MASTER LOAN AGREEMENT

 

Agreement

 

1.                           General Conditions Precedent to the Loan . Before the Lender makes a Loan, Borrower shall execute and deliver to Lender the respective Note corresponding to the Loan, in the form attached hereto as Exhibit “A”, and the Security Agreement for the Collateral corresponding to the Loan, in the form attached hereto as Exhibit “B”, and provide all financial information, corporate documents, certifications, authorizations and invoices requested by Lender and to Lender’s satisfaction. In addition, Lender’s obligations shall be conditioned upon Lender’s receipt of and determination that the following are satisfactory to Lender: (a) lien searches in the jurisdiction in which Borrower’s principal executive office is located; (b) lien searches with the Federal Aviation Administration (“FAA”) ; (c) lien searches with the International Registry of Mobile Assets created by the Cape Town Treaty (“IRMA”) and (d) Borrower’s parent company, Allegiant Travel Company, a Nevada corporation, shall have executed a guaranty in the form attached hereto as Exhibit “C”.

 

2.                           Note Term and Payments . Each Note shall provide for the amortization of principal and interest in equal monthly installments over a period of forty eight (48) months and for a balloon payment of the remaining principal balance on the date that is forty-eight (48) months after the date of the Note, all as set forth in each Note and commencing on the date stated in each Note.

 

3.                           Interest Rate . The interest rate for each Note shall be reflected in the respective Note and shall be equal to 3-Month LIBOR rate (the “3-Month LIBOR rate”) , plus two hundred fifty basis points (2.50%), fixed. For these purposes, the “3-Month LIBOR rate” shall mean the 3-Month LIBOR rate as published in The Wall Street Journal on the date of the advance. This definition of Bank’s 3-Month LIBOR rate is to be strictly interpreted and is not intended to serve any purpose other than providing an index to determine the interest rate used herein. Bank’s 3-Month LIBOR rate may not necessarily be the same as the quoted offered side in the Eurodollar time deposit market by any particular institution or service applicable to any interest period. It is not the lowest rate at which Bank may make loans to any of its customers, either now or in the future. At no time shall the interest rate applicable to the Notes be less than 6.00% per annum.

 

4.                           Origination Fee . Borrower shall pay, as a condition precedent to the Loans, a “loan origination fee” equal to one-quarter of one percent (0.25%) of the amount of each of the Loans. The origination fee shall be payable at the time of each advance of the Loan evidenced by a respective Note by reducing the amount to be disbursed by Lender to Borrower upon the execution of each Note by the amount of the loan origination fee with respect to such Loan.

 

5.                           Consideration for the Note . In consideration of each Note and as a condition of its Loan to Borrower, Lender requires Borrower to grant a security interest in the Collateral described in each Security Agreement to secure Borrower’s payment and performance of all its obligations under the corresponding Note.

 

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6.                           Method of Payment . Borrower shall make each payment under each Note on the date when due thereunder in lawful money of the United States to Lender’s address set forth above (or the address of Lender’s assignee which shall be provided to Borrower) in immediately available funds. Borrower may make payments by wire transfer per wire instructions set forth on Exhibit “D” attached hereto as such wire instructions may be changed by Lender by prior written notice to Borrower.

 

7.                           Fees and Costs . Borrower shall reimburse Lender for all out of pocket appraisal fees, attorneys’ fees and additional costs, charges, and expenses incurred (i) for all searches, filings, registrations, recordings, waivers and appraisals; (ii) in review, preparation, execution and delivery of the Loan Agreement, the Security Agreements and the Notes (“Debt Documents”), (iii) in defending or protecting Lender’s security interest in the Collateral after a default by Borrower or in the event another lien is filed against the Collateral or Lender has reasonable basis to believe its priority secured position in the Collateral is impaired; (iv) in the enforcement of the Loan or the collection of any payments due under the Debt Documents after an Event of Default (defined below) by Borrower, or the preparation of any settlement agreements prepared in connection with the Loan as a result of any such event of default; (v) in any amendment of the Loan other than an amendment requested by Lender; and (vi) in any lawsuit or other legal or arbitration/mediation proceeding to which the Loan gives rise, including without limitation, actions in tort if Lender is the prevailing party. The documentation, appraisal fees and legal fees to be paid by Borrower and described in clauses (i) and (ii) above shall not exceed $20,000.00.

 

8.                           Corporate Existence and Evidence; Citizenship; International Registry . Borrower represents and warrants, on a continuing basis, that it (i) is a limited liability company, (ii) is duly organized and validly existing in good standing under the laws of the jurisdiction of its organization, (iii) is duly qualified to do business in each jurisdiction where its operations require, and (iv) has full power and authority, under the operating or other organizational or governing agreement of the company, to obtain the Loans using the Collateral as security, and to enter into and perform its obligations under the Debt Documents. Borrower’s execution, delivery and performance of the Debt Documents have been duly authorized by all necessary company action on the part of Borrower and are not inconsistent with its operating agreement or other organizational or governing instruments. Borrower is, and shall at all times throughout the term of this Agreement (including any extensions or renewals hereof) be and remain, a citizen of the United States within the meaning of 49 U.S. Code Section 20102(a)(15) of Title 49 of the United States Code. In addition, Borrower shall, throughout the term of the Loan, (i) be registered as a Transaction User Entity, (ii) have designated a Professional User Entity (acceptable to Lender) and (iii) have paid all required fees and taken all actions necessary to enable Lender to register any International Interest with the International Registry. The terms “Transaction User Entity” and “Professional User Entity” shall have the respective meanings assigned thereto in the International Registry Regulations issued pursuant to Article 17(2) of the Cape Town Convention and Article XVIII of the Protocol to the Convention on International Interests in Mobile Equipment on Matters specific to Aircraft Equipment.

 

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9.                           Legally Binding Obligations . The execution, delivery and performance by Borrower of the Debt Documents do not violate any law or governmental rule, regulation or order applicable to Borrower and do not and will not contravene any provision, or constitute a default under any instrument to which it is bound, and will constitute a legal, valid and binding agreement of Borrower, enforceable in accordance with its terms. No action, including any permits or consents, in respect of or by any state, federal or other governmental authority or agency is required with respect to the execution, delivery and performance of the Debt Documents by Borrower.

 

10.                     Financial Statements and Covenants .

 

(a)                       Borrower shall provide to Lender a copy of its parent company’s annual audited financial statements within one hundred twenty (120) days after its fiscal year end, and a copy of its parent company’s quarterly un-audited financial statements within sixty (60) days after the end of each fiscal quarter.

 

(b)                      [Intentionally omitted.]

 

(c)                       [...***...]

 

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(d)                      [...***...]

 

(e)                       Until Borrower’s obligations are paid in full as required under the Debt Documents, Borrower agrees that it will: (i) preserve its organizational existence and not, in one transaction or a series of related transactions, merge into or consolidate with any other entity, or sell all or substantially all of its assets; and (ii) not change its name, address of principal executive offices, address or jurisdiction of organization without first providing Lender with at least thirty (30) days’ prior written notice. The parties acknowledge that Borrower expects to move its principal offices to 8360 South Durango Drive, Las Vegas, Nevada 89113 in 2008;

 

(f)                         At all times prior to the repayment of all of Borrower’s obligations under this Loan Agreement and the Notes executed hereunder, neither Borrower nor any of its officers, directors or members and any other direct or indirect holder of any equity interest in Borrower: (i) shall be a Prohibited Person as defined under U.S. Presidential Executive Order #13224 and the Patriot Act; and (ii) shall fail to be in full compliance with all applicable orders, rules, regulations and recommendations promulgated under or in connection with Executive Order #13224 and the Patriot Act except that Borrower makes no representation with respect to the shareholders of its publicly held parent company; and

 

(g)                      Borrower shall, in all material respects, remain in compliance with all applicable laws, regulations, requirements, rules and orders applicable to its business, all manufacturers’ instructions and warranty requirements, all FAA directives (as applicable) and with the conditions and requirements of all policies of insurance with respect to the Collateral.

 

11.                     Notices required . Borrower shall give Lender written notice of each of the following events within the specified period of time set forth below:

 

(a)                       any loss, damage or destruction to an item of Collateral within 10 days thereof;

 

(b)                      any condition or event that constitutes a default under the Debt Documents, specifying the nature thereof and the action which Borrower is taking or proposes to take with respect thereto, within 10 days thereof;

 

(c)                       the cancellation, revocation, suspension, restriction or expiration of any FAA registration, maintenance certificate, airworthiness certificate, or insurance on any item of Collateral upon Borrower’s receipt thereof;

 

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(d)                      any litigation involving Borrower within 10 days of Borrower’s commencing or receiving notice of such litigation, as applicable, if such litigation, if adversely determined, would have a material adverse effect on Borrower, its Financial condition, or the Collateral;

 

(e)                       a change in ownership of Borrower such that it is no longer a wholly-owned subsidiary of Allegiant Travel Company within 20 days thereof; or

 

(f)                         any other event or change in the type of business conducted by Borrower or the location or jurisdiction of organization of Borrower or its parent corporation within 20 days thereof.

 

12.                     Indemnification . Borrower shall indemnify and hold Lender harmless from and against any and all third party claims (including without limitation, negligence, tort and strict liability), damages, adjustments, suits, administrative and legal proceedings, and any and all costs and expenses in connection therewith (including attorneys’ fees incurred by Lender) arising out of or in any manner connected with or resulting from this Agreement or the Collateral, including, without limitation the manufacture, purchase, financing, ownership, rejection, non-delivery, transportation, importation, delivery, possession, use, operation, maintenance, inspection, condition, lease, return, storage or disposition thereof, and including further, without limitation (a) claims for injury to or death of persons and for damage to property, (b) claims relating to patent, copyright, or trademark infringement, (c) claims relating to latent or other defects in the Collateral whether or not discoverable by Borrower, and (d) claims for wrongful, negligent or improper act or misuse by Borrower. Borrower agrees to give Lender prompt notice of any such claim or liability. The term “Lender,” for purposes of this paragraph, includes Lender, its successors and assigns, shareholders, members, owners, partners, directors, officers, representatives and agents. The provisions of this paragraph shall survive the expiration or other termination of this Agreement and the Debt Documents with respect to events occurring prior to such expiration or termination.

 

13.                     Default. An Event of Default shall occur under this Agreement if:

 

(a)                       Nonpayment of any Note . Borrower fails to pay Lender or its assigns when due any principal or interest payment under any Note and such failure shall continue uncured for five (5) business days.

 

(b)                      Other Nonpayment . Borrower fails to pay Lender or its assigns when due any other obligation under any Note, this Agreement, any Security Agreement or any other instrument executed as a part of this Agreement, and such failure shall continue uncured for five business (5) days after Borrower’s receipt of written notice of the failure from Lender;

 

(c)                       Insurance . Borrower fails to maintain any required insurance in compliance with the terms of the Debt Documents;

 

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(d)                      Unauthorized Use of Collateral or Proceeds . Borrower attempts to or does, remove, sell, assign, transfer, encumber, sublet or part with possession of any one or more items of the Collateral or proceeds, except as expressly permitted herein or in any Security Agreement, allows any of the Collateral or proceeds to become subject to any levy, seizure, attachment, assignment or execution, or Borrower abandons any item of Collateral without substituting therefor additional Collateral in accordance with the terms of the Security Agreement;

 

(e)                       Failure to Provide Notice . Borrower fails to notify Lender of any material loss, damage, or destruction to any of the Collateral within ten (10) days thereof;

 

(f)                         Breach of Debt Documents . Borrower fails to observe or perform any of its covenants and obligations required to be observed or performed under any of the Debt Documents and such failure continues uncured for twenty (20) days after the earlier of receipt of written notice from Lender or Borrower’s knowledge thereof, except that: (i) the twenty (20) day cure period shall not apply and an Event of Default shall occur immediately upon Borrower’s failure to maintain insurance in compliance with the terms of the Debt Documents, and (ii) the twenty (20) day cure period shall not apply when a shorter cure period has been specified in this Section;

 

(g)                      Representations and Warranties . That Prove False. Borrower breaches any of its representations or warranties made under any of the Debt Documents in any material respect, or if any such representations or warranties are false or misleading in any material respect;

 

(h)                      Bankruptcy and Insolvency . Borrower or its parent company shall (i) be adjudicated insolvent or a bankrupt, or cease, be unable, or admit its inability to pay its debts as they mature, or make a general assignment for the benefit of creditors or enter into any composition or arrangement with creditors; (ii) apply for or consent to the appointment of a receiver, trustee or liquidator of it or of a substantial part of the Collateral, or authorize such application or consent, or proceedings seeking such appointment shall be instituted against it without such authorization, consent or application and shall continue undismissed for a period of sixty (60) days; (iii) authorize or file a voluntary petition in bankruptcy or apply for or consent to the application of any bankruptcy, reorganization in bankruptcy, arrangement, readjustment of debt, insolvency, dissolution, moratorium or other similar law of any jurisdiction, or authorize such application or consent; or proceedings to such end shall be instituted against it without such authorization, application or consent and such proceeding instituted against it shall continue undismissed for a period of sixty (60) days;

 

(i)                          Control of Borrower . Borrower shall become a less than wholly-owned subsidiary of Allegiant Travel Company or Allegiant Travel Company shall no longer control the managing board of Borrower;

 

(j)                          Breach of Security Agreement . Debtor fails to comply with the terms of any Security Agreement executed by Borrower and Lender, which failure is not cured by Borrower within the applicable cure period under such Security Agreement;

 

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(k)                       Change in Corporate Existence . Borrower shall have terminated or changed its organizational or limited liability company existence, consolidated with, merged into, or conveyed or leased substantially all of its assets to any person or entity, unless: (i) such person or entity executes and delivers to Lender an agreement reasonably satisfactory in form and substance to Lender, containing such person’s or entity’s effective assumption, and its agreement to pay, perform, comply with and otherwise be liable for, in a due and punctual manner, all of Borrower’s obligations having previously arisen, or then or thereafter arising, under the Debt Documents, together with any and all documents, agreements, instruments, certificates, guarantees, opinions and filings reasonably requested by Lender; (ii) Lender is reasonably satisfied as to the creditworthiness of such person’s or entity’s conformance to other standard criteria then used by Lender for such purposes; and (iii) Borrower has provided no less than twenty (20) days prior written notice of such occurrence to Lender or its assigns; or

 

(1)                       Location of Collateral . Borrower or its lessee operates or locates the Collateral in any country or jurisdiction that does not maintain full diplomatic relations with the United States, any area of hostilities, or any country or jurisdiction for which exports or transactions are subject to specific restrictions under any United States export or other law or United Nations Security Counsel Directive, or otherwise violates, or suffers or permits the violation of, such laws or directives.

 

14.                     Remedies . Upon the occurrence of any Event of Default and at any time thereafter during the continuance of such default, Lender may, with or without giving notice to Borrower, do any one or more of the following:

 

(a)                       Enforcement . Accelerate amounts owing under any or all of the Notes, and enforce this Agreement, any or all of the Security Agreements and any or all of the Notes according to their respective terms;

 

(b)                      Cure . Advance funds on Borrower’s behalf to cure the Event of Default, whereupon Borrower shall immediately reimburse Lender therefor, together with interest charges accrued thereon;

 

(c)                       Cancel Funding Obligations . Refuse to make additional advances provided for under this Agreement;

 

(d)                      Acceleration . Accelerate all obligations due and payable under any or all of the Notes, and declare any or all of the Notes immediately due and payable;

 

(e)                       Additional Collateral . Request additional collateral to secure the Note or Notes;

 

(f)                         File Suit and Obtain Judgment . File suit and obtain monetary judgment and, in conjunction with any action, seek any ancillary remedies provided by law, including levy of attachment or garnishment;

 

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(g)                      Exercise Rights under Security Agreements . Exercise any remedies available to Lender under any or all of the Security Agreements.

 

The rights and remedies afforded Lender hereunder shall not be deemed to be exclusive, but shall be in addition to any rights or remedies provided by law. Lender’s failure promptly to enforce any right or remedy hereunder shall not operate as a waiver of such right or remedy, and Lender’s waiver of any default shall not constitute a waiver of any subsequent or other default. Lender may accept late payments or partial payments of amounts due under the Note or Notes and may delay enforcing any of Lender’s rights or remedies hereunder without losing or waiving any of Lender’s rights or remedies. Except as expressly provided in this Agreement, Borrower waives any notice of Lender’s notice of nonpayment, presentment, notice of dishonor, or any other notice.

 

Lender shall also have and enjoy all rights and remedies provided at law or in equity, including without limitation those provided to secured parties under the Uniform Commercial Code (“UCC”) , to collect, enforce or satisfy any obligations of Borrower then owing, whether by acceleration or otherwise.

 

Notwithstanding the foregoing, in the event Lender is fully compensated for all amounts due under the Debt Documents, including all fees of collection, through the exercise of any or all of the foregoing remedies, any excess amounts obtained by Lender through such collection efforts shall inure to the benefit of and shall be paid to Borrower or as directed by Borrower.

 

15.                     Bankruptcy Code . The parties acknowledge that Lender and its assignees shall not be entitled to the benefits of Section 1110 of the Bankruptcy Code with respect to the security for the Loan.

 

16.                     Governing Law; Waiver of Trial by Jury . THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEVADA, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THE PARTIES AGREE TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF NEVADA; ANY SUIT OR OTHER PROCEEDING BROUGHT BY EITHER PARTY TO ENFORCE OR CONSTRUE THIS AGREEMENT, OR TO DETERMINE MATTERS RELATING TO THE COLLATERAL OR THE RELATIONSHIP BETWEEN THE PARTIES HERETO, SHALL BE BROUGHT ONLY IN THE STATE OR FEDERAL COURTS IN NEVADA. THIS AGREEMENT WAS EXECUTED IN NEVADA AND IS TO BE PERFORMED IN NEVADA (BY REASON OF ONE OR MORE PAYMENTS REQUIRED TO BE MADE TO LENDER IN NEVADA). THE PARTIES HEREBY WAIVE THE RIGHT TO TRIAL BY JURY OF ANY MATTERS ARISING OUT OF THIS AGREEMENT, THE COLLATERAL OR THE CONDUCT OF THE RELATIONSHIP BETWEEN BORROWER AND LENDER.

 

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17.                     Headings . Section headings used in this Agreement are for convenience only and are not a part of this Agreement and shall not be used in construing it.

 

18.                     Severability . In the event that any provision of this Agreement is found to be unenforceable in any legal proceeding, the remaining provisions shall remain in full force and effect.

 

19.                     Integration and Modification. This Agreement is the entire agreement of Borrower and Lender concerning its subject matter until the parties’ execution of one or more Security Agreements and one or more Notes. This Agreement may not be amended or modified except by a written amendment signed by a duly authorized representative of each party, but no such amendment or modification needs further consideration to be binding.

 

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The parties have signed this Agreement as of the day and year written below.

 

Dated:              , 2008

 

BORROWER:				LENDER:
ALLEGIANT AIR, LLC				BANK OF NEVADA
BY:				BY:
NAME:		Andrew C. Levy		NAME:
TITLE:		Authorized Agent		TITLE:

 

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EXHIBIT “A”

 

Form of Note

 

(to be attached)

 

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Loan No.           

 

PROMISSORY NOTE

AIRCRAFT # N860GA

 

$2,895,000.00

Date:          , 2008

 

 

FOR VALUE RECEIVED, ALLEGIANT AIR, LLC, a Nevada limited-liability company, with its principal executive office located at 3301 North Buffalo Drive, Suite B-9 Las Vegas, Nevada 89129 (“Debtor”), hereby promises to pay, without offset, defense or counterclaim, to the order of BANK OF NEVADA (“Secured Party”) with its principal executive office located at 777 N. Rainbow Blvd., Las Vegas, Nevada, 89107, or at such other place as may be designated in writing by the holder of this Note, the principal sum of TWO MILLION EIGHT HUNDRED NINETY FIVE THOUSAND AND NO/100 DOLLARS ($2,895,000.00), with interest under this Note will accrue at the rate of six percent (6%) per annum. Payments under the Note will be paid as follows:

 

A.       Principal and interest under this Note shall be payable in forty-eight (48) installments of SIXTY EIGHT THOUSAND ONE HUNDRED NINETY FIVE AND 72/100 DOLLARS ($68,195.72) each, reflecting a 48-month amortization period, commencing on the            day of          2008, and on the same day of each month thereafter through and including          , 2012.

 

B.        A final installment equal to the unpaid balance of the Note (if any) shall be due and payable on          , 2012.

 

Debtor shall have the right to prepay the Note in whole or in part, at any time or times, without premium or penalty.

 

In the event of a default under this Note, any other Note signed by Debtor in favor of Secured Party, the Loan Agreement or the Security Agreement (as hereinafter defined) and/or after maturity (whether by acceleration or otherwise), interest on any amounts not paid when due under this Note and any amounts accelerated pursuant to the Security Agreement, shall accrue at a per annum rate equal to the aforesaid rate plus three percent (3%), which default interest rate shall apply both before and after any judgment obtained by Secured Party or its assigns. Interest on any amounts not paid when due under this Note and any amounts accelerated pursuant to the Security Agreement shall be computed on the basis of a year equal to 360 days and charged for the actual number of days within the period for which interest is being charged.

 

This Note is entered into pursuant to a Master Loan Agreement dated as of        , 2008, between Debtor and Secured Party and is secured by collateral described in a Security Agreement between Debtor and Secured Party, to which reference is made for a description of the rights of Secured Party and any holder of this Note. If there is an Event of Default under the Loan Agreement which is not cured within the cure period provided for therein, Secured Party may declare the entire amount of the Note to be

 

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immediately due and payable and exercise all of its rights and remedies under the Security Agreement. If suit is brought to collect this Note, Debtor shall be liable to Secured Party for its costs of enforcement of its rights and remedies, including, without limitation, its reasonable attorneys’ fees.

 

Presentment, demand for payment, notice of dishonor and protest are hereby waived.

 

Secured Party may renew or extend this Note, release any guarantor hereof or waive or modify any provision hereof, without affecting the obligations of Debtor, except as may be specifically set forth in such renewal, extension, release, waiver or modification.

 

All payments received by Secured Party in respect hereof shall be applied, first, to any charges then owing hereon, next, to accrued interest and then, to principal. Secured Party may assess Debtor a charge for any remittance that is dishonored.

 

This Note shall in all respects be governed by and construed in accordance with the laws of Nevada, including all matters of construction, validity and performance. The parties agree to submit to the exclusive jurisdiction of the state or federal courts located in the State of Nevada; any suit or other proceeding brought by either party to enforce or construe this Agreement, or to determine matters relating to the Collateral or the relationship between the parties hereto shall be brought only in the state or federal courts in Nevada. This Note was executed in Nevada and is to be performed in Nevada. The parties hereby waive the right to trial by jury of any matters arising out of this Note, or the conduct of the relationship between Debtor and Secured Party.

 

This Note and the Security Agreement may not be otherwise modified or changed, in whole or in part, and no right or remedy of Secured Party under this Note or the Security Agreement or under any other agreement may be waived, except in a writing signed by Secured Party. All rights, remedies and benefits of Secured Party hereunder shall inure to the benefit of the holder of this Note. Secured Party may assign this Note and Security Agreement without notice to Debtor; provided, however, that Debtor shall not be in default hereunder as a result of compliance with the terms of the Note and Security Agreement until Debtor has been notified of such assignment in writing.

 

DEBTOR:

 

ALLEGIANT AIR, LLC, a Nevada limited-liability company
By:
Name:	Andrew C. Levy
Title:	Authorized Agent

 

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EXHIBIT “B”

 

Form of Security Agreement

 

(to be attached)

 

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AIRCRAFT SECURITY AGREEMENT

AIRCRAFT #N860GA

 

THIS AIRCRAFT SECURITY AGREEMENT (“Agreement”) is made between ALLEGIANT AIR, LLC, a Nevada limited liability company, with its principal executive office located at 3301 North Buffalo Drive, Suite B-9 Las Vegas, Nevada 89129 (‘Debtor”), and BANK OF NEVADA, a bank chartered under the laws of Nevada, with its principal executive office located at 777 N. Rainbow Blvd., Las Vegas, Nevada, 89107 (“Secured Party”), effective as of          , 2008, as the Funding Date for the amount of TWO MILLION EIGHT HUNDRED NINETY FIVE THOUSAND AND NO/100 DOLLARS ($2,895,000.00), as set forth in the corresponding Promissory Note.

 

1.         Background . Secured Party and Debtor will have simultaneously herewith entered into a Promissory Note (“860 Note”) , evidencing the loan made by Secured Party with respect to the Collateral hereunder. As a condition to and in consideration of its loan to Debtor under the Note, Secured Party requires Debtor to grant a security interest in the “Collateral” described herein to secure Debtor’s payment and performance of all its obligations under the Note. This Security Agreement has been entered into pursuant to that certain Master Loan Agreement dated as of                 , 2008, between Secured Party and Debtor (“Loan Agreement”). All of the Promissory Notes issued by Debtor under the Loan Agreement are hereinafter referred to as the “Loan Notes”.

 

2.         Grant of Security Interest . For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Debtor hereby grants to Secured Party a security interest in the “Collateral” described in Section 3 to secure all of Debtor’s obligations (including without limitation all payment obligations) under the Loan Notes and all other obligations and liabilities of Debtor to Secured Party arising in connection with the Loan Notes and/or the Loan Agreement, hereinafter together with this Security Agreement collectively referred to as the “Debt Documents,” for which Debtor is now or may hereafter become liable in any manner, whether such obligations arise under the Loan Notes or otherwise, and whether primary or secondary, direct or indirect, contingent or absolute, and howsoever arising, including without limitation, all costs and expenses incurred in connection with the Loan Notes or in the protection or maintenance of the Collateral or in the enforcement of this Security Agreement, including without limitation, court costs and attorneys’ fees and expenses.

 

3.         Collateral . The Collateral serving as “Collateral” and subject to the above security interest shall consist of one aircraft (“Aircraft”) along with the aircraft engines (“Engines”), Parts, appurtenances and other personal property as more fully described in Exhibit “A” attached hereto, together with all attachments, replacements, parts, substitutions, additions, repairs, accessions and accessories incorporated therein or affixed thereto, and all rights and services related thereto, all records, logs, manuals, data, inspection, modification and overhaul records and all maintenance and inspection programs required to be maintained with respect to the personal property under applicable rules and regulations of the FAA, and all other documents at any time maintained with

 

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respect to such personal property and to the extent not listed above as original collateral, rebates, refunds, remittances, proceeds (including insurance proceeds), and income of the foregoing (“Collateral”) .

 

At any time during the term of this Agreement, the Debtor shall have the right to substitute an equivalent Engine with a value and utility of at least the value and utility of the Engine sought to be replaced (assuming the Engine to be replaced is in a condition at least as favorable as required by this Agreement). The term “Engine” shall refer to any Replacement Engine substituted for an Engine i