain Security Agreement dated as of January

   , 2002 (the “Agreement”) between Key Equipment Finance, a Division of Key

Corporate Capital  Inc., as lender, and AIRNET SYSTEMS, INC.,

as Borrower.  Unless otherwise specified herein, all capitalized terms shall

have the meanings ascribed to them in the Agreement.

 

BORROWER’S FINANCIAL COVENANTS. Borrower hereby

covenants with Lender as follows:

 

1.                                       Minimum Net

Worth: permit or suffer the Consolidated Net Worth of the Company

and its subsidiaries at any time to be less than the sum of $73,338,000, plus

50% of the Consolidated net income of the Company and its subsidiaries,

commencing with the fiscal year end ending December 31, 2001, and to accumulate

on an on-going basis throughout the term of the Note, provided that, if such

income is negative in any fiscal year of the Company, the amount added for such

fiscal year shall be zero and such amount shall not reduce the amount added

pursuant to any other fiscal year.

 

2.                                       Funded Debt

Ratio: its Funded Debt Ratio shall not exceed 2.50 to1.00 at any

time.

 

3.                                       Cash Flow

Coverage Ratio: its Cash Flow Coverage Ratio shall not be less than

1.2 to 1.00, as measured on a quarterly basis.

 

4.

Definitions:

 

a)                                     “Consolidated”

shall mean, when used in reference to any financial term in this Agreement, the

aggregate for two or more Persons of the amounts signified by such term for all

such Persons determined on a consolidated basis in accordance with generally

accepted accounting principles.

 

b)                                    “Cash Flow

Coverage Ratio” shall mean as of the last day of any fiscal quarter

of the Company and determined for the Company and its subsidiaries on a

Consolidated basis, the ratio of (a) EBITDA plus the amount of rent paid under

operating leases, and minus the amount of capital expenditures which are not

financed by long term debt, in each case for the four consecutive fiscal

quarter period then ending, to (b) Interest Expense, plus the amount of rent

paid under operating leases, in each case as calculated for the four fiscal

quarters then ending, and plus the current portion of Funded Debt as of the

last day of such fiscal quarter.  .

 

c)                                     

“EBITDA”

shall mean,, for any period, net income for such period plus all amounts

deducted in determining such net income on account of (a) Interest expense, (b)

income taxes , and (c) depreciation and amortization expense..

 

d)                                    “Funded Debt

Ratio” shall mean, as of any date, the ratio of (a) Funded Debt as

of such date to (b) EBITDA, as calculated for the four consecutive fiscal

quarters of the Company most recently ended.

 

 

e)                                     “Funded

Debt” as of any date, shall mean: (a) all debt for borrowed money and

similar monetary obligations evidenced by bonds, notes, debenutures, capital

leease obligations or otherwise, including with out limitation obligations in

respect of deferred purchase price of properties or assets, in each case

whether direct or indirect; (b) all liabilities secured by any lien existing on

property owned or acquired subject thereto, whether or not the liability

secured thereby shall have been assumed; (c) all reimbursements obligations

under outstanding letters of credit in respect of drafts which (i) may be

presented or (ii) have been presented and have not yet been paid, and (d) all

contingent liabilities relating to any obligations or others similar in

character to those described in the foregoing clauses (a) through (c), all as

determined for the Company and its subsidiaries on a Consolidated basis.

 

f)                                       “Interest

Expense” shall mean for any period, total interest and related

expense (including , without limitation, that portion of any capitalized lease

obligation attributable to interest expense in conformity with GAAP,

amortization of debt discount, all capitalized interest, the interest portion

of any deferred payment obligations , all commissions, discounts and other fees

and charges owed with respect to letter of credit and bankers acceptance

financing, the net costs and net payments under any interest rate hedging, cap

or similar agreement or arrangement, prepayment charges, agency fees,

administrative fees, commitment fees and capitalized transaction costs

allocated to interest expense) paid, payable or accrued during such period,

without duplication of any period, with respect to all its subsidiaries on a

Consolidated basis.

 

g)                                    “Net Worth”

of any Person shall mean, as of any date, the amount of capital stock, paid in

capital and similar equity accounts plus (or minus in the case of a deficit)

the capital surplus and retained earnings of such Person and the amount of any

foreign currency translation adjustment account shown as a capital account of

such Person.

 

h)                                    “Person”

shall include an individual, a corporation, an association, a partnership, a

trust or estate, a joint stock company, an unincorporated organization, a joint

venture, a trade or business (whether or not incorporated), a government

(foreign or domestic) and any agency or political subdivision thereof, or any

other entity.

 

5.                                       Compliance. Borrower shall, within ninety (90) days of the end of each fiscal year

end, and within forty five (45) days of each quarter end of Borrower, provide

Lender with a certificate (a “Compliance Certificate”) representing that

Borrower is in full compliance with the foregoing financial covenants and

setting forth the calculations used by Borrower to reach its conclusion. The

Compliance Certificate shall be signed by Borrower’s chief financial officer

or, if Borrower does not have a chief financial officer, such other officer or

employee of Borrower who performs the duties typically undertaken by a chief

financial officer.

 

EXCEPT AS EXPRESSLY MODIFIED HEREBY,

ALL OF THE TERMS, COVENANTS AND CONDITIONS OF THE AGREEMENT SHALL REMAIN IN

FULL FORCE AND EFFECT AND ARE IN ALL RESPECTS HEREBY RATIFIED AND AFFIRMED.

 

2

 

 

IN WITNESS WHEREOF, Lender and

Borrower have executed this Amendment as of the date first written above.

 

	

  Lender:

  	

  Borrower:

  
	

   

  	

   

  
	

  Key

  Equipment Finance, a Division of Key Corporate Capital Inc.

  	

  AIRNET

  SYSTEMS, INC.

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  X

  	

   

  	

   

  
	

  By:

  	

   

  	

   

  	

  Name:

  
	

  Name:

  	

  Title:

  
	

  Title:

  	

   

  
						

 

3

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