UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): June 24, 2019
Air T, Inc.
(Exact Name of Registrant as Specified in Charter) 
 
  
 
 
 
 
Delaware
 
001-35476
 
52-1206400
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(I.R.S. Employer
Identification No.)
 
 
5930 Balsom Ridge Road
____________Denver, North Carolina 28037__________
(Address of Principal Executive Offices, and Zip Code)

_____________________(828) 464-8741__________________
Registrant’s Telephone Number, Including Area Code

_____________________Not applicable______________________
(Former Name or Former Address, if Changed Since Last Report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock
AIRT
NASDAQ Global Market
Alpha Income Preferred Securities (also referred to as 8% Cumulative Capital Securities) (“AIP”)
AIRTP
NASDAQ Global Market
Warrant to purchase AIP
AIRTW
NASDAQ Global Market
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
 
¨
Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
¨
Pre-commencement communication pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
¨
Pre-commencement communication pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 1.01    Entry into a Material Definitive Agreement

To the extent responsive, the information included in Items 2.01 and 2.03 is incorporated herein by reference.

Item 2.01    Completion of Acquisition or Disposition of Assets

On June 26, 2019, Contrail Aviation Leasing, LLC (“CAL”), a wholly-owned subsidiary of Contrail Aviation Support, LLC (“CAS”, and together with CAL, the “Subsidiaries”), a 79%-owned subsidiary Air T, Inc. (the “Company”), CAS, and Wilmington Trust SP Services (Dublin) Limited (“Wilmington”) entered into that Declaration of Trust (MSN 29922) pursuant to which the Aircraft MSN 29922 Trust was created (the “Trust”). Wilmington is the trustee and CAL is the sole beneficial owner of the Trust. On August 2, 2019, Wilmington, as the trustee of the Trust, entered into a purchase agreement to acquire one Boeing B737-800 aircraft with serial number 29922, and two CFM56-7B24 engines with serial numbers 890420 and 890421 (collectively, “Aircraft 29922”). The Aircraft is subject to a lease, novated by the Trust as the lessor. The Aircraft 29922 is the principal asset of the Trust, of which CAL is the sole beneficial owner. The transaction closed on October 31, 2019. The total transaction value for the purchase exceeded $15,000,000.* CAS guarantees the buyer obligations of Wilmington.
The interest in the Trust owning the aircraft and engines purchased as discussed above continues Contrail’s business of purchasing aircraft and/or aircraft engines for the purpose of leasing or disassembling them and selling them for parts.
Transaction documents with respect to the transaction are filed as Exhibits 10.15, 10.16, 10.17, 10.18, 10.19, 10.20 hereto, which are incorporated herein by reference.
To the extent responsive, the information included in Item 2.03(vi) is incorporated herein by reference.

*Portions of the transaction exhibits have been omitted for confidential treatment.
Item 2.03        Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
 
i.
Master Loan Agreement

On June 24, 2019, the Subsidiaries entered into a Master Loan Agreement (“Master Loan Agreement”) with Old National Bank (“ONB”). The Master Loan Agreement consolidates and restates that certain Business Loan Agreement dated January 26, 2018, Business Loan Agreement dated March 2, 2018, and Business Loan Agreement dated September 14, 2018. ONB may lend to the Subsidiaries by entering into a supplement to the Master Loan Agreement, for which the interest rate, maturity date, repayment terms, and all other terms specific to each loan shall be included. In connection with the Master Loan Agreement, the Subsidiaries and ONB also entered into an amendment to amend the existing security agreements and any future security agreements to conform their event of default provisions and the collateral inspection and appraisal cost reimbursement provisions.





The obligations of the Subsidiaries under the Master Loan Agreement are secured by a first-priority security interest in all of the assets of the Subsidiaries, including a first-priority security interest in the aircraft and engines purchased with the funds from each loan in connection with each supplement, evidenced by separate aircraft security agreements. The obligations of the Subsidiaries are also guaranteed by the Company; provided, however, that the total dollar amount of borrowings guaranteed by the Company to ONB is limited to $1,600,000.00, plus costs of collection and costs, fees and expenses associated with the recovery, repossession or other similar efforts to retrieve any of ONB’s collateral securing any of the outstanding debt of the Subsidiaries to ONB, including the aircraft and engines purchased with the funds from each loan in connection with each supplement.

The Master Loan Agreement contains affirmative and negative covenants, including covenants that restrict the ability for the Subsidiaries to make acquisitions or investments, make certain changes to their capital structure, and engage in any business substantially different than they presently conduct as well as financial covenants relating to, among other things, quarterly cash flow coverage, and tangible net worth.

The Master Loan Agreement contains Events of Default, as defined therein, including, without limitation, late payment of three business days, violation of covenants, insolvency events, false statements made in a warranty or representation, defective collateralization, death or incompetency of any guarantor, change in control of operations, or creditor or forfeiture proceedings.

The foregoing summary of the terms of the Master Loan Agreement and Company Continuing Guaranty does not purport to be complete and is qualified in its entirety by reference to the documents which are filed as Exhibit 10.1 and Exhibit 10.2 respectively hereto and are incorporated by reference herein.

ii.
Supplement #1 and Amended Term Note A

On June 24, 2019, the Subsidiaries entered into Supplement #1 to Master Loan Agreement with ONB (“Supplement #1”). In connection therewith, the Subsidiaries entered into that certain First Amended and Restated Promissory Note Term Note A in the principal amount of $9,920,000.00 to Old National Bank (“Amended Term Note A”). Amended Term Note A restates that certain Promissory Note dated January 26, 2018 and is subject to the first-priority security interest pursuant to the existing security agreement.
The foregoing summary of the terms of the Supplement #1 and Amended Term Note A do not purport to be complete and is qualified in its entirety by reference to the documents which are filed as Exhibits 10.4 and 10.5 respectively hereto and are incorporated by reference herein.

iii.
Supplement #2 and Amended Revolving Note

On June 24, 2019, CAS entered into Supplement #2 to Master Loan Agreement with ONB (“Supplement #2”). Supplement #2 provides for revolving credit borrowings by CAS in an amount up to $20,000,000.00. In connection therewith, CAS entered into that certain First Amended and Restated Promissory Note Revolving Note in the principal amount of $20,000,000.00 to ONB (“Amended Revolving Note”). Amended Revolving Note restates that certain Promissory Note dated March 2, 2018 and is subject to the first-priority security interest pursuant to the existing security agreement. Changes within the Amended Revolving Note include: (a) the revolving loan payment resting period; and (b) additional affirmative covenants regarding quarterly cash flow coverage and tangible net worth. CAL guarantees the borrower obligations of CAS for the Amended Revolving Note and all loans made pursuant to the Master Loan Agreement, without limit.

2


The foregoing summary of the terms of the Supplement #2, Amended Revolving Note and CAL Guaranty do not purport to be complete and is qualified in its entirety by reference to the documents which are filed as Exhibits 10.6, 10.7, and 10.3 respectively hereto and are incorporated by reference herein.

iv.
Supplement #3 and Amended Term Note B

On June 24, 2019, the Subsidiaries entered into Supplement #3 to Master Loan Agreement with ONB (“Supplement #3”). In connection therewith, the Subsidiaries enter into that certain First Amended and Restated Promissory Note Term Note B in the principal amount of $18,000,000.00 to Old National Bank (“Amended Term Note B”). Amended Term Note B restates that certain Promissory Note dated September 14, 2018 and is subject to the first-priority security interest pursuant to the existing security agreement. The material changes within the Amended Term Note B are the additional affirmative covenants regarding quarterly cash flow coverage and tangible net worth.
The foregoing summary of the terms of the Supplement #3 and Amended Term Note B do not purport to be complete and is qualified in its entirety by reference to the documents which are filed as Exhibits 10.8 and 10.9 respectively hereto and are incorporated by reference herein.

v.
Supplement #4 and Term Note C

On August 16, 2019, the Subsidiaries entered into Supplement #4 to Master Loan Agreement with ONB (“Supplement #4”). In connection therewith, the Subsidiaries entered into that certain Promissory Note Term Note C in the principal amount of $13,000,594.00 to ONB (“Term Note C”). The Term Note C has a maturity date of August 1, 2024, with a variable interest rate equal to the LIBOR rate plus 3.75% per year. There are additional affirmative covenants regarding quarterly cash flow coverage and tangible net worth.
Pursuant to that Trustee Aircraft Security Agreement dated August 16, 2019, ONB has a first position lien on the Boeing B737-700 aircraft with serial number 30241 and the two model CFM56-7B20 engines with serial numbers 889727 and 889728 (collectively, “Aircraft 30241”), which CAL acquired 100% beneficial interest in the trust holding title to on July 26, 2019. Furthermore, ONB has a first position lien of CAL’s 100% beneficial interest in the trust holding title to the Aircraft 30241 pursuant to a Beneficial Interest Pledge Agreement and Assignment of Beneficial Interest of Trust.

The foregoing summary of the terms of the Supplement #4 and Term Note C, Trustee Aircraft Security Agreement, Beneficial Interest Pledge Agreement and Assignment of Beneficial Interest of Trust do not purport to be complete and is qualified in its entirety by reference to the documents which are filed as Exhibits 10.10, 10.11., 10.12, 10.13, and 10.14 respectively hereto and are incorporated by reference herein.

vi.
Supplement #5 and Term Note D

On October 30, 2019, the Subsidiaries entered into Supplement #5 to Master Loan Agreement with ONB (“Supplement #5”). In connection therewith, the Subsidiaries entered into the Promissory Note Term Note C in the principal amount of $7,553,165 to ONB (“Term Note D”). The Term Note D has a maturity date of October 30, 2021, with a variable interest rate equal to the LIBOR rate plus 3.75% per year. There are additional affirmative covenants regarding quarterly cash flow coverage and tangible net worth.

Pursuant to that Trustee Aircraft Security Agreement dated October 30, 2019, ONB has a first position lien on Aircraft 29922. Furthermore, ONB has a first position lien of CAL’s 100% beneficial interest in the Trust holding title to the Aircraft 29922 pursuant to a Beneficial Interest Pledge Agreement and Assignment of Beneficial Interest of Trust.


3



The foregoing summary of the terms of the Supplement #5 and Term Note D, Trustee Aircraft Security Agreement, Beneficial Interest Pledge Agreement and Assignment of Beneficial Interest of Trust do not purport to be complete and is qualified in its entirety by reference to the documents which are filed as Exhibits 10.21, 10.22, 10.23, 10.24, and 10.25 respectively hereto and are incorporated by reference herein.

To the extent responsive, the information included under Item 2.01 regarding the Trust and acquisition of the Aircraft 29922 is incorporated herein by reference.

Item 9.01    Financial Statements and Exhibits

10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
10.12
10.13
10.14


4


10.15
10.16
10.17
10.18
10.19
10.20
10.21
10.22
10.23
10.24
10.25
*Portions of the transaction exhibit have been omitted for confidential treatment.
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: November 5, 2019

AIR T, INC.


By: /s/ Brian Ochocki          
Brian Ochocki, Chief Financial Officer









18165148v2

5



MASTER LOAN AGREEMENT
THIS MASTER LOAN AGREEMENT (this “Agreement”), is made as of this 24th day of June, 2019, by and among CONTRAIL AVIATION SUPPORT, LLC (“CAS”), CONTRAIL AVIATION LEASING, LLC (“CAL”, and together with Support, each a “Borrower,” and collectively, the “Borrowers”) and OLD NATIONAL BANK (the “Lender,” and together with Borrowers, collectively the “Parties”).
WHEREAS, Borrowers and Lender are party to that certain Business Loan Agreement dated as of January 26, 2018 (the “Term Loan Agreement A”);
WHEREAS, CAS and Lender are party to that certain Business Loan Agreement dated as of March 2, 2018 (the “Revolving Loan Agreement”);
WHEREAS, Borrowers and Lender are party to that certain Business Loan Agreement dated as of September 14, 2018 (the “Term Loan Agreement B,” and together with the Term Loan Agreement A and the Revolving Loan Agreement, the “Existing Loan Agreements”);
WHEREAS, Borrowers and Lender, by this Agreement, desire to consolidate and restate the Existing Loan Agreements and provide an agreement that will govern possible additional future credit facilities extended by Lender to either or both Borrowers;
WHEREAS the Parties wish and intend that this Agreement shall be construed and deemed to be a complete restatement of the Existing Loan Agreements and shall supersede, in all respects, the Existing Loan Agreements each of which is hereby rendered null, void and of no further force or effect by this Agreement;
WHEREAS the Parties also wish and intend that the terms and conditions hereof will apply to and control all credit facilities or other financial accommodations extended by Lender to either or both Borrowers concurrently with or following the date of this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree that the Existing Loan Agreements are hereby amended, restated and consolidated in their entirety to read as follows:
1.
NATURE AND EXTENT OF AGREEMENT.
Borrower has received prior commercial loans from Lender or has applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on any Supplement to this Agreement. Borrower understands and agrees that: (a) in granting, renewing, or extending any loan, Lender is relying on Borrower’s representations, warranties, and agreements as set forth in this Agreement; (b) the granting, renewing or extending of any loan by Lender at all times shall be subject to Lender’s sole judgment and discretion; and (c) all such Loans shall be and remain subject to the terms and conditions of this Agreement.
2.
DEFINITIONS; RULES OF INTERPRETATION.
2.1.
Definitions. As used in this Agreement, the following terms have the following meanings:
“Affiliate” means, as to any Person, any other Person, directly or indirectly controlling, controlled by or under common control with such Person. A Person shall be deemed to control another Person if the controlling Person (a) owns 10% or more of any class of voting Equity Interests of the controlled Person or (b) possesses, directly or indirectly, the power to direct or cause the direction of the management or policies of the controlled Person, whether by ownership of Equity Interests, by contract or otherwise.
“Borrowing Date” means each date on which a Loan was or is made by Lender to a Borrower, including, but not limited to, each advance, loan, disbursement or draw under any revolving loan facility extended by Lender to Borrower hereunder or under a Supplement hereto.
“Business Day” means any day that the Lender is open for business for normal business hours at its offices in Evansville, Indiana, excluding all Saturdays, Sundays and federally designated Bank holidays.
“Capital Contributions” means cash acquired from an owner, partner, member or shareholder, the GAAP accounting effect of which is to increase the equity capital.
“Capital Expenditures” means any expenditures made directly or indirectly for the purpose of acquiring or constructing fixed assets, real property or equipment which, in accordance with GAAP, would be added as a debit to the fixed assets account of a Borrower, including, without limitation, amounts paid or payable under any conditional sale or other title retention agreement or under any lease or other periodic payment arrangement which is of such a nature that payment obligations of the lessee or obligor thereunder would be required by GAAP to be capitalized and shown as liabilities on the balance sheet of such lessee or obligor.
“Closing Date” means the dated upon which all conditions for borrowing as set forth in Section 5 of this Agreement or contained in a Supplement hereto are met or waived by Lender in writing for a given Loan.
“Code” means the Internal Revenue Code of 1986, as amended.
“Collateral” means any and all collateral described in any Collateral Document.
“Collateral Documents” means the documents described in Section 5.1(b), 5.1(c) or any Supplement hereto and any other document, instrument or agreement previously, now or hereafter furnished by a Person to Lender which provides collateral for the Obligations or the obligations of a Guarantor to Lender, or which requires insurance for Collateral or for either Borrower.
“Contingent Obligation” means, as to any Person, any direct or indirect liability of that Person, whether or not contingent, with or without recourse, (a) with respect to any Indebtedness, lease, dividend, letter of credit or other obligation (the “primary obligations”) of another Person (each, a “Guaranty Obligation”); (b) with respect to any letter of credit, banker’s acceptance, bank guaranty, surety bond and other similar instruments issued for the account of that Person or as to which that Person is otherwise liable for reimbursement of drawings or payments; (c) to purchase any materials, supplies or other property from, or to obtain the services of, another Person if the relevant contract or other related document or obligation requires that payment for such materials, supplies or other property, or for such services, shall be made regardless of whether delivery of such materials, supplies or other property is ever made or tendered, or such services are ever performed or tendered, or (d) in respect of any Swap Contract.
The amount of any Contingent Obligation shall (x) in the case of Guaranty Obligations, be deemed equal to the stated or determinable amount of the primary obligation in respect of which such Guaranty Obligation is made or, if not stated or if indeterminable, the maximum reasonably anticipated liability in respect thereof, (y) in the case of Swap Contracts, equal the Swap Termination Value in the case of Swap Contracts under which a “termination event” or “event of default” has occurred and, in all other cases, shall equal $0 and (z) in the case of other Contingent Obligations, be deemed equal to the maximum reasonably anticipated liability of the Person in respect thereof
“Debt Service” means with reference to any period, the sum of all due and owing payments of principal on Indebtedness for borrowed money and interest expense of the Borrowers determined in accordance with GAAP for the applicable Testing Period.
“Default” means any act, event, condition or omission which, with the giving of notice or lapse of time, would constitute an Event of Default if uncured or unremedied.
“EBITDA” means, with respect to any period, Net Income of the Borrowers for such period plus all amounts deducted in arriving at such Net Income amount in respect of (i) interest expense of Borrowers for such period, (ii) federal, state and local income taxes for such period, and (iii) depreciation and amortization expense for such period.
“Environmental Laws” means all federal, state and local laws including statutes, regulations, ordinances, codes, rules and other governmental restrictions and requirements relating to the discharge of air pollutants, water pollutants or process waste water or otherwise relating to the environment or hazardous substances including the Federal Solid Waste Disposal Act, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976, the Federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, regulations of the Environmental Protection Agency, regulations of the Nuclear Regulatory Commission and regulations of any state department of natural resources or state environmental protection agency now or at any time hereafter in effect.
“Equity Interest” means, as to any Person, any capital stock, limited liability company membership interest, partnership or limited partnership interest or other interest representing equity in, or ownership of, such Person.
“Event of Default” means the occurrence of any of the events described in Section 8.1.
“GAAP” means generally accepted accounting principles in effect in the United States from time to time.
“Grantor” means the owner of any Collateral.
“Governmental Authority” means any nation or government, any state or other political subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any court or similar judicial authority thereof, any entity exercising executive, legislative, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or controlled, through Equity Interests or otherwise, by any of the foregoing.
“Guarantor” means Air T, Inc. (“Air T”) or Joseph G. Kuhn (“Kuhn”) and “Guarantors” means, collectively, all of such Persons, together with any other Person that has or may execute a Guaranty Agreement.
“Guaranty Agreement” means any guaranty agreement executed by a Guarantor, pursuant to which such Guarantor guarantees the payment of all or any portion of the Obligations and “Guaranty Agreements” means all such documents, collectively.
“Hazardous Materials” means any gasoline or petroleum (including crude oil or any fraction thereof) or petroleum products or any hazardous or toxic substances, materials or wastes, defined or regulated as such in or under any Environmental Law, including asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
“Indebtedness” means, as to any Person, (a) all indebtedness for borrowed money, (b) Non-RE Capitalized Lease Obligations, (c) notes payable and drafts accepted representing extensions of credit, (d) indebtedness and obligations owing by virtue of the issuance of Letters of Credit on behalf of obligor, including, but not limited to, obligations owing under any Reimbursement Agreement, (e) any obligation owed for all or any part of the deferred purchase price of property or services (excluding trade payables incurred in the ordinary course of business), (f) all indebtedness secured by any Lien on any property of the Person even though such Person has not assumed or become liable for the payment of such Indebtedness, provided that for purposes of this clause (g) the amount of such Indebtedness shall be limited to the greater of (i) the amount of such Indebtedness as to which there is recourse to such Person and (ii) the fair market value of the property which is subject to the Lien and (h) Contingent Obligations, but shall exclude RE Capitalized Lease Obligations.
“IRS” means the Internal Revenue Service, and any Governmental Authority succeeding to any of its principal functions under the Code.
“Knowledge” means the actual or constructive knowledge of such Person, including, but no limited to, the knowledge a reasonable person would obtain after making reasonable inquiry and exercising reasonable diligence with respect to the matters at hand.
“LIBOR Rate” shall mean that variable interest rate which is subject to change from time to time based upon changes in the independent index which is the 30 day London Interbank Offered Rate (LIBOR) as published in the Wall Street Journal (the “Index”). The Index is not necessarily the lowest rate charged by Lender on its loans. If the Index becomes unavailable during the term of this loan, Lender may, after notifying borrower, designate a substitute index, which may be a rate designated by the Alternative Reference Rates Committee or such other rate as determined in Lender’s reasonable discretion. Lender may adjust such substitute index in its reasonable discretion to account for any differential in pricing between the Index and substitute index. Lender will tell Borrower the current Index rate upon Borrower’s request. The interest rate change will not occur more often than each applicable adjustment period. Adjustment shall become effective the next business day after publication or announcement of the Index change. Borrowers understand that Lender may make loans based upon other rates and indexes as well.
“LIBOR Rate Loan” means a Loan bearing interest at a rate determined by reference to the LIBOR Rate.
“Lien” means any security interest, mortgage, deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement, encumbrance, lien (statutory or otherwise) or charge of any kind including any agreement to give any of the foregoing, any conditional sale or other title retention agreement or any financing or similar statement or notice filed under the Uniform Commercial Code as adopted and in effect in the relevant jurisdiction (or other similar recording or notice statute, and any lease in the nature thereof), except a filing for precautionary purposes made with respect to a true lease or other true bailment.
“Loan” means any revolving loan, term loan, credit facility or financial accommodation of any kind or nature extended by Lender to either or both Borrowers and described herein or in any Supplement hereto or in any promissory note or other document, instrument or agreement executed by either or both Borrowers in favor of or with Lender; and “Loans” means, collectively, all such Loans.
“Loan Documents” means this Agreement, all Supplements to this Agreement, the Notes, the Collateral Documents, the Guaranty Agreements, all Permitted Swap Agreements and all other documents, instruments, agreements and certificates related to or executed in connection with this Agreement and the transactions contemplated hereby, all as reaffirmed, amended, restated, supplemented or otherwise modified from time to time.
“Margin Stock” means “margin stock” as such term is defined in Regulation G, T, U or X of the Federal Reserve Board.
“Material Adverse Effect” means (a) a material adverse change in, or a material adverse effect upon, the operations, business, properties, condition (financial or otherwise) or prospects of a Borrower; (b) a material impairment of the ability of a Borrower to perform under any Loan Document and to avoid any Event of Default; or (c) a material adverse effect upon the legality, validity, binding effect or enforceability against a Borrower of any Loan Document.
“Net Income” means, with reference to any period, the net income (or net loss) of the Borrowers for such period, but excluding any nonrecurring income and extraordinary profits during such period and any taxes on such nonrecurring income and extraordinary profits.
“Non-RE Capitalized Lease” means, as to any Person, any lease that is not a RE Capitalized Lease, the obligations under which have been, or are required to be, recorded as a capital lease liability on the balance sheet of that Person.
“Non-RE Capitalized Lease Obligations” means, as to any Person, at any date, the obligations of such Person under Non-RE Capitalized Leases.
“Note” means any promissory note of either Borrower to Lender now existing or hereafter executed; and “Notes” means, collectively, all such promissory notes of either Borrower.
“Obligations” means all obligations of every nature of either Borrower from time to time, whether existing or arising hereunder or hereafter, owed to Lender or an Affiliate of Lender and whether under the Loan Documents or otherwise, and whether for principal, interest, fees, expenses, indemnification or otherwise.
“Obligations Due from Related Parties” means any and all debts, liabilities and obligations of every nature or form owing from Related Parties.
“PBGC” means the Pension Benefit Guaranty Corporation, or any Governmental Authority succeeding to any of its principal functions under ERISA.
“Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA) subject to Title IV of ERISA which a Borrower sponsors, maintains, or to which a Borrower makes, is making, or is obligated to make contributions, or in the case of a multiple employer plan (as described in Section 4064(a) of ERISA) has made contributions at any time during the immediately preceding five (5) plan years.
“Permitted Distributions” means (a) distributions by either Borrower to its respective shareholders, members, or partners, as the case may be, by April 15 of the year following the end of each taxable year of either Borrower for which it is taxed as a partnership under the Code (the “Year End Distributions”) in an aggregate amount equal to a Borrower’s taxable income for such taxable year multiplied by a percentage (the “Applicable Percentage”) equal to the sum of the highest marginal tax rate for individuals then in effect under the Code plus the Effective State Tax Rate and (b) distributions by a Borrower to its shareholders, members, or partners during each taxable year of a Borrower for which it is taxed as a partnership under the Code (the “Interim Distributions”) in such amounts and at such times the shareholders, members, or partners of a Borrower will be able to make timely estimated and final tax payments, if any, of all federal and state taxes attributable to a Borrower’s taxable income; provided that (i) the sum of all Interim Distributions shall be credited against the Year End Distributions and (ii) the aggregate amount of all Interim Distributions shall not exceed a Borrower’s estimated taxable income from the beginning of the taxable year through the date of such Interim Distribution multiplied by the Applicable Percentage; provided that this subsection (ii) shall not be violated so long as Interim Distributions are made based on estimates of taxable income made in good faith by a Borrower. The Effective State Tax Rate applicable to a Borrower equals the highest marginal rate of state income taxation imposed by any state in which a member or partner of a Borrower resides or is domiciled on the taxable income of a Borrower which is passed through to such member or partner pursuant to the Code.
“Permitted Liens” means (a) Liens for taxes, assessments or governmental charges not delinquent or being contested in good faith by a Borrower for which adequate reserves are established and maintained in accordance with GAAP; (b) other statutory Lien claims not delinquent or remain payable without penalty, or which a Borrower is contesting in good faith, including construction, mechanics’ and warehousemen Liens; (c) security interests and Liens incurred in connection with RE Capitalized Lease Obligations or purchase money Liens on any property acquired after the date hereof to be used by a Borrower in the normal course of its business, and created or incurred simultaneously with the acquisition of such property, if such Lien is limited to the property so acquired, the Indebtedness secured by such Lien does not exceed 100% of the purchase price of such property and, in the case of purchase money Liens, the aggregate Indebtedness secured by all such Liens does not exceed $100,000.00 at any time outstanding in the aggregate for a Borrower; (d) Liens or deposits in connection with worker’s compensation or other insurance or to secure customs’ duties, the performance of bids, trade contracts (other than for borrowed money), leases, public or statutory obligations, surety or appeal bonds, or deposits required by law or government regulations or by any court order, decree, judgment or rule as a condition to the transaction of business or the exercise of any right, privilege or license, or other obligations or deposits of like nature incurred in the ordinary course of business; (e) any attachment or judgment lien not constituting an Event of Default under this Agreement; (e) Liens in favor of Lender; and (f) easements, restrictions, minor title irregularities and similar matters which have no material adverse effect as a practical matter upon the ownership or use of its property by a Borrower.
“Permitted Swap Agreement” means a Swap Contract between a Borrower and Lender, an Affiliate of Lender or another financial institution acceptable to Lender, including, without limitation, any Permitted Swap Agreements in existence as of the Closing Date.
“Person” means any natural person, corporation, limited liability company, joint venture, limited liability partnership, partnership, association, trust or other entity or any Governmental Authority.
“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA) which a Borrower sponsors or maintains or to which a Borrower makes, is making, or is obligated to make contributions and includes any Pension Plan.
“Quarterly Rolling Cash Flow Coverage Ratio” means a ratio, the numerator of which is Borrowers’ Net Income in accordance with GAAP, less dividends to members of either Borrower, plus the aggregate amounts deducted in determining Net Income in respect of interest, depreciation, depletion, and amortization expense, in each case determined in accordance with GAAP, plus Capital Contributions and any increase in Subordinated Debt, all for the then most recently ended period of four (4) consecutive fiscal quarters, and the denominator of which is the Borrowers’ Debt Service for the corresponding period.
“RE Capitalized Lease” means, as to any Person, any lease associated with a building, real estate or facilities (which includes, e.g., printers and copiers), the obligations under which have been, or are required to be, recorded as a capital lease liability on the balance sheet of that Person.
“RE Capitalized Lease Obligations” means, as to any Person, at any date, the obligations of such Person under RE Capitalized Leases.
“Related Parties” means a parent company or any shareholder or shareholder’s spouse, owner or owner’s spouse, member or member’s spouse, manager or manager’s spouse, officer or officer’s spouse, employee or employee’s spouse, agent, or a business entity more than five percent (5%) of the ownership interests of which is owned directly or by any of such persons.
“Requirement of Law” means, as to any Person, any law (statutory or common), treaty, rule or regulation of a Governmental Authority applicable to or binding upon the Person or any of its property or any ruling, order, judgment or determination of an arbitrator or a Governmental Authority to which the Person or any of its property is subject, including, but not limited to, all laws (statutory or common), rules, or regulations arising under or related to the Employee Retirement Income Security Act of 1974, as amended from time to time.
“Restricted Payments” means dividends or other distributions by a Borrower based upon the Equity Interests of a Borrower (except dividends payable solely in Equity Interests of a Borrower) and purchases, redemptions and other acquisitions, direct or indirect, by a Borrower of Equity Interests of a Borrower.
“Solvent” means, with respect to any Person, that as of the date of determination both:
(a)
(i) the then fair saleable value of the property of such Person is (y) greater than the Total Liabilities (including Contingent Obligations) of such Person and (z) not less than the amount that will be required to pay the probable liabilities on such Person’s then existing debts as they become absolute and matured considering all financing alternatives and potential asset sales reasonably available to such Person; and (ii) such Person does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due; and
(b)
such Person is “solvent” within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances.
“Subordinated Debt” means any liabilities for borrowed money which have been subordinated in right of payment and priority to the Loan, all on terms and conditions satisfactory to Lender.
“Subsidiary” of a Person means any other Person, as of a particular date, which it directly, or indirectly through one or more of its Subsidiaries, owns at least 50% of the outstanding Equity Interests of such other Person.
“Supplement” has the meaning ascribed to it in Section 3.1 of this Agreement.
“Swap Contract” means any agreement, whether or not in writing, relating to any transaction that is a rate swap, basis swap, forward rate transaction, commodity swap, commodity option, equity or equity index swap or option, bond, note or bill option, interest rate option, forward foreign exchange transaction, cap, collar or floor transaction, currency swap, cross-currency rate swap, currency option or any other, similar transaction (including any option to enter into any of the foregoing) or any combination of the foregoing, and, unless the context otherwise clearly requires, any master agreement relating to or governing any or all of the foregoing.
“Swap Termination Value” means, in respect of any Swap Contract, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contract, (a) for any date on or after the date such Swap Contract has been closed out and termination value determined in accordance therewith, such termination value, and (b) for any date prior to the date referenced in clause (a) the amount determined as the mark-to-market value for such Swap Contract, as determined by the applicable Borrower based upon one or more mid-market or other readily available quotations provided by any recognized dealer in Swap Contracts (which may include Lender).
“Tangible Net Worth” means a Borrower’s total assets excluding all intangible assets (i.e. goodwill, trademarks, patents, copyrights, organizational expenses, and other intangible assets) less Total Liabilities excluding any amounts owing to Kuhn pursuant to the earn out provision of the Asset Purchase Agreement dated July 18, 2016 by and between Contrail Aviation Support, Inc., as Seller and Contrail Aviation Support, LLC as Buyer. With respect to investments in the equity of another entity or investments in a beneficial interest in a trust made by a Borrower after the date of this Agreement and approved by Lender in writing, the investment shall be included in the calculation of the Borrower’s total assets as a tangible asset. The assets in such entity(ies) and trust(s) shall be appraised on an annual basis. The value of an equity investment or an investment in a beneficial interest in a trust that shall be used in the next calculation of Tangible Net Worth shall be determined as follows: the product of (i) the most current appraised value of the entity’s or trust’s assets, as applicable (excluding cash) minus any outstanding debt of the entity or trust, as applicable, plus the amount of any cash held by the entity or trust, as applicable, multiplied by (ii) the percentage of equity of the entity or the percentage of the beneficial interests in the trust, as applicable, owned by the Borrowers. If Lender has not approved an equity investment or an investment in a beneficial interest in a trust prior to consummation of the investment, the investment shall be deemed intangible for purposes of this definition and not included in the determination of Tangible Net Worth, but notwithstanding anything else in this Agreement or any other Loan Document, the Borrower shall be permitted to consummate the investment as long as the Borrowers (both before and after consummation of such investment) are in compliance with the financial covenants of this Agreement and any Supplement, and no other Event of Default has occurred and is continuing.
“Total Liabilities” means, as to any Person, all items which would be classified as liabilities on the balance sheet of such Person.
2.2.
Rules of Interpretation; Joint and Several Obligations.
(a)
Except as otherwise explicitly specified to the contrary or unless the context clearly requires otherwise: (i) all references to a particular statute or regulation include all rules and regulations promulgated thereunder and any successor statute, regulation or rules, in each case as from time to time in effect; (ii) accounting terms shall be construed, and all financial computations required under this Agreement shall be made, in accordance with GAAP consistently applied; (iii) references to agreements (including this Agreement) and other contractual instruments shall be deemed to include all subsequent amendments and other modifications thereto, but only to the extent such amendments and other modifications are not prohibited by the terms of any Loan Document; (iv) in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including”, the words “to” and “until” each mean “to but excluding” and the word “through” means “to and including”; (v) the word “including” shall be construed as “including without limitation”; (vi) references to a fiscal year or fiscal quarter mean the fiscal year or fiscal quarter of the applicable Borrower; and (vii) references to the word “Subsidiary” shall mean a Subsidiary of either Borrower.
3.
SUPPLEMENTS, CALCULATION OF INTEREST AND PAYMENTS.
3.1.
Supplements. In the event Borrowers desire to borrow from Lender and Lender is willing to lend to the Borrowers, or in the event Lender and Borrowers desire to consolidate any existing Loans hereunder, Lender and Borrowers, will enter into a supplement to this Agreement (each supplement, as it may be amended, modified, supplemented, extended or restated from time to time, a “Supplement” and, collectively, the “Supplements”). Each Supplement will set forth Lender’s commitment to make that Loan to the Borrowers, the amount of the Loan(s), any special purpose of the Loan(s), the interest rate or rate options applicable to the Loan(s), the repayment terms of the Loan(s), and any other terms and conditions applicable to the specific Loan(s). Each Supplement will also be accompanied by a Note of the Borrowers setting forth the Borrowers’ obligation to make payments of interest on the unpaid principal balance of the Loan(s), and fees and premiums, if any, and to repay the principal balance of the Loan(s). Each Loan will be governed by the terms and conditions contained in this Agreement, the Supplement relating to that Loan, and the Note.
3.2.
Interest Rates.
(a)
The unpaid principal balance of each of the Loans outstanding from time to time shall bear interest for the period commencing on the Borrowing Date of such Loan until such Loan is paid in full.
(b)
Upon default, including failure to pay upon final maturity, Lender, at its option, may, as permitted under applicable law, add any unpaid accrued interest to the principal balance of any Note. Also, upon default, including failure to pay upon final maturity, Lender, at its option, may, as permitted under applicable law, increase the interest rate on any Note to three percent (3.0%) (the “Default Rate Margin”) above the then effective interest rate of the Note. The Default Rate Margin may also apply, at Lender’s option, to each succeeding interest rate change that would have applied had there been no default. This increased rate shall never exceed the maximum rate permitted by applicable law.
(c)
Interest on each Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under each Note is computed using this method.
3.3.
Payments. All payments of principal and interest on each Note and of all fees due hereunder shall be made at the office of Lender in immediately available funds not later than 12:00 p.m., Milwaukee time, on the date due; funds received after that time shall be deemed to have been received on the next Business Day. Whenever any payment hereunder or under a Note is stated to be due on a day which is not a Business Day, such payment shall be due on the next succeeding Business Day and such extension of time shall be included in computing any interest or fee then due. Lender may charge any account of a Borrower at Lender for any payment due under any Notes (including prepayments), or any fee or other amount payable hereunder, on or after the date due.
If a payment is ten (10) days or more late, Borrowers will be charged five percent (5%) of the unpaid portion of the regularly scheduled payment or Fifty Dollars ($50.00), whichever is greater, but in any event not to exceed the amount permitted by applicable law.
Borrowers will pay a fee to Lender of $20.00 if a Borrower makes a payment on any Loan and the check or preauthorized charge with which a Borrower pays is later dishonored.
Notwithstanding anything to the contrary contained herein or in any Note, unless required by applicable law, and prior to any default being declared, payments will be applied first to any accrued unpaid interest; then to principal; then to escrow; then to any late charges; and then to any unpaid collection costs.
3.4.
Prepayments.
(a)
Prepayments; Minimum Finance Charge. Borrowers agree that all loan fees and other prepaid finance charges are earned fully as of the date of each Loan and will not be subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. In any event, even upon full prepayment of this Note, Borrowers understand that Lender is entitled to a minimum finance charge of $95.00. Other than Borrowers’ obligations to pay any minimum finance charge, Borrowers may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrowers of Borrowers’ obligation to continue to make payments under the payment schedule. Rather, early payments will reduce the principal balance due and may result in Borrowers’ making fewer payments. Borrowers agree not to send Lender payments marked “paid in full,” “without recourse,” or similar language. IF Borrowers send such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrowers will remain obligated to pay any further amounted owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Old National Bank, PO Box 3728, Evansville, IN 47736-3728.
3.5.
Use of Proceeds. Borrowers shall use all Loan proceeds for Borrowers’ business operations, unless specifically consented to the contrary by Lender in writing.
4.
REPRESENTATIONS AND WARRANTIES. IN ORDER TO INDUCE LENDER TO MAKE THE LOANS, BORROWERS REPRESENT AND WARRANT TO LENDER AS OF EACH BORROWING DATE:
4.1.
Organization; Subsidiaries; Power; Assumed Business Names.
(a)
CAS is a limited liability company organized and validly existing under the laws of the State of North Carolina and properly authorized to do business in Wisconsin and all other states in which CAS is doing business, and (i) no filing has been made with the North Carolina Secretary of State for the dissolution of CAS, (ii) neither the manager nor the members of CAS have taken any action authorizing the liquidation or dissolution of CAS, (iii) has duly qualified as a foreign limited liability company to do business and is in good standing in every jurisdiction in which the nature of its business or the ownership of its properties requires such qualification and in which the failure to so qualify would have a Material Adverse Effect. CAS has the limited liability company power to own its properties and carry on its business as currently being conducted.
(b)
CAL is a limited liability company organized and validly existing under the laws of the State of Wisconsin and properly authorized to do business in Wisconsin and all other states in which CAL is doing business, and (i) no filing has been made with the Wisconsin Department of Financial Institutions for the dissolution of CAL, (ii) neither the manager nor the members of CAL have taken any action authorizing the liquidation or dissolution of CAL, (iii) has duly qualified as a foreign limited liability company to do business and is in good standing in every jurisdiction in which the nature of its business or the ownership of its properties requires such qualification and in which the failure to so qualify would have a Material Adverse Effect. CAL has the limited liability company power to own its properties and carry on its business as currently being conducted.
(c)
Borrowers have filed or recorded all documents or filings required by law relating to all assumed business names used by either Borrower. Excluding the names of Borrowers, the following is a complete list of all assumed business names under which either Borrower does business: None.
4.2.
Authorization and Binding Effect. The execution and delivery by each Borrower of the Loan Documents to which it is a party, and the performance of its obligations thereunder: (a) are within each Borrower’s organizational power, (b) has been duly authorized by proper organizational action, (c) is not in violation of any Requirement of Law, its charter documents or the terms of any agreement, restriction or undertaking to which it is a party or by which it is bound, and (d) does not require the approval or consent of its members, any Governmental Authority or any other Person, other than those obtained and in full force and effect. The Loan Documents to which Borrowers are a party, when executed and delivered, will constitute the valid and binding obligations of Borrowers enforceable in accordance with their terms, except as limited by bankruptcy, insolvency or similar laws of general application affecting the enforcement of creditors’ rights and except to the extent that general principles of equity might affect the specific enforcement of such documents.
4.3.
Financial Statements. Each of Borrowers’ financial statements (whether consolidated or otherwise) supplied to Lender were prepared in accordance with GAAP consistently applied throughout the periods involved, are correct and complete and fairly present the financial condition of either or both Borrowers as of such dates and the results of their operations for the periods ended on such dates, subject, in the case of the interim statements, to normal year-end adjustments. There has been no material adverse change in the condition or prospects of either Borrower, financial or otherwise, and, to the Knowledge of either Borrower, no event, act or failure to act which would reasonably be expected to result in a Material Adverse Effect has occurred, since the date of the most recent financial statements furnished to Lender. Borrowers have no material contingent obligations except as disclosed in such financial statements.
4.4.
Litigation. There is no litigation or administrative proceeding pending or, to the Knowledge of either Borrower, threatened against or affecting either Borrower or the properties of either Borrower which (a) purport to affect or pertain to this Agreement, any other Loan Document or any documents related thereto, or any of the transactions contemplated hereby or thereby or (b) if determined adversely would reasonably be expected to have a Material Adverse Effect.
4.5.
Restricted Payments. Neither Borrower has, since the date of its most recent financial statements furnished to Lender, made any Restricted Payments other than Restricted Payments permitted under Section 7.1.
4.6.
Indebtedness; No Default. Neither Borrower has any outstanding Indebtedness or Contingent Obligations, except those permitted under Sections 7.2 and 7.3. There exists no default nor, to the Knowledge of either Borrower, has any act or omission occurred which, with the giving of notice or the passage of time, would constitute a default under the provisions of (a) any instrument evidencing such Indebtedness, Contingent Obligation or Operating Lease Obligation or any agreement relating thereto or (b) any other agreement or instrument to which either Borrower is a party and, in each case, which would reasonably be expected to have a Material Adverse Effect.
4.7.
Ownership of Properties; Liens and Encumbrances. Each Borrower has good and marketable title to all property, real and personal, reflected on the most recent financial statements of each Borrower furnished to Lender, and all property purported to have been acquired since the date of such financial statements, except property sold or otherwise disposed of in the ordinary course of business subsequent to such date. All such property is free of any Lien, except Permitted Liens. All owned and leased buildings and equipment of each Borrower is in good condition, repair and working order, ordinary wear and tear excepted, and, to each Borrower’s Knowledge, conform to all Requirements of Law.
4.8.
Tax Returns Filed. Each Borrower has filed when due all federal and state income and other tax returns which are required to be filed. Each Borrower has paid or made provision for all taxes shown on said returns and on all assessments received by it to the extent that such taxes have become due except any such taxes which are being contested in good faith by appropriate proceedings and for which adequate reserves have been established. Each Borrower has no Knowledge of any liabilities which may be asserted against them upon audit of such federal or state tax returns.
4.9.
Margin Stock. Neither Borrower is engaged principally, or as one of their important activities, in the business of extending credit for the purpose of purchasing or carrying Margin Stock.
4.10.
Regulated Entities. Neither Borrower is an “investment company” or a company controlled by an “investment company” within the meaning of the Investment Company Act of 1940, as amended. Neither Borrower is subject to any Requirement of Law limiting its ability to incur Indebtedness.
4.11.
No Burdensome Restrictions. To the Knowledge of either Borrower, neither Borrower is a party to or is bound by any agreement, instrument, undertaking, any Requirement of Law, or subject to any other restriction (a) which could reasonably be expected to have a Material Adverse Effect or may in the future have a Material Adverse Effect or (b) under or pursuant to which such Person is or will be required to place (or under which any other person may place) a Lien upon any of its properties securing Indebtedness either upon demand or upon the happening of a condition, with or without such demand.
4.12.
Trademarks, Etc. Each Borrower possesses adequate trademarks, trade names, copyrights, patents, permits, service marks and licenses, or rights thereto, for the present and planned future conduct of its businesses substantially as now conducted, without any known conflict with the rights of others which could reasonably be expected to have a Material Adverse Effect.
4.13.
Environmental Matters.
(a)
Except to the extent that would not have a Material Adverse Effect, the facilities and properties owned, leased or operated by either Borrower (together with the Property, collectively the “Properties”) do not contain any Hazardous Materials in amounts or concentrations which (i) constitute a violation of or (ii) could give rise to liability under, any Environmental Law.
(b)
With respect to the period during which either Borrower owned or occupied the Properties, and to either Borrower’s Knowledge, with respect to the time before either Borrower owned or occupied the Properties there has been no unremediated release or threat of release of Hazardous Materials at or from the Properties, or arising from or related to the operations of either Borrower (the “Business”), in violation of or in amounts or in a manner that could give rise to material liability under Environmental Laws.
(c)
Except to the extent that would not have a Material Adverse Effect, the Properties and all operations at the Properties are in compliance in all material respects with all applicable Environmental Laws, and there is no violation of any Environmental Law with respect to the Properties or the Business. Each Borrower has all permits, licenses and approvals required under Environmental Laws.
(d)
With respect to the period during which either Borrower owned or occupied the Properties, and to either Borrower’s Knowledge, with respect to the time before either Borrower owned or occupied the Properties, (i) Hazardous Materials have not been transported or disposed of from the Properties in violation of, or in a manner or to a location which could give rise to material liability under, any Environmental Law and (ii) Hazardous Materials have not been generated, treated, stored or disposed of at, on or under any of the Properties in violation of, or in a manner that could give rise to material liability under, any applicable Environmental Law.
(e)
Neither Borrower has received any notice of violation, alleged violation, noncompliance, liability or potential liability regarding environmental matters or compliance with Environmental Laws with regard to any of the Properties or the Business, nor does either Borrower have Knowledge or reason to believe that any such notice will be received or is being threatened.
(f)
No judicial proceeding or governmental or administrative action is pending or, to the Knowledge of either Borrower, threatened under any Environmental Law to which either Borrower is or will be named as a party with respect to the Properties or the Business, nor are there any consent decrees or other decrees, consent orders, administrative orders or other orders, or other administrative or judicial requirements outstanding under any Environmental Law with respect to the Properties or the Business.
4.14.
Compliance with All Laws. Borrowers are, and at all times have been, in compliance with all Requirements of Law, writs, judgments, injunctions, decrees and awards to which either may be subject, except those being contested in good faith and involving no possibility of criminal liability and except where the failure to comply could not reasonably be expected or have been expected to have a Material Adverse Effect.
4.15.
Fiscal Year. Each Borrower’s fiscal years end on the last day of March of each year.
4.16.
Employee Controversies. There are no controversies pending or, to either Borrower’s Knowledge, threatened or anticipated between either Borrower and any of their respective employees, other than employee grievances arising in the ordinary course of business which are not, in the aggregate, material to either Borrower’s financial condition or prospects.
4.17.
Solvency. Each Borrower is and, upon the incurrence of any Obligations by either Borrower on any date on which this representation is made, will be Solvent.
4.18.
Accuracy of Information. All information furnished by Borrowers to Lender is true, correct and complete in all material respects as of the date furnished and does not contain any untrue statement of a material fact or omit to state a material fact necessary to make such information not misleading.
5.
CONDITIONS FOR BORROWING.
Lender’s obligation to make any Loan is subject to the satisfaction or waiver by Lender in writing, on or before the following dates, of the following conditions:
5.1.
On or Before the Closing Date of Each Loan. Lender shall have received the following, all in form, detail and content satisfactory to Lender:
(a)
Notes. Each Note, duly executed by the applicable Borrower.
(b)
Supplements. Each Supplement, duly executed by the applicable Borrower and Lender.
(c)
Collateral Documents.
(i)
Any and all documents that Lender reasonably deems necessary to create or continue, in favor of Lender, a first position Lien on all assets of each Borrower and to provide insurance for such assets and the Borrowers, including, but not limited to, the Commercial Security Agreement dated January 26, 2018, duly executed by each Borrower; the Commercial Security Agreement dated September 14, 2018, duly executed by each Borrower; the Aircraft Security Agreement relating to Airbus A319-100 Ser# 1758 dated September 13, 2018 duly executed by each Borrower; the Aircraft Security Agreement relating to Airbus A319-100 Ser# 1790 dated September 13, 2018, duly executed by each Borrower; the Assignment of Life Insurance Policy as Collateral dated May 5, 2017, duly executed by Kuhn; the Agreement to Provide Insurance dated January 26, 2018, duly executed by CAL; the Agreement to Provide Insurance dated March 2, 2018, duly executed by CAS; and the Agreement to Provide Insurance dated September 14, 2018, duly executed by CAL; and
(ii)
all financing statements and other instruments required to perfect the Liens granted to Lender by either Borrower or Kuhn.
Each of the Collateral Documents shall be duly executed by the parties thereto.
(d)
Subordination Agreements. Subordination agreements by which all Subordinated Debt is subordinated to the Obligations and any Lien in favor of the holder of Subordinated Debt is subordinated to the Lien in favor of the Lender, all in a form reasonably acceptable to Lender, including, but not limited to, the Subordination Agreement dated January 26, 2018, by Borrowers and Kuhn in favor of Lender.
(e)
Guaranty Agreements. Guaranty Agreements by each of the Guarantors.
(f)
Personal Property Searches. Searches of the appropriate public offices demonstrating that no Lien is of record affecting either Borrower or any Guarantor or their respective properties except those which are acceptable to Lender.
(g)
Charter Documents.
(i)
a copy of the Articles of Organization or Articles of Incorporation, as applicable, of each Borrower and each Guarantor, other than Kuhn, certified as of a recent date by the appropriate Governmental Authority of each Borrower’s or each Guarantor’s, other than Kuhn, state of organization;
(ii)
a copy of the Operating Agreement or Bylaws, as applicable of each Borrower and each Guarantor, other than Kuhn;
(iii)
certificates of status/good standing with respect to each Borrower and each Guarantor other than Kuhn, issued as of a recent date by the appropriate Governmental Authority of Borrower’s or Guarantor’s, other than Kuhn, state of organization and each state in which each Borrower and each Guarantor, other than Kuhn, is qualified to transact business as a foreign company; and
(iv)
copies, certified by the manager of each Borrower and the secretary of each Guarantor other than Kuhn, to be true and correct and in full force and effect on the Closing Date, of (a) charter documents of each Borrower and each Guarantor, other than Kuhn; (b) resolutions of the members or shareholders, as applicable, of Borrower and each Guarantor, other than Kuhn, authorizing the issuance, execution and delivery of the Loan Documents to which each Borrower and each Guarantor, other than Kuhn, is a party; and (c) a statement containing the names and titles of the officer/member/manager of each Borrower authorized to sign such documents, together with true signatures of such Persons.
(h)
No Default Certificate. A certificate signed by an authorized officer/member/manager/partner of each Borrower to the effect that the representations and warranties contained in Section 4 hereof, in the other Loan Documents are true and correct on and as of the Closing Date and no Default or Event of Default exists on the Closing Date.
(i)
Insurance Certificates. Insurance policies or evidence of insurance coverage (Accord 27 Certificates) in such amounts and against such risks as required in this Agreement or in the Collateral Documents naming Lender as additional insured and lender as loss payee;
(j)
Fees. Payment of all fees and expenses due and owing under Section 9.2 of this Agreement.
(k)
Additional Conditions Set Forth in Supplements. Any conditions set forth in the Supplement for the given Loan.
(l)
Proceedings Satisfactory. Such other documents as Lender may reasonably request; and all proceedings taken in connection with the transactions contemplated by this Agreement, and all instruments, authorizations and other documents applicable thereto, shall be satisfactory to Lender.
5.2.
On or Before Each Subsequent Borrowing Date:
(a)
Borrowing Procedure. Each Borrower shall have complied with the borrowing procedure set forth in the relevant Supplement.
(b)
Representations and Warranties True and Correct. The representations and warranties contained in Section 4 hereof and in the other Loan Documents shall be true and correct on and as of the relevant Borrowing Date except (i) that the representations and warranties contained in Section 4.3 shall apply to the most recent financial statements delivered pursuant to Section 6.1 and (ii) for changes permitted by this Agreement.
(c)
No Default. There shall exist on that Borrowing Date no Default or Event of Default.
(d)
Proceedings and Documentation. Lender shall have received such instruments and other documents as it may reasonably request in connection with the making of such Loan, and all such instruments and documents shall be in form and content satisfactory to Lender.
6.
AFFIRMATIVE COVENANTS.
Each Borrower covenants that it will, until Lender’s commitment to extend credit hereunder and all Permitted Swap Agreements have terminated or expired and the Notes, and all fees and expenses payable hereunder, have been paid in full:
6.1.
Financial Statement.
(a)
Borrower. As soon as available, but in any event not later than one hundred twenty (120) days after the end of the fiscal year of the Borrowers’, furnish to Lender (i) consolidated audited balance sheet and audited statements of income, accumulated earnings, and cash flows for such year, setting forth in each case in comparative form the figures for the previous year, prepared by an independent certified public accountant satisfactory to Lender; and (ii) an appraisal of each Borrower’s fixed assets and inventory and of the fixed assets and inventory of any entity described in the definition of “Tangible Net Worth” set forth in Section 2 above, each prepared by an independent appraiser satisfactory to Lender. In addition, as soon as available, but in any event not later than forty-five (45) days after the end of each month, furnish to Lender each Borrower’s balance sheet and statements of income, accumulated earnings, and cash flows for the respective month and year-to-date periods, all prepared in accordance with GAAP, setting forth in each case in comparative form the figures for the previous year’s respective month and year-to-date periods and certified by an officer of each Borrower as being true and correct. Lender, in its sole discretion, reserves the ability to change upon written notice to Borrowers the required times and frequencies of submissions of financial statements by each Borrower. In addition to any other financial reporting requirements of each Borrower to Lender, each Borrower agrees to furnish to Lender upon written request from Lender, at times and frequencies determined appropriate by Lender in its sole discretion from time to time, Federal and State income tax returns, borrowing base certificates, agings of receivables and payables, inventory schedules, budgets, forecasts, and other reports with respect to each Borrower’s financial condition and business operations.
(b)
Financial Reporting Requirements for Corporate Guarantor (AIR T).To the extent such information is not publicly and readily available, and to the extent not prohibited by applicable law, cause Air T to furnish to Lender within thirty (30) days of the direction of the Lender to do so, but in any case, no less frequently than annually, a financial statement of Air T listing all assets and liabilities (including contingent liabilities) of Air T, and the resulting net worth, signed and dated by Air T, in form, detail and completeness acceptable to Lender in its sole discretion from time to time. In addition, as soon as available, but in any event not later than ten (10) days after filing copies of Air T’s Federal income tax return as filed with the Internal Revenue Service, signed by Air T, complete in all respects including all statements, schedules (including any Schedule K-ls related to income or losses reported), forms and attachments thereto. In addition to any other financial reporting requirements of Air T to Lender, Air T agrees to furnish to Lender, at times and frequencies reasonably determined appropriate by Lender from time to time, any other information or reports with respect to Air T’s financial condition.
(c)
Financial Reporting Requirements for Individual Guarantor (Kuhn). Cause Kuhn to furnish to Lender within thirty (30) days of the direction of the Lender to do so, but in any case, no less frequently than annually, a financial statement of Kuhn listing all assets and liabilities (including contingent liabilities) of Kuhn, and the resulting net worth, signed and dated by Kuhn, in form, detail and completeness acceptable to Lender in its sole discretion from time to time. In addition, as soon as available, but in any event not later than ten (10) days after the respective taxing agency’s mandated date for filing, taking into consideration the time period allowed for one (1) permitted filing extension, copies of the Kuhn’s Federal income tax return as filed with the Internal Revenue Service, signed by Kuhn, complete in all respects including all statements, schedules (including any Schedule K- 1 s related to income or losses reported), forms and attachments thereto. Should Kuhn file a request for any extension with the Internal Revenue Service, Kuhn, within ten (10) days of the filing of the request for extension, shall deliver to the Lender a copy of the extension request as filed. In addition to any other financial reporting requirements of Kuhn to Lender, Kuhn agrees to furnish to Lender, at times and frequencies determined appropriate by Lender in its sole discretion from time to time, any other information or reports with respect to Kuhn’s financial condition.
6.2.
Books and Records; Inspections. Keep proper, complete and accurate books of record and account and permit any representative of Lender to visit and inspect any of the properties and examine and copy any of the books and records of each Borrower at any reasonable time and as often as may reasonably be desired.
6.3.
Collateral Inspection/Appraisal: Cost Reimbursement. At reasonable times and intervals and upon five (5) days prior written notice, Lender shall be entitled to perform and Borrowers shall cooperate with examinations, inspections, audits and appraisals as provided herein. Upon five (5) days advance written notice by Lender to Borrowers, Borrowers shall permit access to their respective books and records by Lender and by Lender’s designated representatives and agents during regular business hours for purposes of inspection, copying and/or auditing; provided, however, after the occurrence and during the continuance of an Event of Default, the Lender need not provide any notice prior to such inspection or audit. Lender and Lender’s designated representatives and agents shall also have the right upon five (5) days advance notice to examine, inspect and/or appraise any collateral for the Obligations wherever located during regular business hours; provided, however, after the occurrence and during the continuance of an Event of Default, the Lender need not provide any notice prior to such inspection or appraisal. Subject to any limitations under applicable law, Borrowers shall reimburse Lender for any professional fees or other out-of-pocket expenses incurred by Lender at its then current rate in connection with any examinations, inspections or audits of the books and records of either Borrower and/or any examinations, inspections and/or appraisals of such collateral.
6.4.
Insurance. Maintain insurance coverage as may be required by law or the Collateral Documents but in any event not less than insurance coverage, in the forms, amounts and with companies, which would be carried by prudent management in connection with similar properties and businesses. Without limiting the foregoing, each Borrower will (a) keep all their respective physical property insured against fire and extended coverage risks in amounts at least equal to, and with deductibles no greater than, those generally maintained by businesses engaged in similar activities in similar geographic areas; (b) maintain all such worker’s compensation and similar insurance as may be required by law; (c) maintain, in amounts and with deductibles at least equal to those generally maintained by businesses engaged in similar activities in similar geographic areas, general public liability insurance against claims for bodily injury, death or property damage occurring on, in or about the properties of the applicable Borrower, business interruption insurance and product liability insurance; (d) maintain $50,000,000 Aviation Commercial General Liability Policy listing Lender as additional insured to include: (i) Endorsement 1 - Named Insured Endorsement, (ii) Endorsement 4 - Worldwide Coverage Territory, (iii) Endorsement 6 - Aircraft Parts Inventory Coverage $15,000,000.00, (iv) Endorsement 9 - 90-day notice of cancellation, (v) Endorsement 17 - Deletion of Terrorism Exclusion, (vi) Endorsement 20 -Extended Coverage Aviation Liabilities $100,000,000; and (e) maintain $500,000,000 Financial Institution Aircraft Policy.
6.5.
Condition of Property. Keep its properties (whether owned or leased) in good condition, repair and working order.
6.6.
Payment of Taxes. Pay and discharge all lawful taxes, assessments and governmental charges upon it or against its properties prior to the date on which penalties are attached thereto, unless and to the extent only that the same shall be contested in good faith and by appropriate proceedings by each Borrower and appropriate reserves with respect thereto are established and maintained.
6.7.
Compliance with Law. Do all things necessary, except as permitted under Section 7.5, to (a) maintain its existence in its respective state of formation and obtain and maintain its qualification to transact business as a foreign entity in any other state where the ownership of property or the conduct of business make qualification necessary and where the failure to so qualify would have a Material Adverse Effect, (b) preserve and keep in full force and effect its rights and franchises necessary to continue its business and (c) comply with all Requirements of Law, writs, judgments, injunctions, decrees and awards to which it may be subject including all applicable Environmental Laws, except those being contested in good faith and involving no possibility of criminal liability and except where the failure to comply could not reasonably be expected to have a Material Adverse Effect.
6.8.
Compliance with Other Loan Documents. Timely comply with all of its obligations under the other Loan Documents.
6.9.
Notices. Promptly, and in any event within 3 Business Days after either Borrower has become aware of the applicable event, notify Lender in writing of:
(a)
any Default or Event of Default;
(b)
any notice given, or any action taken with respect to a claimed default, by any holder of any other Indebtedness issued or assumed by a Borrower, or the lessor under any lease as to which a Borrower is the lessee or under any agreement under which any such Indebtedness was issued or secured;
(c)
any correspondence, notice, pleading, citation, indictment, complaint, order, decree or other document received by a Borrower from any Person asserting or alleging a circumstance or condition which requires or may require a financial contribution by a Borrower or a cleanup, removal, remedial action or other response by or on the part of a Borrower under Environmental Laws or which seeks damages or civil, criminal or punitive penalties from a Borrower for an alleged violation of Environmental Laws and which, in any such circumstance, could reasonably be expected to have a Material Adverse Effect;
(d)
the commencement or non-frivolous threat of, or any material development in, any action, suit, arbitration or other proceeding affecting a Borrower which, if adversely determined, could reasonably be expected to have a Material Adverse Effect; and
(e)
any condition or event which would make any warranty contained in Section 4 inaccurate.
Each notice under this Section 6.9 shall be accompanied by a written statement by an officer or member of the applicable Borrower setting forth details of the occurrence referred to therein, stating what action such Borrower proposes to take with respect thereto and at what time and accompanied by all documents and correspondences from and to third parties relating to the occurrence referred to therein.
6.10.
Lender Accounts. Maintain with Lender all of Borrowers’ depository accounts.
6.11.
Computation of All Financial Covenants. All computations made to determine compliance with any financial covenants set forth in any Supplement shall be made in accordance with GAAP, applied on a consistent basis, certified by Borrowers as being true and correct and shall be completed using the relevant consolidated financial data of all Borrowers.
6.12.
Review and Acceptance of Leases. Provide to Lender all leases or assignments pertaining to the Collateral securing any Note, and other documentation as Lender may require, and Lender shall approve the form and substance of such lease or assignment, which approval shall not be unreasonably withheld.
6.13.
ASA Certification. In the case of CAS, maintain ASA certification at all times.
7.
NEGATIVE COVENANTS.
Each Borrower covenants that, without the prior written consent of Lender, Borrowers will not, until Lender’s commitment to extend credit hereunder and all Permitted Swap Agreements have terminated or expired and the Notes, and all fees and expenses payable hereunder, have been paid in full:
7.1.
Restricted Payments. Make any Restricted Payments; provided that so long as either Borrower is a limited liability company, such Borrower may make Permitted Distributions.
7.2.
Indebtedness. Create, incur, assume or permit to exist any Indebtedness except (a) Indebtedness owed to Lender; (b) Indebtedness secured by Permitted Liens; (c) Indebtedness permitted under Section 7.3; (d) RE Capitalized Lease Obligations; (e) in the case of any wholly-owned or non-wholly-owned subsidiary of CAS or CAL, Indebtedness that is non-recourse and is not secured by any Collateral in which Lender has a security interest, as long as Borrowers (both before and after consummation of such Indebtedness) are in compliance with the financial covenants of this Agreement and no other Event of Default has occurred and is continuing; or (f) Indebtedness identified on Schedule 7.2 hereto.
7.3.
Contingent Obligations. Create, incur, assume or suffer to exist any Contingent Obligations except (a) endorsements for collection or deposit in the ordinary course of business; (b) Contingent Obligations in favor of Lender or an Affiliate of Lender; and (c) obligations under Permitted Swap Agreements.
7.4.
Liens. Create, assume or permit to exist any Lien upon any of its property or assets, whether now owned or hereafter acquired, except Permitted Liens.
7.5.
Mergers. Merge or consolidate with or into any other Person, except as approved by Lender, which approval shall not be unreasonably withheld.
7.6.
Acquisitions, Advances and Investments. Acquire any other business or partnership or joint venture interest or make any loans, advances or extensions of credit to, or any investments in, any Person except (notwithstanding anything contrary in this Agreement or other Loan Documents), (a) the purchase of United States government obligations maturing within one year of the date of acquisition; (b) extensions of credit to customers in the ordinary course of business; (c) the purchase of certificates of deposit at Lender; (d) commercial paper having a maturity not exceeding 90 days which is rated not less than P-1 by Moody’s Investors Service, Inc. or A-1 by Standard and Poor’s Ratings Service; (e) investments in money market funds which invest principally in obligations described in (a) or (d) above; (f) investments in repurchase agreements at Lender; (g) loans and advances to employees and agents in the ordinary course of business for travel and entertainment expenses and similar items; (h) deposits in deposit accounts at Lender; and (i) investments in equity of another entity or in a beneficial interest in a trust, and additional contributions of capital or investment by a Borrower in such other entity or in such trust, as long as Borrowers (both before and after consummation of the investment) are in compliance with the financial covenants of this Agreement and any Supplement and no Event of Default has occurred and is continuing.
7.7.
Lines of Business. (1) Engage in any business activities substantially different than those in which either Borrower is presently engaged, (2) cease operations, liquidate, merge, transfer, acquire or consolidate with any other entity, change its name, dissolve or transfer or sell Collateral out of the ordinary course of business (and Lender acknowledges that Borrowers’ ordinary course of business involves sales of Collateral from time to time, not on a regular schedule, in very large dollar amounts), or (3) purchase or retire any of either Borrower’s outstanding shares, units or partnership interests, or alter or amend either Borrower’s capital structure.
7.8.
Transactions with Affiliates. Enter into or be a party to any transaction with any of its Affiliates except as otherwise provided herein or in the ordinary course of business and upon fair and reasonable terms which are no less favorable than a comparable arm’s length transaction with an entity which is not an Affiliate.
8.
EVENT OF DEFAULT; REMEDIES.
8.1.
Events of Default. The occurrence of any of the following shall constitute an Event of Default:
(a)
Payment Default. A Borrower fails to make any payment within three (3) Business Days after when such payment is due under any of the Loans.
(b)
Other Defaults. A Borrower fails to comply with or to perform any other term, obligation, covenant, or condition contained in this Agreement, in any other Loan Document, or in any of the documents related hereto, or to comply with or to perform any term, obligation, covenant, or condition contained in any other agreement between Lender and Borrowers.
(c)
False Statements. Any warranty, representation, or statement made or furnished to Lender by a Borrower or on a Borrower’s behalf under this Agreement or any related document is false or misleading in any material respect when made.
(d)
Death or Insolvency. The dissolution of a Borrower (whether voluntary or involuntary), or any other termination of a Borrower’s existence as a going business concern; or any equity holder withdraws from a Borrower, dies or its existence is terminated and the applicable Borrower does not obtain a substitute equity holder approved by Lender within one hundred twenty (120) days following such withdrawal, death or termination, and Lender’s approval shall not be unreasonably withheld; or the insolvency of a Borrower, including without limitation, the appointment of a receiver for any part of a Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws (whether voluntary or involuntary).
(e)
Defective Collateralization. This Agreement or any Loan Document ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason or any Collateral is or becomes subject to any liens except Permitted Liens.
(f)
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings; whether by judicial proceeding, self-help, repossession or any other method, by any creditor of a Borrower or by any governmental agency against any collateral securing the Loan. This includes a garnishment or levy of any of a Borrower’s accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by a Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or the forfeiture proceeding and if a Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for such proceeding in amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
(g)
Events Affecting Guarantors. Any of the preceding events occurs with respect to any Guarantor or any Guarantor dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness. Notwithstanding anything to the contrary herein, or in any of the Related Documents, the death or incompetency of a Guarantor shall not be an Event of Default if, within one hundred twenty (120) days following such death, the Borrowers provide a substitute guarantor approved by Lender, and Lender’s approval shall not be unreasonably withheld. Notwithstanding anything else in this Agreement or any Loan Document, or in any of the documents related hereto, neither a breach by a Guarantor of any agreement between the Guarantor and Lender, other than a Guaranty Agreement, nor the failure of a Guarantor to comply with or to perform any term, obligation, covenant, or condition contained in any agreement between the Guarantor and Lender, other than a Guaranty Agreement, shall constitute an Event of Default.
(h)
Change in Control of Operations. Joe Kuhn and Miriam Cohen-Kuhn cease to oversee the day to day operations of Borrowers.
(i)
Right to Cure. If any default, other than a default in payment on the Obligations is curable and if a Borrower has not been given a notice of a similar default within the preceding twelve (12) months, such default may be cured if a Borrower, after receiving written notice from Lender demanding cure of such default: (a) cures the default within fifteen (15) days; or (b) if the cure requires more than fifteen (15) days, immediately initiates steps which Lender, in its sole discretion, determines to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.
8.2.
Remedies. Upon the occurrence of an Event of Default that is susceptible to cure under Section 8.1(i), but is not cured within fifteen (15) days pursuant to Section 8.1(i), the obligation of Lender to make Loans shall terminate and (a) as to an Event of Default described in Sections 8.1(a) through 8.1(e) and 8.1(g) through 8.1(i), inclusive, the holder of a Note may, at its option and without notice, declare such Note to be, and such Note shall thereupon become, immediately due and payable, together with accrued interest thereon, and (b) as to an Event of Default described in Section 8.1(0, the Notes shall, without action on the part of Lender or any notice or demand, become automatically due and payable, together with accrued interest thereon. Presentment, demand, protest and notice of acceleration, nonpayment and dishonor are hereby expressly waived.
9.
MISCELLANEOUS.
9.1.
Survival of Representations and Warranties. The representations and warranties contained in Section 4 hereof and in the other Loan Documents shall survive closing and execution and delivery of the Notes.
9.2.
Expenses. Each Borrower agrees, whether or not the transaction hereby contemplated shall be consummated, to pay on demand (a) all out-of-pocket expenses incurred by Lender in connection with the negotiation, execution, administration, amendment or enforcement of any Loan Document including the reasonable fees and expenses of Lender’s counsel, provided, however, that the legal fees for the negotiation and execution of this Agreement, the Notes, the Guarantees and the Security Agreement dated as of the date hereof shall not exceed $55,000, (b) any taxes (including any interest and penalties relating thereto) payable by Lender (other than taxes based upon Lender’s net income) on or with respect to the transactions contemplated by this Agreement (Each Borrower hereby agreeing to indemnify Lender with respect thereto) and (c) Each Borrower agrees to pay upon demand all of Lender’s costs and expenses, including without limitation, Lender’s attorneys’ fees and Lender’s legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and each Borrower shall pay the costs and expenses of such enforcement. Costs and expenses include Lender’s attorneys’ fees and legal expenses whether or not there is a lawsuit, including attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post judgment collection services. Each Borrower shall also pay all court costs and such additional fees as maybe directed by the court. The obligations of each Borrower under this Section 9.2 will survive payment of the Notes.
9.3.
Notices. Except as otherwise provided herein or in a Supplement, all notices provided for herein shall be in writing and shall be (a) delivered; (b) sent by express or first class mail; or (c) sent by facsimile transmission and confirmed in writing provided to the recipient in a manner described in subsection (a) or (b) above, and addressed as follows, or to such other address with respect to either party as such party shall notify the other in writing; such notices shall be deemed given when delivered, mailed or so transmitted:
if to Lender, addressed to it at:
25 W. Main Street
Suite 200
Madison, WI 53703
Fax:            
if to Borrowers, addressed to them at:
Contrail Aviation Support, LLC
Contrail Aviation Leasing, LLC
435 Investment Court
Verona, WI 53593-8788
Fax: 608-848-8101
9.4.
Security Interest in Deposit Accounts and Right of Setoff. To the extent permitted by applicable law, each Borrower grants to Lender a security interest in, and Lender reserves the right of setoff in, any and all of a Borrower’s deposit accounts with Lender (whether checking, savings, time or any other type of account). This includes such accounts that a Borrower may hold jointly with someone else and all deposit accounts, whether now or hereafter existing. This does not include IRA or Keogh accounts, or any other account for which setoff would be prohibited by applicable law. Each Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Obligations against any or all of such accounts.
9.5.
Lender’s Expenditures. If any action or proceeding is commenced that would materially affect Lender’s interest in the Collateral or if a Borrower fails to comply with any provision of this Agreement or any related documents, including without limitation, a Borrower’s failure to discharge or pay when due any amounts a Borrower is required to discharge or pay under this Agreement or any related documents, Lender on a Borrower’s behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including without limitation, discharging or paying all taxes, liens, security interests, encumbrances, and any other claims, at the time levied or placed on any Collateral and paying all costs for insuring; maintaining and preserving any Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate being charged under the Note from the date incurred or paid by Lender to the date such expenditure is repaid to Lender. All such expenses will become a part of the Indebtedness and, at Lender’s option, shall be (a) payable upon demand; (b) added to the principal balance of the Indebtedness and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (c) treated as a balloon payment which will be due and payable at the Note’s maturity.
9.6.
Participations. Each Borrower agrees that Lender may, at its option, sell to another financial institution or institutions interests in any Note and, in connection with each such sale and thereafter, disclose to the purchaser or prospective purchaser of each such interest financial and other information concerning a Borrower. Each Borrower agrees that if any portion of the Obligations are due and unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each such purchaser shall be deemed to have, to the extent permitted by applicable law, the right of setoff in respect of its participating interest to the same extent as if the amount of its participating interest were owed directly to it. Each Borrower further agrees that each such purchaser shall be entitled to the benefits of Section 3.5 with respect to its participation in Lender’s obligation to make Loans; provided that no such purchaser shall be entitled to receive any greater amount pursuant to that section than Lender would have been entitled to receive if no such sale had occurred.
9.7.
Titles. The titles of sections in this Agreement are for convenience only and do not limit or construe the meaning of any section.
9.8.
Severability. In case any provision or obligation under this Agreement or any Note shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
9.9.
Parties Bound; Waiver. The provisions of this Agreement shall inure to the benefit of and be binding upon any successor of any of the parties hereto; provided that a Borrower’s rights under this Agreement are not delegatable or assignable. Any purported delegation or assignment by a Borrower of its respective rights and obligations hereunder is void. Each Borrower expressly acknowledges that Lender may assign its interests under this Agreement and the other Loan Documents to an Affiliate of Lender after the Closing Date and agree that upon such assignment, as used herein, the term “Lender” shall refer to such Affiliate. No delay on the part of Lender in exercising any right, power or privilege hereunder shall operate as a waiver thereof, and no single or partial exercise of any right, power or privilege hereunder shall preclude other or further exercise thereof or the exercise of any other right, power or privilege. The rights provided for in this Agreement and the other Loan Documents are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by law or in equity, or under any other instrument, documents or agreement now existing or hereafter arising.
9.10.
Governing Law. This Agreement is being delivered in and shall be deemed to be a contract governed by the laws of the State of Wisconsin and shall be interpreted and the rights and obligations of the parties hereunder enforced in accordance with the internal laws of that state without regard to the principles of conflicts of laws.
9.11.
Submission to Jurisdiction; Service of Process. ALL JUDICIAL PROCEEDINGS IN ANY MANNER RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR ANY OBLIGATIONS THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF WISCONSIN LOCATED IN MILWAUKEE COUNTY. BY EXECUTING AND DELIVERING THIS AGREEMENT, EACH BORROWER IRREVOCABLY:
(a)
ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;
(b)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
(c)
AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO A BORROWER AT ITS ADDRESS SPECIFIED IN SECTION 9.3; AND
(d)
AGREES THAT SERVICE AS PROVIDED IN CLAUSE (c) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER A BORROWER IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.
9.12.
Jury Waiver. BORROWERS AND LENDER HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG BORROWERS AND LENDER ARISING OUT OF OR IN ANY WAY RELATED TO THIS DOCUMENT, ANY OTHER RELATED DOCUMENT OR ANY RELATIONSHIP BETWEEN LENDER AND BORROWERS. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN THE OTHER LOAN DOCUMENTS.
9.13.
Limitation of Liability. BORROWER AND LENDER HEREBY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO CLAIM OR RECOVER FROM THE OTHER PARTY ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES, OF WHATEVER NATURE, OTHER THAN ACTUAL DAMAGES.
9.14.
Cross-Collateralization. In addition to the Obligations, the liens in favor of Lender under the Collateral Documents secures all obligations, debts and liabilities, plus interest thereon, of a Borrower or a Grantor to Lender, or any one or more of them, as well as all claims by Lender against a Borrower or a Grantor or any one or more of them whether now existing or hereafter arising, whether related or unrelated to the purpose of the Note, whether voluntary or otherwise, whether due or not due, direct or indirect, determined or undetermined, absolute or contingent, liquidated or unliquidated, whether a Borrower or a Grantor may be liable individually or jointly with others, whether obligated as guarantor, surety, accommodation party or otherwise, and whether recovery upon such amounts may be or hereafter may become barred by any statute of limitations, and whether the obligation to repay such amounts may be or hereafter may become otherwise unenforceable.
9.15.
Entire Agreement. This Agreement and the other Loan Documents shall constitute the entire agreement of the parties pertaining to the subject matter hereof and supersede all prior or contemporaneous agreements and understandings of the parties in connection therewith.
9.16.
Counterpart Signatures. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Except as provided in Section 5.1, this Agreement shall become effective when it shall have been executed by Lender and when Lender shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or e-mail transmission of a portable document file (also known as a PDF file) shall be effective as delivery of a manually executed counterpart of this Agreement.
[remainder of page intentionally left blank; signature page follows]

IN WITNESS WHEREOF, the Parties have executed this Credit Agreement as of the date first written above.
BORROWERS:        LENDER:

CONTRAIL AVIATION SUPPORT, LLC        OLD NATIONAL BANK


By:    /s/ Joseph Kuhn        By:    /s/ Tommy Olson    
Joseph Kuhn        Its:    SVP    
Its: CEO

CONTRAIL AVIATION LEASING, LLC


By:    /s/ Joseph Kuhn    
Joseph Kuhn
Its: CEO



18161595v1





CONTINUING GUARANTY
THIS CONTINUING GUARANTY (this “Guaranty”) is entered into as of June 24, 2019, by AIR T, INC. (the “Guarantor”) in favor of and for the benefit of OLD NATIONAL BANK (the “Lender”).
RECITALS
A.
Pursuant to a Master Loan Agreement dated as of the date hereof (such agreement, as amended, revised, supplemented or restated from time to time, including, but not limited to, by Supplements thereto, the “Master Loan Agreement”) by and among Contrail Aviation Support, LLC (“CAS”), Contrail Aviation Leasing, LLC (“CAL”, and together with CAS, each a “Borrower,” and collectively, the “Borrowers”) and Lender, Lender has agreed to make and continue certain financial accommodations to Borrowers, on the terms and subject to the conditions set forth in the Master Loan Agreement.
B.
Lender requires, as a condition to entering into the Master Loan Agreement, that Guarantor execute and deliver this Guaranty in favor of Lender, and the parties intend that this Guaranty supersedes any and all other guarantees from Guarantor to Lender in connection with loans made by Lender to one or both of the Borrowers.
AGREEMENTS
In consideration of the Recitals and to induce Lender to enter into the Master Loan Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor hereby agrees as follows for the benefit of Lender.
1.
DEFINITIONS.
1.1.
Certain Defined Terms. Words not otherwise defined herein shall have the meanings assigned them in the Master Loan Agreement. As used in this Guaranty, the following terms shall have the following meanings unless the context otherwise requires:
“Bank Documents” means the Master Loan Agreement, the Notes and the other Loan Documents.
“Guaranty” means this Guaranty, as it may be amended, supplemented or otherwise modified from time to time.
“Indebtedness” means all of the principal amount outstanding from time to time and at any one or more times, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law, reasonable attorneys’ fees, arising from any and all debts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired, that Borrowers individually or collectively or interchangeably with others, owes or will owe Lender. “Indebtedness” includes, without limitation, loans, advances, debts, overdraft indebtedness, credit card indebtedness, lease obligations, liabilities and obligations under any interest rate protection agreements or foreign currency exchange agreements or commodity price protection agreements, other obligations, and liabilities of any Borrower, and any present or future judgments against any Borrower, future advances, loans or transactions that renew, extend, modify, refinance, consolidate or substitute these debts, liabilities and obligations whether: voluntarily or involuntarily incurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined; direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several; evidenced by a negotiable or non-negotiable instrument or writing; originated by Lender or another or others; barred or unenforceable against Borrowers for any reason whatsoever; for any transactions that may be voidable for any reason (such as infancy, insanity, ultra vires or otherwise); and originated then reduced or extinguished and then afterwards increased or reinstated.
“Indebtedness” also includes any and all costs and expenses incurred by Lender following an Event of Default associated with any commercially reasonable efforts, whether successful or not, for the recovery, delivery to Lender, sale or other disposition of any Collateral securing any of the Indebtedness, including, but not limited to, Collateral in foreign countries (collectively, “Collateral Recovery Costs”); provided, however, that while Collateral Recovery Costs include all costs, fees, and expenses, including attorney’s fees, associated with the recovery, repossession or other similar efforts to retrieve Lender’s Collateral, neither Collateral Recovery Costs nor Guaranty Collection Costs shall include any costs and fees associated with obtaining replacement Collateral.
“payment in full”, “paid in full” or any similar term means payment in full of the Indebtedness, including all principal, interest, costs, fees and expenses (including reasonable legal fees and expenses) of Lender and all affiliates of Lender as required under the Bank Documents.
1.2.
Interpretation.
(a)
References to “Sections” and “subsections” shall be to Sections and subsections, respectively, of this Guaranty unless otherwise specifically provided.
(b)
In the event of any conflict or inconsistency between the terms, conditions and provisions of this Guaranty and the terms, conditions and provisions of the Master Loan Agreement, the terms, conditions and provisions of this Guaranty shall prevail.
2.
GUARANTY.
2.1.
Continuing Guaranty. THIS IS A “CONTINUING GUARANTY” UNDER WHICH GUARANTOR AGREES TO GUARANTY THE FULL AND PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF BORROWERS, OR ANY ONE OR MORE OF THEM, TO LENDER, NOW EXISTING OR HEREAFTER ARISING OR ACQUIRED ON A CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTOR’S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY FOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TO TIME.
2.2.
Impact on Other Guaranties. This Guaranty supersedes and revokes any and all previous guarantees issued by the Guarantor to the Lender.
2.3.
Guaranty of Payment, not Collection. For good and valuable consideration, Guarantor absolutely and unconditionally guaranties full and punctual payment and satisfaction of the Indebtedness of Borrowers to Lender when due, whether at stated maturity or by acceleration or otherwise. This is a guaranty of payments when due and not of collection, so Lender can enforce this Guaranty against Guarantor even when Lender has not exhausted Lender’s remedies against anyone else obligated to pay the Indebtedness or against any Collateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or its order, on demand, in legal tender of the United States of America, in same-day funds, without set-off or deduction or counterclaim.
2.4.
Conditional Limitation of Liability. Notwithstanding anything to the contrary contained in this Guaranty, Guarantor’s aggregate liability under this Guaranty will, at all times, be equal to the sum of the following:
(a)
One Million Six Hundred Thousand Dollars ($1,600,000.00); plus
(b)
Guaranty Collection Costs pursuant to Section 2.10 below; plus
(c)
Collateral Recovery Costs
(collectively, the “Liability Cap”).
2.5.
Payment by Guarantor; Application of Payments. Guarantor hereby agrees, in furtherance of the foregoing and not in limitation of any other right which Lender may have at law or in equity against Guarantor by virtue hereof, that upon the failure of either Borrower to pay any of the Indebtedness when and as the same shall become clue, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)), but subject to extension to account for any applicable cure periods, Guarantor will upon demand pay, or cause to be paid, in cash, to Lender an amount equal to the sum of the unpaid principal amount of all Indebtedness then due as aforesaid, accrued and unpaid interest on such Indebtedness (including interest which, but for the filing of a petition in bankruptcy with respect to any Borrower, would have accrued on such Indebtedness, whether or not a claim is allowed against such Borrower for such interest in the related bankruptcy proceeding) and all other Indebtedness then owed to Lender as aforesaid. All such payments shall be applied promptly from time to time by Lender to the Indebtedness in the manner determined by Lender in its sole discretion.
Guarantor’s liability under this Guaranty will only be reduced by sums actually paid by Guarantor under this Guaranty, but will not be reduced by sums from any other source, including, but not limited to, sums realized from any Collateral securing the Indebtedness or this Guaranty, or payments by anyone other than Guarantor, or reductions by operation of law, judicial order or equitable principles. Lender has the sole and absolute discretion to determine how sums shall be applied among guaranties of the Indebtedness.
2.6.
Liability of Guarantor Absolute. Guarantor agrees that his obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than payment in full of the Indebtedness. In furtherance of the foregoing and without limiting the generality thereof, Guarantor agrees as follows:
(a)
This Guaranty is a guaranty of payment when due and not of collectability.
(b)
Lender may enforce this Guaranty upon the occurrence of an Event of Default under the Master Loan Agreement or any other Bank Document notwithstanding the existence of any dispute between any Borrower and Lender with respect to the existence of such Event of Default.
(c)
The obligations of Guarantor hereunder are independent of the obligations of Borrowers under the Bank Documents and the obligations of any other guarantor of the obligations of Borrowers under the Bank Documents, and a separate action or actions may be brought and prosecuted against Guarantor whether or not any action is brought against any Borrower or any other guarantor and whether or not any Borrower is joined in any such action or actions.
(d)
Payment by Guarantor of a portion, but not all, of the Indebtedness shall in no way limit, affect, modify or abridge Guarantor’s liability for any portion of the Indebtedness which has not been paid.
(e)
Lender, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability of this Guaranty or giving rise to any reduction, limitation, impairment, discharge or termination of Guarantor’s liability hereunder, from time to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Indebtedness; (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Indebtedness or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Indebtedness and take and hold security for the payment of this Guaranty or the Indebtedness; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Indebtedness, any other guaranties of the Indebtedness, or any other obligation of any person with respect to the Indebtedness; (v) enforce and apply any security now or hereafter held by or for the benefit of Lender in respect of this Guaranty or the Indebtedness and direct the order or manner of sale thereof, or exercise any other right or remedy that Lender may have against any such security, in each case as Lender in its discretion may determine consistent with the Master Loan Agreement and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of Guarantor against any Borrower or any security for the Indebtedness; and (vi) exercise any other rights available to it under the Bank Documents at law or in equity.
(f)
This Guaranty and the obligations of Guarantor hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than payment in full of the Indebtedness), including the occurrence of any of the following, whether or not Guarantor shall have had notice or knowledge of any of them: (i) any failure or omission to assert or enforce any agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Bank Documents, at law, in equity or otherwise) with respect to the Indebtedness or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Indebtedness; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) of the Master Loan Agreement, any other Bank Document or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Indebtedness, in each case whether or not in accordance with the terms of the Master Loan Agreement or such Bank Document or any agreement relating to such other guaranty or security; (iii) the Indebtedness, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source to the payment of indebtedness other than the Indebtedness, even though Lender might have elected to apply such payment to any part or all of the Indebtedness; (v) Lender’s consent to the change, reorganization or termination of the corporate structure or existence of any Borrower and to any corresponding restructuring of the Indebtedness; (vi) any failure to perfect or continue perfection of a security interest in any Collateral which secures any of the Indebtedness; (vii) any defenses, set-offs or counterclaims (other than a defense of payment or performance) which any Borrower may allege or assert against Lender in respect of the Indebtedness, including failure of consideration, breach of warranty, statute of frauds, and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of Guarantor as an obligor in respect of the Indebtedness.
2.7.
Waivers by Guarantor. Guarantor hereby waives, for the benefit of Lender:
(a)
any right to require Lender, as a condition of payment or performance by Guarantor, to (i) proceed against either Borrower, any other guarantor of the Indebtedness or any other person; (ii) proceed against or exhaust any security held from any Borrower, any such other guarantor or any other person; (iii) proceed against or have resort to any balance of any deposit account or credit on the books of Lender in favor of any Borrower or any other person; or (iv) pursue any other remedy in the power of Lender whatsoever;
(b)
any defense arising by reason of the incapacity, lack of authority or any disability or other defense of any Borrower including any defense based on or arising out of the lack of validity or the unenforceability of the Indebtedness or any agreement or instrument relating thereto or by reason of the cessation of the liability of any Borrower from any cause other than payment in full of the Indebtedness;
(c)
any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal;
(d)
any defense based upon Lender’s errors or omissions in the administration of the Indebtedness, except behavior which amounts to bad faith, recklessness, or willful misconduct; and
(e)
(i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of this Guaranty and any legal or equitable discharge of Guarantor’s obligations hereunder; (ii) any rights to set-offs, recoupments and counterclaims; and (iii) promptness, diligence and any requirement that Lender protect, secure, perfect or insure any security interest or lien or any property subject thereto;
(f)
notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance of this Guaranty, notices of default under the Master Loan Agreement, the other Bank Documents or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Indebtedness or any agreement related thereto, notices of any extension of credit to any Borrower and notices of any of the matters referred to in Section 2.6 and any right to consent to any thereof; and
(g)
any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate Guarantor or sureties, or which may conflict with the terms of this Guaranty.
2.8.
Guarantor’s Rights of Subrogation, Contribution, Etc. Until the Indebtedness shall have been indefeasibly paid in full, Guarantor may not exercise any rights of subrogation, contribution, reimbursement or indemnification that Guarantor may have against any Borrower or against any Collateral or security, and any rights of contribution that Guarantor may have against any other guarantor of the Indebtedness. Any rights of subrogation, contribution, reimbursement or indemnification that Guarantor may have against any Borrower or against any Collateral or security, and any rights of contribution that Guarantor may have against any other guarantor, shall be junior and subordinate to any rights Lender may have against either Borrower, to all right, title and interest Lender may have in any such Collateral or security and to any right Lender may have against such other guarantor. If any amount shall be paid to Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all Indebtedness shall not have been paid in full, such amount shall be held in trust for Lender and shall forthwith be paid over to Lender to be credited and applied against the Indebtedness, whether matured or unmatured, in accordance with the terms hereof.
2.9.
Subordination of Other Obligations. Any indebtedness of any Borrower now or hereafter held by Guarantor is hereby subordinated in right of payment to the Indebtedness, and except as otherwise set forth in any Subordination Agreement entered into by Guarantor for the benefit of Lender, any such indebtedness collected or received by Guarantor shall be held in trust for Lender and shall forthwith be paid over to Lender to be credited and applied against the Indebtedness but without affecting, impairing or limiting in any manner the liability of Guarantor under any other provision of this Guaranty.
2.10.
Expenses. Guarantor agrees to pay, or cause to be paid, on demand, and to save Lender harmless against liability for, any and all costs and expenses (including reasonable fees and disbursements of counsel and allocated costs of internal counsel) incurred or expended by Lender in connection with the enforcement of or preservation of any rights under this Guaranty (collectively, “Guaranty Collection Costs”).
2.11.
Authority of Guarantor or Borrowers. It is not necessary for Lender to inquire into the capacity or power of Guarantor or Borrowers or the officers, directors or any agents acting or purporting to act on behalf of any of them.
2.12.
Financial Condition of Borrowers. Lender’s loans to any Borrower may be continued from time to time without notice to or authorization from Guarantor regardless of the financial or other condition of such Borrower at the time of any such grant or continuation. Lender shall not have any obligation to disclose or discuss with Guarantor its assessment, or Guarantor’s assessment, of the financial condition of any Borrower. Guarantor has adequate means to obtain information from Borrowers on a continuing basis concerning the financial condition of each Borrower and its ability to perform its obligations under the Bank Documents, and Guarantor assumes the responsibility for being and keeping informed of the financial condition of Borrowers and of all circumstances bearing upon the risk of nonpayment of the Indebtedness. Guarantor hereby waives and relinquishes any duty on the part of Lender to disclose any matter, fact or thing relating to the business, operations or conditions of Borrowers now known or hereafter known by Lender.
2.13.
Rights Cumulative. The rights, powers and remedies given to Lender by this Guaranty are cumulative and shall be in addition to and independent of all rights, powers and remedies given to Lender by virtue of any statute or rule of law or in any of the other Bank Documents or any agreement between Guarantor and Lender or between any Borrower and Lender. Any forbearance or failure to exercise, and any delay by Lender in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy.
2.14.
Bankruptcy; Post-Petition Interest; Reinstatement of Guaranty.
(a)
The obligations of Guarantor under this Guaranty shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of any Borrower or by any defense which such Borrower may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding.
(b)
Guarantor acknowledges and agrees that any interest on any portion of the Indebtedness which accrues after the commencement of any proceeding referred to in clause (a) above (or, if interest on any portion of the Indebtedness ceases to accrue by operation of law by reason of the commencement of said proceeding, such interest as would have accrued on such portion of the Indebtedness if said proceedings had not been commenced) shall be included in the Indebtedness because it is the intention of Guarantor and Lender that the Indebtedness which are guarantied by Guarantor pursuant to this Guaranty should be determined without regard to any rule of law or order which may relieve any Borrower of any portion of such Indebtedness. Guarantor will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person to pay Lender, or allow the claim of Lender in respect of, any such interest accruing after the date on which such proceeding is commenced.
(c)
In the event that all or any portion of the Indebtedness are paid by Borrowers, the obligations of Guarantor hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from Lender as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Indebtedness for all purposes under this Guaranty.
2.15.
Set Off. In addition to any other rights Lender may have under law or in equity, if any amount shall at any time be due and owing by Guarantor to Lender under this Guaranty, Lender is authorized at any time or from time to time, without notice (any such notice being hereby expressly waived), to set off and to appropriate and to apply any and all deposits (general or special, including indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other indebtedness of Lender owing to Guarantor and any other property of Guarantor held by Lender to or for the credit or the account of Guarantor against and on account of the Indebtedness and liabilities of Guarantor to Lender under this Guaranty.
2.16.
Financial Statements. To the extent such information is not publicly and readily available, and to the extent not prohibited by applicable law, Guarantor agrees to furnish to Lender within thirty (30) days of the direction of the Lender to do so, but in any case, no less frequently than annually, a financial statement of Guarantor listing all assets and liabilities (including contingent liabilities) of Guarantor, and the resulting net worth, signed and dated by Guarantor, in form, detail and completeness acceptable to Lender in its sole discretion from time to time. In addition, as soon as available, but in any event not later than ten (10) days after filing copies of Guarantor’s Federal income tax return as filed with the Internal Revenue Service, signed by Guarantor, complete in all respects including all statements, schedules (including any Schedule K-ls related to income or losses reported), forms and attachments thereto. In addition to any other financial reporting requirements of Guarantor to Lender, Guarantor agrees to furnish to Lender, at times and frequencies reasonably determined appropriate by Lender from time to time, any other information or reports with respect to Guarantor’s financial condition.
3.
MISCELLANEOUS.
3.1.
Survival of Warranties. All agreements, representations and warranties made herein shall survive the execution and delivery of this Guaranty and the other Bank Documents.
3.2.
Limitation of Liability. Guarantor, and by its acceptance of this Guaranty, Lender, hereby confirms that it is the intention of all such persons that this Guaranty and the obligations of Guarantor hereunder not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law to the extent applicable to this Guaranty and the Obligations of Guarantor hereunder. To effectuate the foregoing intention, Lender and Guarantor hereby irrevocably agree that the obligations of Guarantor under this Guaranty at any time shall be limited to the maximum amount as will result in the obligations of Guarantor under this Guaranty not constituting a fraudulent transfer or conveyance.
3.3.
Notices. Any communications between Lender and Guarantor and any notices or requests provided herein to be given may be given by mailing the same, postage prepaid, or by facsimile transmission, if to Lender, at its address set forth in the Master Loan Agreement and if to Guarantor, at his address set forth on the signature pages hereof, or to such other addresses as each such party may in writing hereafter indicate. Any notice, request or demand to or upon Lender or Guarantor shall not be effective until received.
3.4.
Severability. In case any provision in or obligation under this Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
3.5.
Amendments and Waivers. No amendment, modification, termination or waiver of any provision of this Guaranty, and no consent to any departure by Guarantor therefrom, shall in any event be effective without the written concurrence of Lender and Guarantor. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given.
3.6.
Headings. Section and subsection headings in this Guaranty are included herein for convenience of reference only and shall not constitute a part of this Guaranty for any other purpose or be given any substantive effect.
3.7.
Applicable Law: Rules of Construction. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF GUARANTOR AND LENDER HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF WISCONSIN, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
3.8.
Successors and Assigns. This Guaranty is a continuing guaranty and shall be binding upon Guarantor and his respective successors and assigns. This Guaranty shall inure to the benefit of Lender and its successors and assigns. Guarantor shall not assign this Guaranty or any of the rights or obligations of Guarantor hereunder without the prior written consent of Lender. Lender may, without notice or consent, assign its interest in this Guaranty in whole or in part, provided that Lender shall use its best efforts to notify Guarantor of any such assignment promptly following such assignment. The terms and provisions of this Guaranty shall inure to the benefit of any transferee or assignee of the Note, or any portion thereof, and in the event of such transfer or assignment the rights and privileges herein conferred upon Lender shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof.
3.9.
Consent to Jurisdiction. To induce Lender to accept delivery of this Guaranty:
GUARANTOR AGREES THAT ALL ACTIONS OR PROCEEDINGS IN ANY MANNER RELATING TO OR ARISING OUT OF THIS GUARANTY OR THE OTHER BANK DOCUMENTS MAY BE BROUGHT ONLY IN COURTS OF THE STATE OF WISCONSIN LOCATED IN DANE COUNTY OR THE FEDERAL COURT FOR THE WESTERN DISTRICT OF WISCONSIN AND GUARANTOR CONSENTS TO THE JURISDICTION OF SUCH COURTS. GUARANTOR WAIVES ANY OBJECTION HE MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH COURT AND ANY RIGHT HE MAY HAVE NOW OR HEREAFTER HAVE TO CLAIM THAT ANY SUCH ACTION OR PROCEEDING IS IN AN INCONVENIENT COURT.
3.10.
Waiver of Jury Trial. GUARANTOR AND LENDER (BY ITS ACCEPTANCE HEREOF) HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY. The scope of this waiver is intended to be all encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including contract claims, tort claims, breach of duty claims and all other common law and statutory claims. Guarantor and Lender each acknowledge that this waiver is a material inducement for Guarantor and Lender to enter into a business relationship, that Guarantor and Lender have already relied on this waiver in executing or accepting this Guaranty, and that each will continue to rely on this waiver in their related future dealings. Guarantor and Lender further warrant and represent that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION AND EXECUTED BY GUARANTOR AND LENDER), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS Guaranty. In the event of litigation, this Guaranty may be filed as a written consent to a trial by the court.
3.11.
No Other Writing. This writing is intended by Guarantor and Lender as the final expression of this Guaranty and is also intended as a complete and exclusive statement of the terms of Guarantor’s undertaking with respect to the matters covered hereby. No course of dealing, course of performance or trade usage, and no parol evidence of any nature, shall be used to supplement or modify any terms of this Guaranty. There are no conditions to the full effectiveness of this Guaranty.
3.12.
Further Assurances. At any time or from time to time, upon the request of Lender, Guarantor shall execute and deliver such further documents and do such other acts and things as Lender may reasonably request in order to effect fully the purposes of this Guaranty.
3.13.
Errors and Omission. The undersigned Guarantor, if requested by Lender, agrees to fully cooperate and adjust for clerical errors, any or all loan closing documentation if deemed necessary or desirable in the reasonable discretion of Lender for any reason, including, without limitation, to enable Lender to sell, convey, seek guaranty or market said loan to any entity.
3.14.
Effectiveness. This Guaranty shall become effective as to Guarantor upon the execution and delivery hereof by Guarantor.

AIR T, INC.


/s/ Mark Jundt    
Mark Jundt, General Counsel – Air T, Inc.

Address:
5000 W. 36th St. Suite 130
Minneapolis, MN 55416

18172063v1





SUPPLEMENT #1 TO MASTER LOAN AGREEMENT
Date of Supplement: June 24, 2019
THIS SUPPLEMENT #1 TO MASTER LOAN AGREEMENT (this “Supplement”) is made and entered into by Lender and Borrowers as of the date written above pursuant to the Master Loan Agreement by and between Lender and Borrowers dated June 24, 2019 (the “Master Loan Agreement”).
This Supplement constitutes a Supplement under the Master Loan Agreement and is hereby made a part of the Master Loan Agreement. All capitalized terms herein not otherwise defined herein shall have the meaning ascribed to them in the Master Loan Agreement. The credit facility described in this Supplement is governed by and shall be construed and administered in accordance with the terms and conditions of the Master Loan Agreement and this Supplement.
To the extent any term or condition of this Supplement is inconsistent with any term or condition in the Master Loan Agreement or in any Supplement dated prior to this Supplement, the terms and conditions of this Supplement shall control. Except as specifically amended hereby, all terms and conditions of the Master Loan Agreement and all prior Supplements remain in effect.
In consideration of the mutual covenants contained herein and in the Master Loan Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1.
DEFINITIONS.
As used in this Supplement, the following terms have the following meanings:
“Aircraft Engines” means, collectively, CFM International CFM56-7B26 SN: 874771 engine, CFM International CFM56-7B26/3 SN: 874357 engine, CFM International CFM56-5B4 SN: 779224 engine, and any replacements thereto.
“Mandatory Prepayment Amount” means an amount equal to the difference between: (i) seventy percent (70%) of the gross amount of lease income generated by the Aircraft Engines for a given fiscal quarter minus (ii) all payments made pursuant to Section 2.4(b) of this Supplement during such fiscal quarter.
“Mandatory Prepayments” has the meaning ascribed to it in Section 2.4(d) of this Supplement.
“Term Loan A” means an extension of credit to Borrowers by Lender pursuant to this Supplement.
“Term Loan A Maturity Date” means the first to occur of: (1) January 26, 2021; and (2) the date on which Term Loan A is accelerated as provided hereunder, in Term Note A or in the Master Loan Agreement.
“Term Note A” means the Amended and Restated Promissory Note of Borrowers in the form of Exhibit A to be executed concurrently with this Supplement.
2.
THE CREDIT FACILITY; BORROWING PROCEDURES; INTEREST RATE; AND PAYMENTS.
2.1.
Credit Facility. Lender has made a term loan to the Borrowers, prior to the Closing Date, in an amount equal to $9,920,000.00 (“Term Loan A”), which is now subject to the terms and conditions hereof and of the Master Loan Agreement. Term Loan A is evidenced by Term Note A, is payable in accordance with the terms of Term Note A and was made by disbursement of Loan proceeds when and as directed by Borrowers. Amounts borrowed and repaid under the Term Loan A may not be reborrowed.
2.2.
Borrowing Procedures. The entire amount of Term Loan A was advanced in one single advance prior to the Closing Date.
2.3.
Interest Rate. The unpaid principal balance of Term Loan A outstanding from time to time shall bear interest for the period commencing on the Borrowing Date of Term Loan A until such Loan is paid in full. Term Loan A shall accrue interest at a variable rate equal to the LIBOR Rate plus 3.75% per annum and such rate shall be adjusted on the 26th day of each month.
2.4.
Payments. Borrowers shall make the following payments on Term Loan A during the following periods:
(a)
Accrued unpaid interest only due on February 26, 2018, March 26, 2018 and April 26, 2018;
(b)
Two Hundred Fifty Thousand Dollars ($250,000.00) due on July 26, 2018 and on the 26th day of each October, January, April and July thereafter;
(c)
a final payment of all outstanding principal and accrued unpaid interest together with such other amounts as shall then be due and owing from Borrowers to Lender under the Term Loan A on the Term Loan A Maturity Date; and
(d)
in addition to, and not in lieu of the payments required in Section 2.4(a) through (c) above, Borrowers shall make quarterly payments on Term Loan A (“Mandatory Prepayments”) equal to the Mandatory Prepayment Amount calculated for the most recently ended fiscal quarter. Mandatory Prepayments are due on or before the date that is sixty (60) days following the end of the fiscal quarter to which the Mandatory Prepayment relates.
2.5.
Fees.
(a)
[Intentionally Omitted].
3.
CONDITIONS FOR BORROWING.
In addition to all conditions to borrowing set forth in Section 5.1 of the Master Loan Agreement, Lender’s obligation to make the Loan described in this Supplement is subject to the satisfaction or waiver by Lender in writing on or before the Closing Date of such Loan of the following conditions:
3.1.
Lender shall have received the following, all in form, detail and content satisfactory to Lender:
(a)
Term Note A duly executed by both Borrowers.
4.
AFFIRMATIVE COVENANTS.
In addition to all affirmative covenants set forth in Section 6 of the Master Loan Agreement, each Borrower covenants that it will, until Lender’s commitment to extend credit under this Supplement and all Permitted Swap Agreements relating to the credit facility extended under this Supplement have terminated or expired and the promissory note evidencing the credit facility extended under this Supplement, and all fees and expenses payable in connection with the credit facility extended under this Supplement have been paid in full:
4.1.
Quarterly Rolling Cash Flow Coverage Ratio. Maintain, as of the last day of each fiscal quarter, a Quarterly Rolling Cash Flow Coverage Ratio of not less than 1.25 to 1.0. Lender may determine compliance with this Quarterly Cash Flow Coverage Ratio covenant at any time.
4.2.
Tangible Net Worth. Maintain a Tangible Net Worth of at least $8,500,000 at all times. Lender may determine compliance with this Tangible Net Worth covenant at any time.
5.
NEGATIVE COVENANTS.
In addition to all negative covenants set forth in Section 7 of the Master Loan Agreement, each Borrower covenants that, without the prior written consent of Lender, Borrowers will not, until Lender’s commitment to extend credit under this Supplement and all Permitted Swap Agreements relating to the credit facility extended under this Supplement have terminated or expired and the promissory note evidencing the credit facility extended under this Supplement, and all fees and expenses payable in connection with the credit facility extended under this Supplement, have been paid in full:
5.1.
[Intentionally Omitted].
[remainder of page intentionally left blank; signature page follows]


IN WITNESS WHEREOF, the Parties have executed this Supplement as of the date first written above.
BORROWERS:        LENDER:

CONTRAIL AVIATION SUPPORT, LLC        OLD NATIONAL BANK


By:    /s/ Joseph Kuhn        By:    /s/ Tommy Olson    
Joseph Kuhn        Its:    SVP    
Its: CEO

CONTRAIL AVIATION LEASING, LLC


By:    /s/ Joseph Kuhn    
Joseph Kuhn
Its: CEO

18161158v1






Contrail Aviation Support, LLC, Contrail Aviation Leasing, LLC
Loan No. 20007438753.
June 24, 2019
Note
FIRST AMENDED AND RESTATED PROMISSORY NOTE
TERM NOTE A
$9,920,000.00    June 24, 2019
THIS FIRST AMENDED AND RESTATED PROMISSORY NOTE TERM NOTE A (this “Note”) amends and restates the Promissory Note dated September 14, 2018 in the original principal amount of Nine Million Nine Hundred Twenty Thousand Dollars ($9,920,000.00) (the “Original Note”) executed by CONTRAIL AVIATION SUPPORT, LLC (“Support”) and CONTRAIL AVIATION LEASING, LLC (“Leasing”, and together with Support, each a “Borrower,” and collectively, the “Borrowers”) in favor of OLD NATIONAL BANK (the “Lender,” and together with Borrowers, collectively the “Parties”). Borrowers and Lender desire to amend and restate the Original Note in its entirety as follows:
FOR VALUE RECEIVED, Borrowers, jointly and severally, promise to pay to the order of Lender the principal sum of Nine Million Nine Hundred Twenty Thousand Dollars ($9,920,000.00), together with interest thereon as hereinafter provided.
1.
RATE OF INTEREST
The principal amount of the Loan outstanding from time to time shall bear interest at the variable rate of LIBOR Rate (as defined in the Master Loan Agreement referenced below) plus 3.75% per annum and such rate shall be adjusted on the 26th day of each month (the “Loan Rate”).
2.
PAYMENTS
Payments of both principal and interest are to be made in immediately available funds in lawful currency of the United States of America at the office of Lender, or such other place as the holder hereof shall designate to the undersigned in writing. Unless required by applicable law, and prior to any default being declared, payments will be applied first to any accrued unpaid interest; then to principal; then to escrow; then to any late charges; and then to any unpaid collection costs. Funds shall be deemed received by Lender on the next business day if not received by 12:00 p.m. local time at the location payments hereunder are to be made.
Borrowers shall make payments of:
(a)
interest only due on February 26, 2018, March 26, 2018 and April 26, 2018;
(b)
Two Hundred Fifty Thousand Dollars ($250,000.00) due on July 26, 2018 and on the 26th day of each October, January, April and July thereafter; and
(c)
a final payment of all outstanding principal and interest together with such other amounts as shall then be due and owing from Borrowers to Lender under the Term Loan A on the Term Loan A Maturity Date.
3.
FINAL PAYMENT MATURITY DATE
Notwithstanding anything set forth above, all sums due under this Note, both principal and interest, if not sooner paid, shall be due and payable on January 26, 2021 (“Term Loan A Maturity Date”).
4.
PREPAYMENT; MINIMUM FINANCE CHARGE
Borrowers agree that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not be subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. In any event, even upon full prepayment of this Note, Borrowers understand that Lender is entitled to a minimum finance charge of $95.00. Other than Borrowers’ obligations to pay any minimum finance charge, Borrowers may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrowers of Borrowers’ obligation to continue to make payments under the payment schedule. Rather, early payments will reduce the principal balance due and may result in Borrowers making fewer payments. Borrowers agree not to send Lender payments marked “paid in full,” “without recourse,” or similar language. If Borrowers send such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrowers will remain obligated to pay any further amounted owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Old National Bank, PO Box 3728, Evansville, IN 47736‑3728.
5.
MANDATORY PREPAYMENTS
In addition to, and not in lieu of the payments required in Section 2, Borrowers shall make quarterly payments on Term Loan A equal to the Mandatory Prepayment (as defined in the Master Loan Agreement) calculated for the most recently ended fiscal quarter. Mandatory Prepayments are due on or before the date that is sixty (60) days following the end of the fiscal quarter to which the Mandatory Prepayment relates.
6.
PAYMENT DUE DATE/FAILURE TO PAY
(a)
All payments due under this Note shall be made without demand and received on the dates set forth in Section 2 above;
(b)
In the event of a default as defined in this Note, or as set forth in the Master Loan Agreement or any Collateral Documents or Guaranty Agreements, at the option of Lender, for so long as the default exists, interest on the outstanding principal balance hereof shall accrue and will be paid at the rate in effect from time to time hereunder plus an additional 3% per annum, but in no event shall such default rate exceed, however, the maximum rate permitted by law (“Default Interest Rate”); and
(c)
Any installment of principal and/or interest due hereunder which is not received on or before the 10th day following the date on which it is due shall be subject to a late payment fee of 5% of the amount owed on such installment (but not less than $50.00) for the purpose of defraying the expense incident to handling such delinquent payment (this payment is in addition to the amount set forth in (b) above).
7.
INTEREST RATE COMPUTATION
Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method.
8.
PLACE OF PAYMENT
All payments shall be made to Lender at the address on the interest billing statement provided by Lender or at the address of Lender set forth in Section 14 of this Note, at any branch of Lender, or such other place as Lender may from time to time designate in writing.
9.
MASTER LOAN AGREEMENT AND SECURITY
This Note evidences indebtedness incurred under; is the “Term Note A” referred to in; and is subject to the terms and provisions of the Master Loan Agreement by and between Borrowers and Lender of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, including, but not limited to, by Supplements thereto, the “Master Loan Agreement”). Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Master Loan Agreement.
This Note is secured by the Collateral Documents. The terms of the Collateral Documents are incorporated herein and made a part hereof by reference.
10.
DEFAULT
In the event of the occurrence of an Event of Default under the Master Loan Agreement, and after giving effect to any applicable right to cure provided by the Master Loan Agreement, Lender may, at its option and without notice, declare this Note to be, and this Note shall thereupon become, immediately due and payable, together with accrued interest thereon. Without limiting the foregoing right and without limiting any other rights and remedies of the Lender at law or in equity, the Lender is also entitled to the rights and remedies provided for in the Master Loan Agreement and the Collateral Documents and may enforce the covenants, agreements and undertakings of Borrowers contained therein and may exercise the remedies provided for thereby or otherwise available in respect thereto, all in accordance with the terms thereof In addition to any other right, Lender may apply and/or set‑off against amounts due it hereunder any deposits, account balances, or other credits of any Borrower in the possession of or in transit to Lender, and Borrowers hereby grant Lender a security interest in all of the foregoing.
11.
WAIVERS
Except as herein provided, Borrowers and all others who may become liable for all or part of the principal balance hereof or for any obligations of Borrowers to Lender or the holder hereof (a) forever waive presentment, protest and demand, notice of protest, demand and dishonor and non‑payment of this Note, and all other notices in connection with the delivery, acceptance, performance, default or enforcement of the payment of this Note, (b) agree that the time of payment of the debt or any part thereof may be extended from time to time without modifying or releasing the lien of the Collateral Documents or the liability of Borrowers or any other such parties, the right of recourse against Borrowers and such parties being hereby reserved by Lender; and (c) agree that time is of the essence. Borrowers agree to pay all reasonable costs of collection when incurred, whether suit be brought or not, including reasonable attorneys’ fees and costs of suit and preparation therefore, and to perform and comply with each of the covenants, conditions, provisions and agreements of Borrowers contained in this Note, the Master Loan Agreement and Collateral Documents. It is expressly agreed by Borrowers that no extensions of time for the payment of this Note, nor the failure on the part of Lender to exercise any of its rights hereunder, shall operate to release, discharge, modify, change or affect the original liability under this Note, the Master Loan Agreement or any of the Collateral Documents, either in whole or in part.
12.
WAIVER OF JURY TRIAL
BORROWERS WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS INSTRUMENT AND TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS HEREUNDER OR THEREUNDER, ANY COLLATERAL SECURING THE OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED THERETO. BORROWERS REPRESENT THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.
13.
COMPLIANCE
This Note is to be governed by, and construed and enforced in accordance with, the laws of the State of Wisconsin (without giving effect to Wisconsin’s principles of conflicts of law), except to the extent (a) of procedural and substantive matters relating only to the creation, perfection, foreclosure and enforcement of rights and remedies against specific collateral, which matters shall be governed by the laws of the state in which the collateral is located (the “Collateral State”), and (b) that the laws of the United States of America and any rules regulations, or orders issued or promulgated thereunder, applicable to the affairs and transactions entered into by the Lender, otherwise preempt Collateral State law or Wisconsin law; in which event such federal law shall control. Borrowers hereby irrevocably submit to the jurisdiction of any Wisconsin or federal court sitting in Milwaukee, Wisconsin (or, with respect to the matters set forth in subsection (a) above, any state in which the property encumbered by the Collateral Documents is located) over any suit, action or proceeding arising out of or relating to this Note or any of the Loan Documents. Borrowers hereby waive any right to object to the location of venue in any Wisconsin or federal court sitting in Milwaukee, Wisconsin, or, with respect to the matters set forth in subsection (a) above, to the appropriate court located in the Collateral State, concerning any suit, action or proceeding arising out of or relating to this Note or any of the Loan Documents and waives any objection which it may have at any time to the laying of venue in any proceedings brought in any such court, waives any claim that such proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such proceedings, that such court does not have jurisdiction over such party to object to the choice of governing law set forth in this section. Borrowers acknowledge that the loan evidenced by this Note was solicited, negotiated, closed and funded in the State of Wisconsin, and waives any implication that the laws of any other state shall apply for usury purposes.
14.
NOTICES
All notices, requests and demands to be made hereunder to the parties hereto must be in writing and must be delivered to the applicable address stated below by any of the following means: (a) personal service; (b) electronic communication, including, but not limited to electronic mail, telex, telegram or telecopying (and, if by telex, telegram or telecopying, then only if confirmed in writing sent by registered or certified, first class mail, return receipt requested); or (c) registered or certified, first class mail, return receipt requested. Such addresses may be changed by notice to the other parties given in the same manner as provided above. Any notice, demand or request sent pursuant to either subsection (a) or (b) hereof will be deemed received upon such personal service or upon dispatch by electronic means, and, if sent pursuant to subsection (c) will be deemed received three (3) days following deposit in the mail.
Borrowers:    CONTRAIL AVIATION SUPPORT, LLC
CONTRAIL AVIATION LEASING, LLC
435 Investment Court
Verona, WI 53593‑8788

Lender:    OLD NATIONAL BANK
25 W. Main St.
Madison, WI 53703
15.
INTEREST NOT TO EXCEED MAXIMUM ALLOWED BY LAW
If from any circumstances whatsoever, by reason of acceleration or otherwise, the fulfillment of any provision of this Note involves transcending the limit of validity prescribed by any applicable usury statute or any other applicable law, with regard to obligations of like character and amount, then the obligations to be fulfilled will be reduced to the limit of such validity as provided in such statute or law, so that in no event shall any exaction be possible under this Note in excess of the limit of such validity.
16.
SUCCESSORS
All rights, powers, privileges and immunities herein granted to Lender shall extend to its successors and assigns and any other legal holder of this Note, with full right by Lender to assign and/or sell same.
17.
NOT A NOVATION; AMENDMENT AND RESTATEMENT
This Note is an amendment and restatement of the Original Note. It is not intended, and shall not be deemed or construed as a novation of the Original Note and the validity, priority and enforceability of the Original Note shall not be impaired hereby.
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IN WITNESS WHEREOF, the Parties have executed this Note as of the date and year first above written.
BORROWER:        LENDER:

CONTRAIL AVIATION SUPPORT, LLC        OLD NATIONAL BANK


By:/s/ Joseph Kuhn___________________        By:/s/ Tommy Olson__________________
Joseph Kuhn        Its: SVP
Its: CEO
CONTRAIL AVIATION LEASING, LLC


By: /s/ Joseph Kuhn___________________    
Joseph Kuhn
Its: CEO

18175026v1


{B0736611.2}


SUPPLEMENT #2 TO MASTER LOAN AGREEMENT
Date of Supplement: June 24, 2019
THIS SUPPLEMENT #2 TO MASTER LOAN AGREEMENT (this “Supplement”) is made and entered into by Lender and CAS as of the date written above pursuant to the Master Loan Agreement by and between Lender and Borrowers dated June 24, 2019 (the “Master Loan Agreement”).
This Supplement constitutes a Supplement under the Master Loan Agreement and is hereby made a part of the Master Loan Agreement. All capitalized terms herein not otherwise defined herein shall have the meaning ascribed to them in the Master Loan Agreement. The credit facility described in this Supplement is governed by and shall be construed and administered in accordance with the terms and conditions of the Master Loan Agreement and this Supplement.
To the extent any term or condition of this Supplement is inconsistent with any term or condition in the Master Loan Agreement or in any Supplement dated prior to this Supplement, the terms and conditions of this Supplement shall control. Except as specifically amended hereby, all terms and conditions of the Master Loan Agreement and all prior Supplements remain in effect.
In consideration of the mutual covenants contained herein and in the Master Loan Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledges, the Parties agree as follows:
1.
DEFINITIONS.
As used in this Supplement, the following terms have the following meanings:
“CAL Guaranty” means the continuing guaranty of CAL in the form of Exhibit A to be executed concurrently with this Supplement.
“Debt Service Coverage Ratio” means a ratio, the numerator of which shall be EBITDA for the 12-month period then ended and the denominator being the sum of: (i) Debt Service for the same period; plus (ii) the aggregate amount of payments required to be paid by Borrowers by amortizing the lowest principal balance outstanding on the Revolving Note at any time during the applicable Testing Period over a hypothetical five-year period at the then outstanding interest rate in effect at the time of the testing.
“Resting Period” has the meaning ascribed to it in Section 2.4(b) of this Supplement.
“Revolving Loans” means extensions of credit to CAS by Lender pursuant to this Supplement.
“Revolving Note” means the Amended and Restated Revolving Note of CAS in the form of Exhibit B to be executed concurrently with this Supplement.
“Revolving Note Maturity Date” means May 5, 2019, or such earlier date on which the Revolving Note becomes due and payable pursuant to this Supplement or the Master Loan Agreement.
“Testing Period” has the meaning ascribed to it in Section 2.4(b) of this Supplement.
2.
THE CREDIT FACILITY; BORROWING PROCEDURES; INTEREST RATE; PAYMENTS; AND FEES.
2.1.
Credit Facility. So long as no Event of Default has occurred or the obligation of the Lender to advance funds under the Revolving Loans has not been extinguished, Lender may lend to CAS and CAS agrees to borrow from Lender (and to repay to Lender in accordance with the terms hereof) from time to time an aggregate principal sum equal to the principal face amount of the Revolving Note. As long as no Event of Default shall have occurred and be continuing, and subject to the further conditions and limitations contained herein and until expiration or maturity of the Revolving Loans, upon acceleration or otherwise, CAS may borrow, repay and re-borrow the Revolving Loans. If at any time the aggregate principal outstanding of Revolving Loans exceeds the principal face amount of the Revolving Note, CAS shall immediately repay to Lender, without the necessity of notice or demand from Lender, an amount not less than such excess.
All Revolving Loans made pursuant to this Supplement will be evidenced by the Revolving Note, shall be payable, as to interest, in accordance with the Revolving Note, and as to the principal, on the Revolving Note Maturity Date and will be made by deposits or transfers to CAS’s demand deposit account maintained with Lender or as otherwise directed by CAS. Although the Revolving Note shall be expressed to be payable in the full amount specified above, CAS shall be obligated to pay only the principal amount of Revolving Loans actually disbursed to or for the account of CAS, together with interest on the unpaid balance of the sums so disbursed, which remain outstanding from time to time as shown on the records of Lender.
2.2.
Borrowing Procedures. CAS shall request Revolving Loans by written notice, or by telephonic notice confirmed in writing, to Lender, not later than 2:00 p.m., Milwaukee time, on the requested Borrowing Date (which must be a Business Day). Each such request by CAS, must specify the amount of the requested Loan. In the event of any inconsistency between the telephonic notice and the written confirmation thereof, the telephonic notice shall control.
Each request for a Revolving Loan shall be irrevocable and shall constitute a certification by CAS that the borrowing conditions specified in Section 5.2 of the Master Loan Agreement and any conditions set forth in Section 3 of this Supplement will be satisfied on the specified Borrowing Date. Upon fulfillment of the applicable borrowing conditions set forth in Section 5.2 of the Master Loan Agreement and any conditions set forth in Section 3 of this Supplement, Lender shall deposit the Loan proceeds in CAS’s demand deposit account maintained with Lender or as CAS may otherwise direct in writing.
Notwithstanding anything contained herein to the contrary, in the event CAS and Lender have established a loan sweep arrangement, the terms of the documents governing such loan sweep, as applicable, shall supersede the borrowing procedures contained herein.
2.3.
Interest Rate. The unpaid principal balance of each of the Revolving Loans outstanding from time to time shall bear interest for the period commencing on the Borrowing Date of such Loan until such Loan is paid in full. The Revolving Loans shall accrue interest at a variable rate equal to the LIBOR Rate plus 3.00% per annum and such rate shall be adjusted on the 7th day of each month.
2.4.
Payments. CAS shall make the following payments on the Revolving Loans during the following periods:
(a)
Monthly Payments. Monthly payments of accrued unpaid interest only on the Revolving Loans due in arrears on the ‘7th day of each month, commencing on March 7, 2018, together with a final payment of the outstanding principal balance together with all accrued but unpaid interest together with such other amounts as shall then be due and owing from CAS to Lender under the Revolving Note due on the Revolving Note Maturity Date.
(b)
Revolving Loan Resting Period. CAS shall also make principal payments necessary to cause the total outstanding principal balance of all Revolving Loans to be zero (0) for at least thirty (30) consecutive days (the “Resting Period”) during the term of the Revolving Loans, or if the term of the Revolving Loans exceeds one (1) year, during each annual period ending on the anniversary of the date of the Revolving Loans (each a “Testing Period”). Notwithstanding the foregoing, CAS shall have no obligation to cause a Resting Period, if, at the time that a Resting Period would otherwise be required hereunder, CAS achieves a Debt Service Coverage Ratio of 1.10:1.
2.5.
Fees.
(a)
[Intentionally Omitted].
3.
CONDITIONS FOR BORROWING.
In addition to all conditions to borrowing set forth in Section 5.1 of the Master Loan Agreement, Lender’s obligation to make the Loan described in this Supplement is subject to the satisfaction or waiver by Lender in writing on or before the Closing Date of such Loan of the following conditions:
3.1.
Lender shall have received the following, all in form, detail and content satisfactory to Lender:
(a)
The Revolving Note duly executed by CAS; and
(b)
The CAL Guaranty duly executed by CAL.
4.
AFFIRMATIVE COVENANTS.
In addition to all affirmative covenants set forth in Section 6 of the Master Loan Agreement, each Borrower covenants that it will, until Lender’s commitment to extend credit under this Supplement and all Permitted Swap Agreements relating to the credit facility extended under this Supplement have terminated or expired and the promissory note evidencing the credit facility extended under this Supplement, and all fees and expenses payable in connection with the credit facility extended under this Supplement have been paid in full:
4.1.
Quarterly Rolling Cash Flow Coverage Ratio. Maintain, as of the last day of each fiscal quarter, a Quarterly Rolling Cash Flow Coverage Ratio of not less than 1.25 to 1.0. Lender may determine compliance with this Quarterly Cash Flow Coverage Ratio covenant at any time.
4.2.
Tangible Net Worth. Maintain a Tangible Net Worth of at least $8,500,000 at all times. Lender may determine compliance with this Tangible Net Worth covenant at any time.
5.
NEGATIVE COVENANTS.
In addition to all negative covenants set forth in Section 7 of the Master Loan Agreement, each Borrower covenants that, without the prior written consent of Lender, Borrowers will not, until Lender’s commitment to extend credit under this Supplement and all Permitted Swap Agreements relating to the credit facility extended under this Supplement have terminated or expired and the promissory note evidencing the credit facility extended under this Supplement, and all fees and expenses payable in connection with the credit facility extended under this Supplement, have been paid in full:
5.1.
[Intentionally Omitted].
[remainder of page intentionally left blank; signature page follows]

IN WITNESS WHEREOF, the Parties have executed this Supplement as of the date first written above.
BORROWERS:        LENDER:

CONTRAIL AVIATION SUPPORT, LLC        OLD NATIONAL BANK


By:    /s/ Joseph Kuhn        By:    /s/ Tommy Olson    
Joseph Kuhn        Its:    SVP    
Its: CEO

18160956v1





CONTINUING GUARANTY
THIS CONTINUING GUARANTY (this “Guaranty”) is entered into as of June 24, 2019, by CONTRAIL AVIATION LEASING, LLC (the “Guarantor”) in favor of and for the benefit of OLD NATIONAL BANK (the “Lender”).
RECITALS
A.
Pursuant to a Master Loan Agreement dated as of the date hereof (such agreement, as amended, revised, supplemented or restated from time to time, including, but not limited to, by Supplements thereto, the “Master Loan Agreement”) by and among Contrail Aviation Support, LLC (“CAS”), Contrail Aviation Leasing, LLC (“CAL”, and together with CAS, each a “Borrower,” and collectively, the “Borrowers”) and Lender, Lender has agreed to make and continue certain financial accommodations to Borrowers, on the terms and subject to the conditions set forth in the Master Loan Agreement.
B. Lender requires, as a condition to entering into the Master Loan Agreement, that Guarantor execute and deliver this Guaranty in favor of Lender, and the parties intend that this Guaranty supersedes any and all other guarantees from Guarantor to Lender in connection with loans made by Lender to one or both of the Borrowers.
AGREEMENTS
In consideration of the Recitals and to induce Lender to enter into the Master Loan Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor hereby agrees as follows for the benefit of Lender.
1. DEFINITIONS.
1.1 Certain Defined Terms. Words not otherwise defined herein shall have the meanings assigned them in the Master Loan Agreement. As used in this Guaranty, the following terms shall have the following meanings unless the context otherwise requires:
“Bank Documents” means the Master Loan Agreement, the Notes and the other Loan Documents.
“Guaranty” means this Guaranty, as it may be amended, supplemented or otherwise modified from time to time.
“Indebtedness” means all of the principal amount outstanding from time to time and at any one or more times, accrued unpaid interest thereon and all collection costs and legal expenses related thereto permitted by law, reasonable attorneys’ fees,




arising from any and all debts, liabilities and obligations of every nature or form, now existing or hereafter arising or acquired, that CAS owes or will owe Lender. “Indebtedness” includes, without limitation, loans, advances, debts, overdraft indebtedness, credit card indebtedness, lease obligations, liabilities and obligations under any interest rate protection agreements or foreign currency exchange agreements or commodity price protection agreements, other obligations, and liabilities of CAS, and any present or future judgments against CAS, future advances, loans or transactions that renew, extend, modify, refinance, consolidate or substitute these debts, liabilities and obligations whether: voluntarily or involuntarily incurred; due or to become due by their terms or acceleration; absolute or contingent; liquidated or unliquidated; determined or undetermined; direct or indirect; primary or secondary in nature or arising from a guaranty or surety; secured or unsecured; joint or several; evidenced by a negotiable or non‑negotiable instrument or writing; originated by Lender or another or others; barred or unenforceable against CAS for any reason whatsoever; for any transactions that may be voidable for any reason (such as infancy, insanity, ultra vires or otherwise); and originated then reduced or extinguished and then afterwards increased or reinstated.
“Indebtedness” also includes any and all costs and expenses incurred by Lender following an Event of Default associated with any commercially reasonable efforts, whether successful or not, for the recovery, delivery to Lender, sale or other disposition of any Collateral securing any of the Indebtedness, including, but not limited to, Collateral in foreign countries (collectively, “Collateral Recovery Costs”); provided, however, that while Collateral Recovery Costs include all costs, fees, and expenses, including attorney’s fees, associated with the recovery, repossession or other similar efforts to retrieve Lender’s Collateral, neither Collateral Recovery Costs nor Guaranty Collection Costs shall include any costs and fees associated with obtaining replacement Collateral.
“payment in full”, “paid in full” or any similar term means payment in full of the Indebtedness, including all principal, interest, costs, fees and expenses (including reasonable legal fees and expenses) of Lender and all affiliates of Lender as required under the Bank Documents.
1.2 Interpretation.
(a) References to “Sections” and “subsections” shall be to Sections and subsections, respectively, of this Guaranty unless otherwise specifically provided.

2
{B0739907}


(b) In the event of any conflict or inconsistency between the terms, conditions and provisions of this Guaranty and the terms, conditions and provisions of the Master Loan Agreement, the terms, conditions and provisions of this Guaranty shall prevail.
2. GUARANTY.
2.1 Continuing Guaranty. THIS IS A “CONTINUING GUARANTY” UNDER WHICH GUARANTOR AGREES TO GUARANTY THE FULL AND PUNCTUAL PAYMENT, PERFORMANCE AND SATISFACTION OF THE INDEBTEDNESS OF CAS TO LENDER, NOW EXISTING OR HEREAFTER ARISING OR ACQUIRED ON A CONTINUING BASIS. ACCORDINGLY, ANY PAYMENTS MADE ON THE INDEBTEDNESS WILL NOT DISCHARGE OR DIMINISH GUARANTOR’S OBLIGATIONS AND LIABILITY UNDER THIS GUARANTY FOR ANY REMAINING AND SUCCEEDING INDEBTEDNESS EVEN WHEN ALL OR PART OF THE OUTSTANDING INDEBTEDNESS MAY BE A ZERO BALANCE FROM TIME TO TIME.
2.2 Impact on Other Guaranties. This Guaranty supersedes and revokes any and all previous guarantees issued by the Guarantor to the Lender.
2.3 Guaranty of Payment, not Collection. For good and valuable consideration, Guarantor absolutely and unconditionally guaranties full and punctual payment and satisfaction of the Indebtedness of CAS to Lender when due, whether at stated maturity or by acceleration or otherwise. This is a guaranty of payments when due and not of collection, so Lender can enforce this Guaranty against Guarantor even when Lender has not exhausted Lender’s remedies against anyone else obligated to pay the Indebtedness or against any Collateral securing the Indebtedness, this Guaranty or any other guaranty of the Indebtedness. Guarantor will make any payments to Lender or its order, on demand, in legal tender of the United States of America, in same‑day funds, without set‑off or deduction or counterclaim.
2.4 Payment by Guarantor; Application of Payments. Guarantor hereby agrees, in furtherance of the foregoing and not in limitation of any other right which Lender may have at law or in equity against Guarantor by virtue hereof, that upon the failure of CAS to pay any of the Indebtedness when and as the same shall become due, whether at stated maturity, by required prepayment, declaration, acceleration, demand or otherwise (including amounts that would become due but for the

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operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)), but subject to extension to account for any applicable cure periods, Guarantor will upon demand pay, or cause to be paid, in cash, to Lender an amount equal to the sum of the unpaid principal amount of all Indebtedness then due as aforesaid, accrued and unpaid interest on such Indebtedness (including interest which, but for the filing of a petition in bankruptcy with respect to CAS, would have accrued on such Indebtedness, whether or not a claim is allowed against CAS for such interest in the related bankruptcy proceeding) and all other Indebtedness then owed to Lender as aforesaid. All such payments shall be applied promptly from time to time by Lender to the Indebtedness in the manner determined by Lender in its sole discretion.
Guarantor’s liability under this Guaranty will only be reduced by sums actually paid by Guarantor under this Guaranty, but will not be reduced by sums from any other source, including, but not limited to, sums realized from any Collateral securing the Indebtedness or this Guaranty, or payments by anyone other than Guarantor, or reductions by operation of law, judicial order or equitable principles.
Lender has the sole and absolute discretion to determine how sums shall be applied among guaranties of the Indebtedness.
2.5 Liability of Guarantor Absolute. Guarantor agrees that his obligations hereunder are irrevocable, absolute, independent and unconditional and shall not be affected by any circumstance which constitutes a legal or equitable discharge of a guarantor or surety other than payment in full of the Indebtedness. In furtherance of the foregoing and without limiting the generality thereof, Guarantor agrees as follows:
(a) This Guaranty is a guaranty of payment when due and not of collectability.
(b) Lender may enforce this Guaranty upon the occurrence of an Event of Default under the Master Loan Agreement or any other Bank Document notwithstanding the existence of any dispute between any Borrower and Lender with respect to the existence of such Event of Default.
(c) The obligations of Guarantor hereunder are independent of the obligations of Borrowers under the Bank Documents and the obligations of any other guarantor of the obligations of Borrowers under the Bank Documents, and a separate action or actions may be brought and prosecuted against Guarantor whether or not any action is brought against any Borrower or

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any other guarantor and whether or not any Borrower is joined in any such action or actions.
(d) Payment by Guarantor of a portion, but not all, of the Indebtedness shall in no way limit, affect, modify or abridge Guarantor’s liability for any portion of the Indebtedness which has not been paid.
(e) Lender, upon such terms as it deems appropriate, without notice or demand and without affecting the validity or enforceability of this Guaranty or giving rise to any reduction, limitation, impairment, discharge or termination of Guarantor’s liability hereunder, from time to time may (i) renew, extend, accelerate, increase the rate of interest on, or otherwise change the time, place, manner or terms of payment of the Indebtedness; (ii) settle, compromise, release or discharge, or accept or refuse any offer of performance with respect to, or substitutions for, the Indebtedness or any agreement relating thereto and/or subordinate the payment of the same to the payment of any other obligations; (iii) request and accept other guaranties of the Indebtedness and take and hold security for the payment of this Guaranty or the Indebtedness; (iv) release, surrender, exchange, substitute, compromise, settle, rescind, waive, alter, subordinate or modify, with or without consideration, any security for payment of the Indebtedness, any other guaranties of the Indebtedness, or any other obligation of any person with respect to the Indebtedness; (v) enforce and apply any security now or hereafter held by or for the benefit of Lender in respect of this Guaranty or the Indebtedness and direct the order or manner of sale thereof, or exercise any other right or remedy that Lender may have against any such security, in each case as Lender in its discretion may determine consistent with the Master Loan Agreement and any applicable security agreement, including foreclosure on any such security pursuant to one or more judicial or nonjudicial sales and even though such action operates to impair or extinguish any right of reimbursement or subrogation or other right or remedy of Guarantor against CAS or any security for the Indebtedness; and (vi) exercise any other rights available to it under the Bank Documents at law or in equity.
(f) This Guaranty and the obligations of Guarantor hereunder shall be valid and enforceable and shall not be subject to any reduction, limitation, impairment, discharge or termination for any reason (other than payment in full of the Indebtedness), including the occurrence of any of the following, whether or not Guarantor shall have had notice or knowledge of

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any of them: (i) any failure or omission to assert or enforce any agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Bank Documents, at law, in equity or otherwise) with respect to the Indebtedness or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Indebtedness; (ii) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) of the Master Loan Agreement, any other Bank Document or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Indebtedness, in each case whether or not in accordance with the terms of the Master Loan Agreement or such Bank Document or any agreement relating to such other guaranty or security; (iii) the Indebtedness, or any agreement relating thereto, at any time being found to be illegal, invalid or unenforceable in any respect; (iv) the application of payments received from any source to the payment of indebtedness other than the Indebtedness, even though Lender might have elected to apply such payment to any part or all of the Indebtedness; (v) Lender’s consent to the change, reorganization or termination of the corporate structure or existence of any Borrower and to any corresponding restructuring of the Indebtedness; (vi) any failure to perfect or continue perfection of a security interest in any Collateral which secures any of the Indebtedness; (vii) any defenses, set‑offs or counterclaims (other than a defense of payment or performance) which any Borrower may allege or assert against Lender in respect of the Indebtedness, including failure of consideration, breach of warranty, statute of frauds, and usury; and (viii) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of Guarantor as an obligor in respect of the Indebtedness.
2.6 Waivers by Guarantor. Guarantor hereby waives, for the benefit of Lender:
(a) any right to require Lender, as a condition of payment or performance by Guarantor, to (i) proceed against either Borrower, any other guarantor of the Indebtedness or any other person; (ii) proceed against or exhaust any security held from any Borrower, any such other guarantor or any other person; (iii) proceed against or have resort to any balance of any deposit account or credit on the books of Lender in favor of any Borrower or any

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other person; or (iv) pursue any other remedy in the power of Lender whatsoever;
(b) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of any Borrower including any defense based on or arising out of the lack of validity or the unenforceability of the Indebtedness or any agreement or instrument relating thereto or by reason of the cessation of the liability of any Borrower from any cause other than payment in full of the Indebtedness;
(c) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal;
(d) any defense based upon Lender’s errors or omissions in the administration of the Indebtedness, except behavior which amounts to bad faith, recklessness, or willful misconduct; and
(e) (i) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms of this Guaranty and any legal or equitable discharge of Guarantor’s obligations hereunder; (ii) any rights to set‑offs, recoupments and counterclaims; and (iii) promptness, diligence and any requirement that Lender protect, secure, perfect or insure any security interest or lien or any property subject thereto;
(f) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance of this Guaranty, notices of default under the Master Loan Agreement, the other Bank Documents or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Indebtedness or any agreement related thereto, notices of any extension of credit to any Borrower and notices of any of the matters referred to in Section 2.5 and any right to consent to any thereof; and
(g) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate Guarantor or sureties, or which may conflict with the terms of this Guaranty.
2.7 Guarantor’s Rights of Subrogation, Contribution, Etc. Until the Indebtedness shall have been indefeasibly paid in full, Guarantor may not exercise any rights of subrogation, contribution, reimbursement or indemnification that Guarantor may

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have against CAS or against any Collateral or security, and any rights of contribution that Guarantor may have against any other guarantor of the Indebtedness. Any rights of subrogation, contribution, reimbursement or indemnification that Guarantor may have against CAS or against any Collateral or security, and any rights of contribution that Guarantor may have against any other guarantor, shall be junior and subordinate to any rights Lender may have against CAS, to all right, title and interest Lender may have in any such Collateral or security and to any right Lender may have against such other guarantor. If any amount shall be paid to Guarantor on account of any such subrogation, reimbursement, indemnification or contribution rights at any time when all Indebtedness shall not have been paid in full, such amount shall be held in trust for Lender and shall forthwith be paid over to Lender to be credited and applied against the Indebtedness, whether matured or unmatured, in accordance with the terms hereof.
2.8 Subordination of Other Obligations. Any indebtedness of CAS now or hereafter held by Guarantor is hereby subordinated in right of payment to the Indebtedness, and except as otherwise set forth in any Subordination Agreement entered into by Guarantor for the benefit of Lender, any such indebtedness collected or received by Guarantor shall be held in trust for Lender and shall forthwith be paid over to Lender to be credited and applied against the Indebtedness but without affecting, impairing or limiting in any manner the liability of Guarantor under any other provision of this Guaranty.
2.9 Expenses. Guarantor agrees to pay, or cause to be paid, on demand, and to save Lender harmless against liability for, any and all costs and expenses (including reasonable fees and disbursements of counsel and allocated costs of internal counsel) incurred or expended by Lender in connection with the enforcement of or preservation of any rights under this Guaranty (collectively, “Guaranty Collection Costs”).
2.10 Authority of Guarantor or Borrowers. It is not necessary for Lender to inquire into the capacity or power of Guarantor or Borrowers or the officers, directors or any agents acting or purporting to act on behalf of any of them.
2.11 Financial Condition of Borrowers. Lender’s loans to any Borrower may be continued from time to time without notice to or authorization from Guarantor regardless of the financial or other condition of such Borrower at the time of any such grant or continuation. Lender shall not have any obligation to disclose or discuss with Guarantor its assessment, or Guarantor’s assessment, of the financial

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condition of any Borrower. Guarantor has adequate means to obtain information from Borrowers on a continuing basis concerning the financial condition of each Borrower and its ability to perform its obligations under the Bank Documents, and Guarantor assumes the responsibility for being and keeping informed of the financial condition of Borrowers and of all circumstances bearing upon the risk of nonpayment of the Indebtedness. Guarantor hereby waives and relinquishes any duty on the part of Lender to disclose any matter, fact or thing relating to the business, operations or conditions of Borrowers now known or hereafter known by Lender.
2.12 Rights Cumulative. The rights, powers and remedies given to Lender by this Guaranty are cumulative and shall be in addition to and independent of all rights, powers and remedies given to Lender by virtue of any statute or rule of law or in any of the other Bank Documents or any agreement between Guarantor and Lender or between any Borrower and Lender. Any forbearance or failure to exercise, and any delay by Lender in exercising, any right, power or remedy hereunder shall not impair any such right, power or remedy or be construed to be a waiver thereof, nor shall it preclude the further exercise of any such right, power or remedy.
2.13 Bankruptcy; Post‑Petition Interest; Reinstatement of Guaranty.
(a) The obligations of Guarantor under this Guaranty shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any proceeding, voluntary or involuntary, involving the bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement of any Borrower or by any defense which such Borrower may have by reason of the order, decree or decision of any court or administrative body resulting from any such proceeding.
(b) Guarantor acknowledges and agrees that any interest on any portion of the Indebtedness which accrues after the commencement of any proceeding referred to in clause (a) above (or, if interest on any portion of the Indebtedness ceases to accrue by operation of law by reason of the commencement of said proceeding, such interest as would have accrued on such portion of the Indebtedness if said proceedings had not been commenced) shall be included in the Indebtedness because it is the intention of Guarantor and Lender that the Indebtedness which are guaranteed by Guarantor pursuant to this Guaranty should be determined without regard to any rule of law or order which may relieve any

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Borrower of any portion of such Indebtedness. Guarantor will permit any trustee in bankruptcy, receiver, debtor in possession, assignee for the benefit of creditors or similar person to pay Lender, or allow the claim of Lender in respect of, any such interest accruing after the date on which such proceeding is commenced.
(c) In the event that all or any portion of the Indebtedness are paid by Borrowers, the obligations of Guarantor hereunder shall continue and remain in full force and effect or be reinstated, as the case may be, in the event that all or any part of such payment(s) are rescinded or recovered directly or indirectly from Lender as a preference, fraudulent transfer or otherwise, and any such payments which are so rescinded or recovered shall constitute Indebtedness for all purposes under this Guaranty.
2.14 Set Off. In addition to any other rights Lender may have under law or in equity, if any amount shall at any time be due and owing by Guarantor to Lender under this Guaranty, Lender is authorized at any time or from time to time, without notice (any such notice being hereby expressly waived), to set off and to appropriate and to apply any and all deposits (general or special, including indebtedness evidenced by certificates of deposit, whether matured or unmatured) and any other indebtedness of Lender owing to Guarantor and any other property of Guarantor held by Lender to or for the credit or the account of Guarantor against and on account of the Indebtedness and liabilities of Guarantor to Lender under this Guaranty.
2.15 Financial Statements. To the extent such information is not publicly and readily available, and to the extent not prohibited by applicable law, Guarantor agrees to furnish to Lender within thirty (30) days of the direction of the Lender to do so, but in any case, no less frequently than annually, a financial statement of Guarantor listing all assets and liabilities (including contingent liabilities) of Guarantor, and the resulting net worth, signed and dated by Guarantor, in form, detail and completeness acceptable to Lender in its sole discretion from time to time. In addition, as soon as available, but in any event not later than ten (10) days after filing copies of Guarantor’s Federal income tax return as filed with the Internal Revenue Service, signed by Guarantor, complete in all respects including all statements, schedules (including any Schedule K‑1 s related to income or losses reported), forms and attachments thereto. In addition to any other financial reporting requirements of Guarantor to Lender, Guarantor agrees to furnish to Lender, at times and frequencies reasonably determined appropriate by Lender

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from time to time, any other information or reports with respect to Guarantor’s financial condition.
3. MISCELLANEOUS.
3.1 Survival of Warranties. All agreements, representations and warranties made herein shall survive the execution and delivery of this Guaranty and the other Bank Documents.
3.2 Limitation of Liability. Guarantor, and by its acceptance of this Guaranty, Lender, hereby confirms that it is the intention of all such persons that this Guaranty and the obligations of Guarantor hereunder not constitute a fraudulent transfer or conveyance for purposes of the Bankruptcy Code, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law to the extent applicable to this Guaranty and the Obligations of Guarantor hereunder. To effectuate the foregoing intention, Lender and Guarantor hereby irrevocably agree that the obligations of Guarantor under this Guaranty at any time shall be limited to the maximum amount as will result in the obligations of Guarantor under this Guaranty not constituting a fraudulent transfer or conveyance.
3.3 Notices. Any communications between Lender and Guarantor and any notices or requests provided herein to be given may be given by mailing the same, postage prepaid, or by facsimile transmission, if to Lender, at its address set forth in the Master Loan Agreement and if to Guarantor, at his address set forth on the signature pages hereof, or to such other addresses as each such party may in writing hereafter indicate. Any notice, request or demand to or upon Lender or Guarantor shall not be effective until received.
3.4 Severability. In case any provision in or obligation under this Guaranty shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.
3.5 Amendments and Waivers. No amendment, modification, termination or waiver of any provision of this Guaranty, and no consent to any departure by Guarantor therefrom, shall in any event be effective without the written concurrence of Lender and Guarantor. Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it was given.

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3.6 Headings. Section and subsection headings in this Guaranty are included herein for convenience of reference only and shall not constitute a part of this Guaranty for any other purpose or be given any substantive effect.
3.7 Applicable Law; Rules of Construction. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF GUARANTOR AND LENDER HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF WISCONSIN, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
3.8 Successors and Assigns. This Guaranty is a continuing guaranty and shall be binding upon Guarantor and his respective successors and assigns. This Guaranty shall inure to the benefit of Lender and its successors and assigns. Guarantor shall not assign this Guaranty or any of the rights or obligations of Guarantor hereunder without the prior written consent of Lender. Lender may, without notice or consent, assign its interest in this Guaranty in whole or in part, provided that Lender shall use its best efforts to notify Guarantor of any such assignment promptly following such assignment. The terms and provisions of this Guaranty shall inure to the benefit of any transferee or assignee of the Note, or any portion thereof, and in the event of such transfer or assignment the rights and privileges herein conferred upon Lender shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof.
3.9 Consent to Jurisdiction. To induce Lender to accept delivery of this Guaranty:
GUARANTOR AGREES THAT ALL ACTIONS OR PROCEEDINGS IN ANY MANNER RELATING TO OR ARISING OUT OF THIS GUARANTY OR THE OTHER BANK DOCUMENTS MAY BE BROUGHT ONLY IN COURTS OF THE STATE OF WISCONSIN LOCATED IN DANE COUNTY OR THE FEDERAL COURT FOR THE WESTERN DISTRICT OF WISCONSIN AND GUARANTOR CONSENTS TO THE JURISDICTION OF SUCH COURTS. GUARANTOR WAIVES ANY OBJECTION HE MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH COURT AND ANY RIGHT HE MAY HAVE NOW OR HEREAFTER HAVE TO CLAIM THAT ANY SUCH ACTION OR PROCEEDING IS IN AN INCONVENIENT COURT.

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3.10 Waiver of Jury Trial. GUARANTOR AND LENDER (BY ITS ACCEPTANCE HEREOF) HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY. The scope of this waiver is intended to be all encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this transaction, including contract claims, tort claims, breach of duty claims and all other common law and statutory claims. Guarantor and Lender each acknowledge that this waiver is a material inducement for Guarantor and Lender to enter into a business relationship, that Guarantor and Lender have already relied on this waiver in executing or accepting this Guaranty, and that each will continue to rely on this waiver in their related future dealings. Guarantor and Lender further warrant and represent that each has reviewed this waiver with its legal counsel, and that each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION AND EXECUTED BY GUARANTOR AND LENDER), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS Guaranty. In the event of litigation, this Guaranty may be filed as a written consent to a trial by the court.
3.11 No Other Writing. This writing is intended by Guarantor and Lender as the final expression of this Guaranty and is also intended as a complete and exclusive statement of the terms of Guarantor’s undertaking with respect to the matters covered hereby. No course of dealing, course of performance or trade usage, and no parol evidence of any nature, shall be used to supplement or modify any terms of this Guaranty. There are no conditions to the full effectiveness of this Guaranty.
3.12 Further Assurances. At any time or from time to time, upon the request of Lender, Guarantor shall execute and deliver such further documents and do such other acts and things as Lender may reasonably request in order to effect fully the purposes of this Guaranty.
3.13 Errors and Omission. The undersigned Guarantor, if requested by Lender, agrees to fully cooperate and adjust for clerical errors, any or all loan closing documentation if deemed necessary or desirable in the reasonable discretion of Lender for any reason, including, without limitation, to enable Lender to sell, convey, seek guaranty or market said loan to any entity.

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3.14 Effectiveness. This Guaranty shall become effective as to Guarantor upon the execution and delivery hereof by Guarantor.
CONTRAIL AVIATION LEASING, LLC


/s/ Joseph G. Kuhn_________________
Joseph G. Kuhn, CEO

Address:
435 Investment Ct
Verona, WI 53593


18174236v1


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Contrail Aviation Support, LLC
Loan No. 20007260597
June 24, 2019
Note
FIRST AMENDED AND RESTATED PROMISSORY NOTE
REVOLVING NOTE
$20,000,000.00    Execution Date: June 24, 2019
Effective Date: May 5, 2019
THIS FIRST AMENDED AND RESTATED PROMISSORY NOTE REVOLVING NOTE (this “Note”) amends and restates the Promissory Note dated March 2, 2018 in the original principal amount of Twenty Million Dollars ($20,000,000.00) (the “Original Note”) executed by CONTRAIL AVIATION SUPPORT, LLC (“Borrower”) in favor of OLD NATIONAL BANK (the “Lender,” and together with Borrower, collectively the “Parties”). Borrower and Lender desire to amend and restate the Original Note in its entirety as follows:
FOR VALUE RECEIVED, on or before the Revolving Note Maturity Date (as defined in the Master Loan Agreement referred to below), Borrower promises to pay to the order of Lender, or its assignee, the principal sum of Twenty Million Dollars ($20,000,000.00), or such lesser amount as is shown to be outstanding according to the records of Lender, together with interest on the principal balance outstanding from time to time at such rates and payable at such times as set forth below.
1.
RATE OF INTEREST
The principal amount of the Loan outstanding from time to time shall bear interest at the variable rate of LIBOR Rate (as defined in the Master Loan Agreement referenced below) plus 3.00% per annum and such rate shall be adjusted on the 7th day of each month.
2.
PAYMENTS
Payments of both principal and interest are to be made in immediately available funds in lawful currency of the United States of America at the office of Lender, or such other place as the holder hereof shall designate to the undersigned in writing. Unless required by applicable law, and prior to any default being declared, payments will be applied first to any accrued unpaid interest; then to principal; then to escrow; then to any late charges; and then to any unpaid collection costs. Funds shall be deemed received by Lender on the next business day if not received by 12:00 p.m. local time at the location payments hereunder are to be made.
Borrower shall make the following payments during the following periods:




(a)
Monthly Payments. Monthly payments of accrued unpaid interest only on the Revolving Loans due in arrears on the ‘7th day of each month, commencing on June 7, 2019, together with a final payment of the outstanding principal balance together with all accrued but unpaid interest together with such other amounts as shall then be due and owing from Borrower to Lender under the Revolving Loans due on the Revolving Note Maturity Date;
(b)
Revolving Loan Resting Period. Borrower shall cause the total outstanding principal balance of all Revolving Loans to be zero (0) for at least thirty (30) consecutive days during the term of the Revolving Loans, or if the term of the Revolving Loans exceeds one (1) year, during each annual period ending on the anniversary of the date of the Revolving Loans (the “Resting Period”). Notwithstanding the foregoing, Borrower shall have no obligation to cause a Resting Period if at the time such Resting Period would be required the Borrower has achieved a Debt Service Coverage Ratio of 1.10:1. For purposes of this section only, Debt Service Coverage Ratio shall mean a ratio, the numerator of which shall be EBITDA for the 12‑month period then ended and the denominator being Debt Service.
3.
FINAL PAYMENT MATURITY DATE
Notwithstanding anything set forth above, all sums due under this Note, both principal and interest, if not sooner paid, shall be due and payable on May 5, 2019 (“Revolving Note Maturity Date”).
4.
PREPAYMENTS; MINIMUM FINANCE CHARGE
Borrower agrees that all loan fees and other prepaid finance charges are earned fully as of the date of the Revolving Loan and will not be subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. In any event, even upon full prepayment of this Note, Borrower understands that Lender is entitled to a minimum finance charge of $95.00. Other than Borrower’s obligation to pay any minimum finance charge, Borrower may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make payments under the payment schedule. Rather, early payments will reduce the principal balance due and may result in Borrower making fewer payments. Borrower agrees not to send Lender payments marked “paid in full,” “without recourse,” or similar language. If Borrower sends such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrower will remain obligated to pay any further amounted owed to Lender. All written communications concerning disputed amounts, including any check or other payment

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instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Old National Bank, PO Box 3728, Evansville, IN 47736‑3728.
5.
PAYMENT DUE DATE/FAILURE TO PAY
(a)
All payments due under this Note shall be made without demand and received on the dates set forth in Section 2 above;
(b)
In the event of a default as defined in this Note, or as set forth in the Master Loan Agreement or any Collateral Documents or Guaranties, at the option of Lender, for so long as the default exists, interest on the outstanding principal balance hereof shall accrue and will be paid at the rate in effect from time to time hereunder plus an additional 3% per annum, but in no event shall such default rate exceed, however, the maximum rate permitted by law (“Default Interest Rate”); and
(c)
Any installment of principal and/or interest due hereunder which is not received on or before the 10th day following the date on which it is due shall be subject to a late payment fee of 5% of the amount owed on such installment (but not less than $50.00) for the purpose of defraying the expense incident to handling such delinquent payment (this payment is in addition to the amount set forth in (b) above).
6.
INTEREST RATE COMPUTATION
Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method.
7.
PLACE OF PAYMENT
All payments shall be made to Lender at the address on the interest billing statement provided by Lender or at the address of Lender set forth in Section 13 of this Note, at any branch of Lender, or such other place as Lender may from time to time designate in writing.
8.
MASTER LOAN AGREEMENT
This Note evidences indebtedness incurred under; is the “Revolving Note” referred to in; and is subject to the terms and provisions of the Master Loan Agreement by and between Borrower, Contrail Aviation Leasing, LLC and Lender of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, including, but not limited

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{B0736608.2}


to, by Supplements thereto, the “Master Loan Agreement”). Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Master Loan Agreement.
This Note is secured by the Collateral Documents. The terms of the Collateral Documents are incorporated herein and made a part hereof by reference.
9.
DEFAULT
In the event of the occurrence of an Event of Default under the Master Loan Agreement, and after giving effect to any applicable right to cure provided by the Master Loan Agreement, Lender may, at its option and without notice, declare this Promissory Note to be, and this Promissory Note shall thereupon become, immediately due and payable, together with accrued interest thereon. Without limiting the foregoing right and without limiting any other rights and remedies of the Lender at law or in equity, the Lender is also entitled to the rights and remedies provided for in the Master Loan Agreement and the Collateral Documents and may enforce the covenants, agreements and undertakings of Borrower contained therein and may exercise the remedies provided for thereby or otherwise available in respect thereto, all in accordance with the terms thereof. In addition to any other right, Lender may apply and/or set‑off against amounts due it hereunder any deposits, account balances, or other credits of any Borrower in the possession of or in transit to Lender, and Borrower hereby grants Lender a security interest in all of the foregoing.
10.
WAIVERS
Except as herein provided, Borrower and all others who may become liable for all or part of the principal balance hereof or for any obligations of Borrower to Lender or the holder hereof (a) forever waive presentment, protest and demand, notice of protest, demand and dishonor and non‑payment of this Note, and all other notices in connection with the delivery, acceptance, performance, default or enforcement of the payment of this Note, (b) agree that the time of payment of the debt or any part thereof may be extended from time to time without modifying or releasing the lien of the Collateral Documents or the liability of Borrower or any other such parties, the right of recourse against Borrower and such parties being hereby reserved by Lender; and (c) agree that time is of the essence. Borrower agrees to pay all reasonable costs of collection when incurred, whether suit be brought or not, including reasonable attorneys’ fees and costs of suit and preparation therefore, and to perform and comply with each of the covenants, conditions, provisions and agreements of Borrower contained in this Note, the Master Loan Agreement and Collateral Documents. It is expressly agreed by Borrower that no extensions of time for the payment of this Note, nor the failure on the part of Lender to exercise any of its rights hereunder, shall operate to

4
{B0736608.2}


release, discharge, modify, change or affect the original liability under this Note, the Master Loan Agreement or any of the Collateral Documents, either in whole or in part.
11.
WAIVER OF JURY TRIAL
BORROWER HEREBY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS INSTRUMENT AND TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS HEREUNDER OR THEREUNDER, ANY COLLATERAL SECURING THE OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED THERETO. BORROWER REPRESENTS THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.
12.
COMPLIANCE
This Note is to be governed by, and construed and enforced in accordance with, the laws of the State of Wisconsin (without giving effect to Wisconsin’s principles of conflicts of law), except to the extent (a) of procedural and substantive matters relating only to the creation, perfection, foreclosure and enforcement of rights and remedies against specific collateral, which matters shall be governed by the laws of the state in which the collateral is located (the “Collateral State”), and (b) that the laws of the United States of America and any rules regulations, or orders issued or promulgated thereunder, applicable to the affairs and transactions entered into by the Lender, otherwise preempt Collateral State law or Wisconsin law; in which event such federal law shall control. Borrower hereby irrevocably submits to the jurisdiction of any Wisconsin or federal court sitting in Milwaukee, Wisconsin (or, with respect to the matters set forth in subsection (a) above, any state in which the property encumbered by the Collateral Documents is located) over any suit, action or proceeding arising out of or relating to this Note or any of the Loan Documents. Borrower hereby waives any right to object to the location of venue in any Wisconsin or federal court sitting in Milwaukee, Wisconsin, or, with respect to the matters set forth in subsection (a) above, to the appropriate court located in the Collateral State, concerning any suit, action or proceeding arising out of or relating to this Note or any of the Loan Documents and waives any objection which it may have at any time to the laying of venue in any proceedings brought in any such court, waives any claim that such proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such proceedings, that such court does not have jurisdiction over such party to object to the choice of governing law set forth in this section. Borrower acknowledges that the loan evidenced by this Note was solicited, negotiated, closed and funded in the State of Wisconsin, and waives any implication that the laws of any other state shall apply for usury purposes.

5
{B0736608.2}


13.
NOTICES
All notices, requests and demands to be made hereunder to the parties hereto must be in writing and must be delivered to the applicable address stated below by any of the following means: (a) personal service; (b) electronic communication, including, but not limited to, electronic mail, telex, telegram or telecopying (and if by telex, telegram or telecopying, then only if confirmed in writing sent by registered or certified, first class mail, return receipt requested); or (c) registered or certified, first class mail, return receipt requested. Such addresses may be changed by notice to the other parties given in the same manner as provided above. Any notice, demand or request sent pursuant to either subsection (a) or (b) hereof will be deemed received upon such personal service or upon dispatch by electronic means, and, if sent pursuant to subsection (c) will be deemed received three (3) days following deposit in the mail.
Borrower:    CONTRAIL AVIATION SUPPORT, LLC
435 Investment Court
Verona, WI 53593‑8788

Lender:    OLD NATIONAL BANK
23 W. Main St.
Madison, WI 53703
14.
INTEREST NOT TO EXCEED MAXIMUM ALLOWED BY LAW.
If from any circumstances whatsoever, by reason of acceleration or otherwise, the fulfillment of any provision of this Note involves transcending the limit of validity prescribed by any applicable usury statute or any other applicable law, with regard to obligations of like character and amount, then the obligations to be fulfilled will be reduced to the limit of such validity as provided in such statute or law, so that in no event shall any exaction be possible under this Note in excess of the limit of such validity.
15.
SUCCESSORS
All rights, powers, privileges and immunities herein granted to Lender shall extend to its successors and assigns and any other legal holder of this Note, with full right by Lender to assign and/or sell same.
16.
NOT A NOVATION; AMENDMENT AND RESTATEMENT

6
{B0736608.2}


This Note is an amendment and restatement of the Original Note. It is not intended, and shall not be deemed or construed as a novation of the Original Note and the validity, priority and enforceability of the Original Note shall not be impaired hereby.
[remainder of page intentionally left blank; signature page follows]


7
{B0736608.2}


The undersigned agrees to pay all costs of collection, including reasonable attorneys’ fees.
IN WITNESS WHEREOF, the Parties have executed this Note as of the date and year first above written.
BORROWER:        LENDER:

CONTRAIL AVIATION SUPPORT, LLC        OLD NATIONAL BANK


By:/s/ Joseph Kuhn___________________        By:/s/ Tommy Olson___________________
Joseph Kuhn        Its: SVP
Its: CEO


18174632v1


[Signature Page to First Amended and Restated Promissory Note Revolving Note]


SUPPLEMENT #3 TO MASTER LOAN AGREEMENT
Date of Supplement: June 24, 2019
THIS SUPPLEMENT #3 TO MASTER LOAN AGREEMENT (this “Supplement”) is made and entered into by Lender and Borrowers as of the date written above pursuant to the Master Loan Agreement by and between Lender and Borrowers dated June 24, 2019 (the “Master Loan Agreement”).
This Supplement constitutes a Supplement under the Master Loan Agreement and is hereby made a part of the Master Loan Agreement. All capitalized terms herein not otherwise defined herein shall have the meaning ascribed to them in the Master Loan Agreement. The credit facility described in this Supplement is governed by and shall be construed and administered in accordance with the terms and conditions of the Master Loan Agreement and this Supplement.
To the extent any term or condition of this Supplement is inconsistent with any term or condition in the Master Loan Agreement or in any Supplement dated prior to this Supplement, the terms and conditions of this Supplement shall control. Except as specifically amended hereby, all terms and conditions of the Master Loan Agreement and all prior Supplements remain in effect.
In consideration of the mutual covenants contained herein and in the Master Loan Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1.
DEFINITIONS.
As used in this Supplement, the following terms have the following meanings:
“Anticipated Principal Reduction” has the meaning ascribed to it in Section 2.4(d) of this Supplement.
“Term Loan B” means an extension of credit to Borrowers by Lender pursuant to this Supplement.
“Term Loan B Maturity Date” means the first to occur of: (1) September 14, 2021; and (2) the date on which Term Loan B is accelerated as provided hereunder or in Term Note B.
“Term Note B” means the Amended and Restated Promissory Note of Borrowers in the form of Exhibit A to be executed concurrently with this Agreement.
2.
THE CREDIT FACILITY; BORROWING PROCEDURES; INTEREST RATE; AND PAYMENTS.




2.1.
Credit Facility. Lender has made a term loan to Borrowers prior to the Closing Date in the amount of $18,000,000.00 (the “Term Loan B”), which is now subject to the terms and conditions hereof and of the Master Loan Agreement. Term Loan B is evidenced by Term Note B, is payable in accordance with the terms of Term Note B and was made by disbursement of Loan proceeds when and as directed by Borrowers. Amounts borrowed and repaid under the Term Loan B may not be reborrowed.
2.2.
Borrowing Procedures. The entire amount of Term Loan B was advanced in one single advance prior to the Closing Date.
2.3.
Interest Rate. The unpaid principal balance of Term Loan B outstanding from time to time shall bear interest for the period commencing on the Borrowing Date of Term Loan B until such Loan is paid in full. Term Loan B shall accrue interest at a variable rate equal to the LIBOR Rate plus 3.75% per annum and such rate shall be adjusted on the 1st day of each month.
2.4.
Payments. Borrowers shall make the following payments on Term Loan B during the following periods:
(a)
Thirty-five (35) consecutive monthly payments of accrued unpaid interest, beginning October 14, 2018, and payable on the 1st day of each consecutive month thereafter;
(b)
Thirty-six (36) consecutive monthly principal payments of Five Hundred Thousand Dollars ($500,000.00) each, beginning October 1, 2018, and payable on the 1st day of each consecutive month thereafter;
(c)
a final payment of all outstanding principal and accrued unpaid interest together with such other amounts as shall then be due and owing from Borrowers to Lender under the Term Loan B on the Term Loan B Maturity Date; and
(d)
Notwithstanding anything to contrary contained herein or in Term Note B, Borrowers anticipate making significant principal payments on Term Note B between July 2019 and November 2019 (the “Anticipated Principal Reduction”). Upon receipt of the Anticipated Principal Reduction, and upon written request of the Borrowers, the Lender shall recalculate the remaining monthly principal payment amounts based on the outstanding principal balance of Term Note B after applying the Anticipated Principal Reduction and the remaining amortization period. Notwithstanding anything to the contrary contained herein, Borrowers may only request, and

2


Lender is only obligated to implement, one payment re-calculation adjustment.
2.5.
Fees.
(a)    [Intentionally Omitted].
3.
CONDITIONS FOR BORROWING.
In addition to all conditions to borrowing set forth in Section 5.1 of the Master Loan Agreement, Lender’s obligation to make the Loan described in this Supplement is subject to the satisfaction or waiver by Lender in writing on or before the Closing Date of such Loan of the following conditions:
3.1.
Lender shall have received the following, all in form, detail and content satisfactory to Lender:
(a)    Term Note B duly executed by both Borrowers.
4.
AFFIRMATIVE COVENANTS.
In addition to all affirmative covenants set forth in Section 6 of the Master Loan Agreement, each Borrower covenants that it will, until Lender’s commitment to extend credit under this Supplement and all Permitted Swap Agreements relating to the credit facility extended under this Supplement have terminated or expired and the promissory note evidencing the credit facility extended under this Supplement, and all fees and expenses payable in connection with the credit facility extended under this Supplement have been paid in full:
4.1.
Quarterly Rolling Cash Flow Coverage Ratio. Maintain, as of the last day of each fiscal quarter, a Quarterly Rolling Cash Flow Coverage Ratio of not less than 1.25 to 1.0. Lender may determine compliance with this Quarterly Cash Flow Coverage Ratio covenant at any time.
4.2.
Tangible Net Worth. Maintain a Tangible Net Worth of at least $8,500,000 at all times. Lender may determine compliance with this Tangible Net Worth covenant at any time.
5.
NEGATIVE COVENANTS.
In addition to all negative covenants set forth in Section 7 of the Master Loan Agreement, each Borrower covenants that, without the prior written consent of Lender, Borrowers will not, until Lender’s commitment to extend credit under this Supplement and all Permitted Swap Agreements relating to the credit facility extended under this Supplement have terminated or expired and the

3


promissory note evidencing the credit facility extended under this Supplement, and all fees and expenses payable in connection with the credit facility extended under this Supplement, have been paid in full:
5.1.
[Intentionally Omitted].
[remainder of page intentionally left blank; signature page follows]


4



IN WITNESS WHEREOF, the Parties have executed this Supplement as of the date first written above.
BORROWERS:        LENDER:

CONTRAIL AVIATION SUPPORT, LLC        OLD NATIONAL BANK


By:    /s/ Joseph Kuhn        By:    /s/ Tommy Olson    
Joseph Kuhn        Its:    SVP    
Its: CEO

CONTRAIL AVIATION LEASING, LLC


By:    /s/ Joseph Kuhn    
Joseph Kuhn
Its: CEO



18160437v1


[Signature Page to Supplement #3 to Master Loan Agreement]


Contrail Aviation Support, LLC, Contrail Aviation Leasing, LLC
Loan No, 20007675682,
June 24, 2019
Note
FIRST AMENDED AND RESTATED PROMISSORY NOTE
TERM NOTE B
$18,000,000.00    June 24, 2019
THIS FIRST AMENDED AND RESTATED PROMISSORY NOTE TERM NOTE B (this “Note”) amends and restates the Promissory Note dated September 14, 2018 in the original principal amount of Eighteen Million Dollars ($18,000,000.00) (the “Original Note”) executed by CONTRAIL AVIATION SUPPORT, LLC (“Support”) and CONTRAIL AVIATION LEASING, LLC (“Leasing”, and together with Support, each a “Borrower,” and collectively, the “Borrowers”) in favor of OLD NATIONAL BANK (the “Lender,” and together with Borrowers, collectively the “Parties”). Borrowers and Lender desire to amend and restate the Note in its entirety in order that this Note shall supersede the Original Note.
FOR VALUE RECEIVED, on or before the Term Loan B Maturity Date (as defined in the Master Loan Agreement referred to below), Borrowers, jointly and severally, promise to pay to the order of Lender, or its assignee, the principal sum of Eighteen Million Dollars ($18,000,000.00), or such lesser amount as is shown to be outstanding according to the records of Lender, together with interest on the principal balance outstanding from time to time at such rates and payable at such times as set forth in the Master Loan Agreement (as defined below).
1.
RATE OF INTEREST
The principal amount of the Loan outstanding from time to time shall bear interest at the variable rate of LIBOR Rate (as defined in the Master Loan Agreement referenced below) plus 3.75% per annum and such rate shall be adjusted on the 14th day of each month.
2.
PAYMENTS
Payments of both principal and interest are to be made in immediately available funds in lawful currency of the United States of America at the office of Lender, or such other place as the holder hereof shall designate to the undersigned in writing. Unless required by applicable law, and prior to any default being declared, payments will be applied first to any accrued unpaid interest; then to principal; then to escrow; then to any late charges; and then to any unpaid collection costs. Funds shall be deemed received by Lender on the next business day if not received by 12:00 p.m. local time at the location payments hereunder are to be made.
Borrowers shall make payments of:

{B0736610.2}


(a) Thirty‑five (35) consecutive monthly payments of accrued unpaid interest, beginning October 14, 2018, and payable on the 14th day of each consecutive month thereafter;
(b)
Thirty‑six (36) consecutive monthly principal payments of Five Hundred Thousand Dollars ($500,000.00) each, beginning October 14, 2018, and payable on the 14th day of each consecutive month thereafter;
(c) a final payment of all outstanding principal and accrued unpaid interest together with such other amounts as shall then be due and owing from Borrowers to Lender under the Term Loan B on the Term Loan B Maturity Date; and
(d) notwithstanding anything to contrary contained herein or in the Master Loan Agreement, Borrowers anticipate making significant principal payments on Term Loan B between July 2019 and November 2019 (the “Anticipated Principal Reduction”). Upon receipt of the Anticipated Principal Reduction, Borrowers may request that Lender recalculate the remaining monthly principal payment amounts based on the outstanding principal balance of Term Loan B after applying the Anticipated Principal Reduction and the remaining amortization. Notwithstanding anything to the contrary contained herein, Borrower may only request one payment re‑calculation adjustment and such request may only be made after Lender has received and applied the required Anticipated Principal Reduction to Term Loan B.
3.
FINAL PAYMENT MATURITY DATE
Notwithstanding anything set forth above, all sums due under this Note, both principal and interest, if not sooner paid, shall be due and payable on September 14, 2021 (“Term Loan B Maturity Date”).
4.
PREPAYMENT; MINIMUM FINANCE CHARGE
Borrowers agree that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not be subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. In any event, even upon full prepayment of this Note, Borrowers understand that Lender is entitled to a minimum finance charge of $95.00. Other than Borrowers’ obligations to pay any minimum finance charge, Borrowers may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrowers of Borrowers’ obligation to continue to make payments under the payment schedule. Rather, early payments will reduce the principal balance due and may result in Borrowers making fewer payments. Borrowers agree not to send Lender payments marked “paid in full,” “without recourse,” or similar language. If Borrowers send such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrowers will remain obligated to pay any further amounted owed to Lender. All written communications concerning disputed amounts,

2
{B0736610.2}


including any check or other payment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Old National Bank, PO Box 3728, Evansville, IN 47736‑3728.
5.
PAYMENT DUE DATE/FAILURE TO PAY
(a) All payments due under this Note shall be made without demand and received on the dates set forth in Section 2 above;
(b) In the event of a default as defined in this Note, or as set forth in the Master Loan Agreement or any Collateral Documents or Guaranties, at the option of Lender, for so long as the default exists, interest on the outstanding principal balance hereof shall accrue and will be paid at the rate in effect from time to time hereunder plus an additional 3% per annum, but in no event shall such default rate exceed, however, the maximum rate permitted by law (“Default Interest Rate”); and
(c) Any installment of principal and/or interest due hereunder which is not received on or before the 10th day following the date on which it is due shall be subject to a late payment fee of 5% of the amount owed on such installment (but not less than $50.00) for the purpose of defraying the expense incident to handling such delinquent payment (this payment is in addition to the amount set forth in (b) above).
6.
INTEREST RATE COMPUTATION
Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method.
7.
PLACE OF PAYMENT
All payments shall be made to Lender at the address on the interest billing statement provided by Lender or at the address of Lender set forth in Section 13 of this Note, at any branch of Lender, or such other place as Lender may from time to time designate in writing.
8.
MASTER LOAN AGREEMENT AND SECURITY
This Note evidences indebtedness incurred under; is the “Term Note B” referred to in; and is subject to the terms and provisions of the Master Loan Agreement by and between Borrowers and Lender of even date herewith (as amended, restated, supplemented or otherwise modified from time to time, including, but not limited to, by Supplements

3
{B0736610.2}


thereto, the “Master Loan Agreement”). Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Master Loan Agreement.
This Note is secured by the Collateral Documents. The terms of the Collateral Documents are incorporated herein and made a part hereof by reference.
9.
DEFAULT
In the event of the occurrence of an Event of Default under the Master Loan Agreement, and after giving effect to any applicable right to cure provided by the Master Loan Agreement, Lender may, at its option and without notice, declare this Promissory Note to be, and this Promissory Note shall thereupon become, immediately due and payable, together with accrued interest thereon. Without limiting the foregoing right and without limiting any other rights and remedies of the Lender at law or in equity, the Lender is also entitled to the rights and remedies provided for in the Master Loan Agreement and the Collateral Documents and may enforce the covenants, agreements and undertakings of Borrowers contained therein and may exercise the remedies provided for thereby or otherwise available in respect thereto, all in accordance with the terms thereof In addition to any other right, Lender may apply and/or set‑off against amounts due it hereunder any deposits, account balances, or other credits of any Borrower in the possession of or in transit to Lender, and Borrowers hereby grant Lender a security interest in all of the foregoing.
10.
WAIVERS
Except as herein provided, Borrowers and all others who may become liable for all or part of the principal balance hereof or for any obligations of Borrowers to Lender or the holder hereof (a) forever waive presentment, protest and demand, notice of protest, demand and dishonor and non‑payment of this Note, and all other notices in connection with the delivery, acceptance, performance, default or enforcement of the payment of this Note, (b) agree that the time of payment of the debt or any part thereof may be extended from time to time without modifying or releasing the lien of the Collateral Documents or the liability of Borrowers or any other such parties, the right of recourse against Borrowers and such parties being hereby reserved by Lender; and (c) agree that time is of the essence. Borrowers agree to pay all reasonable costs of collection when incurred, whether suit be brought or not, including reasonable attorneys’ fees and costs of suit and preparation therefore, and to perform and comply with each of the covenants, conditions, provisions and agreements of Borrowers contained in this Note, the Master Loan Agreement and Collateral Documents. It is expressly agreed by Borrowers that no extensions of time for the payment of this Note, nor the failure on the part of Lender to exercise any of its rights hereunder, shall operate to release, discharge, modify, change or affect the original liability under this Note, the Master Loan Agreement or any of the Collateral Documents, either in whole or in part.

4
{B0736610.2}


11.
WAIVER OF JURY TRIAL
BORROWERS WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS INSTRUMENT AND TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS HEREUNDER OR THEREUNDER, ANY COLLATERAL SECURING THE OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED THERETO. BORROWERS REPRESENT THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.
12.
COMPLIANCE
This Note is to be governed by, and construed and enforced in accordance with, the laws of the State of Wisconsin (without giving effect to Wisconsin’s principles of conflicts of law), except to the extent (a) of procedural and substantive matters relating only to the creation, perfection, foreclosure and enforcement of rights and remedies against specific collateral, which matters shall be governed by the laws of the state in which the collateral is located (the “Collateral State”), and (b) that the laws of the United States of America and any rules regulations, or orders issued or promulgated thereunder, applicable to the affairs and transactions entered into by the Lender, otherwise preempt Collateral State law or Wisconsin law; in which event such federal law shall control. Borrowers hereby irrevocably submit to the jurisdiction of any Wisconsin or federal court sitting in Milwaukee, Wisconsin (or, with respect to the matters set forth in subsection (a) above, any state in which the property encumbered by the Collateral Documents is located) over any suit, action or proceeding arising out of or relating to this Note or any of the Loan Documents. Borrowers hereby waive any right to object to the location of venue in any Wisconsin or federal court sitting in Milwaukee, Wisconsin, or, with respect to the matters set forth in subsection (a) above, to the appropriate court located in the Collateral State, concerning any suit, action or proceeding arising out of or relating to this Note or any of the Loan Documents and waives any objection which it may have at any time to the laying of venue in any proceedings brought in any such court, waives any claim that such proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such proceedings, that such court does not have jurisdiction over such party to object to the choice of governing law set forth in this section. Borrowers acknowledge that the loan evidenced by this Note was solicited, negotiated, closed and funded in the State of Wisconsin, and waives any implication that the laws of any other state shall apply for usury purposes.
13.
NOTICES
All notices, requests and demands to be made hereunder to the parties hereto must be in writing and must be delivered to the applicable address stated below by any of the following means: (a) personal service; (b) electronic communication, including, but not limited to, electronic mail, telex, telegram or telecopying (and if by telex, telegram or

5
{B0736610.2}


telecopying, then only if confirmed in writing sent by registered or certified, first class mail, return receipt requested); or (c) registered or certified, first class mail, return receipt requested. Such addresses may be changed by notice to the other parties given in the same manner as provided above. Any notice, demand or request sent pursuant to either subsection (a) or (b) hereof will be deemed received upon such personal service or upon dispatch by electronic means, and, if sent pursuant to subsection (c) will be deemed received three (3) days following deposit in the mail.
Borrowers:    CONTRAIL AVIATION SUPPORT, LLC
CONTRAIL AVIATION LEASING, LLC
435 Investment Court
Verona, WI 53593‑8788

Lender:    OLD NATIONAL BANK
25 W. Main St.
Madison, WI 53703
14.
INTEREST NOT TO EXCEED MAXIMUM ALLOWED BY LAW.
If from any circumstances whatsoever, by reason of acceleration or otherwise, the fulfillment of any provision of this Note involves transcending the limit of validity prescribed by any applicable usury statute or any other applicable law, with regard to obligations of like character and amount, then the obligations to be fulfilled will be reduced to the limit of such validity as provided in such statute or law, so that in no event shall any exaction be possible under this Note in excess of the limit of such validity.
15.
SUCCESSORS
All rights, powers, privileges and immunities herein granted to Lender shall extend to its successors and assigns and any other legal holder of this Note, with full right by Lender to assign and/or sell same.
16.
NOT A NOVATION; AMENDMENT AND RESTATEMENT
This Note is an amendment and restatement of the Original Note. It is not intended, and shall not be deemed or construed as a novation of the Original Note and the validity, priority and enforceability of the Original Note shall not be impaired hereby.
[remainder of page intentionally left blank; signature page follows]


6
{B0736610.2}


IN WITNESS WHEREOF, the Parties have executed this Note as of the date and year first above written.
BORROWER:        LENDER:

CONTRAIL AVIATION SUPPORT, LLC        OLD NATIONAL BANK


By:/s/ Joseph Kuhn__________________        By:/s/ Tommy Olson________________
Joseph Kuhn        Its: SVP
Its: CEO
CONTRAIL AVIATION LEASING, LLC


By:/s/ Joseph Kuhn___________________
Joseph Kuhn
Its: CEO

18174811v1


[Signature Page to First Amended and Restated Promissory Note Term Note B]


SUPPLEMENT #4 TO MASTER LOAN AGREEMENT
Date of Supplement: August 16, 2019
THIS SUPPLEMENT #4 TO MASTER LOAN AGREEMENT (this “Supplement”) is made and entered into by Lender and Borrowers as of the date written above pursuant to the Master Loan Agreement by and between Lender and Borrowers dated June 24, 2019 (the “Master Loan Agreement”).
This Supplement constitutes a Supplement under the Master Loan Agreement and is hereby made a part of the Master Loan Agreement. All capitalized terms herein not otherwise defined herein shall have the meaning ascribed to them in the Master Loan Agreement. The credit facility described in this Supplement is governed by and shall be construed and administered in accordance with the terms and conditions of the Master Loan Agreement and this Supplement.
To the extent any term or condition of this Supplement is inconsistent with any term or condition in the Master Loan Agreement or in any Supplement dated prior to this Supplement, the terms and conditions of this Supplement shall control. Except as specifically amended hereby, all terms and conditions of the Master Loan Agreement and all prior Supplements remain in effect.
In consideration of the mutual covenants contained herein and in the Master Loan Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
1.
DEFINITIONS.
As used in this Supplement, the following terms have the following meanings:
“Amortization Period” means a period consisting of sixty (60) consecutive months.
“Term Loan C” means an extension of credit to Borrowers by Lender pursuant to this Supplement.
“Term Loan C Maturity Date” means the first to occur of: (1) August 1, 2024; and (2) the date on which Term Loan C is accelerated as provided hereunder, in Term Note C or in the Master Loan Agreement.
“Term Note C” means the Promissory Note of Borrowers in the form of Exhibit A to be executed concurrently with this Supplement.
2.
THE CREDIT FACILITY; BORROWING PROCEDURES; INTEREST RATE; AND PAYMENTS.
2.1.
Credit Facility. Lender shall make a term loan to the Borrowers, on the Closing Date, in an amount equal to Thirteen Million, Five Hundred Ninety-Four Dollars ($13,000,594.00) (“Term Loan C”), subject to the terms and conditions hereof and of the Master Loan Agreement. Term Loan C shall be evidenced by Term Note C, be payable in accordance with the terms of Term Note C and be made by disbursement of Loan proceeds when and as directed by Borrowers. Amounts borrowed and repaid under the Term Loan C may not be reborrowed.
2.2.
Borrowing Procedures. The entire amount of Term Loan C is to be advanced in one single advance on the Closing Date.
2.3.
Interest Rate. The unpaid principal balance of Term Loan C outstanding from time to time shall bear interest for the period commencing on the Closing Date of Term Loan C until such Loan is paid in full. Term Loan C shall accrue interest at a variable rate equal to the LIBOR Rate plus 3.75% per annum and such rate shall be adjusted on the 1st day of each month.
2.4.
Payments. Borrowers shall make the following payments on Term Loan C during the following periods:
(a)
Sixty (60) consecutive monthly payments of principal and interest commencing on September 1, 2019, and continuing on the 1st day of each successive month thereafter, each in an amount necessary to fully amortize the then remaining principal balance of Term Loan C at the then applicable interest rate over the remaining balance of the Amortization Period; and
(b)
A final payment of all outstanding principal and accrued and unpaid interest together with such other amounts as shall then be due and owing from Borrowers to Lender under the Term Loan C on the Term Loan C Maturity Date.
2.5.
Fees.
(a)
On or before the Closing Date, Borrowers shall pay to Lender a fee in the amount of Fifty-Two Thousand Two Dollars ($52,000.00).
2.6.
Use of Loan Proceeds. Borrowers shall only use the proceeds of Term Loan C to acquire the beneficial interest in the trust described in the Beneficial Interest Pledge Agreement attached hereto as Exhibit B.
3.
CONDITIONS FOR BORROWING.
In addition to all conditions to borrowing set forth in Section 5.1 of the Master Loan Agreement, Lender’s obligation to make the Loan described in this Supplement is subject to the satisfaction or waiver by Lender in writing on or before the Closing Date of such Loan of the following conditions:
3.1.
Lender shall have received the following, all in form, detail and content satisfactory to Lender:
(a)
Term Note C duly executed by both Borrowers.
(b)
The fee due under Section 2.5 hereof.
(c)
A Beneficial Interest Pledge Agreement, in the form of Exhibit B, properly executed by CAL, together with any and all other documents or instruments Lender reasonably deems necessary to grant to Lender and perfect a first position Lien in all of CAL’s beneficial interest in that certain trust described in the Trust Agreement (Aircraft MSN 30241) dated as of August 22, 2016, between Wells Fargo Trust Company, National Association, as owner trustee (the “Owner Trustee”), and CIT Aerospace, LLC as the original Trust settlor, as amended, assigned, supplemented, restated, and modified from time to time (the “Trust Agreement”), all in form and substance reasonably satisfactory to Lender.
(d)
A Trust Aircraft Security Agreement in the form of Exhibit C (the “TASA”), properly executed by the Owner Trustee, together with any and all other documents or instruments Lender reasonably deems necessary to grant to Lender and perfect a first position Lien on the collateral described in the TASA, all in form and substance reasonably satisfactory to Lender.
(e)
A third party written legal opinion opining that:
(i)
CAL has the due power and authority to grant the lien described in Section 3.1(c) above;
(ii)
Owner Trustee has due power and authority to grant the Lien described in Section 3.1(d) above; and
(iii)
The Liens described in Sections 3.1(c) and 3.1(d) are valid and enforceable and neither violate any term or provision of the Trust Agreement.
(f)
Evidence in a form reasonably acceptable to Lender that, prior to or concurrently with the execution of this Supplement, CAL acquired the interest in the trust described in the Beneficial Interest Pledge Agreement and that the trust acquired the collateral described in the TASA, and in each case, such is owned free and clear of all liens, claims and encumbrances.
(g)
An Agreement to Provide Insurance in the form of Exhibit D, properly executed by the Borrowers.
4.
AFFIRMATIVE COVENANTS.
In addition to all affirmative covenants set forth in Section 6 of the Master Loan Agreement, each Borrower covenants that it will, until Lender’s commitment to extend credit under this Supplement and all Permitted Swap Agreements relating to the credit facility extended under this Supplement have terminated or expired and the promissory note evidencing the credit facility extended under this Supplement, and all fees and expenses payable in connection with the credit facility extended under this Supplement have been paid in full:
4.1.
Quarterly Rolling Cash Flow Coverage Ratio. Maintain, as of the last day of each fiscal quarter, a Quarterly Rolling Cash Flow Coverage Ratio of not less than 1.25 to 1.0. Lender may determine compliance with this Quarterly Cash Flow Coverage Ratio covenant at any time.
4.2.
Tangible Net Worth. Maintain a Tangible Net Worth of at least $12,500,000.00 at all times. Lender may determine compliance with this Tangible Net Worth covenant at any time.
5.
NEGATIVE COVENANTS.
In addition to all negative covenants set forth in Section 7 of the Master Loan Agreement, each Borrower covenants that, without the prior written consent of Lender, Borrowers will not, until Lender’s commitment to extend credit under this Supplement and all Permitted Swap Agreements relating to the credit facility extended under this Supplement have terminated or expired and the promissory note evidencing the credit facility extended under this Supplement, and all fees and expenses payable in connection with the credit facility extended under this Supplement, have been paid in full:
5.1.
[Intentionally Omitted].
[remainder of page intentionally left blank; signature page follows]

IN WITNESS WHEREOF, the Parties have executed this Supplement as of the date first written above.
BORROWERS:        LENDER:

CONTRAIL AVIATION SUPPORT, LLC        OLD NATIONAL BANK


By:    /s/ Joseph Kuhn        By:    /s/ Tommy Olson    
Joseph Kuhn            Tommy Olson
Its: CEO            Its: SVP

CONTRAIL AVIATION LEASING, LLC


By:    /s/ Joseph Kuhn    
Joseph Kuhn
Its: CEO


18169328v1





Contrail Aviation Support, LLC, Contrail Aviation Leasing, LLC
Loan No. 20007961462
August 16, 2019
Note
PROMISSORY NOTE
TERM NOTE C
$13,000,594.00    August 16, 2019
FOR VALUE RECEIVED, the undersigned CONTRAIL AVIATION SUPPORT, LLC (“Support”) and CONTRAIL AVIATION LEASING, LLC (“Leasing”, and together with Support, each a “Borrower,” and collectively, the “Borrowers”), jointly and severally, promise to pay to the order of OLD NATIONAL BANK (the “Lender”) the principal sum of Thirteen Million Five Hundred Ninety‑Four Dollars ($13,000,594.00), together with interest thereon as hereinafter provided.
1.
RATE OF INTEREST
The principal amount of the Loan outstanding from time to time shall bear interest at the variable rate of LIBOR Rate (as defined in the Master Loan Agreement referenced below) plus 3.75% per annum and such rate shall be adjusted on the 1st day of each month (the “Loan Rate”).
2.
PAYMENTS
Payments of both principal and interest are to be made in immediately available funds in lawful currency of the United States of America at the office of Lender, or such other place as the holder hereof shall designate to the undersigned in writing. Unless required by applicable law, and prior to any default being declared, payments will be applied first to any accrued unpaid interest; then to principal; then to escrow; then to any late charges; and then to any unpaid collection costs. Funds shall be deemed received by Lender on the next business day if not received by 12:00 p.m. local time at the location payments hereunder are to be made.
Borrowers shall make payments of:
(a) Sixty (60) consecutive monthly payments of principal and interest commencing on September 1, 2019, and continuing on the 1st day of each successive month thereafter, each in an amount necessary to fully amortize the then remaining principal balance of Term Loan C at the then applicable interest rate over the remaining balance of the Amortization Period; and

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(b) A final payment of all outstanding principal and accrued unpaid interest together with such other amounts as shall then be due and owing from Borrowers to Lender under the Term Loan C on the Term Loan C Maturity Date.
3.
FINAL PAYMENT MATURITY DATE
Notwithstanding anything set forth above, all sums due under this Note, both principal and interest, if not sooner paid, shall be due and payable on August 1, 2024 (“Term Loan C Maturity Date”).
4.
PREPAYMENT; MINIMUM FINANCE CHARGE
Borrowers agree that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not be subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. In any event, even upon full prepayment of this Note, Borrowers understand that Lender is entitled to a minimum finance charge of $95.00. Other than Borrowers’ obligations to pay any minimum finance charge, Borrowers may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrowers of Borrowers’ obligation to continue to make payments under the payment schedule. Rather, early payments will reduce the principal balance due and may result in Borrowers making fewer payments. Borrowers agree not to send Lender payments marked “paid in full,” “without recourse,” or similar language. If Borrowers send such a payment, Lender may accept it without losing any of Lender’s rights under this Note, and Borrowers will remain obligated to pay any further amounted owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes “payment in full” of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Old National Bank, PO Box 3728, Evansville, IN 47736‑3728.
5.
MANDATORY PREPAYMENTS
[Intentionally omitted.]
6.
PAYMENT DUE DATE/FAILURE TO PAY
(a) All payments due under this Note shall be made without demand and received on the dates set forth in Section 2 above;

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(b) In the event of a default as defined in this Note, or as set forth in the Master Loan Agreement or any Collateral Documents or Guaranty Agreements, at the option of Lender, for so long as the default exists, interest on the outstanding principal balance hereof shall accrue and will be paid at the rate in effect from time to time hereunder plus an additional 3% per annum, but in no event shall such default rate exceed, however, the maximum rate permitted by law (“Default Interest Rate”); and
(c) Any installment of principal and/or interest due hereunder which is not received on or before the 10th day following the date on which it is due shall be subject to a late payment fee of 5% of the amount owed on such installment (but not less than $50.00) for the purpose of defraying the expense incident to handling such delinquent payment (this payment is in addition to the amount set forth in (b) above).
7.
INTEREST RATE COMPUTATION
Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method.
8.
PLACE OF PAYMENT
All payments shall be made to Lender at the address on the interest billing statement provided by Lender or at the address of Lender set forth in Section 14 of this Note, at any branch of Lender, or such other place as Lender may from time to time designate in writing.
9.
MASTER LOAN AGREEMENT AND SECURITY
This Note evidences indebtedness incurred under; is the “Term Note C” referred to in; and is subject to the terms and provisions of the Master Loan Agreement by and between Borrowers and Lender dated June 24, 2019 (as amended, restated, supplemented or otherwise modified from time to time, including, but not limited to, by Supplements thereto, the “Master Loan Agreement”). Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Master Loan Agreement.
This Note is secured by the Collateral Documents. The terms of the Collateral Documents are incorporated herein and made a part hereof by reference.
10.
DEFAULT
In the event of the occurrence of an Event of Default under the Master Loan Agreement, and after giving effect to any applicable right to cure provided by the Master Loan Agreement,

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Lender may, at its option and without notice, declare this Note to be, and this Note shall thereupon become, immediately due and payable, together with accrued interest thereon. Without limiting the foregoing right and without limiting any other rights and remedies of the Lender at law or in equity, the Lender is also entitled to the rights and remedies provided for in the Master Loan Agreement and the Collateral Documents and may enforce the covenants, agreements and undertakings of Borrowers contained therein and may exercise the remedies provided for thereby or otherwise available in respect thereto, all in accordance with the terms thereof In addition to any other right, Lender may apply and/or set‑off against amounts due it hereunder any deposits, account balances, or other credits of any Borrower in the possession of or in transit to Lender, and Borrowers hereby grant Lender a security interest in all of the foregoing.
11.
WAIVERS
Except as herein provided, Borrowers and all others who may become liable for all or part of the principal balance hereof or for any obligations of Borrowers to Lender or the holder hereof (a) forever waive presentment, protest and demand, notice of protest, demand and dishonor and non‑payment of this Note, and all other notices in connection with the delivery, acceptance, performance, default or enforcement of the payment of this Note, (b) agree that the time of payment of the debt or any part thereof may be extended from time to time without modifying or releasing the lien of the Collateral Documents or the liability of Borrowers or any other such parties, the right of recourse against Borrowers and such parties being hereby reserved by Lender; and (c) agree that time is of the essence. Borrowers agree to pay all reasonable costs of collection when incurred, whether suit be brought or not, including reasonable attorneys’ fees and costs of suit and preparation therefore, and to perform and comply with each of the covenants, conditions, provisions and agreements of Borrowers contained in this Note, the Master Loan Agreement and Collateral Documents. It is expressly agreed by Borrowers that no extensions of time for the payment of this Note, nor the failure on the part of Lender to exercise any of its rights hereunder, shall operate to release, discharge, modify, change or affect the original liability under this Note, the Master Loan Agreement or any of the Collateral Documents, either in whole or in part.
12.
WAIVER OF JURY TRIAL
BORROWERS WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS INSTRUMENT AND TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS HEREUNDER OR THEREUNDER, ANY COLLATERAL SECURING THE OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED THERETO.

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BORROWERS REPRESENT THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.
13.
COMPLIANCE
This Note is to be governed by, and construed and enforced in accordance with, the laws of the State of Wisconsin (without giving effect to Wisconsin’s principles of conflicts of law), except to the extent (a) of procedural and substantive matters relating only to the creation, perfection, foreclosure and enforcement of rights and remedies against specific collateral, which matters shall be governed by the laws of the state in which the collateral is located (the “Collateral State”), and (b) that the laws of the United States of America and any rules regulations, or orders issued or promulgated thereunder, applicable to the affairs and transactions entered into by the Lender, otherwise preempt Collateral State law or Wisconsin law; in which event such federal law shall control. Borrowers hereby irrevocably submit to the jurisdiction of any Wisconsin or federal court sitting in Milwaukee, Wisconsin (or, with respect to the matters set forth in subsection (a) above, any state in which the property encumbered by the Collateral Documents is located) over any suit, action or proceeding arising out of or relating to this Note or any of the Loan Documents. Borrowers hereby waive any right to object to the location of venue in any Wisconsin or federal court sitting in Milwaukee, Wisconsin, or, with respect to the matters set forth in subsection (a) above, to the appropriate court located in the Collateral State, concerning any suit, action or proceeding arising out of or relating to this Note or any of the Loan Documents and waives any objection which it may have at any time to the laying of venue in any proceedings brought in any such court, waives any claim that such proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such proceedings, that such court does not have jurisdiction over such party to object to the choice of governing law set forth in this section. Borrowers acknowledge that the loan evidenced by this Note was solicited, negotiated, closed and funded in the State of Wisconsin, and waives any implication that the laws of any other state shall apply for usury purposes.
14.
NOTICES
All notices, requests and demands to be made hereunder to the parties hereto must be in writing and must be delivered to the applicable address stated below by any of the following means: (a) personal service; (b) electronic communication, including, but not limited to electronic mail, telex, telegram or telecopying (and, if by telex, telegram or telecopying, then only if confirmed in writing sent by registered or certified, first class mail, return receipt requested); or (c) registered or certified, first class mail, return receipt requested. Such addresses may be changed by notice to the other parties given in the same manner as provided above. Any notice, demand or request sent pursuant to either subsection (a) or (b) hereof

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will be deemed received upon such personal service or upon dispatch by electronic means, and, if sent pursuant to subsection (c) will be deemed received three (3) days following deposit in the mail.
Borrowers:    CONTRAIL AVIATION SUPPORT, LLC
CONTRAIL AVIATION LEASING, LLC
435 Investment Court
Verona, WI 53593‑8788

Lender:    OLD NATIONAL BANK
25 W. Main St.
Madison, WI 53703
15.
INTEREST NOT TO EXCEED MAXIMUM ALLOWED BY LAW
If from any circumstances whatsoever, by reason of acceleration or otherwise, the fulfillment of any provision of this Note involves transcending the limit of validity prescribed by any applicable usury statute or any other applicable law, with regard to obligations of like character and amount, then the obligations to be fulfilled will be reduced to the limit of such validity as provided in such statute or law, so that in no event shall any exaction be possible under this Note in excess of the limit of such validity.
16.
SUCCESSORS
All rights, powers, privileges and immunities herein granted to Lender shall extend to its successors and assigns and any other legal holder of this Note, with full right by Lender to assign and/or sell same.
[remainder of page intentionally left blank; signature page follows]

IN WITNESS WHEREOF, the Parties have executed this Note as of the date and year first above written.
BORROWERS:        LENDER:

CONTRAIL AVIATION SUPPORT, LLC        OLD NATIONAL BANK


By: /s/ Joseph Kuhn        By: /s/ Tommy Olson    
Joseph Kuhn            Tommy Olson
Its: CEO            Its: SVP


CONTRAIL AVIATION LEASING, LLC


By: /s/ Joseph Kuhn    
Joseph Kuhn
Its: CEO


18169396v1


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2


Loan No.: 20007961462    TRUSTEE AIRCRAFT SECURITY AGREEMENT    Page 1
NAME & ADDRESS OF DEBTOR / BORROWER:
CONTRAIL AVIATION SUPPORT, LLC
CONTRAIL AVIATION LEASING, LLC
435 INVESTMENT CT
VERONA, WI 53593-8788
 
NAME & ADDRESS OF SECURED PARTY / LENDER:
OLD NATIONAL BANK
619 Madison/Southern WI Coml LPO
23 W Main St
Madison, WI 53703
 
NAME OF GRANTOR / OWNER TRUSTEE:
WELLS FARGO TRUST COMPANY, NATIONAL
ASSOCIATION, not in its individual capacity but solely as
owner trustee
299 South Main Street, 5th Floor
MAC: U1228-051
Salt Lake City, Utah 84111
Attention: Corporate Trust Department

[recording information]

This Trustee Aircraft Security Agreement is entered into as of August 16, 2019 by and between WELLS FARGO TRUST COMPANY, NATIONAL ASSOCIATION (f/k/a Wells Fargo Bank Northwest, National Association), not in its individual capacity but solely as the owner trustee (“Grantor”) of the herein identified Aircraft Trust; CONTRAIL AVIATION SUPPORT, LLC; and CONTRAIL AVIATION LEASING, LLC (collectively, “Borrower”); and OLD NATIONAL BANK (“Lender”).
WHEREAS, Lender has loaned funds to Borrower for, inter alia, the acquisition by Borrower of 100% of the beneficial interest in the Aircraft Trust MSN 30241 which owns the below‑identified Aircraft, for which Grantor is owner, in connection with and pursuant to a Master Loan Agreement effective as of June 24, 2019, together with executed Amendments and Supplements thereto, one or more Promissory Note(s), and other guarantees, assignments, pledges and other instruments associated therewith, hereinafter collectively defined as “Loan Documents”, evidencing Borrower’s obligations to Lender (collectively, the “Indebtedness”); and
WHEREAS, pursuant to the Loan Documents, Borrower has agreed to cause Grantor to grant, and Grantor has agreed, in its capacity as Trustee of the subject Trust, to grant a security interest in the herein‑identified Collateral as security for repayment of Borrower’s Indebtedness and other obligations to Lender.
NOW, THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the sufficiency of which is acknowledged, Grantor and Lender agree as follows:
1.
GRANT OF SECURITY INTEREST. Grantor hereby grants to Lender a continuing security interest in the Collateral to secure the Indebtedness and agrees that Lender shall have the rights stated in this Agreement with


Loan No.: 20007961462    TRUSTEE AIRCRAFT SECURITY AGREEMENT    Page 2
(Continued)
    

respect to the Collateral, in addition to all other rights which Lender may have by law. As used herein, “Collateral” is defined as:
a.
Boeing 737‑73V with manufacturer serial number 30241 (described on the pre‑populated drop down menu of the International Registry as a BOEING model 737‑700 aircraft with manufacturer’s serial number 30241), currently registered in the United States of America bearing FAA Registration No. N710SY (the “Aircraft”), inclusive of the Airframe, Engines, Equipment, Records, Funds, and Proceeds.
i.
“Airframe” is defined as the Aircraft’s airframe together with any and all parts, appliances, components, instruments, accessories, accessions, attachments, equipment, or avionics (including, without limitation, radio, radar, navigation systems, or other electronic equipment) installed in, appurtenant to, or delivered with or in respect of such airframe.
ii.
“Engines” are defined as two CFM International, Inc. model CFM56‑7B20 engines (rated thrust of over 100kN or 22,400 lb/ft) with serial numbers 889727 and 889728 (described on the pre‑populated drop down menu of the International Registry as CFM model CFM56‑7 engines with manufacturer’s serial numbers 889727 and 889728), together with any other aircraft engines which either now or in the future are installed on, appurtenant to, or components with or in respect of the Airframe, together with any and all parts, appliances, components, accessories, accessions, attachments or equipment installed on, appurtenant to, or delivered with or in respect of such Engines pursuant to the provisions of that certain Aircraft Lease Agreement, dated as of January 14, 2009, between Grantor, as assignee of and successor to CIT Leasing Corporation, as lessor, and Sun Country, Inc. (f/k/a MN Airlines, LLC d/b/a Sun Country Airlines), as lessee (“Lessee”) with respect to the lease of the Aircraft, as supplemented, amended, assigned or otherwise modified from time‑to‑time (the “Lease”) or otherwise. The word “Engines” shall also refer to any replacement aircraft engine which, under this Agreement and the Lease, is required or permitted to be installed upon the Airframe.
iii.
“Equipment” is defined as all auxiliary power units, accessories, appliances, avionics, instruments, parts, spares, furnishings, replacements and substituted components installed on or used with the Aircraft,
iv.
“Records” are defined as all log books, manuals, flight records, inspection reports, airworthiness certificates, registration certificates, and other operational records of the Aircraft or any part of it.
v.
“Funds” are defined as all rents, accounts, chattel paper, general intangibles, and monies, arising out of or related to rental, lease, operation or other use of any of the property described as any part or all of the Collateral.
vi.
“Proceeds” are defined as all monies, claims, accounts and intangible rights of any kind resulting from any sale, insurance payments or other disposition of the Aircraft or any part thereof.
b.
All other rights in all the foregoing as defined in the Cape Town Convention on International Interests in Mobile Equipment, including the Aircraft Protocol thereto (“Cape Town Convention”), whether now owned or later acquired.
2.
CROSS‑COLLATERALIZATION. In addition to the Promissory Note(s) associated with the Indebtedness relating to the Aircraft, this Agreement further secures all obligations, debts and liabilities, plus interest thereon, of Borrower or any one or more of them to Lender, as well as all claims by Lender against Borrower or any one o


Loan No.: 20007961462    TRUSTEE AIRCRAFT SECURITY AGREEMENT    Page 3
(Continued)
    

r more of them, whether now existing or hereafter arising, whether related or unrelated to the purpose of the Note, whether voluntary or otherwise, whether due or not due, direct or indirect, determined or undetermined, absolute or contingent, liquidated or unliquidated, whether Borrower may be liable individually or jointly with others, whether obligated as guarantor, surety, accommodation party or otherwise, and whether recovery upon such amounts may be or hereafter may become barred by any statute of limitations, and whether the obligation to repay such amounts may be or hereafter become otherwise unenforceable.
3.
BORROWER’S WAIVERS. Except as otherwise required under this Agreement or by applicable law, Borrower agrees that Lender need not provide notice to Borrower about any action or inaction of Lender in connection with this Agreement, and waives any defense that may arise due to any action or inaction of Lender, including, without limitation, any failure or delay of Lender to realize upon the Collateral; and Borrower agrees to remain liable upon the Indebtedness regardless of Lender’s action or failure to act under this Agreement.
4.
GRANTOR’S REPRESENTATIONS, WARRANTIES AND COVENANTS. Grantor represents, warrants and covenants to Lender, at all times while this Agreement is in effect, as follows:
a.
That Grantor, as owner trustee, is the registered owner of the Aircraft pursuant to a proper registration under either the Federal Aviation Act of 1958, as amended, or the equivalent law of the Grantor’s domicile, that Grantor qualifies in all respects as a citizen of the United States as defined by the Act or is otherwise validly organized and duly qualified to own and register such ownership of the Aircraft pursuant to the applicable law of Grantor’s domicile country, and that Grantor’s citizenship shall not be changed;
b.
That Grantor is the lawful owner of the Collateral and holds good and marketable title to the Collateral, free and clear of all liens, mortgages, claims, or other rights or interests asserted or which may be asserted at any time by any other person (other than the Borrower’s interest as assignee of the original trustor’s interest in the Trust) in or relating to the Collateral (collectively, “Encumbrances”) except the lien of this Agreement and the Lease and such interests, including leases, to which Lender has consented in writing;
c.
That Grantor has the full right, power and authority to enter into this Agreement and to pledge the Collateral to Lender, has not received from or relied upon any representation by Lender about Borrower or Borrower’s creditworthiness, executes this Agreement at Borrower’s request and not at the request of Lender;
d.
That the Aircraft is eligible for recording of interests relating thereto with the International Registry established pursuant to the Cape Town Convention and the national aviation authority having jurisdiction in Grantor’s domicile (for example, and without limitation, the United States Federal Aviation Administration (“FAA”));
e.
That Grantor shall promptly consent or cause its agent to consent to the registration of the International Interest created hereby with the International Registry;
f.
That Grantor is and shall remain registered as a transacting user entity under the procedures of the International Registry with full rights and privileges to access the International Registry;
g.
That the national jurisdiction in which the Aircraft is registered shall not be changed without express written consent of Lender;
h.
That Grantor shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral;


Loan No.: 20007961462    TRUSTEE AIRCRAFT SECURITY AGREEMENT    Page 4
(Continued)
    

i.
That Grantor shall not grant, pledge, mortgage, encumber or otherwise permit the Collateral to be subject to any Encumbrance or charge, other than the security interest provided for in this Agreement and the Lease, without the prior written consent of Lender, including security interests even if junior in right to the security interests granted under this Agreement;
j.
That Grantor shall promptly pay when due all statements and charges of airport authorities, mechanics, laborers, materialmen, suppliers and others incurred in connection with the use, operation, storage, maintenance and repair of the Aircraft so that no Encumbrance may attach to or be filed against the Aircraft, and shall obtain, upon request by Lender, and in form and substance as may then be satisfactory to Lender, appropriate waivers and/or subordinations of any Encumbrances that may affect the Collateral at any time;
k.
That unless waived by Lender all proceeds from any disposition of the Collateral (for whatever reason) shall be held in trust for Lender and immediately delivered to Lender, and shall not be commingled with any other funds; provided however, this requirement shall not constitute consent by Lender to any sale or other disposition;
l.
That Grantor shall not remove or permit the removal of any Engines or Equipment from the Aircraft other than as permitted by this Agreement and, when so permitted, shall only replace the same with comparable parts, engines, accessories, avionics and equipment in accordance with the provisions of Section 12 hereof; and
m.
That Grantor shall defend Lender’s rights in the Collateral against any claims or demands of all other persons.
This Agreement is binding upon Grantor and its successors and any permitted assigns and shall be legally enforceable in accordance with its terms. The foregoing representations and warranties, and all other representations and warranties contained in this Agreement are and shall be continuing in nature and shall remain in full force and effect until such time as this Agreement is terminated, released or cancelled as provided herein. The Lessee shall not be a third party beneficiary of or entitled to enforce in its own name any provisions of this Security Agreement.
5.
WAIVERS. Grantor and Borrower waive all requirements of presentment, protest, demand, and notice of dishonor or non‑payment of any or all of the Indebtedness. Lender may do any of the following with respect to any obligation of any Borrower, without first obtaining the consent of Grantor: (a) grant any extension of time for any payment, (b) grant any renewal, (c) permit any modification of payment terms or other terms, or (d) exchange or release any Collateral or other security. No such act or failure to act shall affect Lender’s rights against Grantor or the Collateral.
6.
DURATION. This Agreement shall remain in full force and effect until such time as the Indebtedness, including principal, interest, costs, expenses, attorneys’ fees and other fees and charges, shall have been paid in full, together with all additional sums that Lender may pay or advance on Borrower or Grantor’s behalf and lawful interest thereon.
7.
RECORDS AND LOGS. Grantor will keep, or will cause Lessee to keep, accurate and complete logs, manuals, books, and records relating to the Collateral in accordance with FAA or other applicable rules and regulations, and will provide Lender with copies of such records and information relating to the Collateral as Lender may reasonably require from time to time.


Loan No.: 20007961462    TRUSTEE AIRCRAFT SECURITY AGREEMENT    Page 5
(Continued)
    

8.
PERFECTION OF INTEREST. Grantor agrees to take all actions requested by Lender to perfect and continue Lender’s security interest in the Collateral. Upon request of Lender, Grantor will deliver to Lender any and all of the documents evidencing or constituting the Collateral, and Grantor will note Lender’s interest upon any and all chattel paper and instruments if not delivered to Lender for possession by Lender. In particular, Grantor will perform, or will cause to be performed, upon Lender’s request, each and all of the following:
a.
Record, register and file this Agreement, together with such notices, financing statements or other documents or instruments as Lender may request from time to time to carry out fully the intent of this Agreement, with the International Registry and any applicable national aviation authority (for example, the FAA if ownership and interests are subject to registration in the U.S.A.), either concurrent with the delivery and acceptance of the Collateral or promptly after the execution and delivery of this Agreement;
b.
Furnish to Lender evidence of every such recording, registering, and filing;
c.
Execute and deliver or perform any and all acts and things which may be reasonably requested by Lender with respect to complying with or remaining subject to the Applicable Laws;
9.
ATTORNEY‑IN‑FACT. Grantor hereby appoints Lender as Grantor’s irrevocable attorney‑in‑fact for the purpose of executing any documents necessary to perfect, amend, or to continue the security interests granted in this Agreement or to demand termination of filings of other secured parties. Lender may at any time, and without further authorization from Grantor, file a carbon, photographic or other reproduction of any financing statement or of this Agreement for use as a financing statement. Borrower will reimburse Lender for all expenses for the perfection and the continuation of the perfection of Lender’s security interest in the Collateral.
10.
NOTICES TO LENDER. Grantor will promptly notify Lender in writing at Lender’s address shown above (or such other addresses as Lender may designate from time to time) prior to any change in Grantor’s name, assumed business name(s), material ownership change consisting of more than 10% of the ownership or voting securities of Grantor, identity of Grantor’s authorized signer(s) in relation to this Agreement, principal office address, state of organization, type of business entity, or any other aspect of Grantor that directly or indirectly relates to any agreements between Grantor and Lender. No change in Grantor’s name or organizational characteristics be effective until Lender has received such notice.
11.
LOCATION AND INSPECTION OF COLLATERAL. The home base location at which the Collateral will be hangered when not in operation shall be Building C, 2005 Cargo Road, St. Paul, MN 55111. Grantor shall, whenever requested, advise Lender of the exact location of the Collateral. At any reasonable time, on demand by Lender, Grantor shall cause the Collateral (including the logs, books, manuals, and records comprising the Collateral) to be exhibited to Lender (or persons designated by Lender) for purposes of inspection and copying, subject to the provisions of the Lease.
12.
AIRWORTHINESS AND REPAIRS. Grantor, at its expense, shall do or cause to be done, in a timely manner, each and all of the following:
a.
Maintain and keep the Collateral in as good condition and repair as it is on the date of this Agreement, ordinary wear and tear excepted;
b.
Maintain and the Aircraft in airworthy condition in accordance with the requirements of the Lease and each of the manufacturers’ manuals and mandatory service bulletins and each of the manufacturers’ non‑mandatory service bulletins which relate to airworthiness, and in compliance with all applicable aviation laws and regulations pursuant to which it may be operated (for example, and without limitation, all requirements of Parts 91 and 121 of FAA Regulations, or all applicable EASA


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(Continued)
    

airworthiness regulations, as applicable based on the jurisdiction of the Aircraft’s registration), the compliance date of which shall occur while this Agreement is in effect;
c.
Replace in or on the Airframe any and all Engines, parts, appliances, instruments or accessories which may be worn out, lost, destroyed or otherwise rendered unfit for use;
d.
Obtain all required inspections of the Aircraft and licensing or re‑licensing of the Aircraft in accordance with all applicable governmental requirements. Grantor shall at all times cause the Aircraft to have on board and in a conspicuous location a current Certificate of Airworthiness; and
e.
Cause all inspections, maintenance, modifications, repairs, and overhauls of the Aircraft (including those performed on the Airframe, the Engines or any components, appliances, accessories, instruments, or equipment) to be performed only by personnel authorized to perform such services by the FAA or other aviation authority having jurisdiction.
If any Engine, component, appliance, accessory, instrument, equipment or part of the Aircraft shall reach such a condition as to require overhaul, repair or replacement, for any cause whatever, in order to comply with the standards for maintenance and other provisions set forth in this Agreement and the Lease, Grantor may install, or cause Lessee to install, temporary replacements of the same type pending overhaul or repair of the unsatisfactory item, so long as such temporary replacements are fit for operational use within applicable regulations and standards and Grantor retains unencumbered title to any and all items temporarily removed, or make permanent replacements of the same type so long as such permanent replacements are fit for operational use within applicable regulations and standards and Grantor complies, or causes Lessee to comply, with the following requirements (subject to the provisions of the Lease):
(i)
Lender is not divested of its security interest in and lien upon any item removed from the Aircraft and no such removed item becomes subject to the lien or claim of any other person, unless and until such item is replaced by an item of the type and condition required by this Agreement, title to which, upon its being installed or attached to the Airframe, is validly vested in Grantor, free and clear of all liens and claims, of every kind or nature, of all persons other than Lender;
(ii)
Grantor’s title to every substituted item shall immediately be and become subject to the security interests and liens of Lender and each of the provisions of this Agreement, and each such item shall remain so encumbered unless it is, in turn, replaced by a substitute item in the manner permitted in this Agreement; and
(iii)
If an item is removed from the Aircraft and replaced in accordance with the requirements of this Agreement, and if the substituted item satisfies the requirements of this Agreement, including the terms and conditions above, then the item which is removed shall thereupon be free and clear of the security interests and liens of Lender. In the event that any Engine, component, appliance, accessory, instrument, equipment or part is installed upon the Airframe, and is not in substitution for or in replacement of an existing item, such additional item shall be considered as an accession to the Airframe.
13.
TAXES, ASSESSMENTS AND LIENS. Grantor will pay when due all taxes, assessments and liens upon the Collateral, its use or operation, upon this Agreement, or upon the Loan Documents to the extent applicable to the Aircraft. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender’s interest in the Collateral is not jeopardized in Lender’s sole opinion. If the Collateral is subjected to a lien which is not d


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(Continued)
    

ischarged within fifteen (15) days, Grantor shall deposit with Lender cash, a sufficient corporate surety bond or other security satisfactory to Lender in an amount adequate to provide for the discharge of the lien plus any interest, costs or other charges that could accrue as a result of foreclosure or sale of the Collateral. In any contest Grantor shall defend itself and Lender and shall satisfy any final adverse judgment before enforcement against the Collateral. Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings.
14.
GOVERNMENTAL COMPLIANCE. Grantor shall comply promptly with all applicable laws, ordinances and regulations of the FAA and/or all other governmental authorities applicable to the use, operation, maintenance, overhauling or condition of the Collateral. Grantor may contest in good faith any such law, ordinance or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Lender’s interest in the Collateral, in Lender’s opinion, is not jeopardized. Without limiting the foregoing, Grantor agrees that at no time during the effectiveness of this Agreement shall the Collateral be operated in, located in, or relocated to, any jurisdiction, unless the Cape Town Convention or some comparable treaty, rules and regulations satisfactory to Lender shall be in effect in such jurisdiction and any notices, financing statements, documents, or instruments necessary or required, in the opinion of Lender, to be filed in such jurisdiction shall have been filed and file stamped copies thereof shall have been furnished to Lender. Notwithstanding the foregoing, at no time shall the Collateral be operated in or over any area which may expose Lender to any penalty, fine, sanction or other liability, whether civil or criminal, under any applicable law, rule, treaty or convention; nor may the Collateral be used in any manner which is or may be declared to be illegal and which may thereby render the Collateral liable to confiscation, seizure, detention or destruction.
15.
INSURANCE.
a.
Grantor shall procure and maintain at all times all risks insurance on the Collateral, including without limitation fire, theft, liability and hull insurance, and such other insurance as Lender may require with respect to the Collateral, in form, amounts, coverages and basis reasonably acceptable to Lender and issued by a company or companies reasonably acceptable to Lender. Grantor shall further provide and maintain, at its sole cost and expense or at the sole cost and expense of Lessee, comprehensive public liability insurance, naming both Grantor and Lender as parties insured, protecting against claims for bodily injury, death and/or property damage arising out of the use, ownership, possession, operation and condition of the Aircraft, and further containing a broad form contractual liability endorsement covering Grantor’s obligations to indemnify Lender as provided under this Agreement. Such policies of insurance must also contain a provision, in form and substance acceptable to Lender, prohibiting cancellation or the alteration of such insurance without at least ten (10) days prior written notice to Lender of such intended cancellation or alteration. Such insurance policies also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Grantor or any other person. Grantor agrees to provide Lender with copies of such policies of insurance. Grantor, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender. In connection with all policies covering assets in which Lender holds or is offered a security interest for the Indebtedness, Grantor will provide Lender with such lender’s loss payable or other endorsements as Lender may require. Grantor shall not use or permit the Collateral to be used in any manner or for any purpose excepted from or contrary to the requirements of any insurance policy or policies required to be carried and maintained under this Agreement or for any purpose excepted or exempted from or contrary to the insurance policies, nor shall Grantor do any other act or permit anything to be done which could reasonably be expected to invalidate or limit any such insurance policy or policies.
b.
Grantor shall promptly notify Lender of any loss or damage to the Collateral, whether or not such casualty or loss is covered by insurance. Lender may make proof of loss if Grantor fails to do so withi


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(Continued)
    

n fifteen (15) days of the casualty. All proceeds of any insurance on the Collateral, including accrued proceeds thereon, shall be held by Lender as part of the Collateral. If Lender consents to repair or replacement of the damaged or destroyed Collateral, Lender shall, upon satisfactory proof of expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration. If Lender does not consent to repair or replacement of the Collateral, Lender shall retain a sufficient amount of the proceeds to pay all of the Indebtedness, and shall pay the balance to Grantor. Any proceeds which have not been disbursed within six (6) months after their receipt and which Grantor has not committed to the repair or restoration of the Collateral shall be used to prepay the Indebtedness.
c.
Grantor, upon request of Lender, shall furnish to Lender reports on each existing policy of insurance showing such information as Lender may reasonably request including the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the property insured; (5) the then current value on the basis of which insurance has been obtained and the manner of determining that value; and (6) the expiration date of the policy. In addition, Grantor shall upon request by Lender (however not more often than annually) have an independent appraiser satisfactory to Lender determine, as applicable, the cash value or replacement cost of the Collateral.
16.
PRIOR ENCUMBRANCES. To the extent applicable, Grantor shall fully and timely perform any and all of Grantor’s obligations under any prior Encumbrances affecting the Collateral. Without limiting the foregoing, Grantor shall not commit or permit to exist any breach of or default under any such prior Encumbrances. Grantor shall further promptly notify Lender in writing upon the occurrence of any event or circumstances that would, or that might, result in a breach of or default under any such prior Encumbrance. Grantor shall further not modify or extend any of the terms of any prior Encumbrance or any indebtedness secured thereby, or request or obtain any additional loans or other extensions of credit from any third party creditor or creditors whenever such additional loan advances or other extensions of credit may be directly or indirectly secured, whether by cross‑collateralization or otherwise, by the Collateral, or any part or parts thereof, with possible preference and priority over the lien of this Agreement.
17.
NOTICE OF ENCUMBRANCES AND EVENTS OF DEFAULT. Grantor shall immediately notify Lender in writing upon the filing of any attachment, judicial process, or claim relating to the Collateral. Grantor additionally agrees to immediately notify Lender in writing upon the occurrence of any Event of Default, or event that with the passage of time, failure to cure, or giving of notice, may result in an Event of Default under any of Grantor’s obligations that may be secured by any presently existing or future Encumbrance, or that may result in an encumbrance affecting the Collateral, or should the Collateral be seized or attached or levied upon, or threatened by seizure or attachment or levy, by any person other than Lender.
18.
POSSESSION; QUIET ENJOYMENT. Until default, Grantor shall have the possession and beneficial use of the Collateral and may use it in any lawful manner not inconsistent with this Agreement or the Loan Documents. Lender confirms that neither it nor any person lawfully claiming through it will interfere with the quiet enjoyment and use of the Aircraft by Lessee throughout the Lease as long as no “Event of Default” (as defined in the Lease) has occurred and is continuing.
19.
LENDER’S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender’s interest in the Collateral or if Grantor fails to comply with any provision of this Agreement or any Loan Documents, including but not limited to Grantor’s failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Agreement or any Loan Documents, Lender on Grantor’s behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Collateral and paying all costs for insuring, maintaining and preserving the Collateral. All s


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(Continued)
    

uch expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lender’s option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note’s maturity. The Agreement also will secure payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon Default.
20.
DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:
a.
Payment Default. Borrower fails to make any payment when due under the Indebtedness.
b.
Other Defaults. Borrower or Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Loan Documents or to comply with or perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower or Grantor.
c.
Default in Favor of Third Parties. Borrower, any guarantor or Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower’s, any guarantor’s or Grantor’s property or ability to perform their respective obligations under this Agreement or any of the Loan Documents.
d.
False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or Grantor or on Borrower’s or Grantor’s behalf under this Agreement or the Loan Documents is false or misleading in any material respect, or becomes so, regardless of when made.
e.
Defective Collateralization. This Agreement or any of the Loan Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.
f.
Insolvency. The dissolution of Borrower or Grantor (regardless of whether election to continue is made) or any other termination of Borrower’s or Grantor’s existence as a going concern, the insolvency of Borrower or Grantor, the appointment of a receiver for any part of Borrower’s or Grantor’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower or Grantor.
g.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self‑help, repossession or any other method, by any creditor of Borrower or Grantor or by any governmental agency against any collateral securing the Indebtedness. This includes a garnishment of any of Borrower’s or Grantor’s accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower or Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower or Grantor gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
h.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or Guarantor dies or becomes incompetent or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness


Loan No.: 20007961462    TRUSTEE AIRCRAFT SECURITY AGREEMENT    Page 10
(Continued)
    

i.
Adverse Change. A material adverse change occurs in Borrower’s or Grantor’s financial condition, or Lender believes the prospect of payment or performance of the Indebtedness is impaired.
21.
CURE. If any default, other than a default in payment, is curable and if Borrower or Grantor has not been given a notice of a breach of the same provision of this Agreement within the preceding twelve (12) months, it may be cured if Borrower or Grantor, as the case may be, after Lender sends written notice demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiates steps which Lender deems in Lender’s sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.
22.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this Agreement, at any time thereafter, Lender shall have all the rights of a secured party under the Wisconsin Uniform Commercial Code. In addition, and without limitation, Lender may exercise any one or more of the following rights and remedies:
a.
Accelerate Indebtedness. Lender may declare the entire Indebtedness, including any prepayment penalty which Borrower would be required to pay, immediately due and payable, without notice of any kind to Borrower or Grantor.
b.
Assemble Collateral. Lender may require Grantor to deliver to Lender all or any portion of the Collateral and any and all certificates of title and other documents relating to the Collateral. Lender may require Grantor to assemble the Collateral and make it available to Lender at a place to be designated by Lender. Lender also shall have full power to enter upon the property of Grantor to take possession of and remove the Collateral. If the Collateral contains other goods not covered by this Agreement at the time of repossession, Grantor agrees Lender may take such other goods, provided that Lender makes reasonable efforts to return them to Grantor after repossession.
c.
Sell the Collateral. Lender shall have full power to sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof in Lender’s own name or that of Grantor. Lender may sell the Collateral at public auction or private sale. Unless the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender will give Grantor, and other persons as required by law, reasonable notice of the time and place of any public sale, or the time after which any private sale or any other disposition of the Collateral is to be made. However, no notice need be provided to any person who, after Event of Default occurs, enters into and authenticates an agreement waiving that person’s right to notification of sale. The requirements of reasonable notice shall be met if such notice is given at least ten (10) days before the time of the sale or disposition. All expenses relating to the disposition of the Collateral, including without limitation the expenses of retaking, holding, insuring, preparing for sale and selling the Collateral, shall become a part of the Indebtedness secured by this Agreement and shall be payable on demand, with interest at the Note rate from date of expenditure until repaid.
d.
Appoint Receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the Collateral, with the power to protect and preserve the Collateral, to operate the Collateral preceding foreclosure or sale, and to collect the rents from the Collateral and apply the proceeds, over and above the cost of the receivership, against the Indebtedness or as the court may direct. The receiver may serve without bond if permitted by law. Lender’s right to the appointment of a receiver shall exist whether or not the apparent value of the Collateral exceeds the Indebtedness by a substantial amount. Employment by Lender shall not disqualify a person from serving as a receiver.


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(Continued)
    

e.
Obtain Deficiency. If Lender chooses to sell any or all of the Collateral, Lender may obtain a judgment against Borrower for any deficiency remaining on the Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided in this Agreement.
f.
Other Rights and Remedies. Lender shall have all the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, as may be amended from time to time, and the Cape Town Convention, including Articles 8, 9, 10 and 13 of the Convention.
g.
De‑Registration. Lender may exercise the Irrevocable De‑Registration and Export Request Authorization, which shall be executed and delivered to Lender upon the effectiveness of this Agreement, the form of which is provided in Exhibit A hereto, without such act waiving or reducing the Indebtedness.
h.
Remedies Non‑exclusive. Except as may be prohibited by applicable law, all of Lender’s rights and remedies, whether evidenced by this Agreement, the Loan Documents, or by any other writing, shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Grantor under this Agreement, after Grantor’s failure to perform, shall not affect Lender’s right to declare a default and exercise its remedies.
23.
INDEMNIFICATION OF LENDER. Grantor agrees to indemnify, defend and hold Lender harmless from any and all claims, suits, obligations, damages, losses, costs and expenses (including, without limitation, Lender’s attorneys’ fees), demands, liabilities, penalties, fines and forfeitures of any nature whatsoever that may be asserted against or Incurred by Lender, its officers, directors, employees, and agents arising out of, relating to, or in any manner occasioned by this Agreement and the exercise of the rights and remedies granted Lender under this Agreement. The foregoing indemnity provisions shall survive the cancellation of this Agreement as to all matters arising or accruing prior to such cancellation and the foregoing indemnity shall survive in the event Lender elects to exercise any of the remedies as provided under this Agreement following default hereunder.
24.
MISCELLANEOUS PROVISIONS.
a.
Amendments. This Agreement, together with the Loan Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.
b.
Attorneys’ Fees & Expenses. Grantor agrees to pay upon demand all of Lender’s costs and expenses, including Lender’s attorneys’ fees and Lender’s legal expenses, incurred in connection with the enforcement of this Agreement, including, without limitation, such fees and expenses incurred in non‑judicial enforcement, bankruptcy proceedings, and any judicial proceedings.
c.
Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement.
d.
Governing Law and Venue. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Wisconsin, without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of Wisconsin. Borrower and Grantor consent to the jurisdiction of the court in and for the State of Wisconsin, and agree that the exclusive venue for any action brought by or against any party arising from or relating to this Agreement shall be the courts in and for the State of Wisconsin.


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(Continued)
    

e.
Joint and Several Liability. All obligations of Borrower and Grantor under this Agreement shall be joint and several.
f.
Notices. Any notice required to be given under this Agreement, unless the form of service of notice is specified by law, shall be effective when actually delivered in writing by receipt‑confirmed facsimile transmission or receipt‑confirmed email directed to party’s designated officer responsible for administration of such party’s duties and rights associated with this Agreement, or when deposited with a nationally recognized overnight courier to the recipient party’s addresses shown in this Agreement, or when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown in this Agreement. Any party may change its address for notices under this Agreement by giving written notice to the other parties.
g.
Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.
h.
Successors and Assigns. Subject to any limitations stated in this Agreement, this Agreement shall be binding upon and inure to the benefit of the parties, their successors and authorized assigns.
i.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender’s right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Grantor, shall constitute a waiver of any of Lender’s rights or of any of Grantor’s obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.
ACCEPTED AND AGREED by and between the parties hereto.
WELL FARGO TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual capacity but solely as owner trustee
By: /s/ Hillary Pavia    
Name:    Hillary Pavia
Title:    Vice President



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(Continued)
    


CONTRAIL AVIATION SUPPORT, LLC

By: /s/ Joseph Kuhn    
Name: Joseph Kuhn    
Title: CEO    

CONTRAIL AVIATION LEASING, LLC
By CONTRAIL AVIATION SUPPORT, LLC, sole member and manager of Contrail Aviation Leasing, LLC

By: /s/ Joseph Kuhn    
Name: Joseph Kuhn    
Title: CEO    
18169579v1



Loan No.: 20007961462    TRUSTEE AIRCRAFT SECURITY AGREEMENT    Page 14
(Continued)
    


[EXHIBIT A]
To:
FAA
Aircraft Registration Branch
Oklahoma City, OK
Re: Irrevocable De‑Registration and Export Request Authorization
The undersigned is the registered owner of the Boeing model 737‑73V aircraft bearing manufacturer’s serial number 30241 (described on the pre‑populated drop down menu of the International Registry as a BOEING model 737‑700 aircraft with manufacturer’s serial number 30241) and United States registration number N710SY (together with all installed, incorporated or attached accessories, parts and equipment, the “Aircraft”).
This instrument is an irrevocable de‑registration and export request authorization issued by the undersigned in favor of OLD NATIONAL BANK (the “Authorized Party”) under the authority of Article XIII of the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment. In accordance with that Article, the undersigned hereby requests:
i.
Recognition that the Authorized Party or the person it certifies as its designee is the sole person entitled to:
a)
Procure the de‑registration of the Aircraft from the register maintained by the FAA for the purposes of Chapter III of the Convention on International Civil Aviation, signed at Chicago, on 7 December 1944; and
b)
Procure the export and physical transfer of the Aircraft from said jurisdiction; and
ii.
Confirmation that the Authorized Party or the person it certifies as its designee may take the action specified in clause (i) above on written demand without the consent of the undersigned and that, upon such demand, the authorities in the United States shall co‑operate with the Authorized Party with a view to the speedy completion of such action.
The rights in favor of the Authorized Party established by this instrument may not be revoked by the undersigned without the written consent of the Authorized Party.
Please acknowledge your agreement to this request and its terms by appropriate notation in the space provided below and filing this instrument in the FAA Aircraft Registry.
OWNER:
WELL FARGO TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual capacity but solely as owner trustee


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(Continued)
    

By: /s/ Hillary Pavia    
Name:    Hillary Pavia
Title:    Vice President











BENEFICIAL INTEREST PLEDGE AGREEMENT
MSN 30241 Trust d/a/o Aug. 22, 2016
THIS BENEFICIAL INTEREST PLEDGE AGREEMENT dated as of August 16, 2019 (this “Agreement”) is between CONTRAIL AVIATION LEASING, LLC, a Wisconsin limited liability company, as pledgor (the “Pledgor”) and OLD NATIONAL BANK, as Secured Party (the “Secured Party”).
WHEREAS, Pledgor is the sole beneficiary by assignment under that certain Trust Agreement (Aircraft MSN 30241) dated as of August 22, 2016, as assigned, assumed, amended, supplemented and/or modified from time‑to‑time between Wells Fargo Trust Company, National Association, as owner trustee (the “Owner Trustee”) and CIT Aerospace, LLC, as amended, supplemented, restated, and/or modified from time to time (the “Trust Agreement”), as assigned to it by Sapphire Finance I Holding Designated Activity Company, and by virtue thereof owns 100% of the Beneficial Interest (as defined below) in the trust created by the Trust Agreement (the “Trust”), the principal asset of which consists of one Boeing 737‑700 aircraft, bearing U.S. registration mark N710SY and manufacturer’s serial number 30241, and CFM International, Inc. model CFM56‑7B20 engines, manufacturer’s serial numbers 889727 and 889728, together with all equipment, parts, instrumentation, documentation, substitutions and proceeds thereof (the “Aircraft”); and
WHEREAS, the Pledgor has entered into a Master Loan Agreement, dated as of June 24, 2019, among the Pledgor, as a borrower, any other parties thereto (the “Participants “), and the Secured Party (the “Credit Agreement”) pursuant to which the Secured Party, as lender, agreed to make certain loans and extend certain credit facilities to Pledgor and Participants, including, but not limited to, a loan to finance the acquisition of Pledgor’s Beneficial Interest in the Aircraft. All capitalized terms used in this Agreement have the meaning ascribed to them in the Credit Agreement unless otherwise defined herein.
NOW THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the sufficiency of which is acknowledged, Pledgor and Secured Party agree as follows:
1.
Pledge. As further security for the payment and performance in full of all of the Obligations, the Pledgor hereby pledges, hypothecates, assigns, transfers, sets over, delivers and grants to the Secured Party a first priority security interest and lien in all right, title and interest of the Pledgor which presently exists or hereafter arises in, to and under the following (hereinafter, collectively, the “Pledged Collateral”):
a.
100% of the beneficial interest in the Trust under and as defined in the Trust Agreement, as amended, restated and/or otherwise modified from time‑to‑time (the “Beneficial Interest”), provided, that such Trust shall not be materially modified without Secured Party’s written consent, which will not be unreasonably withheld.
b.
all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any of or all the Beneficial Interest,
c.
all certificates or other instruments or documents representing any of the foregoing,
d.
all rights and privileges of the Pledgor with respect to the Beneficial Interest and the other property referred to in clauses (a) through (c) above, and
e.
all proceeds of any of the foregoing and any property of any character whatsoever into which any of the foregoing may be converted.
Notwithstanding the foregoing, any funds specifically designated as security deposits payable to the Owner Trustee under a relevant Lease of the Aircraft shall not be Pledged Collateral.
TO HAVE AND TO HOLD the Pledged Collateral, together with all rights, title, interests, powers, privileges and preferences pertaining or incidental thereto, unto the Secured Party, its successors and assigns permitted by the terms of the Credit Agreement; pursuant and subject to the terms, covenants and conditions hereinafter set forth.
2.
Representations and Warranties of the Pledgor. The Pledgor hereby represents and warrants:
a.
That it is a limited liability company duly formed and validly existing under the laws of the jurisdiction of its formation and has the requisite power and authority to enter into this Agreement and to carry out the transactions contemplated hereby;
b.
That Pledgor is the record owner of the Pledged Collateral, free and clear of any and all liens or claims of any other person, except for the security interest granted hereunder and the rights and remedies of the Secured Party related to such interest, and Pledgor has not pledged, hypothecated, assigned, transferred, or otherwise encumbered the Pledged Collateral other than by this Agreement.
c.
That it has duly authorized, executed and delivered this Agreement and this Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, receivership, reorganization, moratorium or other similar laws affecting creditors’ rights generally and by application of general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law);
d.
That the execution, delivery and performance by the Pledgor of this Agreement is not in violation of the Trust Agreement or any indenture, mortgage, deed of trust or other instrument or agreement to which it is a party or by which it is bound or to which any of its property or assets may be subject;
e.
That neither the execution and delivery by the Pledgor of this Agreement nor the consummation by it of any of the transactions contemplated hereby requires the consent or approval of, the giving of notice to, or the registration or filing with, or the taking of any other action in respect of, any agency or authority, except for the filing of Uniform Commercial Code financing statements (and continuations thereof) in respect of the security interests created hereby in the State of Wisconsin;
3.
Covenants of the Pledgor. The Pledgor covenants, for so long as any Obligations remain outstanding and/or unperformed (other than any contingent liabilities that continue past the termination of the Credit Agreement and the Loan Documents:
a.
Except as contemplated hereby, Pledgor will not make any sale, assignment, pledge, mortgage, hypothecation or transfer of the Pledged Collateral or the ownership interests of the Trust and, except for the interest granted hereby, Pledgor will be the sole legal owner of the Pledged Collateral, free and clear of any and all claims or liens other than the interest granted in favor of the Secured Party;
b.
As the sole beneficial owner of the Trust, Pledgor will not cause or authorize the Owner Trustee to issue any further beneficial interests of any class or description or other securities in addition to or in substitution for the Beneficial Interest; it will hold in trust and will pledge hereunder, immediately upon its acquisition (direct or indirect) thereof, any and all additional beneficial interest of any class or description or other securities of the Trust;
c.
At any time and from time to time, at no expense to the Secured Party, Pledgor will promptly execute and deliver all further instruments and documents and take all further action that Secured Party may reasonably request in order to enable Secured Party to perfect, exercise and enforce its rights and remedies hereunder, including consenting to recording of UCC‑1 financing statement(s);
d.
Pledgor shall not authorize or, to the extent within its power or control, consent to the appointment of a receiver, trustee or liquidator of the Trust or any property of the Trust, authorize the filing of a petition in bankruptcy or any other insolvency proceeding, or admit in writing submitted in connection with judicial or other similar procedures the Trust’s inability to pay its debts generally as they come due, or make a general assignment for the benefit of creditors or permit any creditor to exercise a contractual right to assume the operations or financial management of the Trust;
e.
Pledgor shall not authorize the Trust to incur any indebtedness or engage in any business other than as provided in the operative Trust Documents;
f.
When and if Pledgor receives distributions from the Trust that Pledgor is obligated to pay over or deliver to Secured Party pursuant to the Credit Agreement and the Loan Documents, it shall hold such funds in trust for the Secured Party and promptly remit such funds as Secured Party may direct;
g.
Pledgor shall defend Secured Party’s right, title and interest in and to the Pledged Collateral against the claims and demands of all third parties; and
h.
Pledgor will not amend, repeal or modify the Trust without the prior written consent of Secured Party, which will not to be unreasonably withheld, delayed or conditioned.
4.
Delivery of Assignment of Pledged Collateral. Pledgor agrees to deliver to the Secured Party on or prior to the date of acquisition by it of the Beneficial Interest, a duly executed beneficial interest transfer form in blank in the form of Exhibit A hereto.
5.
Remedies upon Default. If an Event of Default (as defined in the Credit Agreement and/or any Loan Document) shall have occurred and be continuing, the Secured Party may exercise all rights of a secured party under the Uniform Commercial Code, as enacted in any applicable jurisdiction, with respect to the Pledged Collateral.
Upon consummation of any public or private sale in the exercise of such rights, the Secured Party shall have the right to assign, transfer, endorse and deliver to the purchaser or purchasers thereof the Pledged Collateral, with or without reservations or qualifications, free from any claim or right on the part of the Pledgor. Pledgor hereby waives and releases, to the extent permitted by law, all rights of redemption, stay, appraisal, reclamation and turnover. Pledgor shall be entitled to 10 days’ prior notice of any public or private sale in exercise of Secured Party’s rights upon default. Secured Party may, without notice or publication, adjourn any public or private sale by announcement at the time and place fixed for sale, and such sale may, without further notice, occur at the time and place identified in such announcement. At any sale made pursuant to this Agreement, to the extent permitted by applicable law, the Secured Party may bid for or purchase of any or all of the Pledged Collateral by using the amount of secured obligations outstanding to it from Pledgor as a credit against the purchase price. As an alternative to exercising the power of sale herein provided, Secured Party may proceed by suit at law or in equity to foreclose this Agreement and sell the Pledged Collateral pursuant judicial order, judgment, or receivership. The proceeds of any sale of or realization upon the any part or all of the Pledged Collateral shall be applied by Secured Party in accordance with the Credit Agreement.
6.
Attorney‑in‑fact. Pledgor hereby appoints Secured Party as attorney‑in‑fact of Pledgor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument which Secured Party deems necessary or reasonable to accomplish the purposes hereof during and after any Event of Default, which appointment is granted as security for the performance of the Pledgor’s obligations hereunder and for valuable consideration, and is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, the Secured Party shall have the right, after the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Secured Party’s name or in the name of the Pledgor, to settle, compromise, prosecute or defend any action, claim or proceeding with respect to the Pledged Collateral and shall have the right to sell, assign, endorse, pledge, transfer and make any agreement respecting, or otherwise deal with, the same.
7.
Cooperation. From an after any Event of Default, Pledgor agrees to use commercially reasonable efforts to do or cause to be done all such other acts as may be necessary to make any sale of the Pledged Collateral or any portion thereof pursuant to this Agreement valid, binding and in compliance with applicable laws.
8.
Limitation of Liability. Neither Secured Party nor any director, officer, employee or counsel of Secured Party shall be liable for any act or omission by them relating to the Pledged Collateral except for its or their gross negligence or willful misconduct.
9.
Notices. All notices required by this Agreement shall be given in the same manner set forth in the Credit Agreement.
10.
No Waiver. No failure on the part of the Secured Party or any of its agents to exercise any right, power or remedy hereunder shall operate as a waiver thereof or of any other right, power or remedy available pursuant to this Agreement, the Credit Agreement, or any other instrument associated therewith.
11.
Termination. Upon payment in full of all Obligations, this Agreement shall terminate and the Secured Party will execute and deliver to the Pledgor an instrument acknowledging the satisfaction, release and termination of this Agreement any other instrument reasonably requested by the Pledgor in connection with the foregoing.
12.
Miscellaneous.
a.
This Agreement shall be governed, interpreted and enforced according to the same law made applicable by the terms of the Credit Agreement.
b.
This Agreement and the terms, covenants and conditions hereof shall be binding upon and inure to the benefit of the parties hereto and all holders of the Obligations and their respective successors and permitted assigns, except that the Pledgor shall not be permitted to assign, delegate or otherwise transfer this Agreement or any rights or interests herein or in the Pledged Collateral or any part thereof, or otherwise to pledge, encumber or grant any option with respect to the Pledged Collateral or any part thereof. The Pledgor shall not be permitted to delegate any of its duties or obligations hereunder.
c.
No term or provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the parties hereto.
d.
If any provision hereof is determined to be invalid or unenforceable in any applicable jurisdiction, the other provisions hereof shall remain in full force and effect, the affected provisions shall be reformed to make them enforceable to the fullest extent permitted by applicable law, and such invalidity or unenforceability shall not affect the validity or enforceability of such provision in any other jurisdiction.
e.
Section headings used herein are for convenience only and are not substantive in interpreting this Agreement.
f.
This Agreement may be executed in separate counterparts each of which when so executed and delivered shall be an exchangeable original, but all such counterparts shall together constitute but one and the same agreement.
g.
This Agreement constitutes the entire agreement of the Pledgor and the Secured Party with respect to the subject matter hereof, and supersedes any prior or contemporaneous understandings or agreements concerning the same subject matter.
IN WITNESS WHEREOF, each of the parties hereto has caused this Beneficial Interest Pledge Agreement to be duly executed as of the day and year first above written.
PLEDGOR:
CONTRAIL AVIATION LEASING, LLC
By: /s/ Joseph Kuhn    
Its: CEO    
SECURED PARTY:
OLD NATIONAL BANK
By: /s/ Tommy Olson    
Its: SVP    

18169131v1







EXHIBIT A
ASSIGNMENT OF BENEFICIAL INTEREST OF TRUST
This Assignment is made this 16th day of August , 2019, pursuant and in furtherance of that certain Beneficial Trust Interest Pledge Agreement of even date herewith (the “Pledge Agreement”).
The undersigned, for valuable consideration received, hereby assigns to Old National Bank (“Lender”) all right, title and beneficial interest, including the power of direction and revocation, under that certain Trust Agreement (Aircraft MSN 30241), dated as of August 22, 2016, as assigned, assumed, amended, supplemented and/or modified from time‑to‑time between Wells Fargo Trust Company, National Association (“Trustee”) and Contrail Aviation Leasing, LLC (hereinafter “Trust Agreement”) , known as Aircraft MSN 30241 Trust, inclusive of any amendments, addenda or restatements thereof. The below‑named Grantor/Beneficiary hereby affirms and warrants (a) that the beneficial interest assigned herein is 100% of the beneficial interest of the trust created by the Trust Agreement, (b) that said beneficial interest has not been granted, transferred, pledged or hypothecated to any other person, (c) that the Grantor/Beneficiary has full power and authority to assign and transfer said interest, (d) that the Trust Agreement, inclusive of any and all amendments, addenda or restatements thereof, does not prohibit such assignment, and (e) that Lender, upon the effectiveness of this Assignment, shall be entitled to exercise all rights of Grantor as beneficiary of the Trust Agreement, including, without limitation, the right to receive all monies due or to become due to the beneficiary of the Trust Agreement. Trustee and any third party shall be entitled to rely solely upon notice by the Lender/Assignee as conclusively establishing the effectiveness of this Assignment following any uncured event of default arising under any of the Loan Documents as such term is defined in the Pledge Agreement.
Grantor/Beneficiary
CONTRAIL AVIATION LEASING, LLC
By: /s/ Joseph Kuhn    
Its: CEO    
STATE OF Wisconsin    )
COUNTY OF Dane    ) ss.
Before me personally appeared the above‑named individual, known to me to be the person described in and who executed the foregoing instrument in the capacity so indicated, and acknowledged to and before me that he executed said instrument being duly authorized to do so in the capacity so indicated and for the purposes therein expressed.
The below‑identified Lender/Assignee accepts, as of the date hereinafter stated, the above‑made Assignment subject to all terms and conditions of the Trust Agreement and all amendments, addendums or restatements thereof of which it has actual notice, inclusive.
Lender/Assignee
OLD NATIONAL BANK
By: /s/ Tommy Olson    
Its: SVP    
Its: CEO    
Date: 08/18/19    

ASSIGNMENT OF BENEFICIAL INTEREST OF TRUST
This Assignment is made this 16th day of August , 2019, pursuant and in furtherance of that certain Beneficial Trust Interest Pledge Agreement of even date herewith (the “Pledge Agreement”).
The undersigned, for valuable consideration received, hereby assigns to Old National Bank (“Lender”) all right, title and beneficial interest, including the power of direction and revocation, under that certain Trust Agreement (Aircraft MSN 30241), dated as of August 22, 2016, as assigned, assumed, amended, supplemented and/or modified from time‑to‑time between Wells Fargo Trust Company, National Association (“Trustee”) and Contrail Aviation Leasing, LLC (hereinafter “Trust Agreement”) , known as Aircraft MSN 30241 Trust, inclusive of any amendments, addenda or restatements thereof. The below‑named Grantor/Beneficiary hereby affirms and warrants (a) that the beneficial interest assigned herein is 100% of the beneficial interest of the trust created by the Trust Agreement, (b) that said beneficial interest has not been granted, transferred, pledged or hypothecated to any other person, (c) that the Grantor/Beneficiary has full power and authority to assign and transfer said interest, (d) that the Trust Agreement, inclusive of any and all amendments, addenda or restatements thereof, does not prohibit such assignment, and (e) that Lender, upon the effectiveness of this Assignment, shall be entitled to exercise all rights of Grantor as beneficiary of the Trust Agreement, including, without limitation, the right to receive all monies due or to become due to the beneficiary of the Trust Agreement. Trustee and any third party shall be entitled to rely solely upon notice by the Lender/Assignee as conclusively establishing the effectiveness of this Assignment following any uncured event of default arising under any of the Loan Documents as such term is defined in the Pledge Agreement.
Grantor/Beneficiary
CONTRAIL AVIATION LEASING, LLC
By: /s/ Joseph Kuhn    
Its: CEO    
STATE OF Wisconsin    )
COUNTY OF Dane    ) ss.
Before me personally appeared the above‑named individual, known to me to be the person described in and who executed the foregoing instrument in the capacity so indicated, and acknowledged to and before me that he executed said instrument being duly authorized to do so in the capacity so indicated and for the purposes therein expressed.
The below‑identified Lender/Assignee accepts, as of the date hereinafter stated, the above‑made Assignment subject to all terms and conditions of the Trust Agreement and all amendments, addendums or restatements thereof of which it has actual notice, inclusive.
Lender/Assignee
OLD NATIONAL BANK
By: /s/ Tommy Olson    
Its: SVP    
Its: CEO    
Date: 08/16/19    

18169092v1



CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.




EXECUTION VERSION












DATED AS OF 2 AUGUST 2019







SAPPHIRE LEASING I (AOE 5) LIMITED
as Seller

SAPPHIRE FINANCE I HOLDING DESIGNATED ACTIVITY COMPANY
as Seller Guarantor

WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED, not in its individual capacity, but solely as owner trustee
as Buyer and
CONTRAIL AVIATION SUPPORT, LLC
as Buyer Guarantor







AIRCRAFT ASSET SALE AND PURCHASE AGREEM ENT

relating to the sale and purchase of

one (1) Boeing B737-800 Aircraft with Manufacturer's Serial Number 29922




Contents

Clause    Name    Page
1
Interpretation    1
2
Representations and Warranties    1
3
Agreement to sell and purchase    2
4
Conditions Precedent/Termination of other Agreements    4
5
Purchase Price and Modifications     5
6
Delivery     8
7
Condition of Aircraft    9
8
Further Provisions    11
9
Law and Jurisdiction     16
10
Brokers and other Third Parties     1
Schedule    Name    Page
1
Aircraft     19
2
Lease Documents    20
3
Definitions        21
4
Conditions Precedent        25
4    Part 1 Seller Conditions Precedent        25
4
Part 2 Buyer Conditions Precedent    26
5
Representations and Warranties        28
5    Part 1 Seller's Representations and Warranties    28
5
Part 2 Buyer's Representations and Warranties    29
6
Bill of Sale        31
7
Acceptance Certificate        33
8
Form of Third Aircraft Lease Amendment Agreement    35




DATED AS OF 2 August 2019 PARTIES
(1)
SAPPHIRE LEASING I (AOE 5) LIMITED, a company incorporated under the laws of Ireland whose registered office is c/o PAFS Ireland Limited, Shannon Business Park, Shannon, Co. Clare, Ireland ("Seller");

(2)
SAPPHIRE FINANCE I HOLDING DESIGNATED ACTIVITY COMPANY, a designated activity company limited by shares incorporated under the laws of the Ireland and whose registered office is Number One Ballsbridge, Building 1, Shelbourne Road, Ballsbridge, Dublin 4, Ireland ("Seller Guarantor");

(3)
WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED, not in its individual capacity, but solely as owner trustee, and having its principal place of business at Fourth Floor, 3 George’s Dock, IFSC, Dublin 1, D01 X5X0, Ireland("Buyer"); and

(4)
CONTRAIL AVIATION SUPPORT, LLC, a limited liability company organized under the laws of the State of North Carolina and having its principal place of business at 435 Investment Court, Verona, Wisconsin 53593 ("Buyer Guarantor").

IT IS AGREED as follows

1
INTERPRETATION

1.1
Definitions

In this Agreement capitalised words and expressions have the meaning specified in Schedule 3 (Definitions), except where the context otherwise requires.

1.2
Construction

Headings are to be ignored in construing this Agreement and unless the contrary intention is stated, a reference to:

(a)
each of "Seller", "Buyer" or any other Person includes, without prejudice to the provisions of this Agreement or any Transaction Document restricting transfer or assignment, any permitted successor, transferee or assignee;

(b)
words importing the plural shall include the singular and vice versa;

(c)
any document, other than the Lease Documents, shall include that document as amended, novated, assigned or supplemented;

(d)
a Clause or a Schedule is a reference to a clause of or a schedule to this Agreement; and

(e)
any Law, or to any specified provision of any Law, is a reference to such Law or provision as amended, substituted or re-enacted.

2
REPRESENTATIONS AND WARRANTI ES

2.1
Seller Representations and Warranties

Seller represents and warrants to Buyer with respect to itself and the Asset being sold by it that the statements contained in Schedule 5, Part 1(Seller's







Representations and Warranties) are at the date hereof, and on the Delivery Date will be (by reference to the facts and circumstances then subsisting), true and accurate.

2.2    Buyer Representations and Warranties

Buyer represents and warrants to Seller that the statements contained in Schedule 5, Part 2 ( Buyer's Representations and Warranties) are at the date hereof, and on the Delivery Date will be (by reference to the facts and circumstances then subsisting), true and accurate.

3
AGREEMENT TO SELL AND PURCHASE

3.1
Agreement

Subject to and in accordance with the provisions of this Agreement and the other Transaction Documents:

(a)
Seller agrees to sell the Asset to Buyer, and Buyer agrees to purchase the Asset from Seller in an "as is, where is" condition; and

(b)
Seller shall pass to Buyer on the Delivery Date good and marketable title in and to the Asset with full title guarantee, free and clear of all Security Interest other than the Lease and any Permitted Liens. Title to the Asset shall pass to Buyer in accordance with Clause 6.1 (Delivery),

provided that, for the avoidance of doubt, Seller shall not be under any obligation hereunder to transfer, sell, assign, convey or deliver any Excluded Property to Buyer. From and after Delivery, Seller shall be released from all obligations under the Lease Documents (to the extent applicable) except for such liabilities, claims against and obligations of Seller under any of the Lease Documents arising solely as a result of events or circumstances occurring prior to the Delivery; and from and after Delivery, Buyer shall assume all of the other liabilities and obligations of Seller under the Lease Documents.

3.2
Registration

In accordance with the provisions of the Transfer Agreement in respect of the Asset, the Seller and Buyer shall deliver, or procure that the Lessee delivers, to the Aviation Authority such documents required to be delivered by it in order to register the Aircraft in the name of Buyer as owner, on the aircraft register maintained by the Aviation Authority.

3.3
Security Interests; Condition at Delivery

3.3.1
The Asset shall as of the Delivery Date be delivered to Buyer in, and the Aircraft shall as of Delivery Date be in, "as is, where is" condition and shall be free and clear of all Security Interests other than the Lease and Permitted Liens.

3.4
Passage of Title and Risk

Risk of loss or destruction of the Aircraft and related Asset shall pass to Buyer upon Delivery in respect of the Asset.




3.5
Inspection

3.5.1
IBuyer elects to inspect the Aircraft, the obligation of Buyer to purchase the related Asset shall be subject to completion of a satisfactory inspection of the Aircraft in accordance with Clause 3.5.2 on or prior to the Inspection Completion Date.

3.5.2
At Buyer's request, the Seller shall use reasonable efforts to procure Lessee's cooperation to facilitate a physical inspection of the Aircraft (including for the avoidance of doubt, the Aircraft Documents which are in the Seller's possession or as otherwise made available by the Lessee, including but not limited to back-to-birth records) by Buyer. If Buyer elects to inspect the Aircraft, Buyer (or its representative(s)) shall perform a general visual inspection of the Aircraft in the presence of the Seller (or its representative(s)) as soon as reasonably practicable after the execution of this Agreement and in any event on or before the Inspection Completion Date. Any such inspection shall be carried out in accordance with the terms of the Lease and this Agreement. Buyer shall promptly notify Seller (and in any event within five (5) Business Days following completion of such inspection) if, following inspection, the Buyer is not satisfied with its inspections (acting in good faith), whereupon Buyer and Seller shall enter into good faith discussions with a view to mutually agreeing a resolution to such unsatisfactory conditions which were identified during such inspection.

3.5.3
If, following good faith discussions in accordance with Clause 3.5.2, such unsatisfactory condition cannot be resolved to the satisfaction of Buyer, Buyer may terminate its obligation to purchase the Asset from the Seller by written notice to Seller, whereupon, (i) none of the parties hereto shall have any further obligation or liability with respect to the Asset under this Agreement to any of the other parties hereto; and (ii) the Seller shall return the Commitment Fee to Buyer within five (5) Business Days from the date of such notice from Buyer.

3.5.4
Buyer hereby confirms that it has received copies of all the Lease Documents for the Asset and has completed its review thereof, and confirms as of the date hereof to Seller that such Lease Documents are satisfactory in all respects to Buyer. Buyer acknowledges that Buyer has no rights or claims whatsoever against either Seller or the Lessor, in each case in respect of the terms of the Lease Documents (other than as expressly set out in to Clause 2.1 (Seller Representations and Warranties) of this Agreement).

3.6
Total Loss and Material Damage

3.6.1
If before Delivery of the Asset has been completed pursuant to this Agreement, the Aircraft suffers a Total Loss or damage with a repair cost in excess of $[ ] ("Material Damage"), then the Seller shall, promptly after it has become aware of such Total Loss or Material Damage, notify Buyer in writing of such Total Loss or Material Damage and effective upon the issuance of such notice, the rights and obligations of the parties hereunder and under any other Transaction Documents in respect of the Aircraft suffering a Total Loss or Material Damage and the Asset shall be discharged so that no party shall have any further obligation or liability to any other party in respect of such Aircraft or Asset, save that the Seller shall pay to Buyer the Commitment Fee in respect of such Asset within five (5) Business Days from such notice. For the avoidance of doubt, Seller shall be entitled to receive and retain any insurance proceeds which are paid in relation to the Total Loss.




4
CONDITIONS PRECEDENT/TERMINATION OF OTHER AGREEMENTS

4.1
Seller Conditions

4.1.1
The obligation of Seller to sell the Asset to Buyer shall be subject to fulfilment of each of the Seller Conditions Precedent on or prior to the Delivery Date (except to the extent that the Seller agrees in writing in its absolute discretion to waive or defer any such condition).

4.1.2
The Seller Conditions Precedent have been inserted for the benefit of the Seller and may be waived in writing, in whole or in part and with or without conditions, by the Seller without prejudicing the right of the Seller to receive fulfilment of such conditions, in whole or in part, at any later time.

4.1.3
If any of the Seller Conditions Precedent remain outstanding on the Final Delivery Date and are not waived or deferred in writing by the Seller, then Seller may at any time after 5pm New York time on the Final Delivery Date terminate its obligation to sell the Asset to Buyer by written notice to Buyer, whereupon none of the parties hereto shall have any further obligation or liability with respect to Asset under this Agreement to any of the other parties hereto except with respect to return of the Commitment Fee, if applicable.

4.2
Buyer Conditions

4.2.1
The obligation of Buyer to purchase the Asset shall be subject to fulfilment of the Buyer Conditions Precedent on or prior to the Delivery Date (except to the extent that Buyer agrees in writing in its absolute discretion to waive or defer any such condition).

4.2.2
The Buyer Conditions Precedent have been inserted for the benefit of Buyer and may be waived in writing, in whole or in part and with or without conditions, by Buyer without prejudicing the right of Buyer to receive fulfilment of such conditions, in whole or in part, at any later time.

4.2.3
If any of the Buyer Conditions Precedent remain outstanding on the Final Delivery Date and are not waived or deferred in writing by Buyer, then Buyer may at any time after 5pm New York time on the Final Delivery Date terminate its obligation to purchase the Asset from the Seller by written notice to Seller, whereupon none of the parties hereto shall have any further obligation or liability with respect to the Asset under this Agreement to any of the other parties hereto except with respect to return of the Commitment Fee, if applicable.

4.3
Breach

4.3.1
IIf at any time Buyer, Buyer Guarantor, Seller, or Seller Guarantor (as applicable) breaches this Agreement then (i) Seller (in the case of a breach by Buyer or Buyer Guarantor) shall be entitled by written notice to Buyer, or (ii) Buyer (in the case of a breach by Seller or Seller Guarantor) shall be entitled by written notice to Seller, to terminate this Agreement, whereupon (A) none of the parties hereto shall have any further obligation or liability hereunder; and (B) this Agreement shall be terminated except with respect to obligations concerning the return of the Commitment Fee, if applicable.

4.3.2
If, at any time prior to (x) the Delivery contemplated hereunder and (y) the delivery of the asset pursuant to the Sun Country SPA, any party to the Sun Country SPA breaches the Sun Country SPA then (i) Seller (in the case of a breach by ‘Buyer’ or ‘Buyer Guarantor’ under the Sun Country SPA) shall be entitled by written notice to







Buyer, or (ii) Buyer (in the case of a breach by 'Seller' under the Sun Country SPA) shall be entitled by written notice to Seller, to terminate this Agreement, whereupon
(A) none of the parties thereto shall have any further obligation or liability thereunder; and (B) this Agreement shall be terminated except with respect to obligations concerning the return of the Commitment Fee, if applicable. For any termination pursuant to this Clause 4.3.2 to be valid and effective, the written notice to terminate both this Agreement and the Sun Country SPA must be given to the respective parties thereto simultaneously.

5
PU RCHASE PRICE AND MODIFICATIONS

5.1
Amount

5.1.1
The base purchase price for the Asset shall be the amount specified in Schedule 1 (Aircraft and Sale/Purchase Details) (the "Base Purchase Price").

5.1.2
The Base Purchase Price payable for the Asset shall, if applicable, be adjusted in accordance with Clause 5.2 (Amount of Purchase Price).

5.2
Amount of Purchase Price

5.2.1
If Delivery of the Asset occurs after the Economic Closing Date, the Base Purchase Price of the Asset shall be:

(a)
increased by an amount equal to [ ] percent ([ ]%) per annum of the Base Purchase Price (calculated based on a 30/360 day count basis) for the period commencing on (and including) the day immediately succeeding the Economic Closing Date and ending on (and including) the day immediately preceding the Delivery Date, pro-rated for the number of days elapsed in such period; and

(b)
decreased by an amount equal to the Rent in respect of the Aircraft that accrued to or was received by the Lessor under the Lease in respect of the period commencing on (and including) the day immediately succeeding the Economic Closing Date and ending on (and including) the day immediately preceding the Delivery Date.

5.3
Payment of Purchase Price

5.3.1
Subject to the provisions of this Agreement, on the Delivery Date, Buyer shall cause the Escrow Agent to pay to the Seller the Net Purchase Price for the Asset contemporaneously with the release of the Transaction Document(s) to Buyer.

5.4
Payments

5.4.1
All payments by any party to any other party under this Agreement and the other Transaction Documents will be made for value on the due date in US Dollars and in immediately available funds by wire transfer to:
(a)
in the case of Seller:



Bank Name: SWIFT: ABA:
For credit to: Account No.: Quote Ref:




Wells Fargo Bank, N.A.
[ ]
[ ]
Corporate Trust Lease Group
[ ]
FFC [ ], MSN 29922






or such other account as Seller may from time to time advise to Buyer by not less than five (5) Business Days' prior written notice; and
(b)
in the case of Buyer:


Bank:
SWIFT Code: ABA No.:
Account Number: Account Name: Payment Reference:

Old National Bank
[ ]
[ ]
[ ]
Contrail Aviation Leasing, LLC MSN 29922


or such account as Buyer may from time to time advise Seller by not less than five (5) Business Days' prior written notice.

5.4.2
No payment shall be considered made by a party hereto until it is received in the account of the relevant other party pursuant to Clause 5.4.1. Promptly upon becoming aware of receipt of the Purchase Price, the Seller will confirm receipt to Buyer.

5.4.3
The time of payment shall be of the essence of this Agreement.

5.5
No Withholdings

5.5.1
Save as specifically provided in Clause 5.7.3, all payments in respect of the Purchase Price of the Asset made or to be made by Buyer under this Agreement shall be made in full without set off or counterclaim whatsoever.

5.5.2
All payments to be made under this Agreement and the other Transaction Documents by any of the parties hereto or thereto shall be made in full without any deduction or withholding in respect of Taxes or otherwise unless the deduction is required by Law, in which event such paying party shall:

(a)
ensure that the deduction or withholding does not exceed the minimum amount legally required;

(b)
promptly pay to the other party entitled to receive the relevant payment such additional amount so that the net amount received by such other party will equal the full amount which would have been received by it had no such deduction or withholding been made;

(c)
pay to the relevant taxation authority or other authorities within the period for payment permitted by Law the full amount of the deduction or withholding (including, but without prejudice to the generality of the foregoing, the full amount of any deduction or withholding from any additional amount paid pursuant to this sub-clause); and

(d)
if requested, provide such other party, within the period for payment permitted by the relevant Law, with an official receipt of the relevant taxation authorities involved in respect of all amounts so deducted or withheld or if such receipts are not issued by the taxation authorities concerned on payment to them of



amounts so deducted or withheld, a certificate of deduction or equivalent evidence of the relevant deduction or withholding.




5.6
Taxes and Tax Reporting

5.6.1
All sales, use, excise, customs, consumption, registration, documentary, property, stamp, transfer, value added, gross receipts or other similar taxes, duties, fees, levies, imposts, charges deductions or withholdings, together with any assessments, surcharges, penalties, fines, additions to tax or interest thereon, but excluding any taxes, duties or fees imposed on, based on or measured by the net income, profits, or capital gains of Seller (collectively, "Transfer Taxes"), however or wherever imposed (whether imposed upon Buyer, Seller, the Asset or on all or part of the Aircraft or the Engines) by any Government Entity or taxing authority in connection with the sale or purchase of the Asset under this Agreement, the execution of any Transaction Document or the transactions contemplated thereby shall be for the sole cost and account of Buyer and Buyer shall, on demand of Seller, indemnify and hold harmless, on an after-Tax basis, Seller from and against any and all such Transfer Taxes and any liability in respect thereof.

5.6.2
If any Transfer Taxes are payable (or assessed or imposed by the relevant taxing authority) in respect of any amount payable by Buyer under this Agreement, then Buyer must (promptly on request by Seller) pay all such Transfer Taxes and indemnify Seller, as applicable, against any claims for the same, including, without limitation, attorneys' fees and all other legal expenses incurred in advising on and defending any such claims (and where appropriate, Buyer shall increase the payments which would otherwise be required to be made hereunder so that the Seller is left in the same position as Seller would have been in had no Transfer Tax been payable) and Buyer shall provide evidence to Seller, if available, in respect of payment of any such Transfer Tax. For the avoidance of doubt, all amounts payable under the Transaction Documents are stated exclusive of value added tax, sales taxes or any similar tax or duty.

5.7
Commitment Fee, Security Deposit, and Prepaid Rent

5.7.1
The Seller hereby acknowledges receipt of the LOI Amount. Buyer shall pay the balance of the Commitment Fee, taking into account the payment of the LOI Amount, immediately upon execution of this Agreement. The Commitment Fee shall only be refunded to Buyer, free and clear of any set-off, counterclaim or any other deduction and within five (5) Business Days of written request from Buyer, if one or more of the following events or circumstances occurs:

(a)
the Aircraft suffers a Total Loss;

(b)
Seller breaches its obligation(s) under this Agreement and as a consequence Buyer exercises its right to terminate this Agreement pursuant to Clause 4.3.1;

(c)
'Seller' under the Sun Country SPA breaches its obligation(s) under the Sun Country SPA and as a consequence 'Buyer' under the Sun Country SPA exercises its rights to terminate this Agreement and the Sun Country SPA pursuant to Clause 4.3.2; or

(d)
Delivery of the Asset fails to occur before the Final Delivery Date, save where such failure is caused by Buyer's breach of its obligation(s) under this Agreement.

5.7.2
The Seller shall, on Delivery of the Asset, procure that the following amounts related to the Asset are paid to Buyer: any Prepaid Rent, Maintenance Reserves, and Security Deposit to the extent then held by Lessor or Seller at the Delivery Date.




5.8    Late Receipt of Rent

IIf after Delivery has occurred in relation to the Asset, the Lessor receives from the Lessee in respect of the Asset any amount of Rent payable by Lessee pursuant to the Lease (notwithstanding the Transfer Agreement), the Seller shall procure that such Rent is promptly and, in any case, within five (5) Business Days, paid to Buyer (or at the request of Buyer, to the Lessor) and pending such payment the same shall be held in trust for Buyer.

5.9
Escrow Agreement and Netting Letter

5.9.1
To facilitate payment on the Delivery Date in respect of the Asset, Buyer, Seller and Escrow Agent will enter into an Escrow Agreement to facilitate payment of the Net Purchase Price and release of the relevant Transaction Documents to Buyer. The Buyer's obligation under Clause 5.3.1 shall be deemed satisfied when the Seller receives the Net Purchase Price from Escrow Agent. To further facilitate payment on the Delivery Date, the Buyer, the Seller and the Lessor will enter into a netting letter (a "Netting Letter") such that an amount equal to the sum of the following related to the Asset:

(a)
the Commitment Fee;

(b)
any Maintenance Reserves;

(c)
any Security Deposit; and

(d)
any Prepaid Rent,

shall be netted from the Purchase Price. The amount calculated pursuant to the prior sentence is referred to herein as the "Net Purchase Price". When Seller receives the Net Purchase Price from the Escrow Agent in satisfaction of the Buyer's obligation under Clause 5.3.1, the Seller shall be deemed to be discharged of its obligation under Clause 5.7.2 to procure the payment of the relevant amount to Buyer.

5.10    Maintenance Reserve Claims

Buyer and Seller hereby agree that, unless otherwise represented by Seller in Schedule 5 hereto, from and after the Delivery Date, Seller shall have no liability to Lessee or Buyer for any Maintenance Reserve Claim and all Maintenance Reserves (in accordance with Clause 5.9.1(b) hereof), except in the event of a breach of the representations regarding Maintenance Reserve Claims under Schedule 5 by the Seller in which case the Seller shall be liable to the extent of such breach.

6
DELIVERY

6.1
Delivery

Subject to satisfaction (or waiver or deferral with the agreement in writing of the Seller) of the Seller Conditions Precedent, the Seller shall tender the Asset for Delivery and effect the transfer to Buyer of good and marketable title in and to such Asset with full title guarantee, on the Delivery Date by execution and delivery to Buyer of a Bill of Sale.

Simultaneously with the delivery of a Bill of Sale, good and marketable title in and to the Asset will pass, with full title guarantee, from the Seller to Buyer, free and clear of



all Security Interests other than the Lease and any Permitted Liens, but Buyer acknowledges that the Aircraft (including the Aircraft Documents) will, upon and




following such transfer, remain in the possession of the Lessee and the Seller shall not be obliged to give or effect physical delivery of the Aircraft (including the Aircraft Documents) to Buyer. The Buyer's acceptance of the transfer of the Asset contemplated hereby shall be evidenced by its signature to the Acceptance Certificate.

6.2
Delivery Date

The parties hereto shall each use all commercially reasonable efforts to ensure that Delivery takes place while the Aircraft: is at the Delivery Location on or about the Target Transfer Date but in any event no later than the Final Delivery Date.

7
CONDITION OF AIRCRAFT

7.1
Disclaimers

7.1.1
THE ASSET IS BEING SOLD AND DELIVERED WHILE THE RELATED AIRCRAFT, EACH RELATED ENGINE AND EACH RELATED PART IS "AS IS" AND "WHERE IS", AND WITHOUT ANY REPRESENTATION, GUARANTEE OR WARRANTY OF SELLER EXPRESS OR IMPLIED, OF ANY KIND, ARISING BY LAW OR OTHERWISE EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT (AND THE BILL OF SALE); AND

7.1.2
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING BUYER UNCONDITIONALLY AGREES THAT AS BETWEEN ITSELF, AND THE SELLER THAT THE ASSET IS TO BE SOLD AND PURCHASED WHILE ITS RELATED AIRCRAFT, EACH RELATED ENGINE AND EACH RELATED PART THEREOF IS IN AN "AS IS, WHERE IS" CONDITION AS AT THE DELIVERY DATE, AND NO TERM, CONDITION, WARRANTY, REPRESENTATION OR COVENANT OF ANY KIND HAS BEEN ACCEPTED, MADE OR IS GIVEN BY SELLER OR ITS SERVANTS OR AGENTS IN RESPECT OF THE AIRWORTHINESS, VALUE, QUALITY, DURABILITY, DATE PROCESSING, CONDITION, DESIGN, OPERATION, DESCRIPTION, MERCHANTABILITY OR FITNESS FOR USE OR PURPOSE OF AIRCRAFT, ANY ENGINE OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT, INHERENT OR OTHER DEFECTS (WHETHER OR NOT DISCOVERABLE), AS TO THE COMPLETENESS OR CONDITION OF ANY AIRCRAFT DOCUMENTS, OR AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, COPYRIGHT, DESIGN, OR OTHER PROPRIETARY RIGHTS; AND EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE BILL OF SALE, ALL CONDITIONS, WARRANTIES AND REPRESENTATIONS (OR OBLIGATION OR LIABILITY, IN CONTRACT OR IN TORT) IN RELATION TO ANY OF THOSE MATTERS, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, ARE EXPRESSLY EXCLUDED.

7.2
Acceptance Certificate

Delivery of the Acceptance Certificate by Buyer to Seller shall be conclusive proof as between each of the parties hereto that Buyer has examined and investigated the Asset and related Aircraft: and each part thereof and that such Asset and such Aircraft and each part thereof is in every way satisfactory to Buyer.

7.3
Lessee and the Lease; Transfer Agreements

7.3.1
Buyer hereby confirms that it has completed its due diligence in relation to the Lease Documents with respect to the Asset and that it is satisfied in all respects with the Lease Documents with respect to the Asset. Without prejudice to any



representation and/or warranty made to Buyer in this Agreement or any other Transaction Document by Seller, Buyer acknowledges that it has been and will be solely responsible for making its own independent investigation and appraisal of the operations, financial condition, creditworthiness, status and affairs of Lessee, and of the provisions of the Lease and the other Lease Document in respect of the Asset, and has not relied, and will not at any time rely, on the Seller:

(a)
to provide Buyer with any information relating to any such matters; or

(b)
to check or enquire into the adequacy, accuracy or completeness of any information provided by Lessee pursuant to or in relation to the Lease or the other Lease Documents applicable to the Asset or Lessee; or

(c)
to assess or keep under review any of such matters.

7.3.2
Buyer and Seller shall act reasonably and in good faith to negotiate the terms of a Transfer Agreement with the Lessee with the intention of executing them as soon as possible and, in any event, with the understanding that they must be fully executed before the Final Delivery Date; provided that, notwithstanding any other term herein, neither party shall be obligated to execute a Transfer Agreement unless the Lessee has agreed to commercially reasonable terms. No Transfer Agreement shall materially increase any Lessee's liabilities or obligations under the Lease, based on current laws in effect at the time of the Delivery; provided that an increase in the number of indemnified parties or additional insureds shall not constitute or be considered as contributing to an increase in Lessee's obligations thereunder.

7.4
Liability Insurance

7.4.1
With effect from Delivery of the Asset, Buyer agrees for the benefit of each Additional Insured in respect of the Asset that:

(a)
Buyer shall use commercially reasonable efforts to procure that for a period of two (2) years after the Delivery Date (or, if earlier, until the next heavy maintenance check of the Aircraft is performed or such Lease is terminated) in respect of the Aircraft, that Lessee shall name the Seller, and all other Additional insureds in respect of such Aircraft as additional insureds on any liability insurance (and reinsurance) in respect of such Aircraft pursuant to the Lease; and

7.4.2
If (a) the Lease in respect of the Asset is terminated, including as a result of redelivery at the end of the Lease term, (b) Buyer sells the Asset or Aircraft to any Person or (c) Lessee fails to perform any of its obligations under the Lease in relation to liability insurance for such Aircraft (including any obligation to name an Additional Insured in respect of such Aircraft on the liability insurance), then Buyer shall notify the Seller in writing of any such event or circumstance promptly upon becoming aware of it. Notwithstanding any other term under this Section 7.4, if the Aircraft has been permanently removed from service, then Buyer's sole insurance obligation shall be to maintain product liability insurance coverage in favour of the Additional Insureds for an amount not less than ten million Dollars ($10,000,000). If the Asset has not been permanently removed from service, for a period of two (2) years after the Delivery Date (or, if earlier, until the next heavy maintenance check of the Aircraft is performed on that Aircraft), Buyer shall maintain or procure that there is maintained Aircraft Third Party, Property Damage, Passenger, Baggage, Cargo and Mail and Airline General Third Party (including Products) Legal Liability insurance in respect of the Aircraft for a combined single limit (bodily injury/property damage) of an amount not less than five hundred million Dollars ($500,000,000) for any one occurrence and in the aggregate



in respect to products liability with the Additional Insureds in respect of the Aircraft each named as an additional insured. With effect from Delivery of the Asset, the Buyer shall, on the request of the Seller, deliver to such Seller in respect of the Asset a copy of the certificate of insurance in respect of the related Aircraft and in respect of the insurance referred to in Clause 7.4.1, and upon expiration or cancellation of any such certificate, shall on request by the Seller, promptly provide such Seller with a copy of any renewal or replacement certificate thereof in respect of the insurance (and reinsurance) referred to in Clause 7.4.1.

8
FURTHER PROVISIONS

8.1
Benefit of Agreement

No party shall assign or transfer all or any of its rights and/or obligations under this Agreement without the prior written consent of Seller (in the case of any assignment or transfer by Buyer) or Buyer (in the case of any assignment or transfer by a Seller), except that Buyer may, without the prior written consent of any Seller, assign all or any of its rights under the Transaction Documents to any financier to whom Buyer, its shareholder or its affiliate has granted a Security Interest in the Asset and/or the related Aircraft or related Lease.

8.2
Counterparts

This Agreement may be executed in any number of separate counterparts and each counterpart shall when executed and delivered be an original document but all counterparts shall together constitute one and the same instrument.

8.3    Waivers and Variation

Rights of a party arising under this Agreement or the general law shall not be waived or varied unless done expressly in writing and only then in that specific case, on that specific occasion and on any terms specified.

8.4    Third Party Rights

A Person who is not a party to this Agreement has no direct right under this Agreement or otherwise to enforce any term of this Agreement nor to object or be consulted about any amendments to this Agreement.

8.5    Notices

Any notice, request, demand or other communication in connection with this Agreement shall be given in writing and in English. A notice, request, demand or other communication shall be delivered personally or by registered post, internationally recognised express courier service, email or facsimile as detailed below (or as otherwise notified by the receiving party from time to time). A notice, request, demand or other communication shall be deemed received, if posted, three
(3) days after it is mailed; if sent by hand or courier, when it is delivered; if faxed, when the fax is sent and the sender receives a successful transmission report; and, if by email, when the sender receives a successful delivery receipt.




To the Seller:

c/o PAFS Ireland Limited
Unit 5, Block 1
Shannon Business Park Shannon
Co. Clare
Ireland

Fax:    +353 61 475 52
Email: sapphire@phxa.com
Attention:     The Directors


With a copy to:

Number One Ballsbridge Building 1
Shelbourne Road Dublin 4
Ireland

Fax:    +353 1485 3242
Email:    notices@avolon.aero
Attention:    The Directors


To Seller Guarantor at:

Number One Ballsbridge Building 1
Shelbourne Road Dublin 4
IIreland

Fax:    +353 1485 3242
Email:     notices@avolon.aero
Attention:    The Directors


To Buyer at:

Wilmington Trust SP Services (Dublin) Limited Fourth Floor,
3 George's Dock,
IFSC, Dublin 1, DO1 X5XO,
Ireland

Email:    ireland@wilmingtontrust.com With Copy To:
Contrail Aviation Support, LLC
435 Investment Court
Verona, Wisconsin 53593
Fax:    +1-808-848-8101



Attention:    Joe Kuhn
Email:    joe@contrail.com




To Buyer Guarantor:

Contrail Aviation Support, LLC
435 Investment Court
Verona, Wisconsin 53593
Fax:    +1-808-848-8101
Attention:    Joe Kuhn
Email:    joe@contrail.com

8.6
Invalidity of any Provision

If any provision of this Agreement becomes invalid, illegal or unenforceable under any applicable law, the validity, legality and enforceability of the remaining provisions shall not in any way be affected.

8.7
Entire Agreement

This Agreement constitutes the entire agreement between the parties hereto in relation to the sale and purchase of the Asset and supersedes all previous proposals, representations, agreements and other written and oral communications in relation thereto.

8.8
Costs and Expenses

8.8.1
Except where this Agreement states differently, each party shall bear its own fees, costs and expenses (including but not limited to, fees of legal counsel, accounting, tax and insurance advisors and equipment appraisers) arising out of or in connection with this Agreement; provided that with respect to the Asset:

(a)
The Seller shall pay any and all of the costs and expenses incurred by Lessee in connection with the Transfer Agreement (including but not limited to any novation or assumption agreement) this Agreement (including, but not limited to, its legal costs, costs incurred by such Lessee in facilitating any inspection referred to in Clause 3.5 (Inspection) (all such costs "Lessee Costs"), but excluding any costs and expenses solely incurred in connection with (if applicable) Buyer's financing and/or security requirements ("Financing Costs")). For avoidance of doubt, Financing Costs are not Lessee Costs;

(b)
IIIf applicable, Buyer shall pay [ ]% of any Financing Costs incurred by Lessee for which the Lessee is entitled to reimbursement pursuant to the terms of the Lease;

(c)
The Buyer shall bear the cost of any legal opinions requested by Lessee in respect of Buyer or any guarantor of Buyer's or any Lessor's obligations for the period following Delivery or any Cape Town Convention registrations to which Lessee is entitled pursuant to the terms of the Lease (if at all) and the Seller shall bear the cost of any legal opinions that may be required relating to Seller to which Lessee is entitled pursuant to the terms of the Lease; and

(d)
Buyer and Seller shall bear the fees and costs of Escrow Agent in respect of the Escrow Agreement on a 50/50 basis.

8.8.2
Subject to Clause 8.8.1, Seller and Buyer will each co-operate reasonably with the other to lawfully eliminate or minimise the imposition upon the other party of any costs arising out of the sale of such Asset pursuant to this Agreement (including,




without limitation, arranging for the Delivery Location in respect of the related Aircraft to be in a jurisdiction where the imposition of such costs are lawfully eliminated or minimised) and/or in connection with the related amendment of any of the Lease Documents, and Seller shall use reasonable commercial endeavours to procure co-operation by the Lessee in connection therewith.

8.9    Further Assurances

Each party hereto agrees from time to time to do and perform such other and further acts and execute and deliver any and all such other instruments as may be required by law or reasonably requested in writing by any other party hereto to establish, maintain and protect the rights and remedies of the parties hereto and to carry out and effect the intent and purpose of this Agreement.

8.10
Registrations, Filings and the Cape Town Convention

8.10.1
The Seller and Buyer hereby agree that they will cooperate with each other in order to complete all registrations and filings, and to execute any and all documents as may reasonably be requested by any other party to this Agreement in order for such party to apply for any exemption from, reduction of, or credit for, any Taxes arising as a consequence of this Agreement or the transactions contemplated by this Agreement that may be available under applicable law, or that may reasonably be requested by any other party to this Agreement in order for such party to document or evidence any such exemption, reduction, refund or credit that may be available under applicable law, provided that nothing in this Clause 8.10.1 shall oblige any party to take any action or other step which that party, acting reasonably, determines would be prejudicial to its interests.

8.10.2
Buyer shall bear all costs and expenses, including any duties or fees payable (a) to the Air Authority in connection with qualifying to own the Asset, (b) in connection with the registration of Buyer's and/or Lessor's (as applicable) interests in the Aircraft and the Lease (and related documents) with the International Registry, and for any legal opinions that may be required relating to Cape Town Convention filings or filings with any Aviation Authority, or (c) in connection with Buyer's financing.

8.10.3
Buyer agrees that it will not, and it will procure that no financier of Buyer will, register an interest (or prospective interest) at the International Registry or make any other security registration in relation to the Aircraft until after Delivery of the Asset.

8.10.4
The Seller agrees and covenants that it will at or immediately after the Delivery procure that any interests filed at the International Registry or other security filings in respect of the interests of such Seller, or the financiers of such Seller in relation to the Aircraft are discharged at the time of Delivery.

8.11
Waivers, Rights Cumulative

8.11.1
No failure or delay on the part of any party in exercising any right, power or remedy under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise by any party of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy.

8.11.2
Nothing contained in this Agreement shall be construed to limit in any way any right, power, remedy or privilege of any party thereunder or how or hereafter existing at law or in equity. Each and every right, power, remedy and privilege of each party under this Agreement (a) shall be in addition to and not in limitation of, or in substitution for,



any other right, power, remedy or privilege under this Agreement or at law or in equity, (b) may be exercised from time to time or simultaneously and as




often and in such order as may be deemed expedient by such party, and (c) shall be cumulative and not mutually exclusive and the exercise of one shall not be deemed a waiver of the right to exercise any other.

8.12
Survival

All indemnities, representations, warranties, undertakings and covenants of Seller and Buyer shall survive, and remain in full force and effect, notwithstanding the expiration or other termination or completion of this Agreement or the transactions contemplated hereby.

8.13
Co-operation with Financiers

The Seller acknowledges and agrees that Buyer may obtain financing from third parties in order to fund its acquisition of the Asset hereunder. The Seller agrees that it shall, at no cost to itself, use reasonable efforts to co-operate with Buyer in relation to any such financing that Buyer may seek to arrange, provided that Buyer shall provide such Seller with reasonable advance written notice of any request for additional documentation.

8.14
Confidentiality

This Agreement and the terms and conditions contained herein shall be and remain strictly privileged and confidential between Buyer, Buyer Guarantor, Seller and Seller Guarantor, and shall not be discussed, revealed, disseminated or divulged to the media or general public, or to any other third party, without the express prior written consent of each other party hereto, except that:

(a)
Buyer may disclose any relevant term to any of its potential financiers, solely for the purpose of such potential financier financing the purchase of the Asset;

(b)
Buyer may disclose any relevant term to its insurers for the purpose of insuring the Asset or related Aircraft;

(c)
any party may disclose any relevant term to any of its affiliates;

(d)
any party may make any disclosure required by generally accepted accounting principles, by applicable Law or by any order of a court or other Governmental Entity;

(e)
any party may make any disclosure to its investors or prospective investors;

(f)
any party may make any disclosure required in connection with any legal proceedings arising out of or relating to the transactions contemplated by this Agreement;

(g)
any party may make any disclosure to its professional advisors in connection with the negotiation and/or administration of this Agreement; or

(h)
any party may make any disclosure to the extent such information is publicly available through no fault of the party making the disclosure,

in every case, provided that (i) the disclosing party shall inform such persons of the confidential nature of such documents and/or information; and (ii) the disclosing party shall, with respect to private parties, procure that any such persons undertake




to maintain the confidentiality of any such documents and/or information disclosed in accordance with the terms of this Clause 8.14 (Confidentiality).

9    LAW AND JURISDICTION

9.1    GOVERNING LAW

THIS AGREEMENT, AND ANY NON-CONTRACTUAL OBLIGATIONS ARISING OUT OF OR IIN CONNECTION WITH THIS AGREEMENT, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAW (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

9.2    Dispute Resolution

The parties hereto hereby agree that the courts of the State of New York or Federal court in the Southern District of New York, in either case, located in the Borough of Manhattan ("New York Courts") are to have jurisdiction to settle any disputes arising out of or relating to this Agreement or any other Transaction Document (unless expressly stated otherwise in any such Transaction Document) and any non­contractual obligations arising out of or in connection with this Agreement or any other Transaction Document. For such purposes each party hereby submits itself and its assets to the exclusive jurisdiction of the New York Courts in relation to such disputes. The parties further agree that the prevailing party in such action shall be entitled to an award of reasonable attorney fees and costs.

9.3
Waivers

Each of Buyer, Buyer Guarantor, Seller and Seller Guarantor:

(a)
waives to the fullest extent permitted by law any objection which it may now or hereafter have to the courts referred to in Clause 9.2 (Dispute Resolution) on grounds of inconvenient forum or otherwise as regards proceedings in connection with this Agreement or any other Transaction Document; and

(b)
agrees that a judgment or order of any court referred to in Clause 9.2 (Dispute Resolution) in connection with this Agreement or any other Transaction Document is conclusive and binding on it and may be enforced against it in the courts of any other jurisdiction; and

(c)
IIIIRREVOCABLY WAIVES ANY RIGHT TO A TRIAL BY JURY IIN ANY ACTION TO ENFORCE OR DEFEND ANY DISPUTE OR ANY OTHER MATTER ARISING FROM OR RELATED TO THIS AGREEMENT AND/OR THE OTHER TRANSACTION DOCUMENTS.

9.4
No Immunity

Each of Seller, Seller Guarantor, Buyer and Buyer Guarantor irrevocably and unconditionally:

(a)
agrees that if any other party brings legal proceeding against it or its assets in relation to this Agreement or any other Transaction Document, no immunity from such legal proceedings (which will be deemed to include without limitation, suit, attachment prior to judgment, other attachment, the obtaining of judgment, execution or other enforcement) will be claimed by or on behalf of itself or with respect to its assets;







(b)
waives any such right of immunity which it or its assets now has or may in the future acquire; and

(c)
consents generally in respect of any such proceedings to the giving of any relief or the issue of any process in connection with such proceedings including, without limitation, the making, enforcement or execution against any property whatsoever (irrespective of its use or intended use) of any order of judgment which may be made or given in such proceedings.

10
BROKERS AND OTHER THIRD PARTIES

10.1
No Brokers

Each party hereto represents and warrants to the other parties hereto that it has not paid, agreed to pay or caused to be paid directly or indirectly in any form, any commission, percentage, contingent fee, brokerage or other similar payments of any kind, in connection with the establishment or operation of this Agreement, to any Person (other than fees payable by each party to its legal advisers, tax advisers or other professional consultants).

10.2
Indemnity

Each party hereto agrees to indemnify and hold the other parties hereto harmless from and against any and all claims, suits, damages, costs and expenses (including, but not limited to reasonable attorneys' fees) asserted by any agent, broker or other third party for any commission or compensation of any nature whatsoever based upon this Agreement or any Transaction Documents or the Aircraft, if such claim, suit, damage, cost or expense arises out of any breach by the indemnifying party, its employees or agents of Clause 10.1 (No Brokers).

[SIGNATURE PAGE FOLLOWS}





IN WITNESS whereof this Agreement has been signed on the day and year first above written.

Sapphire Leasing I (AOE 5) Limited
as Seller


By: /s/ William Brennan    
Name: William Brennan
Title: Director


Sapphire Leasing I (AOE 5) Limited
as Seller Guarantor


By: /s/ William Brennan    
Name: William Brennan
Title: Director



Wilmington Trust SP Services (Dublin)
Limited, not in its individual capacity, but solely as
Owner trustee, as Buyer


By:                
Name:
Title:


Contrail Aviation Support, LLC
as Buyer Guarantor


By:                
Name:
Title:




















Signature Page·



Aircraft Asset Sale and Purchase Agreement
MSN 29922






IN WITNESS whereof this Agreement has been signed on the day and year first above written.

Sapphire Leasing I (AOE 5) Limited
as Seller


By:                     
Name:
Title:



Sapphire Finance I Holding Designated Activity Company
as Seller Guarantor

By:                     
Name:
Title:



Wilmington Trust SP Services (Dublin) Limited, not in its individual capacity, but solely as owner trustee, as Buyer.

By: /s/ Claudio Borza    
Name: Claudio Borza
Title: Director

Contrail Aviation Support, LLC
as Buyer Guarantor

By: /s/ Joseph G. Kuhn    
Name: Joseph G. Kuhn
Title: CEO
















Signature Page·
Aircraft Asset Sale and Purchase Agreement
MSN 29922





SCHEDULE 1 Aircraft and Sale/Purchase Details



SCHEDULE 1
AIRCRAFT AND SALE/PURCHASE DETAILS

 

(1)

(2)

(3)

(4)

(5)

(6)

(7)
 

Seller
Aircraft
Type

Aircraft
MSN

Engine Type

Engine MSNs

Base Purchase Price

Buyer
 

Sapphire

Boeing

29922

CFM56-7B24

890420

US$[ ]

Wilmington Trust
 
Leasing I
737-800
 
SP Services
 
(AOE 5)
890421
(Dublin) Limited,
 
Limited
 
as owner trustee
 




SCHEDULE 2 Lease Documents



SCHEDULE 2 LEASE DOCUMENTS



Asset
Aircraft    List of Lease Documents No.        MSN


1
29922 1.    Aircraft Lease Agreement dated as of January 28, 2008 between CIT Capital Aviation (UK) Limited, as lessor, and MIAT Mongolian Airlines, as lessee

2.
Acceptance Certificate dated April 21, 2008 by MIAT Mongolian Airlines, as lessee

3.
Side Letter to Acceptance Certificate (MSN 29922) dated 22 April 2008 signed by MIAT Mongolian Airlines

4.
Lease Supplement (MSN 29922) dated as of April 21, 2008 between CIT Capital Aviation (UK) Limited, as lessor, and MIAT Mongolian Airlines, as lessee

5. Aircraft Lease Amendment Agreement dated December 22, 2014 between CIT Capital Aviation (UK) Limited, as lessor, and MIAT Mongolian Airlines, as lessee

6. Novation and Amendment Agreement dated July 26, 2018 among CIT Capital Aviation (UK) Limited, as existing lessor, Sapphire Aviation Finance 1(UK) Limited, as new lessor, and MIAT Mongolian Airlines, as lessee

7. Effective Time Notice dated July 30, 2018 among CIT Capital Aviation (UK) Limited, as existing lessor, Sapphire Aviation Finance 1 (UK) Limited, as new lessor, and MIAT Mongolian Airlines, as lessee

8.
Second Aircraft Lease Amendment Agreement dated November 29, 2018 between Sapphire Aviation Finance I (UK) Limited, as lessor, and MIAT Mongolian Airlines, as lessee.

9.
Third Aircraft Lease Amendment Agreement to be entered into between Sapphire Aviation Finance I (UK) Limited, as lessor, and MIAT Mongolian Airlines, as lessee, in substantially the form at Schedule 8.













#67002882 v2







SCHEDULE 3 Definitions



SCHEDULE 3 DEFINITIONS

"Acceptance Certificate" means, an acceptance certificate substantially in the form of Schedule 7 hereto, duly completed and executed by Buyer.

"Additional Insured" means, with respect to the Asset, each person named as an "Indemnitee" under the Lease immediately prior to Delivery of the Asset.

"Aircraft" means the aircraft described in Schedule 1 (Aircraft and Sale/Purchase Details) (which term includes, where the context admits, a separate reference to all relevant Engines, Parts and Aircraft Documents).

"Aircraft Documents", with respect to the Aircraft, has the meaning given to such term in the Lease.

"Asset" means the Aircraft.

"Aviation Authority" means the Irish Aviation Authority.

"Base Purchase Price" is defined in Clause 5.1.1 (‘Amount').

"Bill of Sale" means a bill of sale substantially in the form of Schedule 6 hereto, duly completed and executed by the Seller.

"Business Day" means a day (other than a Saturday or Sunday) on which banks are open for business in Dublin and New York.

"Buyer" has the meaning set out in the Recitals hereto.

"Buyer Conditions Precedent" means the conditions set out in Schedule 4, Part 2 (Buyer Conditions Precedent)

"Buyer Guarantee" means one or more guarantees of all of Buyer's obligations under, inter alia, this Agreement and the Transfer Agreement, issued by the Buyer Guarantor in favour of Seller.

"Buyer Guarantor" has the meaning set out in the Recitals hereto.

"Cape Town Convention" means the Convention on International Interests in Mobile Equipment and its Protocol on Matters Specific to Aircraft Equipment, concluded in Cape Town on 16 November 2001, subject to any declarations of a contracting state.

"Commitment Fee" means an amount of equal to [ ]% of the Base Purchase Price in respect of the Asset.

"Delivery" means the transfer of title to the Asset by Seller to Buyer hereunder as provided in Clause 6.1(Delivery).

"Delivery Date" means the date, being a Business Day, on which Delivery in respect of the Asset occurs.

"Delivery Location" means such location as agreed between the Seller and Buyer (each acting reasonably) prior to the Delivery Date for the Asset.




SCHEDULE 3 Definitions

"Economic Closing Date" means 1 May 2019.

"Engine Manufacturer" means CFM International, Inc.

"Engines" means the engines with the make, model and serial numbers specified in Schedule 1(Aircraft and Sale/Purchase Details), together with all equipment and accessories belonging to, installed in, or appurtenant to, such engines.

"Escrow Agent" means Bank of Utah.

"Escrow Agreement" means an agreement between Escrow Agent, Seller, and Buyer in form and substance reasonably acceptable to each of them, to facilitate the payment of the Net Purchase Price for the Asset and the release of the related Transaction Documents.

"Event of Default" has the meaning given to it in the Lease.

"Excluded Property" means, (i) any amounts received by or payable to Lessor from Lessee as Rent under the Lease Documents that becomes due and payable at any time prior to the Economic Closing Date, (ii) any amounts (other than Rent) received by or payable to Lessor from the Lessee under the Lease Documents that becomes due and payable at any time prior to the Delivery; and (iii) any rights of the Seller and its affiliates to indemnification or liability insurance under the Lease Documents.

"Final Delivery Date" means, October 31, 2019 or such later date as may be agreed between Buyer and Seller.

"Government Entity" means:

(i)
any national government, political subdivision thereof, or local jurisdiction therein;

(ii)
any instrumentality, board, commission, court, or agency of any of the above, however constituted; and

(iii)
any association, organisation or institution of which any of the above is a member or to whose jurisdiction any thereof is subject or in whose activities any of the above is a participant.

"Inspection Completion Date" means the date of the execution of this Agreement.

"International Registry" means the registry established pursuant to the Cape Town Convention.

"Law" includes (a) any statute, decree, constitution, regulation, order, judgment or other directive of any Government Entity; (b) any treaty, pact, compact or other agreement to which any Government Entity is a signatory or party; (c) any judicial or administrative interpretation or application of any Law described in (a) or (b) above; and (d) any amendment or revision of any Law described in (a), (b) or (c) above.

"Lease" means that certain Aircraft Lease Agreement dated as of January 28, 2008 between CIT Capital Aviation (UK) Limited, as lessor, and MIAT Mongolian Airlines, as lessee, as amended and modified pursuant to each of the related Lease Documents specified in Schedule 2 (Lease Documents).

"Lease Documents" means, the documents listed in Schedule 2 (Lease Documents) and such other documents as Buyer and Seller agree in writing shall constitute a "Lease Document".

"Lessee" means MIAT Mongolian Airlines.




SCHEDULE 3 Definitions

"Lessor" means Sapphire Aviation Finance 1 (UK) Limited.

"LOI Amount" means an amount of equal to [ ]% of the Base Purchase Price of the Asset.

"Losses" means losses, liabilities, claims, proceedings, penalties, judgments, damages, costs and expenses.

"Maintenance Reserve Claim" has the same meaning as given to such term in the Lease.

"Maintenance Reserves" means the "Maintenance Reserves" as defined therein, which Lessor is holding in cash at any time of determination and which are not subject to any claim for reimbursement to the Lessee.

"Manufacturer" means The Boeing Company.

"Net Purchase Price" has the meaning given to such term in Clause 5.9.1.

"Netting Letter" means the letter contemplated by Clause 5.9.1.

"Novation Agreement" means that certain novation and amendment agreement among the Seller, Lessee and Buyer which identifies Buyer as the new owner, addresses insurance and other appropriate matters.

"Part" means, whether or not installed on the Aircraft, any component, furnishing or equipment (other than a complete Engine) furnished with such Aircraft on the Delivery Date.

"Permitted Liens" means (a) any Security Interest created by or resulting from debts, liabilities or actions of Buyer, Buyer Guarantor, or their respective subsidiaries and/or affiliates,
(b) the Lease Documents and the rights conferred by the Lease Documents, and (c) Security Interests which Lessee is permitted under the Lease to allow to subsist or which Lessee has allowed to arise but which it is obliged to discharge and indemnify the Lessor for under such Lease (but excluding any Security Interest created by or attributable to debts, liabilities or actions of any Seller, Lessor or any of their respective subsidiaries or affiliates, and any Security Interest of which Seller has actual knowledge which has not been previously disclosed to Buyer in writing).

"Person" means any individual person, corporation, partnership, firm, joint stock company, joint venture, trust, estate, unincorporated organisation, association, Government Entity, or organisation or association of which any of the above is a member or a participant.

"Prepaid Rent" means, the amount of any Rent which has been paid by the Lessee pursuant to the Lease and which is attributable to the period after the Delivery Date.

"Purchase Price" means the Base Purchase Price for the Asset as adjusted in accordance with Clause 5.1.2.

"Rent" has the meaning given to it in the Lease.

"Security Deposit" means the amount in cash held by the Lessor in respect of the "Security Deposit", as defined in the Lease, paid by Lessee under the Lease and not applied by Lessor.

"Security Interest" means any mortgage, charge, pledge, lien, encumbrance, assignment, hypothecation, right of set-off or any other agreement or arrangement having the effect of conferring security.

"Seller" has the meaning set out in the Recitals hereto.




SCHEDULE 3 Definitions


"Seller Conditions Precedent" means, for each Aircraft, the conditions specified in Schedule 4, Part 1(Seller Conditions Precedent).

"Seller Guarantee" means one or more guarantees of all of the Seller's obligations under, inter alia, this Agreement and the Transfer Agreement, issued by the Seller Guarantor in favour of the Buyer.

"Seller Guarantor" has the meaning set out in the Recitals hereto.

"Sun Country SPA" means that certain aircraft asset sale and purchase agreement among Sapphire Finance I Holding Designated Activity Company as seller, Contrail Aviation Leasing, LLC, as the buyer of the beneficial interest in the trust that owns MSN 30241, and Contrail Aviation Support, LLC as Buyer Guarantor, relating to the sale and purchase of the beneficial interest in the trust holding title to one (1) Boeing B737-700 aircraft with manufacturer's serial number 30241.

"Target Transfer Date" means five (5) weeks from the date of this Agreement.

"Taxes" means any and all present and future taxes, duties, withholdings, levies, assessments, imposts, fees and other governmental charges of all kinds (including without limitation any VAT or similar tax and any stamp, documentary, registration or similar tax) imposed, levied, collected, withheld or assessed by any national or regional taxing or fiscal authority or agency or other Government Entity, together with any penalties, fines, surcharges and interest thereon and any additions thereto.

"Total Loss" has the meaning given to the term "Event of Loss" in the Lease.

"Transaction Documents" means this Agreement, the Buyer Guarantee, the Seller Guarantee, the Transfer Agreement, the Bill of Sale, the Acceptance Certificate, the Netting Letter, the Escrow Agreement, and any agreement amending or supplementing any of the foregoing documents and any agreement or document agreed by Seller and Buyer as being a Transaction Document and relating to the Asset.

"Transfer Agreement" means the Novation Agreement.

"Transfer Tax" has the meaning given to such term in Clause 5.6.1.

"US$", "$" and "Dollars" means the lawful currency of the United States of America, and (in relation to all payments in Dollars to be made under this Agreement) same day funds; and

"VAT" means value added tax and any goods and services, sales, consumption or turnover tax, imposition or levy of a like nature.




SCHEDULE 4 Conditions Precedent


SCHEDULE 4
CONDITIONS PRECEDENT
Part 1
Seller Conditions Precedent

1
The Seller in respect of its Asset shall have received or shall have confirmed that the same is held in trust by the Escrow Agent, each of the following documents and evidence on or prior to the Delivery Date:

(a)
an officer's certificate from Buyer certifying attached copies of the following as true and correct: (i) a certified copy of the Articles of Organization of Buyer; (ii) the resolutions of the directors of Buyer; (iii) if applicable, a power of attorney from Buyer in relation to the execution of this Agreement and the other Transaction Documents relating to such Aircraft; and (iv) specimen signatures of the authorised signatories of Buyer;

(b)
executed copies of each Transaction Document relating to such Asset (other than the Bill of Sale) duly executed by the parties thereto (other than the Seller);

(c)
all conditions precedent specified in the Transfer Agreement have been fulfilled or waived to the satisfaction of the Lessor;

(d)
evidence that Buyer and Buyer Guarantor will, on the Delivery Date, satisfy the requirements of the Lease Documents governing the identity of a transferee or assignee of the Asset; and

(e)
an insurance certificate in accordance with this Agreement and the Lease in form reasonably satisfactory to Seller.

2
The Seller shall have confirmed receipt of the Purchase Price in respect of the Asset in accordance with the provisions of this Agreement.

3
The Seller shall be satisfied that the Delivery Location, and the arrangements described in Clause 6 ( Delivery ) in respect of the Asset, do not give rise to any costs, unless agreed by Seller.

4
The representations given by Buyer, Buyer Guarantor and the Lessor in the Transaction Documents relating to the Asset being, in each case, true and accurate on the Delivery Date and as at Delivery of the Asset.

5
Evidence that all governmental and other licences, approvals, certificates, exemptions, consents, registrations and filings necessary in any relevant jurisdiction for any matter contemplated by the Transaction Documents, and any notices or other documents to be given pursuant thereto, and for the legality, validity, enforceability, admissibility in evidence and effectiveness thereof have been obtained or effected on an unconditional basis and remain in full force and effect.

6
Buyer, Buyer Guarantor or Lessor, as the case may be, is not in default of any of its respective obligations under this Agreement, any other Transaction Document or any other agreement between, inter alios, (a) Seller and/or Seller Guarantor and (b) Buyer and/or Buyer Guarantor in relation to the sale and purchase of the Asset (or any interest related thereto).

7
No change having occurred after the date of this Agreement in any applicable Law which would make it illegal for Seller or the Lessor to perform any of its obligations under any Transaction Documents to which it is a party (and any other documents




SCHEDULE 4 Conditions Precedent


or agreements to be entered into pursuant thereto); provided that if any such change has occurred the parties hereto shall use all reasonable co-operative endeavours to restructure the transaction contemplated by such documents so as to avoid the aforementioned illegality.


Part 2
Buyer Conditions Precedent

1
Buyer shall have received or shall have confirmed that the same is held in trust by the Escrow Agent, each of the following documents and evidence on or prior to the Delivery Date:

(a)
an officer's certificate from the Seller certifying attached copies of the following as true and correct: (i) a certified copy of its certificate of incorporation and up-to-date constitution; (ii) the resolutions of its board of directors; (iii) if applicable, a power of attorney from it in relation to the execution of this Agreement and the other Transaction Documents relating to such Aircraft; and (iv) specimen signatures of its authorised signatories;

(b)
a signed original of each of the Lease Documents (and if signed originals are not in the Seller's possession, a certified true copy of those Lease Documents so affected);

(c)
copies of each Transaction Document relating to the Aircraft duly executed by the parties thereto (other than Buyer);

(d)
evidence that all conditions precedent specified in the Transfer Agreement (other than those conditions precedent expressed to be solely for the benefit of Seller) have been fulfilled or waived to the reasonable satisfaction of Buyer;

(e)
originals of each bill of sale in each Seller's possession in respect of the Aircraft which has been executed and delivered in respect of previous title transfers of such Aircraft since it was delivered by Manufacturer (and if signed originals are not in the Seller's possession, a certified copy of each bill of sale so affected); and

(f)
evidence that there are no International Interests registered at the International Registry in relation to the Aircraft other than those registered in favour of the Seller and/or its financiers and shown on a priority search certificate time stamped at or immediately prior to Delivery (obtained by Buyer at Buyer's expense), which are to be released pursuant to Clause 8.10 (Registrations, Filings and the Cape Town Convention);

(g)
a bring down certificate from the Seller dated on the Delivery Date representing and warranting that, (i) the Lessee has not notified Lessor of any unsatisfied Maintenance Reserve Claims, and (ii) the Lessee has not submitted any outstanding work scope for, or estimated cost associated with, a Reimbursable Event to the Lessor; and

2
A Transfer Agreement for the Asset in form and substance satisfying the requirements of Clause 7.3.2 duly executed by the parties thereto.

3
The representations given by Seller and, if applicable, Lessor in the Transaction Documents relating to the Aircraft being, in each case, true and accurate on the Delivery Date of the Asset.

4
Neither the Seller nor Lessor is in default of any of its respective obligations under this Agreement, any other Transaction Document or any other agreement with, inter




SCHEDULE 4 Conditions Precedent


alios, (a) Seller or/and Seller Guarantor (b) Buyer or/and Buyer Guarantor in relation to the sale and purchase of the Asset (or any interest related thereto).

5
No change having occurred after the date of this Agreement in any applicable Law which would make it illegal for Buyer or any Lessor to perform any of its obligations under any Transaction Documents to which it is a party (and any other documents or agreements to be entered into pursuant thereto); provided that if any such change has occurred the parties hereto shall use all reasonable co-operative endeavours to restructure the transaction contemplated by such documents so as to avoid the aforementioned illegality.

6
Buyer shall be satisfied that the Delivery Location, and the arrangements described in Clause 6 (Delivery), do not give rise to any costs, unless agreed by Buyer.

7
Neither the Aircraft nor any Engine relating to the Aircraft shall have suffered a Total Loss or Material Damage.

8
Confirmation from Seller that any existing financing in respect of the Aircraft has been repaid in full and all related security released and discharged.




SCHEDULE S Representations and Warranties



SCHEDULE 5 REPRESENTATIONS AND WARRANTI ES
Part 1
Seller's Representations and Warranties

1
General Representations and Warranties:

(a)
The Seller represents and warrants to Buyer that the following statements are now, and on the Delivery Date will be, true and accurate:

(i)
it is incorporated and duly exists under the laws of its jurisdiction of incorporation and has the power to enter into and implement the transactions contemplated by the Transaction Documents to which it is a party;

(ii)
the execution, delivery and performance of the Transaction Documents to which it is a party have been duly authorised by all necessary corporate action on the part of the such Seller;

(iii)
the Transaction Documents to which it is a party constitute legal, valid and binding obligations of the Seller enforceable in accordance with their respective terms, except as limited by general principles of equity and any relevant bankruptcy, insolvency, administration, examinership or similar laws affecting creditors' rights generally;

(iv)
each consent required by the Seller to authorise, or required by it in connection with the execution, delivery, performance, legality, validity or enforceability of the Transaction Documents to which it is a party has been obtained and is in full force and effect, and
there is no default in the observance or performance of any of the conditions and
restrictions (if any) imposed on or in connection therewith; and

(v)
the execution, delivery and performance by the Seller of the Transaction Documents to which it is a party will not (i) conflict with, or result in any material breach of, any of the terms of, or constitute a default under, any agreement or document to which it is a party or by which it or any of its property or assets may be bound, (ii) contravene or conflict with the provisions of its constitutive documents, or (iii) conflict with any applicable law, regulation, order or decree in its jurisdiction of formation.

2
The Aircraft and the Lease:

(a)
The Seller further represents and warrants to Buyer on the Delivery Date as follows:

(i)
it will at Delivery have good marketable title in and to the Asset, free and clear of all Security Interests other than the Lease and any Permitted Liens;

(ii)
the transfer of the Asset by it is not avoidable or otherwise subject to rescission by reason of any claim of any other person (including any prior transferor thereof or any person acting on behalf of or claiming through any such transferor);

(iii)
to its knowledge, there are no litigation, arbitration or legal, governmental or administrative proceedings, claims or actions pending or threatened in respect of the Asset or the Lease (whether asserted or commenced by Lessee or any other person);




SCHEDULE 5 Representations and Warranties


(iv)
to its knowledge, the information provided by it to Buyer prior to Delivery of such Asset as to the identities of all predecessors in title (if any) to such Aircraft is complete and accurate;

(v)
the Lease Documents provided or to be provided to Buyer are true, correct and complete (originals or copies, as applicable) of such Lease Documents and constitute the entire agreement between the Lessor and Lessee with respect to the Aircraft immediately prior to Delivery which will continue to have effect following the Delivery Date with respect to the Aircraft (which excludes, for the avoidance of doubt, any agreement or document which is released or terminated simultaneously with the Delivery of the Asset) and other than documented in the Lease Documents or as contemplated by the Transfer Agreement, there have been no other amendments or modifications entered into with respect to the Lease Documents that will continue to have effect following the Delivery Date which have not been disclosed;

(vi)
the Lessee has not prepaid any Rent other than under and in accordance with the terms of the Lease;

(vii)
to its knowledge, the Lessor is not in default in respect of any of its obligations to Lessee under the Lease Documents; and

(viii)
to its knowledge, Lessee is not in default in respect of any of its obligations under the Lease Documents.

3    Maintenance Reserve Claims

The Seller represents and warrants to Buyer that the following statements are now true and accurate:

(a)
The Seller represents and warrants that the Lessee has not notified Lessor of any unsatisfied Maintenance Reserve Claims, and Lessee has not submitted any outstanding work scope for, or estimated cost associated with, a Reimbursable Event to Lessor; and

(b)
The Seller represents that it has not waived or deferred any of its rights under the Lease with respect to Maintenance Reserve Claims.



Part 2
Buyer's Representations and Warranties

1
Buyer represents and warrants to Seller that the following statements are now, and on the Delivery Date will be, true and accurate:

(a)
it is incorporated under the laws of Ireland and it has the power to enter into and implement the transactions contemplated by the Transaction Documents to which it is a party;

(b)
the execution, delivery and performance of the Transaction Documents to which it is a party have been duly authorised by all necessary action on the part of it;

(c)
the Transaction Documents to which Buyer is a party constitute legal, valid and binding obligations of Buyer enforceable in accordance with their respective terms, except as limited by







SCHEDULE S Representations and Warranties


general principles of equity and any relevant bankruptcy, insolvency, administration or similar laws affecting creditors' rights generally;

(d)
each consent required by Buyer to authorise, or required by it in connection with the execution, delivery, performance, legality, validity or enforceability of the Transaction Documents relating to the Asset to which it is a party has been obtained and is in full force and effect, and there is no default in the observance or performance of any of the conditions and restrictions (if any) imposed on or in connection therewith;

(e)
the execution, delivery and performance by Buyer of the Transaction Documents to which it is a party will not (i) conflict with, or result in any material breach of, any of the terms of, or constitute a default under, any agreement or document to which it is a party or by which it or any of its property or assets may be bound, (ii) contravene or conflict with the provisions of its constitutive documents or (iii) conflict with any applicable law, regulation, order or decree in Ireland;

(f)
as of the Delivery Date, Buyer Guarantor has a tangible net worth of at least $[ ]; and

(g)
it is not aware of any litigation, arbitration or legal, governmental or administrative proceeding or claim that is pending or threatened (i) against itself for its bankruptcy, liquidation or insolvency which have been commenced and which are continuing under and in accordance with the applicable law of its jurisdiction of incorporation, (ii) which could, individually or collectively, materially adversely affect the ability of Buyer to observe or perform its obligations under the Transaction Documents or (iii) which could challenge the legality, validity or enforceability of the Transaction Documents, and/or the transactions contemplated thereby.




SCHEDULE 6 Bill of Sale



BILL OF SALE (29922)

KNOW ALL MEN BY THESE PRESENTS that SAPPHIRE LEASING I (AOE 5)
LIMITED, ("Seller"), in consideration of value received, the receipt of which is hereby acknowledged, does hereby grant, sell, transfer and deliver to WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED, not in its individual capacity, but solely as owner trustee ("Buyer"), all of its right, title and interest in and to the following (collectively, the "Equipment"):

(a)one Boeing 737-800 aircraft bearing manufacturer's serial number 29922, together with two (2) CFM International, Inc. model CFM56-7B24 (described on the International Registry as a CFM model CFM56-7B) aircraft engines bearing manufacturer's serial numbers 890420 and 890421 (the "Aircraft"); and

(b)all Parts and all equipment, accessories and parts belonging to, installed in or appurtenant to the Aircraft, together with the Aircraft Documents, in each case only to the extent that title thereto is vested in Seller;

TO HAVE AND TO HOLD said Equipment unto Purchaser forever.

Seller hereby warrants to Buyer that it is the owner of full, legal and beneficial title to the Equipment, that there is hereby conveyed to Buyer, on the date hereof, good and marketable title to, and all of Seller's right, title and interest in and to, the Equipment, with full title guarantee and free and clear of all Security Interests other than the Lease and any Permitted Liens.

This Bill of Sale is made and delivered pursuant to the provisions of that certain Aircraft Asset Sale and Purchase Agreement dated as of October 31, 2019 between Seller and Buyer
among others (the "Sale Agreement"). The Delivery Location is Chinggis Khaan International Airport, Ulaanbaatar, Mongolia

and the time of delivery of this Bill of Sale is 12.39 GMT Time on this 31st day of October ,

2019 (the "Delivery Date"). The terms "Lease", "Delivery Location", "Aircraft Documents", "Parts", "Permitted Liens" and "Security Interests" shall have the same meanings in this Bill of Sale as in the Sale Agreement.

Except as otherwise expressly provided in the Sale Agreement and this Bill of Sale, the Equipment is sold as-is and where-is.

This Bill of Sale and any non-contractual matters arising out of or in connection with this Bill of Sale are governed by and shall be construed in accordance with the laws of the State of New York without regard to principles of conflict of law (other than Section 5-1401 of the General Obligations Law of New York).

[REMAINDER OF THE PAGE IS INTENTIONALLY LEFT BLANK. SIGNATURE PAGE FOLLOWS]







IN WITNESS WHREOF, Seller has caused this Bill of Sale to be duly executed and delivered on the Delivery Date set forth above.

SAPPHIRE LEASING I (AOE 5) LIMITED


By:     /s/ William Brennan
Name:     William Brennan
Title:     Director








































-Signature Page-
Bill of Sale
MSN 29922







SCHEDULE 7 Acceptance Certificate



ACCEPTANCE CERTIFICATE

relating to one (1) Boeing 737-800 aircraft bearing manufacture's serial number 29922, together with two (2) CFM International, Inc. model CFM56-7B24 aircraft engines,
bearing manufacturer's serial numbers 890420 and 890421 (collectively, the "Aircraft")

Date: October 31, 2019

WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED, not in its individual capacity, but solely as owner trustee (the "Buyer") hereby certifies that pursuant to the Aircraft Asset Sale and Purchase Agreement dated as of August 2, 2019 (the "Sale Agreement"), between SAPPHIRE LEASING I (AOE
5) LIMITED (the "Seller") and the Buyer among others:

(a)
the Buyer has irrevocably accepted delivery of the Aircraft at 12.39 GMT Time on the date of this Acceptance Certificate, while the Aircraft was located at Chinggis Khaan International Airport, Ulaanbaatar, Mongolia;
(b)
the Buyer confirms that the Aircraft and the Aircraft Documents are satisfactory to the Buyer; and

(c)
the Buyer acknowledges that it accepts the Aircraft subject to each and every disclaimer in Clause
7.1 of the Sale Agreement.

This Acceptance Certificate and any non-contractual matters arising out of or in connection with this Acceptance Certificate are governed by and shall be construed in accordance with the laws of the State of New York.

[REMAINDER OF THE PAGE IS INTENTIONALLY LEFT BLANK. SIGNATURE PAGE FOLLOWS]









IN WITNESS WHEREOF, the Buyer has executed this Acceptance Certificate as of the date first set forth above.

WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED, not in its individual capacity, but solely as owner trustee



By:    /s/ Joanna Taylor
Name:    Joanna Taylor
Title:    Director


18165112v1





CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.

EXECUTION VERSION


THIS THIRD AIRCRAFT LEASE AMENDMENT AGREEMENT (this “Amendment
Agreement”) is made on 2 August 2019.


BETWEEN

(1)
SAPPHIRE AVIATION FINANCE I (UK) LIMITED, a company incorporated under the applicable laws of England, and having its registered office at 3rd Floor, Suite 2, 11-12 St.
James’s Square, London, SW1Y 4LB, England (the “Lessor”); and

(2)
MIAT MONGOLIAN AIRLINES, a joint stock company organized and existing under the laws of Mongolia and having its principal place of business at ChingissKhaan International airport, Buyant-Ukhaa -45, Ullanbaatar, Mongolia (“Lessee”).

Lessor and Lessee each a “Party”, collectively, the “Parties”.

BACKGROUND

(A)
CIT Capital Aviation (UK) Limited (“Original Lessor”) and Lessee entered into an Aircraft Lease Agreement, dated as of 28 January 2008 (as amended, novated, restated, assigned or supplemented from time to time including by the lease supplement dated as of 21 April 2008 between Original Lessor and Lessee, the aircraft lease amendment agreement dated 22 December 2014 between Original Lessor and Lessee, the Novation and Amendment Agreement dated 26 July 2018 between Original Lessor and Lessee, the Amendment to Aircraft Lease Agreement dated 20 November 2018 between Lessor and Lessee, and each of the other Lease Documents (as defined below), the “Lease”), pursuant to which Lessor, as assignee and successor of Original Lessor, has leased to Lessee one (1) Boeing 737-800 aircraft bearing manufacturer’s serial number 29922 and Irish registration mark EI-CSG together with two (2) CFM56-7B24 engines bearing manufacturer’s serial numbers 890420 and 890421, (collectively, the “Aircraft”).

(B)
The Parties now wish to amend the Lease subject to the terms and conditions set out herein.

IT IS NOW AGREED

1    DEFINITIONS AND INTERPRETATION


1.1    Except as otherwise defined herein and except where the context requires otherwise, words and
expressions which are defied in the Lease (whether expressly or by incorporation therein) shall have
the same respective meanings when used in this Amendment Agreement (including the Recitals).


1.2    The rules of interpretation set out in Section 1 (Definitions and Interpretation) of the Lease shall apply
to this Amendment Agreement as if set out in full therein provided that references therein to the
“Lease” shall be construed as references to this Amendment Agreement.

2    AMENDMENTS TO THE LEASE

With effect from the date hereof, the Lease shall be amended as follows:

2.1    Definitions

Appendix 1 shall be amended as follows:
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(i)    In the definition of “Operative Document(s)” the words “the Third Aircraft Lease
    Amendment Agreement” shall be inserted after “the Lease”.

(ii)    The following new definitions shall be inserted:

““Third Aircraft Lease Amendment Agreement” means the aircraft lease amendment agreement dated on or about 2 August 2019 between Lessor and Lessee with respect to the Aircraft.”

2.2    Return Conditions

Upon receipt by Lessor of US$ [ ] in cleared funds, on an after-tax basis, (the “Buyout Amount”) on or before the Return, the Lease shall be amended as follows:

2.2.1    Section 12.8(d)(ii) shall be deleted in its entirely and replaced as follows:

“with respect to Time Controlled Parts, have not accumulated more time since new (and time since Overhaul if such replaced Part has previously been overhauled) more than one hundred and ten per cent (110%) of the time since new (or time since Overhaul as the case may be) of that of the replaced Part, except for the Time Controlled Parts listed in Exhibit A of the Third Aircraft Lease Amendment Agreement, including other Time Controlled Parts which are replaced after the date of the Third Aircraft Lease Amendment Agreement, due to subsequent, (i)AMM requirements, (ii) MPD requirements, or (iii) to support AOG operations as demonstrated by Lessee.”

2.2.2    Section 1.2 of Appendix 2E (Return Conditions) shall be deleted in its entirely and replaced as
follows:

“Exterior washing and interior cleaning of the Aircraft shall not be required.”

2.2.3    The following wording shall be added at the end of Section 1.5 of Appendix 2E (Return
Conditions):

“In the event that the Scheduled Termination Date is not extended to March 2020, the Lessee shall not be required to make the modification to the Controller-Pilot Data Link Communications and ADS B-Out which becomes effective so as to comply with the relevant EASA requirements in force at the relevant time.”

2.2.4    Section 2 (Paint) of Appendix 2E (Return Conditions) shall be deleted in its entirely and replaced
as follows:

“The Aircraft fuselage, engine cowls and outboard main wheel covers shall be accepted by Lessor in an “as-is” condition. All required placards and markings shall be in the English language and shall be replaced if not in English, or if deteriorated from the condition at Delivery.”

2.2.5    Section 3 (Airframe) of Appendix 2E (Return Conditions) shall be deleted in its entirely and
replaced as follows:

“Immediately prior to Return, the Aircraft shall have completed an A-Check in accordance with the Airframe Manufacturer’s MPD, without any deferred items. The A-Check shall be performed by an Approved Maintenance Organization approved by Lessor. Lessee shall give Lessor not less than ten (10) Business Days’ prior written notice of the commencement date of such A-Check.”




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2.2.6    Section 4.2 of Appendix 2E (Return Conditions) shall be deleted in its entirely and replaced as
follows:

“Lessee may return the Aircraft to Lessor at Return with visible crazing and delaminations on the cockpit windows. The cockpit windows shall not have any other defects that exceed allowable limits set forth in the Manufacturer’s Repair Manual.”

2.2.7    Section 4.3 of Appendix 2E (Return Conditions) shall be deleted in its entirely and replaced as
follows:

“Lessee may return the Aircraft to Lessor at Return with visible crazing and delaminations on the passenger compartment windows.”

2.2.8    Section 4.4 of Appendix 2E (Return Conditions) shall be deleted in its entirely and replaced as
follows:

“All equipment and furnishings in the interior of the Aircraft that are defective, damaged, or excessively worn shall be repaired in accordance with the Manufacturer's recommended repair procedures, or replaced by Lessee, with the exception of the (i) cabin passenger seats, (ii) cushions, (iii) carpets and (iv) curtains, only which shall be returned in “as is” condition.”

2.2.9    Section 5.2 of Appendix 2E (Return Conditions) shall be deleted in its entirely and replaced as
follows:

“(a) In respect of the Engine with Engine Serial Number 890420, each Engine Life Limited Part shall have a minimum of twenty (20) Cycles remaining to the Engine Manufacturer’s then- published life limit for each such Engine Life Limited Part (based on twenty four thousand pounds (24,000 lbs) of thrust).

(b) In respect of the Engine with Engine Serial Number 890421, each Engine Life Limited Part shall have a minimum of four hundred (400) Cycles remaining to the Engine Manufacturer’s then-published life limit for each such Engine Life Limited Part (based on twenty four thousand pounds (24,000 lbs) of thrust).”

2.2.10    The following wording shall be added at the end of the Section 6.1 of Appendix 2E (Return
Conditions):

“Such redelivery flight check can be performed as part of the Lessee’s ferry flight to the Redelivery Location (the Redelivery Location being Marana, Arizona, unless otherwise notified to the Lessee, in the sole discretion of the Lessor). In such case, all discrepancies found during such redelivery check flight which exceed or are outside the Manufacturer’s Repair Manual allowable limits shall be corrected by Lessee at Lessee’s expense, or, Lessor and Lessee may elect at Redelivery that Lessee pay financial compensation (in an amount to be reasonably agreed between Lessor and Lessee) to Lessor in lieu of resolving such discrepancies.”

For avoidance of doubt, if the Buyout Amount is not timely received by Lessor, the amendment referred to in this Section 2 shall be of no force or effect.

3    CONDITIONS PRECEDENT

3.1    The transactions contemplated herein are subject to satisfaction of the following:

(a)    each of the representations and warranties of Lessee in Section 4.1 below shall be true and
correct as of the effective time of this Amendment Agreement; and



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(b)    receipt of evidence of all corporate action and approvals required to carry out the transactions
contemplated herein

4    REPRESENTATIONS AND WARRANTIES

4.1    Lessee Representations. On the date hereof, Lessee represents and warrants to Lessor:

(a)    Status. It is a corporation duly incorporated and validly existing under the laws of the
Jurisdiction of where it has been incorporated and has the power to own its assets and carry
on its business as it is now being conducted and to enter into this Amendment Agreement
and perform its obligations hereunder;

(b)    No Conflict. The execution and delivery by Lessee of this Amendment Agreement, the
consummation of such transactions contemplated herein and compliance with the terms and
provisions hereof:

(i)    are within its corporate powers;

(ii)    do not and will not result in a violation of such party’s charter, by laws or other
organisational or constitutional documents as currently in effect; and

(iii)    do not and will not conflict with or result in a breach of any term or provision of,
or constitute a default under, or result in the imposition of a Lien upon this
Amendment Agreement under any indenture, mortgage, or other agreement or
instrument to which Lessee is a party or by which it or any of its properties, is or
may be bound, or any existing applicable Law, rule, or regulation, or any judgment,
order or decree of any Governmental Authority having jurisdiction over Lessee or
any of its properties;

(c)    Legal Validity. This Amendment Agreement has been duly authorised, executed and
delivered by Lessee and constitutes legal, valid and binding obligations of Lessee,
enforceable against Lessee in accordance with its terms, except as its enforceability may be
limited by bankruptcy, insolvency, reorganisation and other laws of equity (regardless of
whether such proceeding is considered a proceeding in equity or law);

(d)    Consents. Lessee has received every consent, approval or authorisation of, and has
given every notice to, each Governmental Authority having jurisdiction with respect to the
execution, delivery, validity, enforceability, admissibility into evidence or performance of
this Amendment Agreement, and to perform the transactions contemplated hereby and each
such consent, approval or authorisation is valid and effective and has not been revoked and
there has been no default in the observance of any of the conditions or restrictions (if any)
imposed in, or in connection with, any of the same;

(e)    No Claims. Lessee is not aware of any claims or actions under the Lease pending or threatened
against Lessor by Lessee;

(f)    No Event of Loss. No Event of Loss or event which with the passage of time would become
an Event of Loss has occurred; and

(g)    No Default. No Default or Event of Default has occurred and is continuing or might result
from the entry into or performance of this Amendment Agreement by Lessee.




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4.2    Lessor Representations. On the date hereof, Lessor represents and warrants to Lessee:

(a)    Status. It is a corporation duly incorporated and validly existing under the laws of the
jurisdiction of where it has been incorporated and has the power to own its assets and carry
on its business as it is now being conducted and to enter into this Amendment Agreement
and perform its obligations hereunder;

(b)    No Conflict. The execution and delivery by Lessor of this Amendment Agreement, the
consummation of such transactions contemplated herein and compliance with the terms and
provisions hereof

(i)    are within its corporate powers;

(ii)    do not and will not result in a violation of such party’s articles of association, by
laws or other organisational or constitutional documents as currently in effect; and

(iii)    do not and will not conflict with, or result in a breach of any term or provision of,
or constitute a default under, or result in the imposition of a Lien upon this
Amendment Agreement under any indenture, mortgage, or other agreement or
instrument to which Lessor is a party or by which it or any of its properties, is or
may be bound, or any existing applicable Law, rule, or regulation, or any judgment,
order or decree of any Governmental Authority having jurisdiction over Lessor or
any of its properties,

(c)    Legal Validity. This Amendment Agreement has been duly authorised, executed and
delivered by Lessor and constitutes legal, valid and binding obligations of Lessor, enforceable
against Lessor in accordance with its terms, except as its enforceability may be limited by
bankruptcy, insolvency, reorganisation and other laws of equity (regardless of whether such
proceeding is considered a proceeding in equity or law); and

(d)    Consents. Lessor has received every consent, approval or authorisation of, and has given
every notice to, each Governmental Authority having jurisdiction with respect to the
execution, delivery, validity, enforceability, admissibility into evidence or performance of
this Amendment Agreement, and to perform the transactions contemplated hereby and each
such consent, approval or authorisation is valid and effective and has not been revoked and
there has been no default in the observance of any of the conditions or restrictions (if any)
imposed in, or in connection with, any of the same.

5    MISCELLANEOUS

5.1    Governing Law. This Amendment Agreement (including any non-contractual obligations arising out
of or in connection with the same) shall be governed by and construed in accordance with the laws
of England. The provisions of section 26 (Law and Jurisdiction) of the Lease will be deemed to be
set out herein mutatis mutandis in their entirety but as if any reference to “this Lease” were a reference
instead to this Amendment Agreement.

5.2    Notices. The provisions of section 27.18 (Notices) of the Lease shall apply to this Amendment
Agreement as if set out herein in full, mutatis mutandis in their entirety but as if any reference to “this
Lease” were a reference instead to this Amendment Agreement.




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5.3    Counterparts. This Amendment Agreement may be executed simultaneously in two or more
counterparts and by different parties hereto on separate counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and the same instrument.

5.4    Delivery of Documents by Electronic Means. Delivery of an executed counterpart of this
Amendment Agreement by fax or other electronic image file will be deemed as effective as delivery
of an originally executed counterpart. Any Party delivering an executed counterpart of this Amendment
Agreement by fax or other electronic image file will also deliver an originally executed counterpart,
but the failure of any Party to deliver an originally executed counterpart of this Amendment Agreement
will not affect the validity or effectiveness of this Amendment Agreement.

5.5    Operative Document. This Amendment Agreement shall be deemed to be an “Operative Document”
for the purposes of and as defined in the Lease.

5.6    No Further Amendment. Save as amended and supplemented by this Amendment Agreement, each
of the Parties hereto acknowledges and agrees that the provisions of the Lease shall continue and
remain in full force and effect in all respects and the Lease and this Amendment Agreement shall be
read and construed together.




[SIGNATURE PAGE FOLLOWS]






IN WITNESS whereof the parties hereto have caused this Amendment Agreement to be duly executed on the date first above written.





The Lessor

SAPPHIRE AVIATION FINANCE I (UK) LIMITED



By: _______________________________

Name: ____________________________

Title: Director


The Lessee

MIAT MONGOLIAN AIRLINES



By: ______________________________

Name: ____________________________

Title: President and CEO


By: _______________________________

Name: ____________________________

Title: Senior Vice President















- Signature Page -
MIAT Mongolian Airlines
Third Aircraft Lease Amendment Agreement
Boeing 737-800 MSN 29922
18172098v1






Exhibit A

Time Controlled Parts




















































MIAT Mongolian Airlines
Third Aircraft Lease Amendment Agreement
Boeing 737-800 MSN 29922






MIATLOGO2.JPG El-CSG Hard Time Status
Date:
25-Apr-19
TSN:
51634
CSN:
29794

MPD
Description
Task
P/N
S/N
Position
Last check
Interval
Next Due
Remain
Certificates
21-100-00
Clean the primary and secondary heat exchangers.
RST
/
/
 
/
0
0
0
ARL
28948
2000 FC
30948
1154
30-Jul-18
1 Yr
30-Jul-19
96
 
Cylinder HST
HST
4A3904-5
IY18142
FWD LH
/
0
0
0
Indicating DOM info
/
0
0
0
1-Dec-17
5 Yrs
29-Nov-22
1314
 
Cylinder Discard
DIS
4A3904-5
IY18142
FWD LH
/
0
0
0
NEW
/
0
0
0
1-Jan-11
15 Yrs
25-Dec-25
2436
25-410-00
Discard the smoke hoods at the manufacturer’s
DIS
802300-14
E14120555
COCKPIT
/
0
0
0
NEW
/
0
0
0
1-Dec-14
10 Yrs
1-Dec-24
2047
25-410-00
Discard the smoke hoods at the manufacturer’s
DIS
802300-14
E10100293
FWD ATT
/
0
0
0
NEW
/
0
0
0
1-Oct-10
10 Yrs
1-Oct-20
525
25-410-00
Discard the smoke hoods at the manufacturer’s
DIS
802300-14
E10100294
FWD ATT
/
0
0
0
NEW
/
0
0
0
1-Oct-10
10 Yrs
1-Oct-20
525
25-410-00
Discard the smoke hoods at the manufacturer’s
DIS
E28180-20-0006
ASEF02138
AFT ATT
/
0
0
0
NEW
/
0
0
0
1-Jun-16
10 Yrs
28-May-26
2590
25-410-00
Discard the smoke hoods at the manufacturer’s
DIS
802300-14
E10100295
AFT ATT
/
0
0
0
NEW
/
0
0
0
1-Oct-10
10 Yrs
1-Oct-20
525
25-410-00
Discard the smoke hoods at the manufacturer’s
DIS
802300-14
E12110362
AFT ATT
/
0
0
0
NEW
/
0
0
0
1-Nov-12
10 Yrs
28-Oct-22
1282
25-410-00
Discard the smoke hoods at the manufacturer’s
DIS
E28180-10
A5CF84037
AFT ATT
/
0
0
0
NEW
/
0
0
0
1-Jul-17
10 Yrs
27-Jun-27
2985
25-430-00
Restore the medical kits
RST
509278
0004
FWD
/
0
0
0
NEW
/
0
0
0
31-Jan-19
1 Yr
31-Jan-20
281
26-MNG-03
Restore engine fire bottles by hydrostatic testing
RST
33700002
27334D1
ENG 2
/
0
0
0
Overhauled indicating DOM info
/
0
0
0
7-Mar-17
5 Yrs
5-Mar-22
1045
26-290-00
Inspect lavatory waste compartment fire bottles for correct weight
DET
30100022-33
NSN
Lav A
/
0
0
0
ARL
/
0
0
0
20-Mar-17
5 Yrs
18-Mar-22
1058
26-290-00
Inspect lavatory waste compartment fire bottles for correct weight
DET
30100022-33
NSN
Lav D
/
0
0
0
ARL
/
0
0
0
20-Mar-17
5 Yrs
18-Mar-22
1058
26-290-00
Inspect lavatory waste compartment fire bottles for correct weight
DET
30100022-33
NSN
Lav E
/
0
0
0
ARL
/
0
0
0
20-Mar-17
5 Yrs
18-Mar-22
1058
26-MNG-05
Restore cargo compartment fire bottle by hydrostatic
RST
34600010-28
39095F1
CARGO
/
0
0
0
Overhauled indicating DOM info
/
0
0
0
17-Apr-18
5 Yrs
15-Apr-23
1451
26-470-00
Inspect the portable water fire exting for condition
DET
892480
30925
RH
/
0
0
0
NEW
/
0
0
0
19-Feb-19
1 Yr
19-Feb-20
300
26-MNG-07
Restore portable water fire extinguisher by HST
RST
892480
30925
RH
/
0
0
0
/
0
0
0
2-Oct-15
5 Yrs
29-Sep-20
523
35-040-00
Discard the flight crew oxygen cylinder
DIS
801307-00
539114
Crew
/
/
/
/
Inspected Indicating DOM info
/
/
/
/
1-Jun-05
15 Yrs
1-Jun-20
403
35-MNG-01
Restore flight crew oxygen cylinder by hydrostatic testing
HST
801307-00
539114
Crew
/
0
0
0
Inspected Indicating DOM info
/
0
0
0
1-Jul-17
60 Mo
1-Jun-20
403
35-MNG-02
Restore portable oxygen cylinders by hydrostatic
OH
5500-A1A-BF23A
563232
MID
/
0
0
0
Overhauled Indicating DOM info
/
0
0
0
27-Mar-15
5 Yrs
24-Mar-20
334
35-MNG-02
Restore portable oxygen cylinders by hydrostatic
OH
5500-A1A-BF23A
135088
MID
/
0
0
0
Overhauled Indicating DOM info
/
0
0
0
30-Jun-17
5 Yrs
28-Jun-22
1160



Exhibit A to Second Lease Amendment (29922) 2019-07-24




EXECUTION VERSION


BUYER GUARANTEE (MSN 29922)

THIS BUYER GUARANTEE (MSN 29922) (this “Guarantee”) is dated as of August 2, 2019, between:

(1)CONTRAIL AVIATION SUPPORT, LLC, a limited liability company organized and existing under the laws of the State of North Carolina, United States of America, having its principal place of business at 435 Investment Court, Verona, Wisconsin 53593, United States of America (“Guarantor”); and

(2)SAPPHIRE LEASING I (AOE 5) LIMITED, a company incorporated under the laws of Ireland and having its registered office at c/o PAFS Ireland Limited, Shannon Business Park, Shannon, Co. Clare, Ireland (“Seller”).

WHEREAS, as a condition to Seller’s participation in the transactions contemplated by the Sale Agreement (as defined below), Guarantor is required to guarantee Purchaser’s (as defined below) performance and compliance with all of the covenants, agreements, and obligations of Purchaser contained in the Sale Agreement.

NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

1.Definitions. Unless the context otherwise requires, the following terms shall have the following meanings for all purposes of this Guarantee and shall be equally applicable both to the singular and plural forms of the terms defined. Any capitalized terms not defined herein shall have the meanings ascribed to them in the Sale Agreement.

“Guaranteed Agreements” means the Sale Agreement and the other Transaction Documents to which Purchaser is a party.

“Guaranteed Obligations” means all of Purchaser’s obligations to the Seller under the Guaranteed Agreements (whether actual or contingent, whether now existing or hereafter arising owed to the Seller), and compliance with, all obligations, covenants, terms, conditions and undertakings of Purchaser contained in the Guaranteed Agreements.

“Purchaser” means Wilmington Trust SP Services (Dublin) Limited, not in its individual capacity, but solely as owner trustee and having its principal place of business at Fourth Floor, 3 George’s Dock, IFSC, Dublin 1, D01 X5X0, Ireland.

“Sale Agreement” means the Aircraft Asset Sale and Purchase Agreement dated as of the date hereof (as may be further amended, modified or supplemented from time to time), concerning one (1) Boeing model 737-800 aircraft, bearing manufacturer’s serial number 29922.







2.Representations and Warranties of Guarantor. Guarantor represents and warrants to the Seller, as of the date hereof, as follows:

(a)it is duly organized and validly existing under the laws of its jurisdiction of organization and has the power and authority to carry on its business as it is being conducted;

(b)the execution and delivery of this Guarantee, the consummation of the transactions contemplated herein, and compliance with the terms and provisions hereof are within Guarantor’s limited liability company powers and do not and will not result in any violation of its charter, by-laws or other constitutional documents or any applicable law, rule, regulation, judgment or court order as currently in effect or any provision in any existing agreement binding on Guarantor;

(c)all authorizations, consents, registrations and notifications required to be obtained by Guarantor in connection with the entry into, performance, validity and enforceability of this Guarantee and the transactions contemplated by this Guarantee, have been (or will be on or before the date hereof) obtained or effected (as appropriate) and are in full force and effect;

(d)neither the execution, delivery nor performance of this Guarantee requires any member approval or the approval or consent of any trustee or any holder of any indebtedness or obligation of Guarantor, and if any approval or consent is required, then such approval or consent has been obtained.

(e)no consent or approval of, giving of notice to, registration with, or taking of any action in respect of or by, any national or local governmental authority or agency of Guarantor’s jurisdiction of formation or any other government agency or authority or other Person is required with respect to the execution, delivery or performance by Guarantor of this Guarantee.

(f)there are no actions, suits or proceedings pending, or to Guarantor’s knowledge threatened, against Guarantor, that, if adversely determined, would hinder or prevent Guarantor’s performance of this Guarantee; and

(g)this Guarantee has been duly executed and delivered by Guarantor; and this Guarantee will be, upon due execution and delivery hereof, a legal, valid and binding obligation of Guarantor, enforceable against Guarantor in accordance with its terms, except as its enforceability may be limited by bankruptcy, insolvency, reorganization and other laws of general application affecting the enforcement of creditors’ rights and general principles of equity (regardless of whether such proceeding is considered a proceeding in equity or at law).

3.
Guarantee.

(a)In consideration of Seller entering into the Sale Agreement and for other good and valuable consideration (the receipt and sufficiency whereof is hereby acknowledged), Guarantor, with effect from the date hereof, unconditionally and irrevocably, as a continuing obligation and guarantee of performance, without set-off, abatement, deferment or deduction, guarantees to Seller the prompt payment and performance by Purchaser of the Guaranteed Obligations and undertakes with Seller that whenever the Purchaser does not promptly pay or perform the Guaranteed Obligations when due, Guarantor shall promptly pay upon the written demand from





the Seller the amount set forth in the demand or perform (or procure the performance of) the Guaranteed Obligation as if it were the principal obligor.

(b)Guarantor as a principal obligor and not merely as surety, and as a separate and independent primary stipulation shall indemnify Seller upon written demand against any documented loss, liability or cost or expense suffered by Seller (including reasonable attorneys’ fees and disbursements incurred by Seller in the enforcement of this Guarantee) if (i) it does not perform the Guaranteed Obligations or (ii) any Guaranteed Obligation becomes unenforceable, void, illegal or ineffective as against the Guarantor, the amount of such loss or liability being the amount which the Seller would otherwise be entitled to recover from Guarantor.

(c)Guarantor shall make any payment (including payments of damages for breach of the Guaranteed Agreements by Purchaser) or procure the performance of or compliance with any Guaranteed Obligation set forth in a demand letter within five (5) Business Days of Guarantor’s receipt of such written demand to an account indicated by the Seller in the demand, all subject to the requirements of, and conditions associated with, the Guaranteed Obligations.

(d)The guarantee by Guarantor contained in this Section 3 is a primary obligation of Guarantor, is in addition to and not in substitution for any other security which Seller may now or hereafter hold for the obligations of Purchaser under the Guaranteed Agreements and is an unconditional, absolute, present and continuing obligation and is not conditional in any way upon the institution of suit or the taking of any other action or any attempt to enforce performance of or compliance with the covenants, agreements, terms or conditions (including without limitation any payment obligations) applicable to Purchaser contained in the Guaranteed Agreements and, to the extent permitted by law, shall be binding upon and enforceable against Guarantor without regard to the validity or enforceability of the Guaranteed Agreements.

(e)To the extent that performance of or compliance with the guarantee by Guarantor contained in this Section 3 requires the payment of money, such guarantee is an absolute, unconditional, present and continuing guarantee of payment and not of collectability and is in no way conditional or contingent upon any attempt to collect from Purchaser or any other entity or to institute a suit against Purchaser or any other entity or to perfect or to enforce any security or upon any other condition or contingency.

(f)Guarantor’s guarantee of Guaranteed Obligations shall not be effect by, discharged or diminished as a consequence of the Seller being released from the Sale Agreement pursuant to its terms, nor by the sale of the Asset under the Sale Agreement failing to occur.

4.
Preservation of Guarantor’s Obligations and Enforcement.

(a)Guarantor’s obligations in this Guarantee are absolute, unconditional and irrevocable. The liability of Guarantor under this Guarantee extends to and is not affected by the grant of any time or indulgence to Purchaser or by any circumstance, act or omission which, but for this sub- clause, might otherwise affect it at law or in equity, and Guarantor irrevocably waives any right it may have to claim its liability has been so affected.





(b)Until the Guaranteed Obligations have been unconditionally and irrevocably satisfied in full, Guarantor may not: (a) exercise any rights as surety in competition with Seller; or (b)

claim to be entitled by way of contribution, indemnity, subrogation, marshalling or otherwise to the benefit of any agreement or document to which Seller is a party, nor prove in a liquidation of Purchaser in competition with Seller.

(c)Guarantor’s obligations in this Guarantee may be enforced against Guarantor without Seller first being required to (a) exhaust any remedy it may have against Purchaser or any other person; or (b) enforce any other guarantee or security interest it may hold relating to the Guaranteed Obligations.

5.
Release.

(a)Once all the Guaranteed Obligations have been satisfied in full and Guarantor does not have any further actual or contingent liabilities hereunder, this Guarantee shall automatically and immediately terminate and all of Guarantor’s obligations under this Guarantee shall be irrevocably and unconditionally released and discharged.

(b)Notwithstanding the provisions of Section 5(a), any release, compromise or discharge of the obligations of the Guarantor may only be made once the Guaranteed Obligations have been unconditionally performed in full, and shall be deemed to be made subject to the condition that this Guarantee will be reinstated without further action if any payment or security which Purchaser may receive or has received is rescinded as a result of insolvency or bankruptcy of Purchaser or Guarantor.

6.
Continuing Guarantee

(a)The obligations of the Guarantor contained in this Guarantee shall constitute and be continuing obligations notwithstanding any settlement of account or other matter or thing whatsoever, and shall not be considered satisfied by any intermediate performance or satisfaction of all or any of the Guaranteed Obligations and shall continue in full force and effect until total satisfaction of all Guaranteed Obligations.

(b)No delay or omission in exercising any powers or privileges hereunder shall be construed as a waiver thereof. Any exercise of any part of the rights shall not preclude subsequent enforcement of any such rights which have not, or have not fully, been exercised.

7.Notice. Any notice required or related to this Guarantee will be in writing and will, unless otherwise stated, be given and will become effective in the same manner as provided in the Sale Agreement:

in the case of Guarantor:

435 Investment Court
Verona, Wisconsin 53593 United States of America Attention: Joe Kuhn




Facsimile:    +1 808-848-8101 Email:    joe@contrail.com

in the case of Seller:

Number One Ballsbridge Building 1
Shelbourne Road Dublin 4
Ireland
Attention: The Directors Facsimile:    +353 1 485 3242
Email:    notices@avolon.aero

8.
Miscellaneous.

(a)Governing Law. THIS GUARANTEE IS DELIVERED IN NEW YORK AND PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW SECTION 5-1401, SHALL IN ALL RESPECTS BE GOVERNED BY NEW YORK LAW WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAW INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.

(b)Jurisdiction. Clause 9 (Law and Jurisdiction) of the Sale Agreement is hereby incorporated by reference as if set forth in full length herein, mutatis mutandis.

(c)Successors and Assigns. The terms of this Guarantee shall be binding on, and inure to the benefit of, Seller and Guarantor and their respective permitted successors and assigns.

(d)Waiver of Notice and Defense. Except as otherwise provided in this Guarantee, Guarantor hereby waives, to the fullest extent permitted by law:

(i)    diligence, promptness, presentment, demand for payment or performance and protest and notice of protest, notice of acceptance and any other notice in respect of the Guaranteed Obligations or any part of them, and any defense arising by reason of any disability or other defense; and

(ii)    any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge, release or defense of a guarantor or surety, or which might otherwise limit recourse against Guarantor.

(e)Severability. Should any one or more of the provisions of this Guarantee be held to be invalid, illegal or unenforceable in any jurisdiction, the same shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity, illegality or unenforceability of a particular provision in a particular jurisdiction shall not render such provision invalid, illegal or unenforceable in any other jurisdiction.





(f)Payments. Guarantor shall make each payment to Seller under this Guarantee without any set-off, counterclaim or any other deduction, or withholding in respect of Taxes or otherwise.


(g)Waivers, Amendments and Variations in Writing. The provisions of this Guarantee shall not be capable of being waived, amended or varied otherwise than by an express waiver or amendment in writing signed by both Guarantor and Seller; and in particular any failure to exercise or any delay in exercising any of such rights shall not operate as a waiver, amendment or variation of that or any other such right; any defective or partial exercise of any of such rights shall not preclude any other or further exercise of that or any other such right; and no act or course of conduct or negotiation on Seller’s part or on its behalf shall in any way preclude it from exercising any such right or constitute a suspension of any variation or amendment of any such right. The rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any party may otherwise have at law or in equity.

(h)Counterparts; Delivery by Email. This Guarantee may be executed in two or more counterparts, each of which will be an original, but all of which will constitute but one and the same instrument.

This Guarantee and any document contemplated hereby may be delivered by a party hereto by way of e-mail transmission and such delivery shall be deemed completed for all purposes upon the completion of such e-mail transmission. A party that so delivers this Guarantee or any such document by way of e-mail transmission agrees to promptly thereafter deliver to the other party hereto an original signed counterpart. The signature of any party transmitted by e-mail transmission shall be considered to have the same binding legal effect as an originally executed document. In consideration of the mutual covenants herein contained, the parties agree that neither of them shall raise the use of e-mail as a defense in any suit or controversy related to this guarantee or any of such other documents and forever waive any such defense.

(i)Entire Agreement. This Guarantee constitutes the complete agreement of the parties hereto regarding the subject matter hereof and supersedes all prior understandings, communications and agreements (written or oral).
* * *












IN WITNESS WHEREOF, the parties hereto have executed and delivered this Guarantee by their duly authorized officers or attorneys on the date shown at the beginning of this Guarantee.
    
GUARANTOR:

CONTRAIL AVIATION SUPPORT, LLC

By: /s/ Joseph G. Kuhn        
Name: Joseph G. Kuhn
Title: CEO


SELLER:

SAPPHIRE LEASING I (AOE 5) LIMITED
By:            
Name:
Title:


































Signature Page Buyer Guarantee





IN WITNESS WHEREOF, the parties hereto have executed and delivered this Guarantee by their duly authorized officers or attorneys on the date shown at the beginning of this Guarantee.

GUARANTOR:

CONTRAIL AVIATION SUPPORT, LLC


By:         
Name:
Title:



SELLER:

SAPPHIRE LEASING I (AOE 5) LIMITED

By: /s/ William Brennan        
Name: William Brennan
Title: Director


























Signature Page Buyer Guarantee

18172334v1









DATED: 26 JUNE 2019






CONTRAIL AVIATION LEASING, LLC
as Initial Beneficial Owner


and



WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED
not in its individual capacity, except as provided herein, but otherwise solely as Initial Trustee

and


CONTRAIL AVIATION SUPPORT, LLC
as Parent








DECLARATION OF TRUST (MSN 29922)

Relating to One Boeing 737-800 Aircraft bearing Manufacturer’s Serial Number 29922
















CONTENTS

CLAUSE    PAGE

1.
DEFINITIONS AND INTERPRETATION        1
2.
CREATION OF TRUST        4
3.
THE TRUSTEE        5
4.
THE TRUST ESTATE        10
5.
DISTRIBUTIONS        12
6.
INDEMNIFICATION        12
7.
TERMINATION        14
8.
MISCELLANEOUS        14
Schedule 1- Form of Assignment of Beneficial Interest.    20
Schedule 2 - Specification Sheet        22

































MYO/759988-000001/24565729v2








THIS DECLARATION OF TRUST (MSN 29922) is made this 26 day of June 2019 BETWEEN:
(1)
CONTRAIL AVIATION LEASING, LLC, a company incorporated under the laws of the State of Wisconsin, United States of America, having its principal place of business at 435 Investment Court, Verona, WI 53593, United States of America (the "Initial Beneficial Owner");

(2)
WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED, a private limited company duly incorporated under the laws of Ireland (registered number 318390) having its registered office at Fourth Floor, 3 George's Dock, IFSC, Dublin 1, acting not in its individual capacity but solely as trustee (the "Initial Trustee"); and

(3)
CONTRAIL AVIATION SUPPORT, LLC, a company incorporated under the laws of the State of North Carolina, having its registered office at 3524 Airport Road, Maiden, North Carolina 28650-9056, Catawba County. (the "Parent")

WHEREAS

(A)
The Beneficial Owner desires to create the trust set out in clause 2 below (the "Trust") in order to acquire and hold title to the Aircraft (as hereinafter defined) until such time as the Beneficial Owner directs the Trustee to distribute the Aircraft in accordance with the Beneficial Owner's written instructions. The Beneficial Owner shall retain all interests in the Trust Estate other than the bare legal title to the Trust Estate.

(B)
The Trustee is willing to accept the trust as herein provided.

(C)
The Parent has agreed to become party to this Deed for the purpose of giving, jointly and severally with the Beneficial Owner, the indemnities set out in clause 6 hereof.

NOW THIS DEED WITNESSETH as follows:

1.
DEFINITIONS AND INTERPRETATION

1.1
Definitions

Capitalised terms used in this Deed shall have the respective meanings assigned thereto below, unless such terms are otherwise defined herein or the context hereof shall otherwise require.

"Aircraft" means one (1) Boeing 737-800 Aircraft bearing serial number 29922 together with the relevant engines as more specifically set out in the specification sheet attached at Schedule 2 hereto.

“Assignment of Beneficial Interest" means an assignment of beneficial interest in the form
set out at Schedule 1 of this Deed, duly completed.

"Beneficial Owner" means the Initial Beneficial Owner and each other person that becomes the beneficiary of the Trust in accordance with clause 8.9.

"Business Day" means a day (other than a Saturday or Sunday) on which banks are open for general business in Dublin and New York.





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"Finance Documents" means any indenture, credit agreement or loan facility agreement between the Beneficial Owner and/ or one or more of its affiliates and/or the Trustee (acting in such capacity) and a Finance Party or Finance Parties from time to time whether now or in the future relating to the transactions in respect of the financing of, among other things, the Aircraft, together with each and every mortgage or other security agreement howsoever defined securing such financing, including any other documents, arrangements, contracts, deeds, powers, instruments, certificates, notices, letters, indemnities, guarantees and arrangements in respect of or in connection with the financing of, among other things, the Aircraft and all amendments, extensions, restatements, replacements, supplements, renewals and additions from time to time made to such documents.

"Finance Parties" means any lender, indenture trustee, security trustee, administrative agent or collateral agent (howsoever defined in any Finance Document) under each and party to each Finance Document.

"Lease" means any lease agreement between the Initial Trustee as lessor and any person designated by the Initial Beneficial Owner as lessee in respect of the Aircraft.

"Lessor Documents" means this Deed, the warranty bill of sale in favour of the Initial Trustee in respect of the Aircraft, each Finance Document, each Lease each Operative Document (as defined in the Lease) and the other Operative Documents to which the Trustee is a party, and any other documents in connection with the foregoing, including, but not limited to, such certificates, consents, powers of attorney, notices and assignments as may be issued from time to time.

"Material Action" means any action to (a) terminate the Trust or (b) execute any conveyance, transfer, Lease or assignment of, or other right to use all or any part of, or sell or dispose of all or any part of, the assets of the Trust Estate or (c) create any legal or equitable estate or other interest in or over, or otherwise relating to all or any part of the Trust Estate or (d) institute or commence any procedures or take any action to appoint, or to institute proceedings to have the Trust be adjudicated bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency proceedings against the Trust or file a petition seeking, or consent to, reorganisation or relief with respect to the Trust under any applicable law relating to bankruptcy, or consent to the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other similar official) of the Trust or any part of its property, or make any assignment for the benefit of creditors of the Trust, or admit in writing the Trust's inability to pay its debts generally as they become due, take action in furtherance of any such action, or, to the fullest extent permitted by law, dissolve or liquidate the Trust.

"Operative Documents" has the meaning ascribed to that term in any Finance Document.

"Trust" means the trust created and constituted by this Deed.

"Trust Estate" means all estate, right, title, benefit and interest in and to the Aircraft and the Lessor Documents (other than this Deed), including, without limitation, all amounts of rent, supplemental rent, maintenance reserves, security deposits, insurance proceeds (other than insurance proceeds payable to or for the benefit of the Trustee, for its own account or in its individual capacity, if any, or the Beneficial Owner), damage, claim and requisition, indemnity or other payments of any kind for or with respect to the Lessor Documents or Aircraft (other than amounts owing to the Trustee, for its own account or in its individual capacity, or to the Beneficial Owner).

"Trustee" means the Initial Trustee or the trustee or trustees for the time being of the Trust Estate. The Trustee shall be appointed trustee for the purposes of the Land and Conveyancing Law Reform Act 2009 and section 57 of the Succession Act 1965. A sole trustee for the time


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being hereof shall be competent to act for all purposes of the said Acts including the receipt of
capital monies and notices hereunder.

"Trustee Indemnitee" has the meaning given to such term in clause 6.1.

1.2
Interpretation In this Deed:
(a)
the terms "hereof," "herein," "hereunder" and comparable terms refer to this Deed, as amended, modified or supplemented from time to time, and not to any particular portion hereof;

(b)
where the context so requires, in this Deed words importing the singular only shall also include the plural and vice versa;

(c)
unless otherwise specifically stated, reference to any "clause" or "Schedule" is a reference to such clause or Schedule of this Deed;

(d)
any reference to a person shall be construed as a reference to any person, firm, company, corporation, government, state or agency of any government or state or any association or partnership (whether or not having separate legal personality) of any two or more of the foregoing and shall include their respective successors, permitted assignees and permitted transferees;

(e)
"losses" means any losses, costs, charges, expenses, interest, fees (including, without limitation, legal and other professional advisers fees and expenses and any value added tax thereon), payments, demands, liabilities, claims, actions, proceedings, penalties, damages, adverse judgements, orders or other sanctions;

(f)
references to "applicable law" include, without limitation (i) applicable laws, rules, statutes, decrees, acts, codes, legislation, treaties, directives, decisions, regulations, conventions and similar instruments, (ii) recommendations and mandatory requirements of any governmental agency or other competent authority or agency (whether or not having the force of law but with which, if not having the force of law, institutions equivalent to the relevant party in the relevant jurisdiction would comply in the ordinary course of business) and, in respect of any of the foregoing, any instrument passed in substitution therefor or for the purposes of consolidation thereof with any other instrument or instruments, (iii) any judicial or administrative interpretation or application of any law described in (i) or (ii), (iv) any amendment or revision of any law described in (i), (ii) or (iii) and/ or, (v) final judgments, orders, determinations or awards of any court, arbitral body, administrative body or tribunal from which there is no right of appeal or if there is a right of appeal such appeal is not prosecuted within the allowable time;

(g)
the rule of interpretation known as the ejusdem generis rule shall not apply to the construction of this Deed. The terms "include", "including" and similar terms shall be construed as if followed by the phrase "without limitation";

(h)
references to "indemnify", "indemnity" and other words of similar import shall include being indemnified, being compensated, being held harmless and being reimbursed; and

(i)
Save where the contrary is indicated, any reference in this Deed to:



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(i)
this Deed or any other agreement or document shall be construed as a reference to this Deed or, as the case may be, such other agreement or document as the same may have been, or may from time to time be, amended, varied, novated or supplemented; and

(ii)
a statute shall be construed as a reference to such statute as the same may
have been, or may from time to time be, amended or re-enacted.

2.
CREATION OF TRUST

2.1
The Initial Beneficial Owner shall cause title to the Aircraft to be conveyed to the Trustee free and clear of all liens and encumbrances other than as may be provided for in this Deed.

2.2
The Trustee hereby acknowledges that:

(a)
the Aircraft shall form part of the Trust Estate, and shall be deemed to have been received by the Trustee, in each case upon transfer of title to the Aircraft to the Trustee; and

(b)
each Lessor Document shall form part of the Trust Estate, and shall be deemed to have been received by the Trustee, upon the execution and delivery thereof by each of the parties thereto.

2.3
The Trustee HEREBY DECLARES AND AGREES that:

(a)
upon transfer of the title to the Aircraft to the Trustee, it holds the legal title to the interest in the Trust Estate on trust for the Beneficial Owner;

(b)
subject to all applicable laws, it will deal with the Trust Estate at all times as and only as directed by and on the instructions of the Beneficial Owner and on behalf of the Beneficial Owner; and

(c)
it will comply in all material respects with all the laws applicable to the Trust Estate.

2.4
The Trustee HEREBY DECLARES that it has no beneficial or equitable interest in the Trust Estate and merely holds the legal interest therein as trustee or nominee for the Beneficial Owner.

2.5
The Trustee HEREBY DECLARES that it holds the Trust Estate in trust for the Beneficial Owner absolutely.

2.6
The Trustee accepts the Trust created by this Deed, and declares that it will hold the Trust Estate upon the trusts herein set forth for the use and benefit of the Beneficial Owner, in accordance with and subject to all of the terms and conditions contained in this Deed and agrees to perform the same, including, without limitation, the actions specified in clause 4.1, and agrees to receive and disburse all monies, if any, constituting part of the Trust Estate, all in accordance with the terms hereof.

2.7
The Trust created and governed by this Deed shall be known as, and is named, the "Aircraft MSN 29922 Trust".

2.8
The Trustee and the Beneficial Owner hereby agree that the trust created hereby has been created for the purposes of acquiring, financing, leasing, subleasing and disposing of the Aircraft and that the Trustee (acting in such capacity) shall not engage in any other activity or business whatsoever.


MY0/759988-000001/24565729v2    4








2.9
Except to the extent otherwise required by applicable law, the Trustee may not take a Material Action except with the consent of the Beneficial Owner.

2.10
The Trustee, acting in such capacity, shall not incur, create, issue, assume, guarantee or otherwise become liable for or with respect to, or become responsible for, the payment of, contingently or otherwise, whether present or future, any indebtedness, except as permitted to the Beneficial Owner or an affiliate of the Beneficial Owner under any Finance Document. The interest of the Beneficial Owner in the Trust Estate shall not constitute indebtedness.

2.11
The Trustee will administer the Trust such that it maintains its existence as a separate trust, including maintaining its assets and liabilities in such a manner that it is not difficult to segregate, identify or ascertain such assets and liabilities from those of affiliates of the Beneficial Owner and any other Person.

2.12
The Trustee, acting in such capacity, shall not engage in any activity other than as required or authorised herein and the Beneficial Owner undertakes not to engage in any activity or cause the Trustee to engage in any activity which would cause the Beneficial Owner or any of its affiliates to be in violation of any Finance Document or their respective constitutional documents. Any party to this Deed and, for so long as any of the Beneficial Owner's or its affiliates' obligations under the Finance Documents remain outstanding, any holders of any loans (or any trustee or other representative thereof) may bring a proceeding to set aside and enjoin the performance of any act or acts by the Trustee, acting in such capacity, that are not required or authorised by this Deed.

3.
THE TRUSTEE

3.1
Status

The Trustee hereby represents and warrants that it is a company duly incorporated and validly existing under the laws of Ireland.

3.2
Removal

Notwithstanding anything to the contrary contained in the Trustee Act 1893, the Trustee may be removed at any time with or without cause by a written instrument or instruments signed by the Beneficial Owner and delivered to the Trustee. Such removal shall take effect immediately upon the appointment of a successor Trustee pursuant to clause 3.4, whereupon all powers, rights and obligations of the removed Trustee under this Deed (except the rights set forth in clauses 3.8 and 6) shall cease and terminate.

3.3
Resignation

The Trustee may resign at any time upon giving 30 days' prior written notice of such resignation to the Beneficial Owner. Such resignation shall take effect only upon the appointment of a successor Trustee pursuant to clause 3.4 (except, however, in the case of (i) the Parent's or the Beneficial Owner's respective failure to comply with the indemnification requirements in clause 6 (including, for the avoidance of doubt, the representation and warranty of the Beneficial Owner in Clause 6.3), or (ii) the Beneficial Owner's failure to pay fees and expenses pursuant to clause 3.8, or (iii) the Parent ceasing to satisfy the Trustee's credit criteria and a further indemnity (in substance equivalent to that contained in clause 6) not being provided to the Trustee by an entity which satisfies the Trustee's credit criteria and is otherwise satisfactory to it, in which case the Trustee's resignation shall be effective 30 days after giving written notice to the Beneficial Owner), whereupon all powers, rights and obligations of the resigning Trustee under this Deed (except the rights set forth in clauses 3.8 and 6) shall cease and terminate. Such successor trustee shall be incorporated in a jurisdiction
MY0/759988-000001/24565729v2    5







acceptable to the Beneficial Owner (acting reasonably) and shall assume all powers, rights and obligations of the Trustee hereunder immediately upon the resignation of the Trustee becoming effective. This clause 3.3 is without prejudice to the right of the Trustee to resign with immediate effect and without notice in the circumstances set out in the last sentence of clause 6.2.

3.4
Successor Trustee

(a)
Promptly upon receipt of a notice of resignation from the Trustee in accordance with clause 3.3, or in circumstances in which the Trustee is removed in accordance with clause 3.2 or where a vacancy occurs in the position of Trustee in accordance with clause 3.7, a successor trustee shall be appointed by a written instrument signed by a duly authorised officer of the Beneficial Owner and the successor trustee shall execute and deliver to the predecessor Trustee an instrument accepting such appointment.

(b)
If a successor Trustee shall not have been appointed within 30 days after such notice of resignation or removal, the Trustee or the Beneficial Owner may apply to any court of competent jurisdiction to appoint a successor Trustee to act until such time, if any, as a successor shall have been appointed as provided in sub-paragraph (a) above. Any successor Trustee so appointed by such court shall immediately and without further act be superseded by any successor Trustee appointed in accordance with the provisions of sub-paragraph (a) above.

(c)
Such successor Trustee shall assume all powers, rights and obligations of the predecessor Trustee hereunder immediately upon the resignation or removal of the predecessor Trustee becoming effective. All costs and expenses of any succession (including with respect to the transfer to the successor Trustee, upon the terms of this Trust, the Trust Estate and with respect to any necessary perfection of security interests in the Aircraft and any Lessor Documents) shall be the responsibility of the successor trustee unless such succession resulted from a removal of the Trustee by the Beneficial Owner or a resignation by the Trustee as provided in the parenthetical phrase of the second sentence of clause 3.3, in which case they shall be the responsibility of the Beneficial Owner.

(d)
Notwithstanding the provisions of clause 3.2 and clause 3.4(c) above, while any sum remains due and outstanding to the Trustee under clause 3.8 or clause 6 hereof:

(i)
the Beneficial Owner shall not be entitled to remove the Trustee and appoint a successor Trustee without the prior written consent of the Trustee; and

(ii)
unless written consent has been provided by the Trustee in accordance with
(i)    above, the Trustee shall not be obliged to take any action contemplated by clause 3.4(c).

3.5
Merger

Any corporation into which the Trustee, in its individual capacity, may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee, in its individual capacity, shall be a party, or any corporation to which substantially all the corporate trust business of Trustee, in its individual capacity, may be transferred, shall be, subject to the terms of clause 3.4, the Trustee without further act.

3.6
Tax Returns


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The Trustee shall be responsible for keeping all appropriate books and records relating to the receipt and disbursement by the Trustee of monies under this Deed or any agreement contemplated hereby. The Beneficial Owner shall be responsible for causing to be prepared and filed all tax returns required to be filed by the Beneficial Owner. The Trustee shall sign and/ or file all returns with respect to taxes as the Beneficial Owner may cause to be prepared and direct the Trustee to sign and/ or file. The Beneficial Owner, upon request, will furnish the Trustee with all such information as may reasonably be required from the Beneficial Owner in connection with the preparation of such tax returns.

3.7
Vacancies

If any vacancy shall occur in the position of Trustee for any reason, including, without limitation, removal, resignation, or the inability or refusal of such Trustee to act as Trustee, the vacancy shall be filled in accordance with clause 3.4.

3.8
Fees, Etc.

The Beneficial Owner shall pay, or cause to be paid, to the Trustee, in its individual capacity, reasonable compensation, as separately agreed by the Beneficial Owner and the Trustee, for its administration of the Trust and for the proper exercise of its powers and performance of its duties under this Deed. The Beneficial Owner shall also reimburse, or cause to be reimbursed, the Trustee for the reasonable costs and expenses (including reasonable legal fees but excluding general overhead charges) incurred by it in the administration of this Deed.

3.9
No Duties

The Trustee shall have no duties except those expressly set forth in this Deed and those duties provided for by applicable law. Without prejudice to the generality of the foregoing, the Trustee shall not have any duty:

(a)
to obtain any insurance on the Aircraft or maintain any such insurance;

(b)
to see to the payment or discharge of any tax, assessment or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against, the Aircraft or the Trust Estate (provided, however, that Trustee shall not create, permit or suffer to exist any lien or encumbrance on any part of the Aircraft or the Trust Estate which results from claims against Trustee unrelated to its capacity as Trustee hereunder);

(c)
to confirm or verify any notices or reports other than to furnish the Beneficial Owner with a copy of each notice or report furnished to Trustee with respect to the Aircraft;

(d)
to inspect the Aircraft at any time; or

(e)
except as set forth herein, to be responsible for any recording or the maintenance of any such recording or filing with any relevant government agency.

3.10
Status of Monies Received

All monies (if any) received by the Trustee under or pursuant to any provision of this Deed (other than pursuant to clause 3.8 and clause 6) or any Lessor Document shall constitute trust funds for the purpose for which they are paid or held, and shall be segregated from any other monies and deposited by Trustee under such conditions as may be prescribed or permitted by law for trust funds and the Trustee shall not be liable for any interest thereon, except as may be separately agreed with the Beneficial Owner.


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3.11
Trustee May Rely

(a)
The Trustee shall not incur any liability to anyone in acting or refraining from acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and reasonably believed by it to be signed by the proper party or parties. The Trustee may accept a copy of a resolution of the board of directors of any corporate party, certified by the secretary, an assistant secretary or any other duly appointed officer of said party, as duly adopted and in full force and effect and as conclusive evidence that such resolution has been adopted by said board and is in full force and effect. As to any fact or matter, the manner or ascertainment of which is not specifically described herein, the Trustee may absent actual knowledge to the contrary for all purposes hereof rely on a certificate, signed by or on behalf of the party executing such certificate, as to such fact or matter, and such certificate shall constitute full protection of the Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon. In the administration of the Trust, the Trustee may, at the reasonable cost and expense of the Beneficial Owner, seek advice of counsel, accountants and other skilled persons to be selected and employed by them, and the Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the actions, advice or opinion of any such counsel, agents, accountants or other skilled persons. If the approval of such cost and expense by the Beneficial Owner is unreasonably withheld, the Trustee shall be released from its obligations to perform the specific service in relation to which the approval was requested.

(b)
If at any time the Trustee determines that it requires or desires guidance regarding the application of any provision of this Deed or any other document, regarding compliance with any direction it receives hereunder, the Trustee may deliver a notice to the Beneficial Owner requesting written instructions as to such application or compliance, and such instructions by or on behalf of the Beneficial Owner, as applicable, shall constitute full and complete authorization and protection for actions taken and other performance by the Trustee in reliance thereon. Until the Trustee has received such instructions after delivering such notice, it may, but shall be under no duty to, take or refrain from taking any action with respect to the matters described in such notice and the Trustee shall not incur any liability to the Beneficial Owner for any such act or omission.

(c)
The Trustee may appoint and pay at the expense of the Trust Estate any person or persons in any part of the world to act as its attorneys or agents for the purposes of administering, managing or doing any act in relation to the property forming part of the Trust Estate or for the purpose of executing or exercising any discretion, trust or power vested in the Trustee in relation to any such property, with such ancillary powers and with and subject to such provisions and restrictions as the Trustee may think fit, including a power to appoint substitutes, and the Trustee shall not by reason only of its having made such appointment be responsible for any loss arising out of or occasioned by the act or omission of any person or persons so appointed.

(d)
In the administration of Trusts under this Deed, the Trustee may execute any of the trusts or powers and perform its powers and duties directly or through agents or attorneys.

3.12
Trustee Acts as Trustee

(a)
In accepting the Trust, the Trustee acts solely as trustee hereunder and not in any individual capacity, and all persons (other than the Beneficial Owner pursuant to

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clause 3.12(b)) having any claim against the Trustee by reason of the transactions contemplated hereby shall not have any recourse to the Trustee in its individual capacity, except as expressly provided herein.

Each Trustee from time to time, in its individual capacity, shall only be liable for losses and/ or damages suffered by the Beneficial Owner and expenses incurred by the Beneficial Owner resulting from fraud and/ or gross negligence and/ or willful misconduct on the part of such Trustee, its directors, officers, servants, agents and/ or employees in the performance and/ or exercise by such Trustee of its duties and responsibilities under this Deed. Notwithstanding anything to the contrary herein or any rule of law or of equity, the Trustee shall not in any circumstance be liable for any indirect or consequential loss or damage of any nature suffered by the Beneficial Owner or any other person arising out of or in connection with the performance or non-performance by the Trustee its directors, officers, servants, agents and/ or employees of its responsibilities under this Deed or in any other way in connection with this Deed.

3.13
No Expenses for Trustee

The Trustee shall not have any obligation by virtue of this Deed to expend or risk any of its own funds, or to take any action which could, in the reasonable opinion of the Trustee, result in any cost or expense being incurred by the Trustee, if it shall have reasonable grounds for believing that repayment of such funds is not assured to it. The Trustee shall not be required to take any action or refrain from taking any action under this Deed unless it shall have been indemnified and/ or secured and/ or pre-funded by the Beneficial Owner in a manner and form satisfactory to the Trustee against any liability, cost or expense (including reasonable legal fees) which may be incurred in connection therewith. Notwithstanding any provision of this Deed the Trustee shall not be required to act in any manner directed by the Beneficial Owner which will, or is reasonably likely to, or the Trustee has been advised by counsel will, cause the Trustee to be in breach of any applicable law or regulation or which will or might expose the Trustee to personal liability.

3.14
Certain Duties and Responsibilities of Trustee

(a)
The Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Deed or as instructed by the Beneficial Owner, and no implied duties, covenants or obligations shall be read into this Deed against the Trustee; the Trustee agrees that it will not manage, control, possess, use, sell, lease, dispose of or otherwise deal with the Aircraft or any other part of the Trust Estate, except as required by the terms of the agreements executed by the Trustee in accordance with this Deed and as otherwise expressly provided herein or as expressly instructed by the Beneficial Owner in writing, and in no event will the Trustee permit any party to possess or use the Aircraft except as required or permitted by the terms of the agreements executed by the Trustee in accordance with this Deed.

(b)
Whether or not herein expressly so provided every provision of this Deed relating to the conduct or affecting the liability of, or affording protection to, the Trustee (in its individual capacity) shall be subject to the provisions of clause 3.13 and this clause 3.14.

(c)
Notwithstanding anything else herein to the contrary, each Trustee from time to time hereby agrees that it will, in its individual capacity and at its own cost or expense (but without any right of indemnity in respect of any such cost or expense under clause 6 hereof) promptly take such action as may be necessary to duly discharge and


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satisfy in full (i) any lien or encumbrance on the Trust Estate attributable to it in its individual capacity (other than any lien as permitted by clause 6.2 below), (ii) any liens or encumbrances created as a result of its breach of any of its express obligations under this Deed on any part of the Trust Estate, or on any properties of the Trustee assigned, pledged or mortgaged as part of the Trust Estate which arise from acts of such Trustee in its individual capacity; and (iii) any other lien or encumbrance attributable to such Trustee in its individual capacity on any part of the Trust Estate which results from claims against such Trustee in its individual capacity unrelated to the Trust Estate, the administration of the Trust Estate or the transaction contemplated by this Deed and any other transaction documents, if applicable.

3.15
No Representations or Warranties as to the Aircraft or Documents THE TRUSTEE MAKES:
(a)
NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT OR AS TO THE TITLE THERETO, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT, EXCEPT THAT WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED, IN ITS INDIVIDUAL CAPACITY, WARRANTS THAT ON THE DATE OF ACQUISITION OF THE AIRCRAFT BY THE TRUSTEE, THE TRUSTEE SHALL HAVE RECEIVED WHATEVER RIGHTS, TITLES AND INTERESTS THEREIN THAT WERE CONVEYED TO IT; AND

(b)
NO REPRESENTATION OR WARRANTY AS TO THE VALIDITY, LEGALITY OR ENFORCEABILITY OF THIS DEED OR ANY LESSOR DOCUMENTS OR OTHER OPERATIVE DOCUMENTS (AS SUCH TERM (OR ANY COMPARABLE TERM) MAY BE DEFINED IN ANY LEASE OR FINANCING DOCUMENTS TO WHICH THE AIRCRAFT IS SUBJECT AT THE TIME) OR AS TO THE CORRECTNESS OF ANY STATEMENT CONTAINED IN ANY THEREOF, OTHER THAN TO THE EXTENT EXPRESSLY MADE HEREIN OR THEREIN BY THE TRUSTEE, AND EXCEPT THAT WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED, IN ITS INDIVIDUAL CAPACITY, REPRESENTS AND WARRANTS THAT IT HAS FULL RIGHT, POWER AND AUTHORITY TO ENTER INTO, EXECUTE AND PERFORM THIS DEED AND ITS OBLIGATIONS HEREUNDER ARE LEGAL, VALID, BINDING AND ENFORCEABLE.

4.
THE TRUST ESTATE

4.1
Authorization and Direction to Trustee

The Beneficial Owner hereby authorises and directs the Trustee, not individually but solely as Trustee hereunder, and the Trustee covenants and agrees for the benefit of the Beneficial Owner, upon the written instructions of the Beneficial Owner (or its duly authorised representatives) and subject to receipt by the Trustee of all information deemed by it to be necessary or desirable for such purposes, and subject further to the Trustee being satisfied that it will not incur any personal liability as a result:

(a)
to acquire legal title to the Aircraft as anticipated by and in accordance with the terms of this Deed;

(b)
to effect the registration of the Aircraft with such aviation authority as the Beneficial Owner may require by executing, delivering, recording or filing such documents or notices as shall be specified in such instructions;


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(c)
to execute and deliver each other document which the Trustee is required to deliver pursuant to this Deed or by the relevant aviation authority; and

(d)
to execute, deliver, record and file, and to perform, and to exercise rights, powers and remedies under, such Leases, Finance Documents, Lessor Documents and other agreements as shall be specified in such instructions, including such mortgages, promissory notes, guaranties, security agreements and collateral assignments in connection with financing or refinancing the purchase of the Aircraft or any agreements relating to the purchase, sale or leasing of the Aircraft and to take all other reasonable actions in any applicable jurisdiction in accordance with the direction of the Beneficial Owner as the Beneficial Owner may deem necessary or advisable (including, without limitation in connection with the Cape Town Convention on International Interests in Mobile Equipment and the Aircraft Equipment Protocol thereto).

4.2
Supplier Warranties

The Beneficial Owner hereby assigns to the Trustee to hold upon the Trusts hereby created any and all warranties and indemnities of and other claims the Beneficial Owner may have against any transferor or supplier relating to the Aircraft or any part thereof, subject to obtaining the consent of the relevant transferor or supplier, effective upon the conveyance of title to the Aircraft to the Trustee, and the Beneficial Owner shall be deemed to have assigned to the Trustee any and all such warranties, indemnities and claims relating to any replacement engine upon the conveyance of title to such replacement engine to the Trustee pursuant to any lease.

4.3
Action Upon Instructions

Upon written instructions only at any time and from time to time of the Beneficial Owner (or its duly authorised representatives), the Trustee will take each of the following actions, not inconsistent with the provisions of this Deed or any other Lessor Documents as may be specified in such instructions: (a) give such notice or direction or exercise such right, remedy or power under this Deed or any of the other Operative Documents or in respect of all or any part of the Trust Estate, or take such other action, as shall be specified in such instructions; (b) take such action to preserve or protect the Trust Estate (including the discharge of liens) as may be specified in such instructions; (c) approve as satisfactory to it all matters required by the terms of any lease to which the Aircraft is subject and the other Operative Documents to be satisfactory to the Trustee, it being understood that without written instructions of the Beneficial Owner, the Trustee shall not approve any such matter as satisfactory to it; (d) subject to the rights of any lessee under any applicable lease, convey all or part of the Trustee's right, title and interest in and to the Trust Estate for such amount, on such terms and to such buyer or buyers as shall be designated in such instructions, or retain, lease or otherwise dispose of, or from time to time take such other action with respect to, the Trust Estate on such terms as shall be designated in such instructions; (e) take any action the Beneficial Owner may reasonably specify as may be necessary with respect to the Aircraft and/ or the Lessor Documents in order to comply with the Beneficial Owner's obligations thereunder; and (f) take or refrain from taking such other action or actions as may be specified in such instructions. In the event that the Trustee is unsure of the application of any provision of this Deed or any other agreement relating to the transactions contemplated hereby, the Trustee may request and rely upon instructions of the Beneficial Owner (or its duly authorised representatives). The Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with such instructions.





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5.
DISTRIBUTIONS

5.1
Receipts

The Trustee shall direct that all payments in respect of the Trust Estate be paid directly to the Beneficial Owner. Except as otherwise provided in this Deed, any payment received by the Trustee for which no provision as to the application thereof is made in this clause 5 shall, unless the Beneficial Owner shall have otherwise instructed the Trustee in writing, be distributed promptly to the Beneficial Owner or as it has instructed.

5.2
Manner of Making Distributions

All monies, proceeds and funds in respect of the Trust Estate ("Trust Monies") shall be paid directly to the Beneficial Owner. If, however, any Trust Monies are received by the Trustee, the Trustee shall distribute such Trust Monies to the Beneficial Owner promptly upon the receipt of such Trust Monies, but shall not be obligated to make any distributions until the Trust Monies have been received by the Trustee from the Trust Estate. All distributions to the Beneficial Owner hereunder shall be made to such account and in such manner as the Beneficial Owner shall from time to time direct in writing.

6.
INDEMNIFICATION

6.1
Indemnification of Trustee by the Beneficial Owner and Parent

(a)
The Parent and the Beneficial Owner hereby agree, jointly and severally, whether or not any of the transactions contemplated hereby shall be consummated, to assume liability for, and to indemnify, protect, save and keep harmless each Trustee from time to time, each in its individual capacity, and its successors, assigns, legal representatives, officers, directors, owners, shareholders, affiliates, employees, agents and servants (collectively, the "Trustee Indemnitees", each a "Trustee Indemnitee") from and against, any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by each Trustee in its individual capacity on or measured by any compensation received by each Trustee in its individual capacity for its services hereunder), claims, actions, suits, costs, expenses or disbursements (including, without limitation, reasonable ongoing fees of such Trustee and reasonable legal fees and expenses) of any kind and nature whatsoever which may be imposed on, incurred by or asserted against each Trustee in its individual capacity (whether or not also indemnified against by any other person) in any way relating to or arising out of this Deed or the enforcement of any of its terms or in any way relating to or arising out of the manufacture, purchase, acceptance, non-acceptance, rejection, ownership, delivery, lease, sublease, possession, use, operation, condition, sale, return or other disposition of any of the Aircraft (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Estate or the action or inaction of such Trustee, in its individual capacity or in its capacity as trustee of the Trust, hereunder except (a) in the case of wilful misconduct or gross negligence on the part of such Trustee, in its individual capacity or in its capacity as trustee of the Trust, in the performance or non-performance of its duties hereunder, or (b) in the case of the failure to use ordinary care on the part of such Trustee, in its individual capacity or in its capacity as trustee of the Trust, in the disbursement of funds actually received by it in accordance with the terms of the Operative Documents (as such term (or any comparable term) may be defined in any lease to which the Aircraft is subject). The indemnities contained in this clause 6 extend to each Trustee from time to time only in its individual capacity and shall not be construed as indemnities in favour of the


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Trust Estate. The indemnities contained in this clause 6 shall survive the termination of this Deed and the resignation or removal of any person from time to time acting as Trustee.

(b)
Each of the Parent and the Beneficial Owner shall be subrogated to any right of the Trustee in respect of any matter indemnified by the Parent or the Beneficial Owner hereunder.

(c)
The indemnities contained in this clause 6 shall be in addition to, and not in substitution for, any and all rights of indemnity which the Trustee, in its individual capacity, is entitled to claim out of the Trust Estate in respect of any claims, actions, suits, costs, expenses, costs or losses suffered by it.

(d)
This clause 6 shall continue to bind the Parent notwithstanding:

(i)
any amalgamation or reconstruction that may be effected by the Parent with any other company or person, or

(ii)
any transfer of its business or any part thereof, or

(iii)
any change in its constitution.

(e)
This clause 6 shall continue to bind the Parent and the Beneficial Owner notwithstanding any transfer of Beneficial Interest in the Trust Estate pursuant to clause 8.9 in respect of any matter having taken place before the effective date of such transfer, regardless of whether such matter was discovered prior to or following the effective date of such transfer.

(f)
The Parent shall procure that this clause 6 shall continue to be binding on any company or corporation for the time being carrying on the Parent's business or any part thereof as successor to, or assignee of, the Parent, whether or not such company or corporation shall differ in its name, objects, character or constitution from the Parent, it being the intent that this clause 6 shall remain binding on any such company or corporation, enforceable against such company or corporation in the same manner to all intents and purposes as if such company or corporation had been expressly named and referred to herein instead of the Parent.

(g)
The Parent undertakes with the Trustee to notify any such company or corporation as is referred to in clause 6.l(e) of the terms of this clause 6 and to notify the Trustee in writing of the name and address of, and the contact person within, any such company or corporation as soon as practicable after the occurrence of any one or more of the events described in this clause.

6.2
Aircraft Liability Insurance

The Beneficial Owner shall maintain or cause to be maintained third party liability insurance for the Aircraft covering the Trustee Indemnitees as additional insureds, such insurance to be carried by the Beneficial Owner if no lessee of the Aircraft is providing such insurance or in the amount provided under the applicable lease if a lessee of the Aircraft is providing such insurance. Notwithstanding the foregoing, the Trustee shall not be under any obligation to insure any of the Trust Estate or any deeds or documents of title or other evidence in respect of the Trust Estate or to require any other person to maintain any such insurance or monitor the adequacy of any such insurance and shall not be responsible for any liability which may be suffered by any person as a result of the lack of or inadequacy of any such insurance. Notwithstanding anything herein to the contrary, if at any time during the term of this Deed,


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following the expiry of 30 days from the receipt by the Beneficial Owner of a written request from the Trustee for evidence that the insurance coverage as specified herein is in full force and effect, the Trustee has not received reasonably satisfactory evidence of such insurance coverage, the Trustee may immediately resign without prior written notice to the Beneficial Owner.

7.
TERMINATION

7.1
Termination

The Beneficial Owner shall be entitled at any time to terminate the trust created by this Deed by written notice to the Trustee, at which time the Trustee shall, at the direction of the Beneficial Owner, forthwith transfer, assign and convey (by way of bill of sale in the form instructed by the Beneficial Owner) the legal title to the Aircraft to the Beneficial Owner or such other person as the Beneficial Owner may nominate.

7.2
Termination Date

The Trust shall terminate without any notice or other action of Trustee upon the sale or other transfer of all of the Aircraft from the Trust Estate and the final distribution of all other property or proceeds constituting part of the Trust Estate.

7.3
Distribution of Trust Estate Upon Termination

Upon any termination of the Trust pursuant to the provisions of clause 7.1, the Trustee shall transfer, assign and/ or convey to the Beneficial Owner or its nominee the Trust Estate.

8.
MISCELLANEOUS

8.1
Nature of Title of the Beneficial Owner

The Beneficial Owner shall not have legal title to any part of the Trust Estate but shall hold the beneficial interest in the Trust Estate hereunder absolutely as against the Trustee. No transfer, by operation of law or otherwise, of the right, title and interest of the Beneficial Owner in and to the Trust Estate or the trusts hereunder, in accordance with the terms hereof, shall operate to terminate this Deed or the trusts hereunder or entitle any successor or transferee of the Beneficial Owner to an accounting or to the transfer to it of legal title to any part of the Trust Estate.

8.2
Power of Trustee to Convey

The Trustee shall sell, assign or transfer all or any part of the Aircraft (by way of bill of sale in the form instructed by the Beneficial Owner) only as the Beneficial Owner may in its sole discretion direct and such sale, assignment or transfer shall bind the Beneficial Owner and shall be effective to transfer or convey all right, title and interest of the Trustee and the Beneficial Owner in and to the Aircraft or such part thereof. No permitted buyer or other permitted grantee shall be required to inquire as to the authorisation, necessity, expediency or regularity of such assignment, sale, transfer or conveyance or as to the application of any sale or other proceeds with respect thereto by the Trustee.

8.3
Declaration of Trust for Benefit of Certain Parties Only

Nothing herein, whether express or implied, shall be construed to give any person other than the Trustee and the Beneficial Owner any legal or equitable right, remedy or claim under or



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in respect of this Deed; but this Deed shall be held to be for the sole and exclusive benefit of the Trustee and the Beneficial Owner.

8.4
Notices

(a)
Unless otherwise expressly provided herein, all notices, instructions, demands and other communications hereunder shall be in writing and shall be delivered personally or sent by facsimile transmission or electronic mail, with a confirming copy sent by airmail, postage prepaid, and the date of personal delivery or facsimile transmission, as the case may be, shall be the date of such notice, in each case addressed:

(1)
if to the Trustee to:    Wilmington Trust SP Services (Dublin) Limited

Attn:    Managing Director

Address:    Fourth Floor
3 George's Dock IFSC
Dublin 1
Ireland

Email:    ireland@wilmingtontrust.com



(2)
if to the Beneficial Owner to:

Contrail Aviation Leasing, LLC

Attention:    Joe Kuhn

Address:
435 Investment Court Verona, Wisconsin 53593 U.S.A.

Email:    joe@contrail.com



(b)
From time to time any party may designate a new address for purposes of notices and communications by written notice to the other parties.

8.5
Co-Trustee and Separate Trustees

(a)
If at any time it shall be necessary or prudent in order to conform to any law of any jurisdiction in which all or any part of the Trust Estate is located, or the Trustee or the Beneficial Owner being advised by counsel shall determine that it is so necessary or prudent in the interest of the Beneficial Owner or the Trustee, or the Trustee shall have been directed to do so by the Beneficial Owner, the Trustee and the Beneficial Owner shall execute and deliver an agreement supplemental hereto and all other instruments and agreements necessary or proper to constitute another bank or trust company or one or more persons approved by the Trustee and the Beneficial Owner,
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to act as co-trustee jointly with the Trustee (any such co-trustee being herein referred to as an "additional trustee"). In the event the Beneficial Owner shall not have joined in the execution of such agreements supplemental hereto within 10 Business Days after the receipt of a written request from the Trustee so to do, the Trustee may act under the foregoing provisions of this clause 8.5 without the concurrence of the Beneficial Owner, and the Beneficial Owner hereby appoints the Trustee its agent and attorney-in-fact to act for it under the foregoing provisions of this clause 8.5 in either of such contingencies.

(b)
Every additional trustee hereunder shall, to the extent permitted by law, be appointed and act, and Trustee and its successors shall act, subject to the following provisions and conditions:

(i)
all powers, duties, obligations and rights conferred upon the Trustee in respect of the custody, control and management of monies, the Aircraft or documents authorised to be delivered hereunder shall be exercised or performed by the Trustee and such additional trustee jointly;

(ii)
all other rights, powers, duties and obligations conferred or imposed upon the Trustee shall be conferred or imposed upon and exercised or performed by the Trustee and such additional trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (including the holding of title to the Trust Estate) the Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such additional trustee;

(iii)
no power given to any such additional trustee shall be exercised hereunder by such additional trustee, except jointly with, or with the consent in writing of, the Trustee;

(iv)
no trustee hereunder shall be personally liable by reason of any act or
omission of any other trustee hereunder;

(v)
the Beneficial Owner, at any time, by an instrument in writing may remove any such additional trustee. In the event that the Beneficial Owner shall not have executed any such instrument within 10 days after the receipt of a written request from the Trustee so to do, the Trustee shall have the power to remove any such additional trustee without the concurrence of the Beneficial Owner; and the Beneficial Owner hereby appoints the Trustee its agent and attorney-in-fact for it in such contingency; and

(vi)
no appointment of, or action by, any additional trustee will relieve the Trustee of any of its obligations under, or otherwise affect any of the terms of, this Deed or the agreements executed by the Trustee in accordance with this Deed.

8.6
Governing Law and Jurisdiction; Severability

The Trust has been accepted by the Trustee and will be administered in Ireland. The validity, construction and enforcement of this Deed (and any non-contractual obligations arising out of or in connection with this Deed) shall be governed by the laws of Ireland. The courts of Ireland shall have jurisdiction to hear any disputes or matters (whether relating to contractual or non-contractual obligations) that arise out of or in connection with this Deed. If any provision of this Deed shall be invalid or unenforceable, the remaining provisions hereof


MY0/759988-000001/24565729v2    16








shall continue to be fully effective, provided that such remaining provisions do not increase the obligations or liabilities of the Trustee.

8.7
Amendment

This Deed may not be amended, modified, supplemented, or otherwise altered except by an instrument in writing signed by the parties hereto.

8.8
Successors and Assigns

In accordance with the terms hereof, this Deed shall be binding upon and shall inure to the benefit of, and shall be enforceable by, the parties hereto and their respective successors and permitted assigns, including any successive holder of all of the Beneficial Owner's beneficial interest in the Trust Estate.

8.9
Transfers of Beneficial Interest in Trust Estate

The Beneficial Owner will be entitled to assign all (but not part only) of its rights and interest in and to the Trust Estate as set out in this Deed to a third party (the "New Beneficial Owner") by delivering to the Trustee, and procuring that each of the New Beneficial Owner and the Parent delivers to the Trustee, an Assignment of Beneficial Interest executed by the Beneficial Owner, the New Beneficial Owner and the Parent, or their respective attorneys, duly authorised in writing. Any such assignment shall be subject to the Trustee receiving (i) all required documentation and other evidence as may be requested by the Trustee to comply with all necessary "Know Your Customer" or other similar checks under all applicable laws and regulations and (ii) the applicable fee as agreed between the Trustee and the Beneficiary.

8.10
Trustee not required to recognise sub-trusts

Except as required by law, no person shall be recognised by the Trustee as holding any beneficial interest in the Trust Estate upon any trust (other than the Trust hereby constituted) and the Trustee shall not be bound by or be compelled in any way to recognise (even when having notice thereof) any equitable, contingent, future or partial interest in any beneficial interest in the Trust Estate or any interest in any fractional part of a beneficial interest in the Trust Estate or any other rights in respect of the Trust Estate except as hereby constituted, but this shall not preclude the Trustee from requiring the Beneficial Owner to furnish the Trustee with information as to the ultimate beneficial ownership of the Trust Estate when such information is reasonably required by the Trustee for the proper administration of the Trust hereby constituted.

8.11
Transfer of Owner Trustee's interests

The Trustee shall have no right to transfer, assign or convey in any manner its rights or interest under this Deed except as expressly provided in clause 3.4, clause 8.2 and clause 8.5.

8.12
Headings and Table of Contents

The headings of the clauses and Schedules of this Deed and the Table of Contents are inserted for convenience only and shall not affect the meaning or construction of any of the provisions hereof.






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8.13    Counterparts

This Deed may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, and such counterparts together shall constitute and be one and the same instrument.



[Execution page follows]




















































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DECLARATION OF TRUST (MSN 29922) - EXECUTION PAGE


IN WITNESS WHEREOF, this Deed has been executed as a deed and each party executes and delivers it as a deed.

SIGNED and DELIVERED as a Deed for and on behalf of
CONTRAIL AVIATION LEASING, LLC
as Initial Beneficial Owner

by _______________________
Director
in the presence of: Signature:
Name:
Address:

SIGNED and DELIVERED as a Deed for and on behalf of
CONTRAIL AVIATION SUPPORT, LLC
as Parent

by ______________________
Director
in the presence of: Signature:
Name: Address:


SIGNED and DELIVERED as a Deed for and on behalf of
WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED
as Initial Trustee

by /s/                
its duly authorised attorney
in the presence of: Signature: Signature:
Name:
Address:    




MY0/759988-000001/24565729v2    19


Form of Assignment of Beneficial Interest


This Assignment of Beneficial Interest, dated as of [•], is made by the undersigned, being [•] (the "Seller"), and [•] (the "Buyer").

We refer to that certain Declaration of Trust (MSN [•]) dated as of [•] (the "Trust Deed") between the Seller, as Beneficial Owner, [•], and [•], as Trustee in respect of one (1) [_]with serial number [•] (the "Aircraf t") (in such capacity, the "Trustee").

Capitalised terms used herein and not otherwise defined shall have the meanings attributed thereto in the Trust Deed.

The Seller, as the sole Beneficial Owner under the Trust Deed and the sole legal and beneficial owner of the beneficial interest (the "Beneficial Interest") in the Trust Estate (as defined in the Trust Deed), hereby sells, assigns, conveys, transfers and sets over to the Buyer, all of the Seller's right, title and interest in and to the Beneficial Interest.

The Seller hereby warrants to the Buyer, its successors and assigns, that (i) there is hereby irrevocably conveyed to the Buyer full beneficial title to the Beneficial Interest, free and clear of all Liens (other than Permitted Encumbrances) (each term as defined in the relevant Finance Documents) and (ii) the Trustee holds full legal title to the Aircraft for the benefit of the Seller as sole holder of the Beneficial Interest free and clear of all Liens (other than Permitted Encumbrances).

The Seller agrees with the Buyer, and its successors and assigns, that the Seller will warrant and defend such title to the Beneficial Interest and such title of the Trustee in the Aircraft forever against all claims and demands whatsoever (other than Permitted Encumbrances).

This Assignment of Beneficial Interest may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, and such counterparts together shall constitute and be one and the same instrument.

This Assignment of Beneficial Interest and all non-contractual obligations arising out of or in connection therewith shall be governed by and construed in accordance with the laws of Ireland.

This Assignment of Beneficial Interest is executed and delivered as a deed.

SIGNED and DELIVERED as a Deed for and on behalf of
[•]
as Seller

by
its duly authorised attorney
in the presence of: Signature:
Name: Address:








The above and foregoing Assignment of Beneficial Interest is hereby accepted and agreed to on the day and year first above written. By its execution and delivery to the Trustee of this Assignment of Beneficial Interest, the Buyer hereby covenants in favour of the Trustee that it will, with effect from the date hereof, be bound by the terms of the Trust Deed as Beneficial Owner, including, without limitation, clause 6 thereof (Indemnification). By its execution and delivery to the Trustee of this Assignment of Beneficial Interest, the Parent hereby confirms its consent to the assignment of the Beneficial Interest in the Trust Estate effected hereby and that it shall remain bound by the terms of the Trust Deed as Parent, including, without limitation, clause 6 thereof (Indemnification).

SIGNED and DELIVERED as a Deed
for and on behalf of
[•]
as Buyer

by
its duly authorised attorney in the presence of:
Signature: Name: Address:


SIGNED and DELIVERED as a Deed for and on behalf of
[•]
as Parent

by
[Director/ its duly authorised attorney] in the presence of:
Signature: Name: Address:


Acknowledged by the Trustee

SIGNED and DELIVERED as a Deed for and on behalf of
[•]

as Trustee

by
its duly authorised attorney

in the presence of:

Signature: Name: Address:

Specification Sheet


Aircraft Type

Aircraf t MSN

Engine Type

Engine MSNs
Boeing 737-800
29922
CFM56-7B24
890420 and 890421


18172528v1



CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.

EXECUTION VERSION

DATED: 24 October 2019
SAPPHIRE AVIATION FINANCE I (UK) LIMITED
AS EXISTING LESSOR

WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED,
not in its individual capacity, but solely as owner trustee
AS NEW LESSOR
AND
MIAT MONGOLIAN AIRLINES
AS LESSEE
________________________________________________________
NOVATION AND AMENDMENT AGREEMENT
RELATING TO ONE (1) BOEING 737-800 AIRCRAFT
MANUFACTURER’S SERIAL NUMBER 29922,
IRISH REGISTRATION MARK EI-CSG
________________________________________________________
COUNTERPART NO. 1 OF 6 SERIALLY NUMBERED, MANUALLY EXECUTED COUNTERPARTS. TO THE EXTENT THAT THIS AGREEMENT CONSTITUTES CHATTEL PAPER UNDER ANY APPLICABLE LAW IN ANY JURISDICTION, NO SECURITY INTEREST IN THIS AGREEMENT MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART OTHER THAN COUNTERPART NO. 1


1


TABLE OF CONTENTS
Page
Section 1. Defined Terms and Interpretation    1
Section 2.    Effectiveness    2
Section 3.    Novation    2
Section 4.    Rent, Security Deposit and Maintenance Reserves    4
Section 5.    Delivery Matters    5
Section 6.    Payments to New Lessor    5
Section 7.    Run-off Insurances    5
Section 8.    Identification Plates    6
Section 9. Quiet Enjoyment    6
Section 10. Lease Amendments    6
Section 11. Cooperation    6
Section 12. Representations and Warranties    7
Section 13. Intentionally left blank    9
Section 14. Conditions Precedent    9
Section 15. Assignment    11
Section 16. Notices    11
Section 17. Sole and Entire Agreement    12
Section 18. Modifications    12
Section 19. Third Parties    12
Section 20. Counterparts; Chattel Paper Originals    12
Section 21. Delivery of Documents by Fax or E-mail    12
Section 22. Governing Law, etc    12
Section 23. Further Assurances    13
Section 24. Survival    13
Section 25. Headings    13
ANNEX A LEASE DOCUMENTS    17
ANNEX B AMENDMENTS TO LEASE DOCUMENTS    18
ANNEX C FORM OF EFFECTIVE TIME NOTICE    21
THIS NOVATION AND AMENDMENT AGREEMENT (this “Agreement”), is entered into on 24 October 2019, by and among (1) Sapphire Aviation Finance I (UK) Limited, a company incorporated under the applicable laws of England, and having its registered office at 3rd Floor, Suite 2, 11-12 St. James’s Square, London, England, SW1Y 4LB (“Existing Lessor”), (2) Wilmington Trust SP Services (Dublin) Limited, not in its individual capacity, but solely as owner trustee, a company limited by shares incorporated under the laws of Ireland, and having its registered officer at Fourth Floor, 3 George’s Dock, IFSC, Dublin 1, D01 X5X0 (“New Lessor”) and (3) MIAT Mongolian Airlines, a company organised and existing under the laws of Mongolia and having its principal place of business at MIAT Building, Buyant-Ukhaa 458 Khan-Uul district, Ulaanbaatar 17120, Mongolia (“Lessee”).
PRELIMINARY STATEMENTS:
(a)CIT Capital Aviation (UK) Limited (“Original Lessor”) and Lessee entered into an Aircraft Lease Agreement, dated as of 28 January 2008 (as amended, novated, restated, assigned or supplemented from time to time including by the lease supplement dated as of 21 April 2008 between Original Lessor and Lessee, the aircraft lease amendment agreement dated 22 December 2014 between Original Lessor and Lessee, the Novation and Amendment Agreement dated 26 July 2018 among Existing Lessor, Original Lessor and Lessee, and each of the other Lease Documents (as defined below), the “Lease”), pursuant to which Existing Lessor, as assignee and successor of Original Lessor, has leased to Lessee one (1) Boeing 737-800 aircraft bearing manufacturer’s serial number 29922 and Irish registration mark EI-CSG together with two (2) CFM56-7B24 engines bearing manufacturer’s serial numbers 890420 and 890421 (collectively, the “Aircraft”).
(b)    Sapphire Leasing I (AOE 5) Limited (“Existing Owner”) has agreed, among other things, to transfer title to the Aircraft to New Lessor (“New Owner”) subject to the Lease and New Lessor has agreed to acquire title to the Aircraft from Existing Owner.
(c)    Accordingly, with effect from the Effective Time (as defined below) and subject to the terms and conditions set forth herein, Existing Lessor will transfer by way of novation all of its rights, obligations and interest in, to and under the Lease and the agreements set forth in Annex A (collectively, the “Lease Documents”) to New Lessor, subject to the rights of Lessee.
(d)    Existing Lessor, New Lessor and Lessee have agreed to enter into this Agreement in order to, among other things, (i) effect the foregoing transfer, (ii) evidence Lessee’s acknowledgment of, and consent to, such transfer, and (iii) amend certain provisions of the Lease (the Lease as novated and amended by this Agreement being referred to herein as the “Novated Lease”).
NOW, THEREFORE, in consideration of the provisions herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each of the parties hereto, it is agreed as follows:
(e)    Defined Terms and InterpretationAny and all initially capitalised terms used herein and not otherwise defined herein shall have the meanings assigned thereto in the Lease.
(f)    The rules of interpretation set out in section 1 of the Lease shall apply to this Agreement as if set out in full herein provided that references therein to the “Lease” shall be construed as references to this Agreement.
Section 2.    Effectiveness. Subject to Section 3, the novation and amendment of the Lease contemplated by this Agreement (the “Novation”) will take effect at the Effective Time (as defined below).
Section 3.    Novation. The parties hereby agree to cooperate with one another in order to close the Novation at a convenient date and time when the Aircraft is in a jurisdiction reasonably acceptable to New Lessor and Existing Lessor on one of Lessee’s regular routes and as agreed by the parties hereto in the Effective Time Notice (defined below) (the “Effective Time”), it being acknowledged that (x) nothing herein shall require Lessee to change any of its scheduled or maintenance operations and (y) Lessee’s operations may be subject to change at any time. It shall be a condition to the occurrence of the Effective Time that the documents and evidence (i) to be provided by Lessee and Existing Lessor to New Lessor (in form and substance reasonably satisfactory to New Lessor) set out in Section 14(a) have been received by New Lessor in accordance with the terms and conditions thereof (the “New Lessor’s Conditions Precedent”), (ii) to be provided by Lessee and New Lessor to Existing Lessor (in form and substance reasonably satisfactory to Existing Lessor) set out in Section 14(b) have been received by Existing Lessor in accordance with the terms and conditions thereof (the “Existing Lessor’s Conditions Precedent”) and (iii) to be provided by New Lessor and Existing Lessor to Lessee (in form and substance reasonably satisfactory to Lessee) set out in Section 14(c) have been received by Lessee in accordance with the terms and conditions thereof (the “Lessee’s Conditions Precedent”). Lessee will, upon request by Existing Lessor, provide prior notice to Existing Lessor of the scheduled route of the Aircraft (and, if different, the airframe on which any Engine is installed, or of the storage location of such Engine, if not installed on an airframe) for the date that is scheduled for the Novation prior to such date. Upon the occurrence of the Effective Time, Existing Lessor and New Lessor shall promptly notify Lessee in writing of the time at which such transfer of the Aircraft shall have occurred by executing and delivering to Lessee an Effective Time Notice in the form attached as Annex C (the “Effective Time Notice”) and such execution and delivery shall constitute confirmation to Lessee that each of the New Lessor’s Conditions Precedent and the Existing Lessor’s Conditions Precedent have been satisfied or waived (as applicable). Subject to the satisfaction or waiver (as applicable) of the Lessee’s Conditions Precedent, Lessee shall promptly acknowledge the effectiveness of the novation of the Lease and the amendments to the Lease as so novated hereunder by executing and delivering to Existing Lessor and New Lessor the Effective Time Notice and such execution and delivery shall constitute confirmation to Existing Lessor and New Lessor that the Lessee’s Conditions Precedent have been satisfied or waived. Notwithstanding any other provision of this Agreement, the Effective Time shall not occur unless and until Lessee has executed and delivered to Existing Lessor and New Lessor the Effective Time Notice, and Lessee agrees that it will promptly execute and deliver the Effective Time Notice upon the satisfaction of the Lessee’s Conditions Precedent. At any time prior to execution of the Effective Time Notice, Existing Lessor or New Lessor may serve notice on Lessee that this Agreement is to be terminated and upon service of such notice, this Agreement shall terminate and be of no legal force or effect and the rights and obligations of the parties hereto (other than pursuant to Section 11(d)) shall be as if this Agreement had never been executed.
(a)    Effective as of the Effective Time, the following shall happen simultaneously and the occurrence of each is conditional on each of the other not being invalid, illegal or unenforceable:
(i)    (x) Existing Lessor assigns, conveys, transfers, novates and sets over to New Lessor all of Existing Lessor’s rights, benefits, liabilities and obligations and interests in, to and under the Lease Documents, arising on and after the Effective Time, subject to the rights of Lessee thereunder, (y) New Lessor accepts and assumes (except as may be otherwise expressly specified herein) all present and future rights, benefits, interests, liabilities and obligations of the “Lessor” in, to and under the Novated Lease relating to the period from and after the Effective Time, including (without limitation) all obligations to return the Security Deposit and to make any required payments in respect of any Maintenance Reserve Claim, in each case in accordance with the terms of the Novated Lease, and (z) Lessee will owe its present and future obligations and liabilities under the Novated Lease (to the extent such obligations and liabilities relate to the period from and after the Effective Time) to New Lessor;
(ii)    Existing Lessor and Lessee are each released by the other from their respective obligations, duties and liabilities to each other under the Lease and shall have no rights against or obligations to the other under the Lease on or after the Effective Time except that Existing Lessor agrees with Lessee that Existing Lessor will remain solely liable to Lessee for all obligations, duties and liabilities of “Lessor” under the Lease Documents which arose or relate to the period prior to the Effective Time (except as may be otherwise expressly specified herein). Existing Lessor will not be liable for any obligations of “Lessor” under the Novated Lease which arise on or after the Effective Time;
(iii)    Lessee agrees that it will not assert against New Lessor any claim or defence which it may have or have had against Existing Lessor under the Lease in respect of or attributable to the period prior to the Effective Time and New Lessor agrees that it will not assert any claim or defence against Lessee under the Lease in respect of or attributable to the period prior to the Effective Time;
(iv)    all Security Deposits and Maintenance Reserves held in cash by Existing Lessor in accordance with the Lease prior to the Effective Time shall be deemed to have been paid by Lessee to New Lessor and shall be deemed to be held by New Lessor for application in accordance with the provisions of the Novated Lease;
(v)    the Lease shall be novated and shall constitute an agreement between New Lessor as lessor and Lessee as lessee on the terms of the Novated Lease;
(vi)    the leasing of the Aircraft by Existing Lessor to Lessee terminates, and Lessee accepts the leasing of the Aircraft from New Lessor, on the terms and conditions of the Novated Lease;
(vii)    Lessee, Existing Lessor and New Lessor agree that Existing Lessor shall have no further rights under the Lease Documents, except that the disclaimers, insurance provisions and indemnities contained in the Lease Documents (including, without limitation, those contained in section 10.3 (Disclaimer; Waiver of Warranties; Waiver of Remedies), section 10.5 (No Duty of Indemnitees to Inspect, Etc.), section 18 (General Indemnity), section 19.2 (Liability Insurance) and section 21 (Taxes; Tax Indemnity) of the Lease) and any other provisions of the Lease Documents which survive the expiration or termination of the Lease shall continue in full force and effect for the benefit of Existing Lessor with respect to the period prior to the Effective Time, and for such purposes the term “Lessor” shall continue to include the Existing Lessor;
(viii)    New Lessor warrants, covenants and agrees with Lessee that on and after the Effective Time, New Lessor will perform all obligations to be performed by “Lessor” under the Novated Lease that arise on or after the Effective Time and will be bound by all of the terms thereof; and
(ix)    Lessee acknowledges and consents to the assignment, novation, transfer and assumption and agrees that (i) New Lessor, and not Existing Lessor, will be obligated to fulfill all of the obligations of “Lessor” under the Novated Lease which arise on and after the Effective Time and (ii) Lessee will perform all of Lessee’s obligations under the Novated Lease which arise on and after the Effective Time in accordance with the terms of the Novated Lease.
(b)    New Lessor, Existing Lessor and Lessee agree that under applicable Law in force as at the Effective Time, Lessee’s liabilities and obligations under the Novated Lease or any other Operative Document to which it is a party shall not be materially increased and Lessee’s rights under the Novated Lease or any other Operative Document to which it is a party shall not be materially adversely affected pursuant to this Agreement and the transactions contemplated hereunder had the Lease not been novated. Lessee acknowledges that the increase in the number of Indemnitees and Additional Insureds contemplated hereunder does not, of itself, constitute an increase in Lessee’s obligations under the Novated Lease.
(c)    For the avoidance of doubt, any reference to the rights of “Lessor” under the Novated Lease in connection with the right of “Lessor” to assign such rights, shall include any “associated rights” (as defined in the Cape Town Convention) of the New Lessor in, and to, this Agreement and the Novated Lease. Any such associated rights may consist of any of New Lessor’s rights to procure payment or other performance by Lessee (as debtor) under this Agreement, the Novated Lease and/or any other document associated with the Novated Lease.
Section 4.    Rent, Security Deposit and Maintenance Reserves.
(a)    Existing Lessor and Lessee hereby confirm that the Basic Rent currently payable under the Lease (and subject to adjustment in accordance with the terms of the Lease Documents) is [ ] U.S. Dollars (US$[ ]) and that a cash Security Deposit in the amount of [ ] U.S. Dollars (US [ ]) has been paid by Lessee and remains outstanding pursuant to the terms and conditions of the Lease. With effect as of the Effective Time, New Lessor shall assume and perform the duties, obligations and liabilities of Existing Lessor under the Lease in respect of the Security Deposit, including but not limited to the obligation to return the Security Deposit to Lessee pursuant to the terms of the Novated Lease. Lessee agrees that on and after the Effective Time, New Lessor will be responsible for returning the Security Deposit to Lessee pursuant and subject to the terms of the Novated Lease.
(b)    As of the applicable date set forth in the Effective Time Notice, Existing Lessor and Lessee hereby acknowledge that Lessee has paid Maintenance Reserves in the amounts in respect of each type of Maintenance Reserves set forth in the Effective Time Notice pursuant to the terms and conditions of the Lease, which amounts remain unreimbursed, outstanding and unapplied in accordance with the terms of the Lease as of such date. Effective as of the Effective Time, New Lessor shall assume and perform the duties, obligations and liabilities of Existing Lessor under the Lease in respect of the Maintenance Reserves. Lessee agrees that on and after the Effective Time, the obligation to reimburse to Lessee the cost of qualifying maintenance events will be transferred by Existing Lessor to New Lessor.
(c)    The balances of the Maintenance Reserves held by Existing Lessor under the Lease as at the Effective Time shall be confirmed in the Effective Time Notice at the Effective Time. New Lessor acknowledges and agrees that all such amounts shall be deemed held by New Lessor for application in accordance with the provisions of the Novated Lease. New Lessor acknowledges and agrees to its repayment and reimbursement obligations in favour of Lessee in accordance with the terms in the Novated Lease.
Section 5.    Delivery Matters. Lessee acknowledges that the Aircraft was delivered to Lessee on 21 April 2008 in accordance with the terms of the Lease; that New Lessor may rely on the Lease Supplement and Acceptance Certificate executed and delivered by Lessee pursuant to the Lease as though they had been issued to New Lessor; that Lessee is in possession of the Aircraft; and that no further physical delivery of the Aircraft by New Lessor is required or contemplated as a result of this Agreement.
Section 6.    Payments to New Lessor.
(a)    Lessee and New Lessor agree that, on and after the Effective Time all Rent, Supplemental Rent, Maintenance Reserves and other payments due from Lessee under the Novated Lease will be made by wire transfer to the bank account set forth in Section 3 of Appendix 2B of the Novated Lease, as amended by paragraph 8 of Annex B hereof, until such time as the New Lessor notifies otherwise.
(b)    To the extent that Existing Lessor prior to the Effective Time has received (or, after the Effective Time, does receive) from Lessee any amount of Rent payable by Lessee pursuant to the Lease that is referable to any period after the Effective Time, such payment by Lessee shall discharge pro tanto Lessee’s obligation to pay Rent to New Lessor for the relevant period.
Section 7.    Run-off Insurances. From and after the Effective Time, Lessee agrees to ensure that Existing Owner, Existing Lessor and each of their respective successors, assigns, affiliates, subsidiaries, shareholders, directors, officers, servants, agents, members, contractors and employees are named as additional insureds under Lessee’s aviation third party liability insurance maintained by Lessee on the terms and in the amounts required by the Lease, until the earlier of (i) the second anniversary of the Effective Time, or (ii)    the next major aircraft check.
Section 8.    Identification Plates. As soon as is reasonably practicable after the Effective Time, Lessee will:
(a)    prepare new identification plates for the Aircraft bearing the legends set forth in section 5 of Appendix 2B of the Lease as amended by paragraph 9 of Annex B hereto;
(b)    remove the existing identification plates and install the replacement identification plates on the Aircraft; and
(c)    notify New Lessor of such replacement.
The costs of such replacement shall be borne by New Lessor and shall be reimbursed to Lessee by New Lessor promptly following request by Lessee, provided Lessee shall provide New Lessor with an invoice and supporting documentation evidencing such costs.
Section 9.    Quiet Enjoyment. New Lessor covenants that so long as an Event of Default shall not have occurred and be continuing, Lessee shall quietly enjoy the Aircraft without interference by New Lessor or by any Person lawfully claiming by or through New Lessor. New Lessor shall procure that each of New Owner and any Financing Party (as defined in the Novated Lease) granted a Lien (as defined in the Novated Lease) on the Aircraft shall, on or prior to the Effective Time, give an undertaking to Lessee on terms substantially in the form set out in Appendix 8 of the Novated Lease or in the Notice of Assignment.
Section 10.    Lease Amendments. Existing Lessor, New Lessor and Lessee hereby agree that with effect on and from the Effective Time, the Lease shall be amended as set forth in Annex B hereto. Except as set out in this Agreement, the Lease shall remain unmodified and in full force and effect and as of and with effect from the Effective Time shall constitute the Novated Lease between New Lessor and Lessee.
Section 11.    Cooperation.
(a)    Upon request, Lessee will consent to the registration by New Lessor of the international interest provided for under this Agreement at the international registry established pursuant to the Cape Town Convention as applied to aircraft objects.
(b)    Lessee shall, to the extent permitted by applicable Law, perform and do all such other and further acts and things and execute and deliver any and all such other instruments (including any notification to the Aeronautics Authority of changes in the ownership structure of the Aircraft) as New Lessor may reasonably require to reflect the change in the identity of the owner and lessor of the Aircraft as contemplated by this Agreement and to perfect or protect the interests of New Lessor and any other interest holder, and for the purpose of carrying out the intent of and giving New Lessor the full benefit of the novation effected by this Agreement.
(c)    Existing Lessor shall be responsible for obtaining any legal opinions required under this Agreement. Lessee will however provide Existing Lessor’s selected counsel with such documents and assistance as reasonably required for such counsel to give such opinions and to make any filings with the Aeronautics Authority of the State of Registration.
(d)    Any costs and expenses incurred by Lessee in connection with the transactions contemplated under this Agreement or the Novated Lease shall be fully reimbursed to Lessee by Existing Lessor promptly following request by Lessee.
Section 12.    Representations and Warranties.
A.    Lessee Representations. Lessee represents and warrants to Existing Lessor and New Lessor on the date hereof and at the Effective Time the following:
(a)    Lessee is duly incorporated and validly existing under the laws of its jurisdiction of incorporation.
(b)    The transactions contemplated hereby and the execution, delivery and performance of this Agreement by Lessee (1) have been duly authorised by all necessary corporate or other applicable action of Lessee and (2) do not and will not violate its organisational documents, any applicable Law, rule or regulation or any provision in any existing agreement binding on Lessee.
(c)    All authorisations, consents, registrations and notifications required to be obtained by Lessee in connection with the entry into, performance, validity and enforceability of this Agreement and the transactions contemplated by this Agreement, have been (or will on or before the Effective Time have been) obtained or effected (as appropriate) and are (or will be on their being obtained or effected) in full force and effect, except for the filing of this Agreement with the MCAA and in connection therewith the amendment of Lessee’s Air Operator’s Certificate (including the Operations Specifications) to reflect the new Lessor.
(a)    No Event of Loss has occurred in respect of the Aircraft or any Engine.
(b)    The certificate of airworthiness for the Aircraft remains in full force and effect.
(c)    No Default or Event of Default has occurred and is continuing under the Lease or the Lease Documents.
(d)    Lessee is not aware of any claims or actions under the Lease pending or threatened against Existing Lessor by Lessee.
(e)    As of the Effective Time, the Aircraft is not being subleased (which, for the avoidance of doubt, does not include any wet leasing).
(f)    As of the Effective Time, Existing Lessor has no unperformed maintenance related reimbursement obligations or other unperformed payment obligations owing to Lessee under the Lease Documents in respect of claims that have been properly submitted by Lessee to Existing Lessor as of the Effective Time in accordance with the terms and conditions of the Lease Documents.
A.    Existing Lessor Representations. Existing Lessor hereby represents and warrants to Lessee and New Lessor on the date hereof and at the Effective Time the following:
(a)    Existing Lessor is duly organised, validly existing and in good standing (to the extent applicable) under the laws of its jurisdiction of organisation.
(a)    The transactions contemplated hereby and the execution, delivery and performance of this Agreement by Existing Lessor (1) have been duly authorised by all necessary corporate or other applicable action of Existing Lessor and (2) do not and will not violate the organisational documents of Existing Lessor, any applicable law, rule or regulation or any provision in any existing agreement binding on Existing Lessor.
(b)    This Agreement constitutes a valid, binding and enforceable agreement of Existing Lessor, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganisation, moratorium and other similar laws affecting creditors’ rights generally from time to time in effect and subject, as to enforceability, to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.
(c)    All authorisations, consents, registrations and notifications required to be obtained by Existing Lessor in connection with the entry into, performance, validity and enforceability of this Agreement and the transactions contemplated by this Agreement, have been (or will on or before the Effective Time have been) obtained or effected (as appropriate) and are (or will be on their being obtained or effected) in full force and effect.
A.    New Lessor Representations. New Lessor represents and warrants to Lessee and Existing Lessor on the date hereof and at the Effective Time the following:
(a)    New Lessor is duly organised, validly existing and in good standing (to the extent applicable) under the laws of its jurisdiction of organisation.
(a)    The transactions contemplated hereby and the execution, delivery and performance of this Agreement by New Lessor (1) have been duly authorised by all necessary corporate or other applicable action of New Lessor and (2) do not and will not violate the organisational documents of New Lessor, any applicable law, rule or regulation or any provision in any existing agreement binding on New Lessor.
(b)    This Agreement constitutes a valid, binding and enforceable agreement of New Lessor, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganisation, moratorium and other similar laws affecting creditors’ rights generally from time to time in effect and subject, as to enforceability, to general principles of equity, regardless of whether such enforceability is considered in a proceeding in equity or at law.
(c)    All authorisations, consents, registrations and notifications required to be obtained by New Lessor in connection with the entry into, performance, validity and enforceability of this Agreement and the transactions contemplated by this Agreement, have been (or will on or before the Effective Time have been) obtained or effected (as appropriate) and are (or will be on their being obtained of effected) in full force and effect.
(d)    the representation and warranty set out in section 10.1(e) of the Novated Lease is (or will, at the Effective Time, be) true and correct.
Section 13.    [Intentionally left blank.]
Section 13.    Conditions Precedent. On or before the Effective Time, the following conditions shall have been fulfilled, waived or deferred:
(a)    New Lessor will have received the following, all of which shall be reasonably satisfactory in form and substance to New Lessor:
(i)    a copy of the Effective Time Notice in the form attached at Annex C and a copy of this Agreement duly executed by Lessee and Existing Lessor;
(ii)    an incumbency certificate or power of attorney or equivalent corporate authority, as the case may be, of Lessee naming the person or persons authorised to execute this Agreement and the documents delivered in connection herewith;
(iii)    an incumbency certificate or power of attorney or equivalent corporate authority, as the case may be, of Existing Lessor naming the person or persons authorised to execute this Agreement and the documents delivered in connection herewith;
(iv)    a copy of a certificate of insurance in compliance with the provisions of the Lease and this Agreement;
(v)    an IDERA authorising New Lessor or such other person as New Lessor may from time to time specify to do anything or act or to give any consent or approval which may be required to obtain deregistration of the Aircraft and to export the Aircraft from Mongolia and/or Ireland upon termination of the leasing of the Aircraft under the Lease;
(vi)    letters addressed (1) to the air traffic control authority in the State of Registration and (2) to the relevant air traffic control authorities and airport authorities where Lessee operates or intends to operate the Aircraft in similar form and substance to those previously provided by Lessee in connection with the delivery of the Aircraft by Existing Lessor to Lessee under the Lease;
(vii)    (at no cost to Lessee) a legal opinion of Mongolian counsel in form and substance reasonably acceptable to New Lessor as to matters of Mongolian law pertaining to the authorisation, execution, delivery, enforceability, filing, registration and other matters applicable to this Agreement and the other documents contemplated hereby, such legal opinion to be obtained by New Lessor;
(viii)    (at no cost to Lessee) a legal opinion of Irish counsel in form and substance reasonably acceptable to New Lessor as to matters of Irish law (including in relation to the Aeronautics Authority) pertaining to the authorisation, execution, delivery, enforceability, filing, registration and other matters applicable to this Agreement and the other documents contemplated hereby, such legal opinion to be obtained by New Lessor.
(ix)    a notarized copy of the state registration certificate and a currently valid and effective charter of Lessee; and
(x)    each of the representations and warranties of Lessee and Existing Lessor contained in Sections 12.A and 12.B, respectively, of this Agreement are true and accurate on the date hereof and the date the Effective Time occurs.
(b)    Existing Lessor will have received the following, all of which shall be reasonably satisfactory in form and substance to Existing Lessor:
(i)    a copy of the Effective Time Notice in the form attached at Annex C and a copy of this Agreement duly executed by Lessee and New Lessor;
(ii)    an incumbency certificate or power of attorney or equivalent authority, as the case may be, of Lessee naming the person or persons authorised to execute this Agreement and the documents delivered in connection herewith;
(iii)    an incumbency certificate or power of attorney or equivalent authority, as the case may be, of New Lessor naming the person or persons authorised to execute this Agreement and the documents delivered in connection herewith;
(iv)    a copy of the insurance certificates referred to in clause (iv) of Section 14(a) above; and.
(v)    each of the representations and warranties of Lessee and New Lessor contained in Sections 12.A and 12.C, respectively, of this Agreement are true and accurate on the date hereof and the date the Effective Time occurs;
(c)    Lessee will have received the following, all of which shall be reasonably satisfactory in form and substance to Lessee:
(i)    a copy of the Effective Time Notice in the form attached at Annex C and a copy of this Agreement duly executed by Existing Lessor and New Lessor;
(ii)    an incumbency certificate or power of attorney or equivalent authority, as the case may be, of New Lessor naming the person or persons authorised to execute this Agreement and the documents delivered in connection herewith;
(iii)    an incumbency certificate or power of attorney or equivalent authority, as the case may be, of Existing Lessor naming the person or persons authorised to execute this Agreement and the documents delivered in connection herewith;
(iv)    a duly executed quiet enjoyment letter from New Owner executed and delivered substantially in the form contained in Appendix 8 of the Lease;
(i)    within five (5) Business Days after the Effective Time, the return of the original IDERA by Existing Lessor; and
(ii)    each of the representations and warranties of Existing Lessor and New Lessor contained in Sections 12.B and 12.C, respectively, of this Agreement are true and accurate on the date hereof and the date the Effective Time occurs.
(d)    The conditions precedent specified in subparagraphs (a), (b) and (c) above have been inserted for the benefit of New Lessor, Existing Lessor and Lessee, respectively, and may be waived, deferred or extended in writing in whole or in part and with or without conditions, by such party, without prejudicing such party’s right to receive fulfillment of such conditions.
Section 14.    Assignment. This Agreement will be binding upon and inure to the benefit of each party hereto and its respective successors and assigns as permitted under the Lease and the Novated Lease (as applicable).
Section 15.    Notices. Any notices hereunder will be in writing and will be delivered as and in the manner specified in the Lease Documents. The address of Lessee and New Lessor for notices under the Lease Documents is as set forth in the Novated Lease. The address of Existing Lessor for notices under the Lease Documents is as follows, until further notice:
Sapphire Aviation Finance I (UK) Limited
c/o PAFS Ireland Limited
Unit J, Block 1
Shannon Business Park
Shannon, Co. Clare Ireland
Attention:    Company Secretary
Fax:        +353 61 475521
E-mail:        sapphire@phxa.com
with a copy to:
Sapphire Leasing I (AOE 5) Limited
c/o PAFS Ireland Limited
Unit J, Block 1
Shannon Business Park
Shannon, Co. Clare Ireland
Attention:    Company Secretary
Fax:        +353 61 475521
E-mail:        sapphire@phxa.com
and

Avolon Aerospace Leasing Limited
Building 1, The Oval
Shelbourne Road
Dublin 4
Ireland
Attention:    General Counsel
Fax:        + 353 1 231 5889
E-mail:        notices@avolon.aero
Section 16.    Sole and Entire Agreement. The documents set forth in Annex A, together with this Agreement, constitute the entire agreement of Lessee and Existing Lessor with respect to the leasing of the Aircraft and represent all agreements that affect the rights or obligations of the “Lessor” or Lessee thereunder as of and after the Effective Time.
Section 17.    Modifications. This Agreement may not be amended or modified except by a written agreement signed by Existing Lessor, New Lessor and Lessee; provided that New Lessor and Lessee shall be entitled to amend, modify or vary the terms of the Novated Lease after the Effective Time without reference to or the signature of Existing Lessor.
Section 18.    Third Parties. Other than the Indemnitees (as defined in each of the Novated Lease and the Lease) a person who is not a party to this Agreement may not enforce any of its terms under the Contracts (Rights of Third Parties) Act 1999. The consent of any third party is not required for any variation or termination of this Agreement.
Section 19.    Counterparts; Chattel Paper Originals. This Agreement may be executed in three or more counterparts, each of which will be an original, but all of which will constitute but one and the same instrument. To the extent that this document constitutes chattel paper under the Uniform Commercial Code in effect in any applicable jurisdiction, no security interest in this document may be created through the transfer of possession of any counterpart other than Counterpart No. 1 as indicated on the cover page of this Agreement.
Section 20.    Delivery of Documents by Fax or E-mail. Delivery of an executed counterpart of this Agreement or of any other documents in connection with this Agreement by fax or email will be deemed as effective as delivery of an originally executed counterpart. Any party delivering an executed counterpart of this Agreement or other document by fax or email will also deliver an originally executed counterpart, but the failure of any party to deliver an originally executed counterpart of this Agreement or such other document will not affect the validity or effectiveness of this Agreement or such other document.
Section 21.    Governing Law, etc. This Agreement shall be governed and construed in accordance with the laws of England. Sections 26.2 (Jurisdiction), 26.3 (Waiver of Immunity) and 26.4 (Arbitration) of the Lease are incorporated in this Agreement by reference as if such provisions were set forth herein and as if references therein to the “Lease” were to this Agreement and references therein to “Lessor” were to Existing Lessor and/or New Lessor (as applicable).
Section 22.    Further Assurances. Each party hereto agrees that it shall, at no cost to Lessee, at any time and from time to time, promptly and duly execute and deliver any and all such further instruments and documents and take such further action as may be required by law or reasonably requested in order to obtain the full benefits of this Agreement and to implement the rights and powers herein granted, provided that New Lessor shall be responsible for all expenses incurred by Lessee in respect of any financing of the Aircraft by New Lessor. Each party hereby agrees that this Agreement shall constitute a “novation” for the purposes of the Cape Town Convention. Upon request and at the expense of New Lessor, Lessee will consent to the registration by New Lessor and the further assignment by New Lessor of any international interest or associated rights created under this Agreement and the Lease at the international registry established pursuant to the Cape Town Convention.
Section 23.    Survival. Notwithstanding anything contained herein to the contrary, all agreements, indemnities, representations and warranties contained in this Agreement shall survive the Effective Time.
Section 24.    Headings. The headings in this agreement are to be ignored in construing this Agreement.
[SIGNATURE PAGES FOLLOW]



IN WITNESS WHEREOF, the parties hereto or their duly authorised representatives have executed this Agreement as of the day and year first herein written.

SAPPHIRE AVIATION FINANCE I (UK)
LIMITED                         
    
as Existing Lessor     
/s/ Sunil Masson    
By: Sunil Masson
Its: Director















WILMINGTON TRUST SP SERVICES
(DUBLIN) LIMITED, not in its individual
capacity, but solely as owner trustee
    
as New Lessor        
/s/ Joanna Taylor    
By: Joanna Taylor
Its: Director        

MIAT MONGOLIAN AIRLINES
as Lessee


/s/ Battur Davaakhuu            


By:Battur Davaakhuu
Its: President and CEO

ANNEX A
LEASE DOCUMENTS
1.
Aircraft Lease Agreement, dated as of 28 January 2008, between CIT Capital Aviation (UK) Limited and MIAT Mongolian Airlines.
2.
Lease Supplement dated as of 21 April 2008 between CIT Capital Aviation (UK) Limited and MIAT Mongolian Airlines.
3.
Acceptance Certificate dated 21 April 2008 from MIAT Mongolian Airlines.
4.
Side Letter to Acceptance Certificate dated 22 April 2008 from MIAT Mongolian Airlines.
5.
Aircraft Lease Amendment Agreement dated 22 December 2014 between CIT Capital Aviation (UK) Limited and MIAT Mongolian Airlines.
6.
Novation and Amendment Agreement dated 26 July 2018 among CIT Capital Aviation (UK) Limited, Sapphire Aviation Finance I (UK) Limited and MIAT Mongolian Airlines.
1.
Effective Time Notice dated 30 July 2018 from MIAT Mongolian Airlines.
2.
Amendment to Lease Agreement dated 20 November 2018 between Sapphire Aviation Finance I (UK) Limited and MIAT Mongolian Airlines.
3.
Third Aircraft Lease Amendment Agreement dated 2 August 2019, between Sapphire Aviation Finance I (UK) Limited and MIAT Mongolian Airlines.


ANNEX B
AMENDMENTS TO LEASE DOCUMENTS
1.
Lessor. All references in the Lease to the “Lessor” being Sapphire Aviation Finance I (UK) Limited, a company organised and existing under the applicable Law of England with its registered office at 3rd Floor, Suite 2, 11-12 St. James’s Square, London, England, SW1Y 4LB shall mean and refer to Wilmington Trust SP Services (Dublin) Limited, not in its individual capacity, but solely as owner trustee, a company limited by shares incorporated under the laws of Ireland, and having its registered officer at Fourth Floor, 3 George’s Dock, IFSC, Dublin 1, D01 X5X0. Without limiting the foregoing:
(a)
The cover page of the Lease shall be amended by replacing the text “Sapphire Aviation Finance I (UK) Limited” with “Wilmington Trust SP Services (Dublin) Limited, not in its individual capacity, but solely as owner trustee”.
(b)
Page 1 of the Lease shall be amended by deleting in its entirety the paragraph that reads “Sapphire Aviation Finance I (UK) Limited, a company organised and existing under the applicable Law of England with its registered office at Winchester House, Mailstop 202, 1 Great Winchester Street, London EC2N 2DB, England (“Lessor”)” and replacing it with the following paragraph: “Wilmington Trust SP Services (Dublin) Limited, not in its individual capacity, but solely as owner trustee, a company limited by shares incorporated under the laws of Ireland, and having its registered officer at Fourth Floor, 3 George’s Dock, IFSC, Dublin 1, D01 X5X0 (“Lessor”)”.
2.
New Definitions. The following definition of the Lease shall be added to Appendix 1 (Definitions) of the Lease in the proper alphabetical order:
““2019 Novation and Amendment Agreement” means the novation and amendment agreement dated 24 October 2019 between Lessor as new lessor, Lessee as lessee and Sapphire Aviation Finance I (UK) Limited as existing lessor.”
3.
Amended Definitions. The definition of “Indemnitee” shall have the words “the Servicer, Glencar Investments VI Designated Activity Company” deleted.
4.
Deleted and Amended Definitions. The following definitions set forth in Appendix 1 (Definitions) of the Lease shall be deleted in its entirety and replaced with the following:
““Operative Document(s)” means, either collectively or individually as the context requires, this Lease, Aircraft Lease Amendment Agreement, 2018 Novation and Amendment Agreement, 2019 Novation and Amendment Agreement, the Lease Supplement, the Second Lease Amendment Agreement, the Third Lease Amendment Agreement, the Acceptance Certificate, any warranty assignment, acknowledgment and consent, the IDERA, any Permitted Sublease (and any security assignment of any Permitted Sublease), and any and all other documents, instruments and agreements entered into in connection with any of the foregoing and to which Lessee is a party or which Lessee acknowledges is an Operative Document.”; and
““Owner” means Lessor.”
5.
Subleasing (Section 15.1). The words “Sapphire Aviation Finance I (UK) Limited” in Section 15.1 of the Lease shall be deleted in their entirety and replaced with the words “Wilmington Trust SP Services (Dublin) Limited, not in its individual capacity but solely as owner trustee”.
6.
Excluded Taxes (Section 21.1(b)).
(a)    The first sentence in Section 21.1(b) shall be revised to read in part as follows:
“Lessee shall have no obligation under Section 21.1(a) oe Section 21.1(b) to indemnify an Indemnitee or pay additional amounts for:”
(b)    The word “or” at the end of Section 21.1(b)(ii) shall be deleted,
(c)    The word “or” shall be inserted at the end of Section 21.1(b)(iii) and
(d)
a new Section 21.1(b)(iv) shall be added to read as follows:
“(iv)     any Mongolian withholding tax at a rate of up to and including twenty percent (20%) (or lower) imposed on Lessee’s payment of Rent and/or Maintenance Reserves to Lessor under the Lease (“Mongolian Withholding Tax”).”
7.
Mongolian Withholding Tax (Section 21.1(c)). Section 21.1(c) of the Lease shall be amended by adding the following to the end of Section 21.1(c) of the Lease:
“Notwithstanding anything in the Lease to the contrary, to the extent that Mongolian Withholding Tax is required to be deducted or withheld by applicable Law, Lessee shall deduct Mongolian Withholding Tax from Lessee’s payments of Rent and/or Maintenance Reserves to Lessor under the Lease, shall not be required to pay additional amounts pursuant to the previous sentence in respect of any such Mongolian Withholding Tax and shall pay such withholding tax to the relevant taxing authority on or prior to the date due and shall deliver to Lessor, within sixty (60) days after the date of such payment, an official receipt of the relevant taxing authority (or other evidence of payment thereof reasonably satisfactory to the Lessor) showing that Lessee paid to such taxing authority the full amount of Mongolian Withholding Tax required to be withheld.”
8.
Lessor’s Account (Section 3 of Appendix 2B). Section 3 of Appendix 2B of the Lease shall be deleted in its entirety and Section 3 of Appendix 2B of the Lease shall be amended to read as follows:
“All payments made under Section 5.1 of this Lease or any other Operative Document shall be made to the account of Lessor by wire transfer of immediately available funds to its correspondent bank:
Bank:    Old National Bank
ABA#:    [ ]
SWIFT:    [ ]
Account Name:    Contrail Aviation Support, LLC
Reference:    MSN 29922”
9.
Legend (Section 5 of Appendix 2B). Section 5 of Appendix 2B of the Lease shall be amended by replacing the description of the legend on the identification plates with the following:
“Legend: “THIS AIRCRAFT IS OWNED BY AND LEASED FROM WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED, NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS OWNER TRUSTEE.””
10.
Notices (Section 6 of Appendix 2B). Section 6 of Appendix 2B of the Lease relating to the notice details of the “Lessor” shall be amended by replacing the address information set forth therein with the following:
If to Lessor:
Wilmington Trust SP Services (Dublin) Limited
Fourth Floor,
3 George's Dock,
IFSC, Dublin 1, D01 X5X0,
Ireland

Attention:    The Directors
Email:         ireland@wilmingtontrust.com

11.
Form of Return Acceptance Receipt (Appendix 7). Appendix 7 of the Lease shall be amended by replacing each use of the words “Sapphire Aviation Finance I (UK) Limited” with “Wilmington Trust SP Services (Dublin) Limited, not in its individual capacity, but solely as owner trustee”.
ANNEX C
EFFECTIVE TIME NOTICE



October 31, 2019

Section 25.    MIAT Mongolian Airlines
MIAT Building, Buyant-Ukhaa-45, Khan-Uul District
Ulaanbaatar 17120, Mongolia

Re:    Confirmation of Effective Time Ladies & Gentlemen:
Reference is hereby made to the Novation and Amendment Agreement dated as October 24, 2019 by and among Sapphire Aviation Finance I (UK) Limited, as Existing Wilmington Trust SP Services (Dublin) Limited, not in its individual capacity, but solely as owner trustee, as New Lessor, and MIAT Mongolian Airlines, as Lessee (the “Novation Agreement”) pertaining to one (1) Boeing 737-800 aircraft bearing manufacturer’s serial number 29922 and Irish registration mark EI-CSG. Any and all initially capitalised terms used herein shall have the meanings ascribed thereto in the Novation Agreement, unless specifically defined herein.

For purposes of Section 4(b) of the Novation Agreement, Existing Lessor and Lessee hereby acknowledge that, as of October 31, 2019 Lessee has paid Maintenance Reserves in the amounts set forth in Schedule 1, which amounts remain unreimbursed, outstanding and unapplied in accordance with the terms of the Lease as of such date.
In accordance with Section 2 of the Novation Agreement, the undersigned hereby confirms to Lessee that the novation contemplated by the Novation Agreement has occurred and for the

purposes of the Novation Agreement, the Effective Time is    12.39    (

GMT

time)

this 31st    day of October 2019 whilst:


(a)
the Aircraft was located at Chinggis Khaan International Airport, Ulaanbaatar, Mongolia;

(b)
the Engine with manufacturer’s serial number 890420 was located at Chinggis Khaan International Airport, Ulaanbaatar, Mongolia; and

(c)
the Engine with manufacturer’s serial number 890421 was located at Chinggis Khaan International Airport, Ulaanbaatar, Mongolia.
This notice and any non-contractual obligations arising out of or in connection with it are governed by and shall be construed in accordance with English law.
Sincerely,

Sapphire Aviation Finance I (UK) Limited


/s/ Sunil Masson

By:    Sunil Masson
Its:     Director











Wilmington Trust SP Services (Dublin) Limited, not in its individual capacity, but solely as owner trustee

/s/ Joanna Taylor
By:     Joanna Taylor
Its:    Director


MIAT MONGOLIAN AIRLINES


/s/ Battur Davaakhuu
By:    Battur Davaakhuu
Its:    President and CEO


SCHEDULE 1




COMPONENT
CASH BALANCE
Airframe 8 Year Check
US$[ ]
Landing Gear
US$[ ]
APU [SN: P-5651]
US$[ ]
Engine [SN:890420] EPR
US$[ ]
Engine [SN:890421] EPR
US$[ ]
Engine [SN: 890420] LLP
US$[ ]
Engine [SN: 890421] LLP
US$[ ]


18171681v1





CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS BOTH (I) NOT MATERIAL AND (II) WOULD BE COMPETITIVELY HARMFUL IF PUBLICLY DISCLOSED.
EXECUTION VERSION


NETTING LETTER – MSN 29922

This Agreement is made on 31 October, 2019 between:

(1)
SAPPHIRE LEASING I (AOE 5) LIMITED, a company incorporated under the laws of Ireland whose registered office is c/o PAFS Ireland Limited, Shannon Business Park, Shannon, Co. Clare,
Ireland (“Seller”); and

(2)
WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED, not in its individual capacity, but solely as owner trustee, and having its principal place of business at Fourth Floor, 3 George’s Dock, IFSC, Dublin 1, D01 X5X0, Ireland (“Buyer”).

The parties refer to:

A.
The aircraft asset sale and purchase agreement dated as of August 2, 2019 between, amongst others, Seller and Buyer (the “Sale and Purchase Agreement”); and

B.
The novation and amendment agreement in respect of one (1) Boeing B737-800 aircraft with manufacturer's serial number 29922 (the “Aircraft”) entered or to be entered into between Seller, Buyer and MIAT Mongolian Airlines (as “Lessee”) (the “Novation”). Capitalized terms defined in the Sale and Purchase Agreement and Novation shall have the same meanings when used herein.

It is agreed between the parties that:

1.
The parties intend for the Delivery Date to be today, unless otherwise agreed in writing by the parties.

2.
Provided that the Delivery Date is today, the Purchase Price for Asset No. 1 is US$ [ ], which was calculated by starting with the Base Purchase Price of US$ [ ] and:

(a)
in accordance with clause 5.2.2(b) of the Sale and Purchase Agreement, subtracting an amount equal to US$ [ ]; and

(b)
in accordance with clause 5.2.2(a) of the Sale and Purchase Agreement, adding an amount equal to US$ [ ];

representing the adjustment to account for the difference between the Delivery Date and the Economic Closing Date.

3.
Provided that the Delivery Date is today, Seller is obligated to pay Buyer an amount equal to US$ [ ] (the “Netting Amount”), which represents the sum of Seller’s payment obligations under clause 5.9.1 of the Sale and Purchase Agreement for the following:

(a)
the Commitment Fee;

(b)
Maintenance Reserves (which is equal to US$ [ ]);

(c)
Security Deposit (which is equal to US$ [ ]); and

(d)
any Prepaid Rent held by Seller as of the date hereof (which is equal to US$ [ ]).

4.
Provided, that in accordance with clause 5.9.1 of the Sale and Purchase Agreement and this Letter, the parties agree to net the Netting Amount from the Purchase Price, and they agree that doing so results in a net amount owing from Buyer to Seller in respect of the Purchase Price of US$ [ ] (the “Net Purchase Price”).

5.
Seller hereby irrevocably instructs and directs Buyer to pay, or cause to be paid, an amount equal to the Net Purchase Price to the following account (the “Seller’s Account”) for the benefit of Seller on or before the Delivery in connection with Buyer’s obligation under clause 5.3 of the Sale and Purchase Agreement:

Bank Name:    Wells Fargo Bank, N.A. SWIFT:    [ ]
ABA:    [ ]
For credit to:    Corporate Trust Lease Group Account No.:    [ ]
Quote Ref:    FFC [ ], MSN 29922

6.
The payment by Buyer of the Net Purchase Price into the account specified in paragraph 5 above shall constitute valid discharge of Buyer’s obligation to pay the Purchase Price and of Seller’s obligations under clause 5.3.1 of the Sale and Purchase Agreement.

7.
This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

8.
This Agreement shall be a Transaction Document.

9.
This Agreement may be executed in any number of separate counterparts and each counterpart shall when executed and delivered be an original document but all counterparts shall together constitute one and the same instrument.

10.
Capitalized terms used in this Letter but not defined herein shall have the meaning given to such terms in the Sale and Purchase Agreement.

In witness whereof, the parties have executed this Letter on the day and year first above written.



[SIGNATURE PAGES FOLLOW]
















2

Execution Page


For and on behalf of

SAPPHIRE LEASING I (AOE 5) LIMITED

Name: William Brennan

Title: Director

Signature: /s/ William Brennan        
















































Signature Page
Netting Letter
MSN 29922





WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED, not in its individual capacity, but solely as owner trustee


Name: Joanna Taylor


Title: Director


Signature: /s/ Joanna Taylor        



















































Netting Letter
(MSN 29922)

18172425v1





SUPPLEMENT #5 TO MASTER LOAN AGREEMENT


Date of Supplement: October 30, 2019

THIS SUPPLEMENT #5 TO MASTER LOAN AGREEMENT (this "Supplement") is made and entered into by Lender and Borrowers as of the date written above pursuant to the Master Loan Agreement by and between Lender and Borrowers dated June 24, 2019 (the “Master Loan Agreement”).

This Supplement constitutes a Supplement under the Master Loan Agreement and is hereby made a part of the Master Loan Agreement. All capitalized terms herein not otherwise defined herein shall have the meaning ascribed to them in the Master Loan Agreement. The credit facility described in this Supplement is governed by and shall be construed and administered in accordance with the terms and conditions of the Master Loan Agreement and this Supplement.

To the extent any term or condition of this Supplement is inconsistent with any term or condition in the Master Loan Agreement or in any Supplement dated prior to this Supplement, the terms and conditions of this Supplement shall control. Except as specifically amended hereby, all terms and conditions of the Master Loan Agreement and all prior Supplements remain in effect.

In consideration of the mutual covenants contained herein and in the Master Loan Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

1.
DEFINITIONS.

As used in this Supplement, the following terms have the following meanings:

"Term Loan D" means an extension of credit to Borrowers by Lender pursuant to this Supplement.

"Term Loan D Maturity Date" means the first to occur of: (1) October 30, 2021; and (2) the date on which Term Loan D is accelerated as provided hereunder, in Term Note D or in the Master Loan Agreement.

"Term Note D" means the Promissory Note of Borrowers in the form of Exhibit A to be executed concurrently with this Supplement.

2.
THE CREDIT FACILITY; BORROWING PROCEDURES; INTEREST RATE; AND PAYMENTS.

2.1
Credit Facility. Lender shall make a term loan to the Borrowers, on the Closing Date, in an amount equal to Seven Million, Five Hundred Fifty-Three Thousand, One Hundred Sixty-Five Dollars ($7,553,165.00) ("Term Loan D"), which is subject to the terms and conditions hereof and of the Master Loan Agreement. Term Loan D shall be evidenced by Term Note D, be payable in accordance with the terms of Term Note D and be made by disbursement of Loan proceeds when and as



{80742168 }

directed by Borrowers. Amounts borrowed and repaid under the Term Loan D may not be reborrowed.

2.2
Borrowing Procedures. The entire amount of Term Loan D is to be advanced in one single advance on to the Closing Date.

2.3
Interest Rate. The unpaid principal balance of Term Loan D outstanding from time to time shall bear interest for the period commencing on the Closing Date of Term Loan D until such Loan is paid in full. Term Loan D shall accrue interest at a variable rate equal to the LIBOR Rate plus 3.75% per annum and such rate shall be adjusted on the 1st day of each month.

2.4
Payments. Borrowers shall make the following payments on Term Loan D during the following periods:

(a)
Twenty-three (23) consecutive monthly payments of accrued and unpaid interest beginning November 1, 2019, and payable on the pt day of each consecutive month thereafter; and

(b)
Sixteen (16) consecutive monthly payments of Two Hundred Fifty Thousand Dollars ($250,000.00) each beginning November 1, 2019, and continuing on the 1st day of each consecutive month thereafter; and

(c)
a final payment of all outstanding principal and accrued and unpaid interest together with such other amounts as shall then be due and owing from Borrowers to Lender under the Term Loan D on the Term Loan D Maturity Date.

2.5
Fees

(a)
On or before the Closing Date Borrowers shall pay to Lender a fee in the amount of Thirty Thousand Two Hundred Thirteen Dollars ($30,213).

2.6
Use of Loan Proceeds. Borrowers shall only use the proceeds of Term Loan D to acquire the beneficial interest in the trust described in the Beneficial Interest Pledge Agreement attached hereto as Exhibit B.

3.
CONDITIONS FOR BORROWING.

In addition to all conditions to borrowing set forth in Section 5.1 of the Master Loan Agreement, Lender's obligation to make the Loan described in this Supplement is subject to the satisfaction or waiver by Lender in writing on or before the Closing Date of such Loan of the following conditions:

3.1
Lender shall have received the following, all in form, detail and content satisfactory to Lender:

(a)
Term Note D duly executed by both Borrowers.


(80742168 }    2

(b)
The fee due under Section 2.5 hereof.

(c)
A Beneficial Interest Pledge Agreement, in the form of Exhibit B, properly executed by CAL, together with any and all other documents or instruments Lender reasonably deems necessary to grant to Lender and perfect a first position Lien in all of CAL' s beneficial interest in that certain trust described in the Declaration of Trust (MSN 29922) dated as of June 26, 2019, among Contrail Aviation Leasing, LLC, Contrail Aviation Support, LLC, and Wilmington Trust SP Services (Dublin) Limited (registration number 318390), not in its individual capacity but solely as Trustee (the "Owner Trustee"), as amended, assigned, supplemented, restated, and modified from time to time (the "Trust Agreement"), all in form and substance reasonably satisfactory to Lender.

(d)
A Trust Aircraft Security Agreement in the form of Exhibit C (the "TASA"), properly executed by the Owner Trustee, together with any and all other documents or instruments Lender reasonably deems necessary to grant to Lender and perfect a first position Lien on the collateral described in the TASA, all in form and substance reasonably satisfactory to Lender.

(e)
A third party written legal opinion opining that:

(i)
CAL has the due power and authority to grant the Lien described in Section 3.1(c) above;

(ii)
Owner Trustee has due power and authority to grant the Lien described in Section 3.1(c) above; and

(iii)
The Liens described in Sections 3.1(c) and 3.1(d) are valid and enforceable and neither violate any term or provision of the Trust Agreement.

(f)
Evidence in a form reasonably acceptable to Lender that, prior to or concurrently with the execution of this Supplement, CAL acquired the interest in the trust described in the Beneficial Interest Pledge Agreement and that the trust acquired the collateral described in the TASA, and in each case, such is owned free and clear of all liens, claims and encumbrances.

(g)
An Agreement to Provide Insurance in the form of Exhibit D, properly executed by the Borrowers.

4.
AFFIRMATIVE COVENANTS.

In addition to all affirmative covenants set forth in Section 6 of the Master Loan Agreement, each Borrower covenants that it will, until Lender's commitment to extend credit under this Supplement and all Permitted Swap Agreements relating to the credit facility extended under this Supplement have terminated or expired and the promissory note evidencing the credit facility extended under
[B0742168 )    3

this Supplement, and all fees and expenses payable in connection with the credit facility extended under this Supplement have been paid in full:

4.1
Quarterly Rolling Cash Flow Coverage Ratio. Maintain, as of the last day of each fiscal quarter, a Quarterly Rolling Cash Flow Coverage Ratio of not less than 1.25 to 1.0. Lender may determine compliance with this Quarterly Cash Flow Coverage Ratio covenant at any time.

4.2
Tangible Net Worth. Maintain a Tangible Net Worth of at least $12,500,000.00 at all times. Lender may determine compliance with this Tangible Net Worth covenant at any time.

5.    NEGATIVE COVENANTS.

In addition to all negative covenants set forth in Section 7 of the Master Loan Agreement, each Borrower covenants that, without the prior written consent of Lender, Borrowers will not, until Lender's commitment to extend credit under this Supplement and all Permitted Swap Agreements relating to the credit facility extended under this Supplement have terminated or expired and the promissory note evidencing the credit facility extended under this Supplement, and all fees and expenses payable in connection with the credit facility extended under this Supplement, have been paid in full:

5.1    [Intentionally Omitted]

[remainder of page intentionally left blank; signature page follows]
























{80742168 }    4

IN WITNESS WHEREOF, the Parties have executed this Supplement as of the date first written above.

BORROWERS:    LENDER:

CONTRAIL AVIATION SUPPORT, LLC    OLD NATIONAL BANK


By: /s/Joseph Kuhn                         By: /s/ Tommy Olson        
Joseph Kuhn                            Tommy Olson
Its: CEO                                Its: SVP



CONTRAIL AVIATION LEASING, LLC


By: /s/Joseph Kuhn        
Joseph Kuhn Its: CEO








































[Signature Page to Supplement #5 to Master Loan Agreement}
18169776v1




Contrail Aviation Support, LLC, Contrail Aviation Leasing, LLC Loan No. 20007991448
October 30, 2019 Note

PROMISSORY NOTE TERM NOTE D

$7,553,165.00    October 30, 2019


FOR VALUE RECEIVED, the undersigned CONTRAIL AVIATION SUPPORT, LLC ("Support")
and CONTRAIL AVIATION LEASING, LLC ("Leasing", and together with Support, each a "Borrower," and collectively, the "Borrowers"), jointly and severally, promise to pay to the order of OLD NATIONAL BANK (the "Lender")the principal sum of Seven Million Five Hundred Fifty-Three Thousand One Hundred Sixty-Five Dollars ($7,553,165.00), together with interest thereon as hereinafter provided.

1. RATE OF INTEREST

The principal amount of the Loan outstanding from time to time shall bear interest at the variable rate of LIBOR Rate (as defined in the Master Loan Agreement referenced below) plus 3.75% per annum and such rate shall be adjusted on the 1st day of each month (the "Loan Rate").

2.
PAYMENTS

Payments of both principal and interest are to be made in immediately available funds in lawful currency of the United States of America at the office of Lender, or such other place as the holder hereof shall designate to the undersigned in writing. Unless required by applicable law, and prior to any default being declared, payments will be applied first to any accrued unpaid interest; then to principal; then to escrow; then to any late charges; and then to any unpaid collection costs. Funds shall be deemed received by Lender on the next business day if not received by 12:00 p.m. local time at the location payments hereunder are to be made.

Borrowers shall make payments of:

(a)
Twenty-three (23) consecutive monthly payments of accrued and unpaid interest beginning November 1, 2019, and payable on the 1st day of each consecutive month thereafter;

(b)
Sixteen (16) consecutive monthly payments of Two Hundred Fifty Thousand Dollars ($250,000.00) each beginning November 1, 2019, and continuing on the 1st day of each consecutive month thereafter; and

(c)
a final payment of all outstanding principal and interest together with such other amounts as shall then be due and owing from Borrowers to Lender under the Term Loan D on the Term Loan D Maturity Date.




3.
FINAL PAYMENT MATURITY DATE

Notwithstanding anything set forth above, all sums due under this Note, both principal and interest, if not sooner paid, shall be due and payable on October 30, 2021 ("Term Loan D Maturity Date").

4.
PREPAYMENT; MINIMUM FINANCE CHARGE

Borrowers agree that all loan fees and other prepaid finance charges are earned fully as of the date of the loan and will not be subject to refund upon early payment (whether voluntary or as a result of default), except as otherwise required by law. In any event, even upon full prepayment of this Note, Borrowers understand that Lender is entitled to a minimum finance charge of $95.00. Other than Borrowers' obligations to pay any minimum finance charge, Borrowers may pay without penalty all or a portion of the amount owed earlier than it is due. Early payments will not, unless agreed to by Lender in writing, relieve Borrowers of Borrowers' obligation to continue to make payments under the payment schedule. Rather, early payments will reduce the principal balance due and may result in Borrowers making fewer payments. Borrowers agree not to send Lender payments marked "paid in full," "without recourse," or similar language. If Borrowers send such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrowers will remain obligated to pay any further amounted owed to Lender. All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to: Old National Bank, PO Box 3728, Evansville, IN 47736-3728.

5.
MANDATORY PREPAYMENTS

[Intentionally omitted.]

6.
PAYMENT DUE DATE/FAILURE TO PAY



(a) All payments due under this Note shall be made without demand and received on the dates set forth in Section 2 above;

(b) In the event of a default as defined in this Note, or as set forth in the Master Loan Agreement or any Collateral Documents or Guaranty Agreements, at the option of Lender, for so long as the default exists, interest on the outstanding principal balance hereof shall accrue and will be paid at the rate in effect from time to time hereunder plus an additional 3% per annum, but in no event shall such default rate exceed, however, the maximum rate permitted by law (“Default Interest Rate”); and

(c)
Any installment of principal and/or interest due hereunder which is not received on or before the 10th day following the date on which it is due shall be subject to a late payment fee of 5% of the amount owed on such installment (but not less than $50.00) for the purpose of defraying the expense incident to handling such



delinquent payment (this payment is in addition to the amount set forth in (b) above).

7.
INTEREST RATE COMPUTATION

Interest on this Note is computed on a 365/360 basis; that is, by applying the ratio of the interest rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. All interest payable under this Note is computed using this method.

8.
PLACE OF PAYMENT

All payments shall be made to Lender at the address on the interest billing statement provided by Lender or at the address of Lender set forth in Section 14 of this Note, at any branch of Lender, or such other place as Lender may from time to time designate in writing.

9.
MASTER LOAN AGREEMENT AND SECURITY

This Note evidences indebtedness incurred under; is the "Term Note D" referred to in; and is subject to the terms and provisions of the Master Loan Agreement by and between Borrowers and Lender dated June 24, 2019 (as amended, restated, supplemented or otherwise modified from time to time, including, but not limited to, by Supplements thereto, the (“Master Loan Agreement”). Capitalized terms not otherwise defined herein shall have the meaning ascribed to them in the Master Loan Agreement.

This Note is secured by the Collateral Documents. The terms of the Collateral Documents are incorporated herein and made a part hereof by reference.

10.
DEFAULT

In the event of the occurrence of an Event of Default under the Master Loan Agreement, and after giving effect to any applicable right to cure provided by the Master Loan Agreement, Lender may, at its option and without notice, declare this Note to be, and this Note shall thereupon become, immediately due and payable, together with accrued interest thereon. Without limiting the foregoing right and without limiting any other rights and remedies of the Lender at law or in equity, the Lender is also entitled to the rights and remedies provided for in the Master Loan Agreement and the Collateral Documents and may enforce the covenants, agreements and undertakings of Borrowers contained therein and may exercise the remedies provided for thereby or otherwise available in respect thereto, all in accordance with the terms thereof. In addition to any other right, Lender may apply and/or set-off against amounts due it hereunder any deposits, account balances, or other credits of any Borrower in the possession of or in transit to Lender, and Borrowers hereby grant Lender a security interest in all of the foregoing.

11.
WAIVERS

Except as herein provided, Borrowers and all others who may become liable for all or part of the principal balance hereof or for any obligations of Borrowers to Lender or the holder




hereof (a) forever waive presentment, protest and demand, notice of protest, demand and dishonor and non-payment of this Note, and all other notices in connection with the delivery, acceptance, performance, default or enforcement of the payment of this Note, (b) agree that the time of payment of the debt or any part thereof may be extended from time to time without modifying or releasing the lien of the Collateral Documents or the liability of Borrowers or any other such parties, the right of recourse against Borrowers and such parties being hereby reserved by Lender; and (c) agree that time is of the essence. Borrowers agree to pay all reasonable costs of collection when incurred, whether suit be brought or not, including reasonable attorneys' fees and costs of suit and preparation therefore, and to perform and comply with each of the covenants, conditions, provisions and agreements of Borrowers contained in this Note, the Master Loan Agreement and Collateral Documents. It is expressly agreed by Borrowers that no extensions of time for the payment of this Note, nor the failure on the part of Lender to exercise any of its rights hereunder, shall operate to release, discharge, modify, change or affect the original liability under this Note, the Master Loan Agreement or any of the Collateral Documents, either in whole or in part.

12.
WAIVER OF JURY TRIAL

BORROWERS WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING RELATING TO THIS INSTRUMENT AND TO ANY OF THE LOAN DOCUMENTS, THE OBLIGATIONS HEREUNDER OR THEREUNDER, ANY COLLATERAL SECURING THE OBLIGATIONS, OR ANY TRANSACTION ARISING THEREFROM OR CONNECTED THERETO. BORROWERS REPRESENT THAT THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY GIVEN.

13.
COMPLIANCE

This Note is to be governed by, and construed and enforced in accordance with, the laws of the State of Wisconsin (without giving effect to Wisconsin's principles of conflicts of law), except to the extent (a) of procedural and substantive matters relating only to the creation, perfection, foreclosure and enforcement of rights and remedies against specific collateral, which matters shall be governed by the laws of the state in which the collateral is located (the "Collateral State"), and (b) that the laws of the United States of America and any rules regulations, or orders issued or promulgated thereunder, applicable to the affairs and transactions entered into by the Lender, otherwise preempt Collateral State law or Wisconsin law; in which event such federal law shall control. Borrowers hereby irrevocably submit to the jurisdiction of any Wisconsin or federal court sitting in Milwaukee, Wisconsin (or, with respect to the matters set forth in subsection (a) above, any state in which the property encumbered by the Collateral Documents is located) over any suit, action or proceeding arising out of or relating to this Note or any of the Loan Documents. Borrowers hereby waive any right to object to the location of venue in any Wisconsin or federal court sitting in Milwaukee, Wisconsin, or, with respect to the matters set forth in subsection (a) above, to the appropriate court located in the Collateral State, concerning any suit, action or proceeding arising out of or relating to this Note or any of the Loan Documents and waives any objection which it may have at any time to the laying




of venue in any proceedings brought in any such court, waives any claim that such proceedings have been brought in an inconvenient forum and further waives the right to object, with respect to such proceedings, that such court does not have jurisdiction over such party to object to the choice of governing law set forth in this section. Borrowers acknowledge that the loan evidenced by this Note was solicited, negotiated, closed and funded in the State of Wisconsin, and waives any implication that the laws of any other state shall apply for usury purposes.

14.
NOTICES

All notices, requests and demands to be made hereunder to the parties hereto must be in writing and must be delivered to the applicable address stated below by any of the following means: (a) personal service; (b) electronic communication, including, but not limited to electronic mail, telex, telegram or telecopying (and, if by telex, telegram or telecopying, then only if confirmed in writing sent by registered or certified, first class mail, return receipt requested); or (c) registered or certified, first class mail, return receipt requested. Such addresses may be changed by notice to the other parties given in the same manner as provided above. Any notice, demand or request sent pursuant to either subsection (a) or (b) hereof will be deemed received upon such personal service or upon dispatch by electronic means, and, if sent pursuant to subsection (c) will be deemed received three (3) days following deposit in the mail.

Borrowers:    CONTRAIL AVIATION SUPPORT, LLC
CONTRAIL AVIATION LEASING, LLC
435 Investment Court
Verona, WI 53593-8788

Lender:    OLD NATIONAL BANK
25 W. Main St. Madison, WI 53703

15.
INTEREST NOT TO EXCEED MAXIMUM ALLOWED BY LAW.

If from any circumstances whatsoever, by reason of acceleration or otherwise, the fulfillment of any provision of this Note involves transcending the limit of validity prescribed by any applicable usury statute or any other applicable law, with regard to obligations of like character and amount, then the obligations to be fulfilled will be reduced to the limit of such validity as provided in such statute or law, so that in no event shall any exaction be possible under this Note in excess of the limit of such validity.

16.
SUCCESSORS

All rights, powers, privileges and immunities herein granted to Lender shall extend to its successors and assigns and any other legal holder of this Note, with full right by Lender to assign and/or sell same.

[remainder of page intentionally left blank; signature page follows]



IN WITNESS WHEREOF, the Parties have executed this Note as of the date and year first above written.

BORROWERS:

CONTRAIL AVIATION SUPPORT, LLC

By: /s/ Joseph Kuhn        
Joseph Kuhn Its: CEO

CONTRAIL AVIATION LEASING, LLC

By: /s/ Joseph Kuhn        
Joseph Kuhn Its: CEO



































[Signature Page to Promissory Note Term Note D]

18169744v1






NAME & ADDRESS OF DEBTOR/BORROWER:
CONTRAIL AVIATION SUPPORT, LLC CONTRAIL AVIATION LEASING, LLC 435 INVESTMENT CT
VERONA, WI 53593-8788



















[recording information]
NAME & ADDRESS OF SECURED PARTY/LENDER: OLD NATIONAL BANK
619 Madison/Southern WI Coml LPO
23 W Main St Madison, WI 53703
NAME OF GRANTOR I OWNER TRUSTEE:

WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED ATTN: MANAGING DIRECTOR
FOURTH FLOOR
3 GEORGE'S DOCK IFSC
DUBLIN 1 IRELAND

This Trustee Aircraft Security Agreement is entered into as of October 30, 2019 by and between Wilmington Trust SP Services (Dublin) Limited (registration number 318390), not in its individual capacity but solely as Trustee ("Grantor") of the herein identified Aircraft MSN 29922 Trust; CONTRAIL AVIATION SUPPORT, LLC; and CONTRAIL AVIATION LEASING,
LLC (collectively, "Borrower"); and OLD NATIONAL BANK ("Lender").

WHEREAS, Borrower and Grantor entered into that certain Declaration of Trust (MSN 29922), dated as of June 26, 2019, which created the Aircraft MSN 29922 Trust;
WHEREAS, Lender has loaned funds to Borrower for, inter alia, the acquisition by Grantor of the below-identified Aircraft in connection with and pursuant to a Master Loan Agreement effective as of June 24, 2019, together with executed Amendments and Supplements thereto, one or more Promissory Note(s), and other guarantees, assignments, pledges and other instruments associated therewith, hereinafter collectively defined as "Loan Documents", evidencing Borrower's obligations to Lender (collectively, the "Indebtedness"); and
WHEREAS, pursuant to the Loan Documents, Borrower has agreed to cause Grantor to grant, and Grantor has agreed, in its capacity as Trustee of the Aircraft MSN 29922 Trust, to grant a security interest in the herein-identified Collateral as security for repayment of Borrower's Indebtedness and other obligations to Lender.
NOW THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the sufficiency of which is acknowledged, Grantor and Lender agree as follows:

I.
GRANT OF SECURITY INTEREST. Grantor hereby grants to Lender a continuing security interest in the Collateral to secure the Indebtedness and agrees that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender may have by law. As used herein, "Collateral" is defined as:
a.
Boeing 737-7B26 with manufacturer serial number 29922 (described on the pre-populated drop down
menu of the International Registry as a BOEING model 737-800 aircraft with manufacturer's serial number 29922), which has heretofore been registered in the national aircraft registry of Ireland as aircraft EI-CSG, (the "Aircraft"), inclusive of the Airframe, Engines, Equipment, Records, Funds, and Proceeds.
i. "Airframe" is defined as the Aircraft's airframe together with any and all parts, appliances, components, instruments, accessories, accessions, attachments, equipment, or avionics (including, without limitation, radio, radar, navigation systems, or other electronic equipment) installed in, appurtenant to, or delivered with or in respect of such airframe.



ii. "Engines" are defined as two CFM International, Inc. model CFM56-7B24 engines (rated thrust of over 100kN or 22,400 lb./ft) with serial numbers 890420 and 890421 (described on the pre­ populated drop down menu of the International Registry as CFM model CFM56-7 engines with manufacturer's serial numbers 890420 and 890421), together with any other aircraft engines which either now or in the future are installed on, appurtenant to, or components with or in respect of the Airframe, together with any and all parts, appliances, components, accessories, accessions, attachments or equipment installed on, appurtenant to, or delivered with or in respect of such Engines pursuant to the provisions of that certain Aircraft Lease Agreement, dated as of January 28, 2008, between Grantor, as assignee of and successor to Sapphire Aviation Finance I (UK) Limited, as assignee and successor to CIT Capital Aviation (UK) Limited, as lessor, and MIAT Mongolian Airlines, a company organized and existing under the laws of Mongolia and having its principal place of business at MIAT Building, Buyant-Ukhaa 458 Khan-Uul district, Ulaanbaatar 17120, Mongolia ("Lessee") with respect to the lease of the Aircraft, as supplemented, amended, novated, assigned or otherwise modified from time-to-time (the "Lease") or otherwise. The word "Engines" shall also refer to any replacement aircraft engine which, under this Agreement and the Lease, is required or permitted to be installed upon the Airframe.
iii. "Equipment" is defined as all auxiliary power units, accessories, appliances, avionics, instruments, parts, spares, furnishings, replacements and substituted components installed on or used with the Aircraft,
iv.
"Records" are defined as all log books, manuals, flight records, inspection reports, airworthiness certificates, registration certificates, and other operational records of the Aircraft or any part of it.
v.
"Funds" are defined as all rents, accounts, chattel paper, general intangibles, and monies, arising out of or related to rental, lease, operation or other use of any of the property described as any part or all of the Collateral.
vi.
"Proceeds" are defined as all monies, claims, accounts and intangible rights of any kind resulting from any sale, insurance payments or other disposition of the Aircraft or any part thereof.
b.
All other rights in all the foregoing as defined in the Cape Town Convention on International Interests in Mobile Equipment, including the Aircraft Protocol thereto ("Cape Town Convention"), whether now owned or later acquired.

2.
CROSS-COLLATERALIZATION. In addition to the Promissory Note(s) associated with the Indebtedness relating to the Aircraft, this Agreement further secures all obligations, debts and liabilities, plus interest thereon, of Borrower or any one or more of them to Lender, as well as all claims by Lender against Borrower or any one or more of them, whether now existing or hereafter arising, whether related or unrelated to the purpose of the Note, whether voluntary or otherwise, whether due or not due, direct or indirect, determined or undetermined, absolute or contingent, liquidated or unliquidated, whether Borrower may be liable individually or jointly with others, whether obligated as guarantor, surety, accommodation party or otherwise, and whether recovery upon such amounts may be or hereafter may become barred by any statute of limitations, and whether the obligation to repay such amounts may be or hereafter become otherwise unenforceable.

3.
BORROWER'S WAIVERS. Except as otherwise required under this Agreement or by applicable law, Borrower agrees that Lender need not provide notice to Borrower about any action or inaction of Lender in connection with this Agreement, and waives any defense that may arise due to any action or inaction of Lender, including, without limitation, any failure or delay of Lender to realize upon the Collateral; and Borrower agrees to remain liable upon the Indebtedness regardless of Lender's action or failure to act under this Agreement.

4.
GRANTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Grantor represents, warrants and covenants to Lender, at all times while this Agreement is in effect, as follows:
a.
That Grantor, as owner trustee, is the registered owner of the Aircraft pursuant to a proper registration under either the Federal Aviation Act of 1958, as amended, or the equivalent law of the Grantor's domicile, that Grantor qualifies in all respects as a citizen of the United States as defined by the Act or is otherwise validly organized and duly qualified to own and register such ownership of the Aircraft pursuant to the applicable law of Grantor's domicile country, and that Grantor's citizenship shall not be changed;



b.
That Grantor is the lawful owner of the Collateral and holds good and marketable title to the Collateral, free and clear of all liens, mortgages, claims, or other rights or interests asserted or which may be asserted at any time by any other person in or relating to the Collateral (collectively, "Encumbrances") except the lien of this Agreement and the Lease and such interests, including leases, to which Lender has consented in writing;
c.
That Grantor has the full right, power and authority to enter into this Agreement and to pledge the Collateral to Lender, has not received from or relied upon any representation by Lender about Borrower or Borrower's creditworthiness, executes this Agreement at Borrower's request and not at the request of Lender;
d.
That the Aircraft is eligible for recording of interests relating thereto with the International Registry established pursuant to the Cape Town Convention and the national aviation authority having jurisdiction in Grantor's domicile;
e.
That Grantor shall promptly consent or cause its agent to consent to the registration of the International Interest created hereby with the International Registry;
f.
That Grantor is and shall remain registered as a transacting user entity under the procedures of the International Registry with full rights and privileges to access the International Registry;
g.
That the national jurisdiction in which the Aircraft is registered shall not be changed without express written consent of Lender;
h.
That Grantor shall not sell, offer to sell, or otherwise transfer or dispose of the Collateral;
i
That Grantor shall not grant, pledge, mortgage, encumber or otherwise permit the Collateral to be subject to any Encumbrance or charge, other than the security interest provided for in this Agreement and the Lease, without the prior written consent of Lender, including security interests even if junior in right to the security interests granted under this Agreement;
j.
That Grantor shall promptly pay when due all statements and charges of airport authorities, mechanics, laborers, materialmen, suppliers and others incurred in connection with the use, operation, storage, maintenance and repair of the Aircraft so that no Encumbrance may attach to or be filed against the Aircraft:, and shall obtain, upon request by Lender, and in form and substance as may then be satisfactory to Lender, appropriate waivers and/or subordinations of any Encumbrances that may affect the Collateral at any time;
k.
That unless waived by Lender all proceeds from any disposition of the Collateral (for whatever reason) shall be held in trust for Lender and immediately delivered to Lender, and shall not be commingled with any other funds; provided however, this requirement shall not constitute consent by Lender to any sale or other disposition;
l.
That Grantor shall not remove or permit the removal of any Engines or Equipment from the Aircraft other than as permitted by this Agreement and, when so permitted, shall only replace the same with comparable parts, engines, accessories, avionics and equipment in accordance with the provisions of Section 12 hereof; and
m.
That Grantor shall defend Lender's rights in the Collateral against any claims or demands of all other persons.
n.
That any rights, claims or interests of Grantor with regard to the Collateral, heretofore existing or hereafter arising, shall be and remain subordinate in all respects to the interests of Lender in such Collateral.
This Agreement is binding upon Grantor and its successors and any permitted assigns and shall be legally enforceable in accordance with its terms. The foregoing representations and warranties, and all other representations and warranties contained in this Agreement are and shall be continuing in nature and shall remain in full force and effect until such time as this Agreement is terminated, released or cancelled as provided herein. The Lessee shall not be a third party beneficiary of or entitled to enforce in its own name any provisions of this Security Agreement.
5.
WAIVERS. Grantor and Borrower waive all requirements of presentment, protest, demand, and notice of dishonor or non-payment of any or all of the Indebtedness. Lender may do any of the following with respect to any obligation of any Borrower, without first obtaining the consent of Grantor: (a) grant any extension of time for any payment, (b) grant any renewal, (c) permit any modification of payment terms or other terms, or (d) exchange or release any Collateral or other security. No such act or failure to act shall affect Lender's rights against Grantor or the Collateral.

6.
DURATION. This Agreement shall remain in full force and effect until such time as the Indebtedness, including principal, interest, costs, expenses, attorneys' fees and other fees and charges, shall have been paid in full, together with all additional sums that Lender may pay or advance on Borrower or Grantor's behalf and lawful interest thereon.


7.
RECORDS AND LOGS. Grantor will keep, or will cause Lessee to keep, accurate and complete logs, manuals, books, and records relating to the Collateral in accordance with applicable rules and regulations, and will provide Lender with copies of such records and information relating to the Collateral as Lender may reasonably require from time to time.

8.
PERFECTION OF INTEREST. Grantor agrees to take all actions requested by Lender to perfect and continue Lender's security interest in the Collateral. Upon request of Lender, Grantor will deliver to Lender any and all of the documents evidencing or constituting the Collateral and Grantor will note Lender's interest upon any and all chattel paper and instruments if not delivered to Lender for possession by Lender. In particular, Grantor will perform, or will cause to be performed, upon Lender's request, each and all of the following:

a.
Record, register and file this Agreement, together with such notices, financing statements or other documents or instruments as Lender may request from time to time to carry out fully the intent of this Agreement, with the International Registry and any applicable national aviation authority (for example, the FAA if ownership and interests are subject to registration in the U.S.A.), either concurrent with the delivery and acceptance of the Collateral or promptly after the execution and delivery of this Agreement;
b.
Furnish to Lender evidence of every such recording, registering, and filing;
c.
Execute and deliver or perform any and all acts and things which may be reasonably requested by Lender with respect to complying with or remaining subject to the Applicable Laws;

9.
ATTORNEY-IN-FACT. Grantor hereby appoints Lender as Grantor's irrevocable attorney-in-fact for the purpose of executing any documents necessary to perfect, amend, or to continue the security interests granted in this Agreement or to demand termination of filings of other secured parties. Lender may at any time, and without further authorization from Grantor, file a carbon, photographic or other reproduction of any financing statement or of this Agreement for use as a financing statement. Borrower will reimburse Lender for all expenses for the perfection and the continuation of the perfection of Lender's security interest in the Collateral.

10. NOTICES TO LENDER. Grantor will promptly notify Lender in writing at Lender's address shown above (or such other addresses as Lender may designate from time to time) prior to any change in Grantor's name, assumed business name(s), material ownership change consisting of more than 10% of the ownership or voting securities of Grantor, identity of Grantor's authorized signer(s) in relation to this Agreement, principal office address, state of organization, type of business entity, or any other aspect of Grantor that directly or indirectly relates to any agreements between Grantor and Lender. No change in Grantor's name or organizational characteristics shall be effective until Lender has received such notice.

11. LOCATION AND INSPECTION OF COLLATERAL. The home base location at which the Collateral will be hangered when not in operation shall be Chinggis Khaan International Airport at Ulaanbaatar, Mongolia. Grantor shall, whenever requested, advise Lender of the exact location of the Collateral. At any reasonable time, on demand by Lender, Grantor shall cause the Collateral (including the logs, books, manuals, and records comprising the Collateral) to be exhibited to Lender (or persons designated by Lender) for purposes of inspection and copying, subject to the provisions of the Lease.

12.
AIRWORTHINESS AND REPAIRS. Grantor, at its expense, shall do or cause to be done, in a timely manner, each and all of the following:

a.
Maintain and keep the Collateral in as good condition and repair as it is on the date of this Agreement, ordinary wear and tear excepted ;
b.
Maintain and keep the Aircraft in airworthy condition in accordance with the requirements of the Lease and each of the manufacturers' manuals and mandatory service bulletins and each of the manufacturers' non­mandatory service bulletins which relate to airworthiness, and in compliance with all applicable aviation laws and regulations pursuant to which it may be operated (for example, and without limitation, all requirements of Parts 91 and 121 of FAA Regulations, or all applicable EASA airworthiness regulations, as applicable, based on the jurisdiction of the Aircraft's registration), the compliance date of which shall occur while this Agreement is in effect;
c.
Replace in or on the Airframe any and all Engines, parts, appliances, instruments or accessories which may be worn out, lost, destroyed or otherwise rendered unfit for use;
d.
Obtain all required inspections of the Aircraft and licensing or re-licensing of the Aircraft in accordance with all applicable governmental requirements. Grantor shall at all times cause the Aircraft to have on board and in a conspicuous location a current Certificate of Airworthiness; and
e.
Cause all inspections, maintenance, modifications, repairs, and overhauls of the Aircraft (including those performed on the Airframe, the Engines or any components, appliances, accessories, instruments, or equipment) to be performed only by personnel authorized to perform such services by the FAA or other aviation authority having jurisdiction.

If any Engine, component, appliance, accessory, instrument, equipment or part of the Aircraft shall reach such a condition as to require overhaul, repair or replacement, for any cause whatsoever, in order to comply with the standards for maintenance and other provisions set forth in this Agreement and the Lease, Grantor may install, or cause Lessee to install, temporary replacements of the same type pending overhaul or repair of the unsatisfactory item, so long as such temporary replacements are fit for operational use within applicable regulations and standards and Grantor retains unencumbered title to any and all items temporarily removed, or make permanent replacements of the same type so long as such permanent replacements are fit for operational use within applicable regulations and standards and Grantor complies, or causes Lessee to comply, with the following requirements (subject to the provisions of the Lease):
(i)
Lender is not divested of its security interest in and lien upon any item removed from the Aircraft and no such removed item becomes subject to the lien or claim of any other person, unless and until such item is replaced by an item of the type and condition required by this Agreement, title to which, upon its being installed or attached to the Airframe, is validly vested in Grantor, free and clear of all liens and claims, of every kind or nature, of all persons other than Lender;
(ii)
Grantor's title to every substituted item shall immediately be and become subject to the security interests and liens of Lender and each of the provisions of this Agreement, and each such item shall remain so encumbered unless it is, in tum, replaced by a substitute item in the manner permitted in this Agreement; and
(iii)
If an item is removed from the Aircraft and replaced in accordance with the requirements of this Agreement, and if the substituted item satisfies the requirements of this Agreement, including the terms and conditions above, then the item which is removed shall thereupon be free and clear of the security interests and liens of Lender. In the event that any Engine, component, appliance, accessory, instrument, equipment or part is installed upon the Airframe, and is not in substitution for or in replacement of an existing item, such additional item shall be considered as an accession to the Airframe.

13. Taxes, Assessments and Liens. Grantor will pay when due all taxes, assessments and liens upon the Collateral, its use or operation, upon this Agreement, or upon the Loan Documents to the extent applicable to the Aircraft. Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender's interest in the Collateral is not jeopardized in Lender's sole opinion. If the Collateral is subjected to a lien which is not discharged within fifteen (15) days, Grantor shall deposit with Lender cash, a sufficient corporate surety bond or other security satisfactory to Lender in an amount adequate to provide for the discharge of the lien plus any interest, costs or other charges that could accrue as a result of foreclosure or sale of the Collateral. In any contest Grantor shall defend itself and Lender and shall satisfy any final adverse judgment before enforcement against the Collateral. Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings.

14.
GOVERNMENTAL COMPLIANCE. Grantor shall comply promptly with all applicable laws, ordinances and regulations of all governmental authorities applicable to the use, operation, maintenance, overhauling or condition of the Collateral. Grantor may contest in good faith any such law, ordinance or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Lender's interest in the Collateral, in Lender's opinion, is not jeopardized. Without limiting the foregoing, Grantor agrees that at no time during the effectiveness of this Agreement shall the Collateral be operated in, located in, or relocated to, any jurisdiction, unless the Cape Town Convention or some comparable treaty, rules and regulations satisfactory to Lender shall be in effect in such


jurisdiction and any notices, financing statements, documents, or instruments necessary or required, in the opinion of Lender, to be filed in such jurisdiction shall have been filed and file stamped copies thereof shall have been furnished to Lender. Notwithstanding the foregoing, at no time shall the Collateral be operated in or over any area which may expose Lender to any penalty, fine, sanction or other liability, whether civil or criminal, under any applicable law, rule, treaty or convention; nor may the Collateral be used in any manner which is or may be declared to be illegal and which may thereby render the Collateral liable to confiscation, seizure, detention or destruction.

15.
INSURANCE.

a.
Grantor shall procure and maintain at all times all risks insurance on the Collateral, including without limitation fire, theft, liability and hull insurance, and such other insurance as Lender may require with respect to the Collateral, in form, amounts, coverages and basis reasonably acceptable to Lender and issued by a company or companies reasonably acceptable to Lender. Grantor shall further provide and maintain, at its sole cost and expense or at the sole cost and expense of Lessee, comprehensive public liability insurance, naming both Grantor and Lender as parties insured, protecting against claims for bodily injury, death and/or property damage arising out of the use, ownership, possession, operation and condition of the Aircraft, and further containing a broad form contractual liability endorsement covering Grantor's obligations to indemnify Lender as provided under this Agreement. Such policies of insurance must also contain a provision, in form and substance acceptable to Lender, prohibiting cancellation or the alteration of such insurance without at least ten (10) days prior written notice to Lender of such intended cancellation or alteration. Such insurance policies also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Grantor or any other person. Grantor agrees to provide Lender with copies of such policies of insurance. Grantor, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender. In connection with all policies covering assets in which Lender holds or is offered a security interest for the Indebtedness, Grantor will provide Lender with such lender's loss payable or other endorsements as Lender may require. Grantor shall not use or permit the Collateral to be used in any manner or for any purpose excepted from or contrary to the requirements of any insurance policy or policies required to be carried and maintained under this Agreement or for any purpose excepted or exempted from or contrary to the insurance policies, nor shall Grantor do any other act or permit anything to be done which could reasonably be expected to invalidate or limit any such insurance policy or policies.
b.
Grantor shall promptly notify Lender of any loss or damage to the Collateral, whether or not such casualty or loss is covered by insurance. Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty. All proceeds of any insurance on the Collateral, including accrued proceeds thereon, shall be held by Lender as part of the Collateral. If Lender consents to repair or replacement of the damaged or destroyed Collateral, Lender shall, upon satisfactory proof of expenditure, pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration. If Lender does not consent to repair or replacement of the Collateral, Lender shall retain a sufficient amount of the proceeds to pay all of the Indebtedness, and shall pay the balance to Grantor. Any proceeds which have not been disbursed within six
(6) months after their receipt and which Grantor has not committed to the repair or restoration of the Collateral shall be used to prepay the Indebtedness.
c.
Grantor, upon request of Lender, shall furnish to Lender reports on each existing policy of insurance showing such information as Lender may reasonably request including the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the property insured; (5) the then current value on the basis of which insurance has been obtained and the manner of determining that value; and (6) the expiration date of the policy. In addition, Grantor shall upon request by Lender (however not more often than annually) have an independent appraiser satisfactory to Lender determine, as applicable, the cash value or replacement cost of the Collateral.

16.
Prior Encumbrances. To the extent applicable, Grantor shall fully and timely perform any and all of Grantor's obligations under any prior Encumbrances affecting the Collateral. Without limiting the foregoing, Grantor shall not commit or permit to exist any breach of or default under any such prior Encumbrances. Grantor shall further promptly notify Lender in writing upon the occurrence of any event or circumstances that would, or that might, result in a breach


of or default under any such prior Encumbrance. Grantor shall further not modify or extend any of the terms of any prior Encumbrance or any indebtedness secured thereby, or request or obtain any additional loans or other extensions of credit from any third party creditor or creditors whenever such additional loan advances or other extensions of credit may be directly or indirectly secured, whether by cross-collateralization or otherwise, by the Collateral, or any part or parts thereof, with possible preference and priority over the lien of this Agreement.

17.
NOTICE OF ENCUMBRANCES AND EVENTS OF DEFAULT. Grantor shall immediately notify Lender in writing upon the filing of any attachment, judicial process, or claim relating to the Collateral. Grantor additionally agrees to immediately notify Lender in writing upon the occurrence of any Event of Default, or event that with the passage of time, failure to cure, or giving of notice, may result in an Event of Default under any of Grantor's obligations that may be secured by any presently existing or future Encumbrance, or that may result in an encumbrance affecting the Collateral, or should the Collateral be seized or attached or levied upon, or threatened by seizure or attachment or levy, by any person other than Lender.

18.
POSSESSION; QUIET ENJOYMENT. Until default, Grantor shall have the possession and beneficial use of the Collateral and may use it in any lawful manner not inconsistent with this Agreement or the Loan Documents. Lender confirms that neither it nor any person lawfully claiming through it will interfere with the quiet enjoyment and use of the Aircraft by Lessee throughout the Lease as long as no "Event of Default" (as defined in the Lease) has occurred and is continuing.

19.
LENDER'S EXPENDITURES. If any action or proceeding is commenced that would materially affect Lender's interest in the Collateral or if Grantor fails to comply with any provision of this Agreement or any Loan Documents, including but not limited to Grantor's failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Agreement or any Loan Documents, Lender on Grantor's behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Collateral and paying all costs for insuring, maintaining and preserving the Collateral. All such expenditures incurred or paid by Lender for such purposes will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Grantor. All such expenses will become a part of the Indebtedness and, at Lender's option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note's maturity. The Agreement also will secure payment of these amounts. Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon Default.

20.
DEFAULT. Each of the following shall constitute an Event of Default under this Agreement:

a.
Payment Default. Borrower fails to make any payment when due under the Indebtedness.
b.
Other Defaults. Borrower or Grantor fails to comply with or to perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Loan Documents or to comply with or perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower or Grantor.
c.
Default in Favor of Third Parties. Borrower, any guarantor or Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's, any guarantor's or Grantor's property or ability to perform their respective obligations under this Agreement or any of the Loan Documents.
d.
False Statements. Any warranty, representation or statement made or furnished to Lender by Borrower or Grantor or on Borrower's or Grantor's behalf under this Agreement or the Loan Documents is false or misleading in any material respect, or becomes so, regardless of when made.
e.
Defective Collateralization. This Agreement or any of the Loan Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any reason.


f.
Insolvency. The dissolution of Borrower or Grantor (regardless of whether election to continue is made) or any other termination of Borrower's or Grantor's existence as a going concern, the insolvency of Borrower or Grantor, the appointment of a receiver for any part of Borrower's or Grantor's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower or Grantor.
g. Creditor or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or Grantor or by any governmental agency against any collateral securing the Indebtedness. This includes a garnishment of any of Borrower's or Grantor's accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower or Grantor as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower or Grantor gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.
h.
Events Affecting Guarantor. Any of the preceding events occurs with respect to any Guarantor of any of the Indebtedness or Guarantor dies or becomes incompetent or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness
i.
Adverse Change. A material adverse change occurs in Borrower's or Grantor's financial condition, or Lender believes the prospect of payment or performance of the Indebtedness is impaired.

21.
CURE. If any default, other than a default in payment, is curable and if Borrower or Grantor has not been given a notice of a breach of the same provision of this Agreement within the preceding twelve (12) months, it may be cured if Borrower or Grantor, as the case may be, after Lender sends written notice demanding cure of such default: (1) cures the default within fifteen (15) days; or (2) if the cure requires more than fifteen (15) days, immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.

22.
RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this Agreement, at any time thereafter, Lender shall have all the rights of a secured party under the Wisconsin Uniform Commercial Code. In addition, and without limitation, Lender may exercise any one or more of the following rights and remedies:

a.
Accelerate Indebtedness. Lender may declare the entire Indebtedness, including any prepayment penalty which Borrower would be required to pay, immediately due and payable, without notice of any kind to Borrower or Grantor.
b.
Assemble Collateral. Lender may require Grantor to deliver to Lender all or any portion of the Collateral and any and all certificates of title and other documents relating to the Collateral. Lender may require Grantor to assemble the Collateral and make it available to Lender at a place to be designated by Lender. Lender also shall have full power to enter upon the property of Grantor to take possession of and remove the Collateral. If the Collateral contains other goods not covered by this Agreement at the time of repossession, Grantor agrees Lender may take such other goods, provided that Lender makes reasonable efforts to return them to Grantor after repossession.
c.
Sell the Collateral. Lender shall have full power to sell, lease, transfer, or otherwise deal with the Collateral or proceeds thereof in Lender's own name or that of Grantor. Lender may sell the Collateral at public auction or private sale. Unless the Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market, Lender will give Grantor, and other persons as required by law, reasonable notice of the time and place of any public sale, or the time after which any private sale or any other disposition of the Collateral is to be made. However, no notice need be provided to any person who, after Event of Default occurs, enters into and authenticates an agreement waiving that person's right to notification of sale. The requirements of reasonable notice shall be met if such notice is given at least ten (10) days before the time of the sale or disposition. All expenses relating to the disposition of the Collateral, including without limitation the expenses of retaking, holding, insuring, preparing for sale and selling the Collateral, shall become a part of the Indebtedness secured by this Agreement and shall be payable on demand, with interest at the Note rate from date of expenditure until repaid.


d.
Appoint Receiver. Lender shall have the right to have a receiver appointed to take possession of all or any part of the Collateral, with the power to protect and preserve the Collateral, to operate the Collateral preceding foreclosure or sale, and to collect the rents from the Collateral and apply the proceeds, over and above the cost of the receivership, against the Indebtedness or as the court may direct. The receiver may serve without bond if permitted by law. Lender's right to the appointment of a receiver shall exist whether or not the apparent value of the Collateral exceeds the Indebtedness by a substantial amount. Employment by Lender shall not disqualify a person from serving as a receiver.
e.
Obtain Deficiency. If Lender chooses to sell any or all of the Collateral, Lender may obtain a judgment against Borrower for any deficiency remaining on the Indebtedness due to Lender after application of all amounts received from the exercise of the rights provided in this Agreement.
f.
Other Rights and Remedies. Lender shall have all the rights and remedies of a secured creditor under the provisions of the Uniform Commercial Code, as may be amended from time to time, and the Cape Town Convention, including Articles 8, 9, 10 and 13 of the Convention.
g.
De-Registration. Lender may exercise the Irrevocable De-Registration and Export Request Authorization, which shall be executed and delivered to Lender upon the effectiveness of this Agreement, the form of which is provided in Exhibit A hereto, without such act waiving or reducing the Indebtedness.
h.
Remedies Non-exclusive. Except as may be prohibited by applicable law, all of Lender's rights and remedies, whether evidenced by this Agreement, the Loan Documents, or by any other writing, shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to perform an obligation of Grantor under this Agreement, after Grantor's failure to perform, shall not affect Lender's right to declare a default and exercise its remedies.

23.
INDEMNIFICATION OF LENDER. Grantor agrees to indemnify, defend and hold Lender harmless from any and all claims, suits, obligations, damages, losses, costs and expenses (including, without limitation, Lender's attorneys' fees), demands, liabilities, penalties, fines and forfeitures of any nature whatsoever that may be asserted against or Incurred by Lender, its officers, directors, employees, and agents arising out of, relating to, or in any manner occasioned by this Agreement and the exercise of the rights and remedies granted Lender under this Agreement. The foregoing indemnity provisions shall survive the cancellation of this Agreement as to all matters arising or accruing prior to such cancellation and the foregoing indemnity shall survive in the event Lender elects to exercise any of the remedies as provided under this Agreement following default hereunder.

24.
MISCELLANEOUS PROVISIONS.

a.
Amendments. This Agreement, together with the Loan Documents, constitutes the entire understanding and agreement of the parties as to the matters set forth in this Agreement. No alteration of or amendment to this Agreement shall be effective unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment.
b.
Attorneys' Fees & Expenses. Grantor agrees to pay upon demand all of Lender's costs and expenses, including Lender's attorneys' fees and Lender's legal expenses, incurred in connection with the enforcement of this Agreement, including, without limitation, such fees and expenses incurred in non-judicial enforcement, bankruptcy proceedings, and any judicial proceedings.
c.
Caption Headings. Caption headings in this Agreement are for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement.
d.
Governing Law and Venue. This Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Wisconsin, without regard to its conflicts of law provisions. This Agreement has been accepted by Lender in the State of Wisconsin. Borrower and Grantor consent to the jurisdiction of the court in and for the State of Wisconsin, and agree that the exclusive venue for any action brought by or against any party arising from or relating to this Agreement shall be the courts in and for the State of Wisconsin.
e.
Joint and Several Liability. All obligations of Borrower and Grantor under this Agreement shall be joint and several.


f.
Notices. Any notice required to be given under this Agreement, unless the form of service of notice is specified by law, shall be effective when actually delivered in writing by receipt-confirmed facsimile transmission or receipt-confirmed email directed to party's designated officer responsible for administration of such party's duties and rights associated with this Agreement, or when deposited with a nationally recognized overnight courier to the recipient party's addresses shown in this Agreement, or when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown in this Agreement. Any party may change its address for notices under this Agreement by giving written notice to the other parties.
g.
Severability. If a court of competent jurisdiction finds any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality, invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement.
h.
Successors and Assigns. Subject to any limitations stated in this Agreement, this Agreement shall be binding upon and inure to the benefit of the parties, their successors and authorized assigns.
1.
No Waiver by Lender. Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of Lender's right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Grantor, shall constitute a waiver of any of Lender's rights or of any of Grantor's obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender.
ACCEPTED AND AGREED by and between the parties hereto.


WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED, not in its individual capacity but solely as Trustee
By: /s/ Claudio Borza        
Name: Claudio Borza
Title: Director


CONTRAIL AVIATION SUPPORT, LLC

By: /s/ Joseph G. Kuhn        
Name: Joseph G. Kuhn
Title: CEO



CONTRAIL AVIATION LEASING, LLC
By CONTRAIL AVIATION SUPPORT, LLC, sole member and manager of Contrail Aviation Leasing, LLC

By: /s/ Joseph G. Kuhn        
Name: Joseph G. Kuhn
Title: CEO







[EXHIBIT A]


To: IRISH AIR AUTHORITY
The Times Building, 11-12 D'Olier Street,
Dublin 2 Ireland

Re: Irrevocable De-Registration and Export Request Authorization

The undersigned is the registered owner of the 737-7826 bearing manufacturer's serial number 29922 and registration EI-CSG (together with all installed, incorporated or attached accessories, parts and equipment, the "Aircraft").
This instrument is an irrevocable de-registration and export request authorization issued by the undersigned in favor of OLD NATIONAL BANK (the "Authorized Party") under the authority of Article XIII of the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment. In accordance with that Article, the undersigned hereby requests:
i.     Recognition that the Authorized Party or the person it certifies as its designee is the sole person entitled to:

a)
Procure the de-registration of the Aircraft from the register maintained by the FAA for the purposes of Chapter III of the Convention on International Civil Aviation, signed at Chicago, on 7 December 1944; and
b)
Procure the export and physical transfer of the Aircraft from said jurisdiction; and

ii.
Confirmation that the Authorized Party or the person it certifies as its designee may take the action specified in clause
(i)    above on written demand without the consent of the undersigned and that, upon such demand, the authorities in the United States shall co-operate with the Authorized Party with a view to the speedy completion of such action.
The rights in favor of the Authorized Party established by this instrument may not be revoked by the undersigned without the written consent of the Authorized Party.
Please acknowledge your agreement to this request and its terms by appropriate notation in the space provided below and filing this instrument in your applicable aircraft registration records.
OWNER:
WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED, not in its individual capacity but solely as Trustee

By: /s/ Claudio Borza        
Name: Claudio Borza
Title: Director


BORROWER:
CONTRAIL AVIATION SUPPORT, LLC
By: /s/ Joseph G. Kuhn        
Name: Joseph G. Kuhn
Title: CEO





CONTRAIL AVIATION LEASING, LLC
By CONTRAIL AVIATION SUPPORT, LLC, sole member and manager of Contrail Aviation Leasing, LLC


By: /s/ Joseph G. Kuhn            
Name: Joseph G. Kuhn        
Title: CEO


18169796v1




BENEFICIAL INTEREST PLEDGE AGREEMENT
MSN 29922 Trust d/a/o June 26, 2019

THIS BENEFICIAL INTEREST PLEDGE AGREEMENT dated as of October 30, 2019 (this
"Agreement") is between CONTRAIL AVIATION LEASING, LLC, a Wisconsin limited liability company, as pledgor (the "Pledgor") and OLD NATIONAL BANK, as Secured Party (the "Secured Party").

WHEREAS, Pledgor, as Beneficial Owner (as defined in the Trust Deed), Wilmington Trust SP Services (Dublin) Limited (registration number 318390), not in its individual capacity, except as provided in the Trust Deed, but otherwise as Trustee (the "Owner Trustee") and Contrail Aviation Support, LLC, as Parent (as defined in the Trust Deed) entered into that certain Declaration of Trust (MSN 29922), dated as of June 26, 2019 (the "Trust Deed") (the "Trust Deed"), pursuant to which the Aircraft MSN 2922 Trust was created (the "Trust");

WHEREAS, Pledgor is the sole Beneficial Owner (as defined in the Trust Deed) under the Trust Deed and the sole legal and beneficial owner of the beneficial interest (the "Beneficial Interest") in the Trust Estate (as defined in the Trust Deed), the principal asset of which consists of one (1) Boeing model 737-800 aircraft, manufacturer's serial number 29922, and CFM International, Inc. model CFM56-7B24 aircraft engines, serial numbers 890420 and 890421, together with all equipment, parts, instrumentation, documentation, substitutions and proceeds thereof (the "Aircraft"); and

WHEREAS, the Pledgor has entered into a Master Loan Agreement, dated as of June 24, 2019, among the Pledgor, as a borrower, any other parties thereto (the "Participants"), and the Secured Party (the "Credit Agreement") pursuant to which the Secured Party, as lender, agreed to make certain loans and extend certain credit facilities to Pledgor and Participants, including, but not limited to, a loan to finance the acquisition of the Aircraft. All capitalized terms used in this Agreement have the meaning ascribed to them in the Credit Agreement unless otherwise defined herein.

NOW THEREFORE, in consideration of the foregoing premises and other good and valuable consideration, the sufficiency of which is acknowledged, Pledgor and Secured Party agree as follows:

1.
Pledge. As further security for the payment and performance in full of all of the Obligations, the Pledgor hereby pledges, hypothecates, assigns, transfers, sets over, delivers and grants to the Secured Party a first priority security interest and lien in all right, title and interest of the Pledgor which presently exists or hereafter arises in, to and under the following (hereinafter, collectively, the "Pledged Collateral"):
a.
100% of the Beneficial Interest, provided, that the Trust shall not be materially modified without Secured Party's written consent, which will not be unreasonably withheld.
b.
all interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any of or all the Beneficial Interest,
c.
all certificates or other instruments or documents representing any of the foregoing,
d.
all rights and privileges of the Pledgor with respect to the Beneficial Interest and the other property referred to in clauses (a) through (c) above, and
e.
all proceeds of any of the foregoing and any property of any character whatsoever into which any of the foregoing may be converted.
Notwithstanding the foregoing, any funds specifically designated as security deposits payable to the Owner Trustee under a relevant Lease of the Aircraft shall not be Pledged Collateral.

TO HAVE AND TO HOLD the Pledged Collateral, together with all rights, title, interests, powers, privileges and preferences pertaining or incidental thereto, unto the Secured Party, its successors and assigns permitted by the terms of the Credit Agreement; pursuant and subject to the terms, covenants and conditions hereinafter set forth.

2.
Representations and Warranties of the Pledgor. The Pledgor hereby represents and warrants:
a.
That it is a limited liability company duly formed and validly existing under the laws of the jurisdiction of its formation and has the requisite power and authority to enter into this Agreement and to carry out the transactions contemplated hereby;
b.
That Pledgor is the record owner of the Pledged Collateral, free and clear of any and all liens or claims of any other person, except for the security interest granted hereunder and the rights and remedies of

the Secured Party related to such interest, and Pledgor has not pledged, hypothecated, assigned, transferred, or otherwise encumbered the Pledged Collateral other than by this Agreement.
c.
That it has duly authorized, executed and delivered this Agreement and this Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, receivership, reorganization, moratorium or other similar laws affecting creditors' rights generally and by application of general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law);
d.
That the execution, delivery and performance by the Pledgor of this Agreement is not in violation of
the Trust Deed or any indenture, mortgage, deed of trust or other instrument or agreement to which it is a party or by which it is bound or to which any of its property or assets may be subject;
e.
That neither the execution and delivery by the Pledgor of this Agreement nor the consummation by it of any of the transactions contemplated hereby requires the consent or approval of, the giving of notice to, or the registration or filing with, or the taking of any other action in respect of, any agency or authority, except for the filing of Uniform Commercial Code financing statements (and continuations thereof) in respect of the security interests created hereby in the State of Wisconsin;

3.
Covenants of the Pledgor. The Pledgor covenants, for so long as any Obligations remain outstanding and/or unperformed (other than any contingent liabilities that continue past the termination of the Credit Agreement and the Loan Documents:
a.
Except as contemplated hereby, Pledgor will not make any sale, assignment, pledge, mortgage, hypothecation or transfer of the Pledged Collateral or the ownership interests of the Trust and, except for the interest granted hereby, Pledgor will be the sole legal owner of the Pledged Collateral, free and clear of any and all claims or liens other than the interest granted in favor of the Secured Party;
b.
As the sole beneficial owner of the Trust, Pledgor will not cause or authorize the Owner Trustee to issue any further beneficial interests of any class or description or other securities in addition to or in substitution for the Beneficial Interest; it will hold in trust and will pledge hereunder, immediately upon its acquisition (direct or indirect) thereof, any and all additional beneficial interest of any class or description or other securities of the Trust;
c.
At any time and from time to time, at no expense to the Secured Party, Pledgor will promptly execute and deliver all further instruments and documents and take all further action that Secured Party may reasonably request in order to enable Secured Party to perfect, exercise and enforce its rights and remedies hereunder, including consenting to recording of UCC-l financing statement(s);
d.
Pledgor shall not authorize or, to the extent within its power or control, consent to the appointment of a receiver, trustee or liquidator of the Trust or any property of the Trust, authorize the filing of a petition in bankruptcy or any other insolvency proceeding, or admit in writing submitted in connection with judicial or other similar procedures the Trust's inability to pay its debts generally as they come due, or make a general assignment for the benefit of creditors or permit any creditor to exercise a contractual right to assume the operations or financial management of the Trust;
e.
Pledgor shall not authorize the Trust to incur any indebtedness or engage in any business other than as provided in the operative Trust Documents;
f.
When and if Pledgor receives distributions from the Trust that Pledgor is obligated to pay over or deliver to Secured Party pursuant to the Credit Agreement and the Loan Documents, it shall hold such funds in trust for the Secured Party and promptly remit such funds as Secured Party may direct;
g.
Pledgor shall defend Secured Party's right, title and interest in and to the Pledged Collateral against the claims and demands of all third parties; and
h.
Pledgor will not amend, repeal or modify the Trust without the prior written consent of Secured Party, which will not to be unreasonably withheld, delayed or conditioned.

4.
Delivery of Assignment of Pledged Collateral. Pledgor agrees to deliver to the Secured Party on or prior to the date of acquisition by it of the Beneficial Interest, a duly executed beneficial interest transfer form in blank in the form of Exhibit A hereto.

5.
Remedies upon Default. If an Event of Default (as defined in the Credit Agreement and/or any Loan Document) shall have occurred and be continuing, the Secured Party may exercise all rights of a secured party under the Uniform Commercial Code, as enacted in any applicable jurisdiction, with respect to the Pledged Collateral.

Upon consummation of any public or private sale in the exercise of such rights, the Secured Party shall have the right to assign, transfer, endorse and deliver to the purchaser or purchasers thereof the Pledged Collateral, with or without reservations or qualifications, free from any claim or right on the part of the Pledgor. Pledgor hereby waives and releases, to the extent permitted by law, all rights of redemption, stay, appraisal, reclamation and turnover. Pledgor shall be entitled to 10 days' prior notice of any public or private sale in exercise of Secured Party's rights upon default. Secured Party may, without notice or publication, adjourn any public or private sale by announcement at the time and place fixed for sale, and such sale may, without further notice, occur at the time and place identified in such announcement. At any sale made pursuant to this Agreement, to the extent permitted by applicable law, the Secured Party may bid for or purchase of any or all of the Pledged Collateral
by using the amount of secured obligations outstanding to it from Pledgor as a credit against the purchase price. As an alternative to exercising the power of sale herein provided, Secured Party may proceed by suit at law or in equity to foreclose this Agreement and sell the Pledged Collateral pursuant judicial order, judgment, or receivership. The proceeds of any sale of or realization upon the any part or all of the Pledged Collateral shall be applied by Secured Party in accordance with the Credit Agreement.

6.
Attorney-in-fact. Pledgor hereby appoints Secured Party as attorney-in-fact of Pledgor for the purpose of carrying out the provisions of this Agreement and taking any action and executing any instrument which Secured Party deems necessary or reasonable to accomplish the purposes hereof during and after any Event of Default, which appointment is granted as security for the performance of the Pledgor's obligations hereunder and for valuable consideration, and is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, the Secured Party shall have the right, after the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Secured Party's name or in the name of the Pledgor, to settle, compromise, prosecute or defend any action, claim or proceeding with respect to the Pledged Collateral and shall have the right to sell, assign, endorse, pledge, transfer and make any agreement respecting, or otherwise deal with, the same.

7.
Cooperation. From and after any Event of Default, Pledgor agrees to use commercially reasonable efforts to do or cause to be done all such other acts as may be necessary to make any sale of the Pledged Collateral or any portion thereof pursuant to this Agreement valid, binding and in compliance with applicable laws.

8.
Limitation of Liability. Neither Secured Party nor any director, officer, employee or counsel of Secured Party shall be liable for any act or omission by them relating to the Pledged Collateral except for its or their gross negligence or willful misconduct.

9.
Notices. All notices required by this Agreement shall be given in the same manner set forth in the Credit Agreement.

10.
No Waiver. No failure on the part of the Secured Party or any of its agents to exercise any right, power or remedy hereunder shall operate as a waiver thereof or of any other right, power or remedy available pursuant to this Agreement, the Credit Agreement, or any other instrument associated therewith.

11.
Termination. Upon payment in full of all Obligations, this Agreement shall terminate and the Secured Party will execute and deliver to the Pledgor an instrument acknowledging the satisfaction, release and termination of this Agreement any other instrument reasonably requested by the Pledgor in connection with the foregoing.

12.
Miscellaneous.

a.
This Agreement shall be governed, interpreted and enforced according to the same law made applicable by the terms of the Credit Agreement.
b.
This Agreement and the terms, covenants and conditions hereof shall be binding upon and inure to the benefit of the parties hereto and all holders of the Obligations and their respective successors and permitted assigns, except that the Pledgor shall not be permitted to assign, delegate or otherwise transfer this Agreement or any rights or interests herein or in the Pledged Collateral or any part thereof, or otherwise to pledge, encumber or grant any option with respect to the Pledged Collateral or any part thereof. The Pledgor shall not be permitted to delegate any of its duties or obligations hereunder.

c.
No term or provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the parties hereto.
d.
If any provision hereof is determined to be invalid or unenforceable in any applicable jurisdiction, the other provisions hereof shall remain in full force and effect, the affected provisions shall be reformed to make them enforceable to the fullest extent permitted by applicable law, and such invalidity or unenforceability shall not affect the validity or enforceability of such provision in any other jurisdiction.
e.
Section headings used herein are for convenience only and are not substantive in interpreting this Agreement.
f.
This Agreement may be executed in separate counterparts each of which when so executed and delivered shall be an exchangeable original, but all such counterparts shall together constitute but one and the same agreement.
g.
This Agreement constitutes the entire agreement of the Pledgor and the Secured Party with respect to the subject matter hereof, and supersedes any prior or contemporaneous understandings or agreements concerning the same subject matter.

IN WITNESS WHEREOF, each of the parties hereto has caused this Beneficial Interest Pledge Agreement to be duly executed as of the day and year first above written.


PLEDGOR:
CONTRAIL AVIATION LEASING, LLC

By: /s/ Joseph G. Kuhn        

Its: CEO

SECURED PARTY:
OLD NATIONAL BANK

By: /s/ Tommy Olson        

Its: SVP



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ASSIGNMENT OF BENEFICIAL INTEREST OF TRUST

This Assignment of Beneficial Interest, dated as of ____________________, is made by the undersigned, being CONTRAIL AVIATION LEASING, LLC (the "Pledgor"), and OLD NATIONAL BANK (the "Secured Party").

We refer to that certain Declaration of Trust (MSN 29922, dated as of June 26, 2019 (the "Trust Deed") among the Pledgor, as Beneficial Owner (as defined in the Trust Deed), Wilmington Trust SP Services (Dublin) Limited, not in its individual capacity, except as provided in the Trust Deed, but solely as Trustee (in such capacity, the "Trustee") and Contrail Aviation Support, LLC, as Parent (as defined in the Trust Deed) in respect of one (1) Boeing model 7370800 aircraft with manufacturer's serial number 29922 (the "Aircraft").

Capitalized terms used herein and not otherwise defined shall have the meanings attributed thereto in the Trust Deed.

The Pledgor, as the sole Beneficial Owner under the Trust Deed and the sole legal and beneficial owner of the beneficial interest (the "Beneficial Interest") in the Trust Estate (as defined in the Trust Deed), hereby assigns, conveys, transfers and sets over to the Secured Party, all of the Pledgor's right, title and interest in and to the Beneficial Interest.

The Pledgor hereby warrants to the Secured Party, its successors and assigns, that (i) there is hereby irrevocably conveyed to the Secured Party full beneficial title to the Beneficial Interest, free and clear of any and all claims or liens other than the interests granted in favor of the Secured Party (the "Permitted Encumbrances") and
(ii) the Trustee holds full legal title to the Aircraft for the benefit of the Pledgor as sole holder of the Beneficial Interest free and clear of any and all claims or liens (other than Permitted Encumbrances).

The Pledgor agrees with the Secured Party, and its successors and assigns, that the Pledgor will warrant and defend such title to the Beneficial Interest and such title of the Trustee in the Aircraft forever against all claims and demands whatsoever (other than Permitted Encumbrances).

This Assignment of Beneficial Interest may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, and such counterparts together shall constitute and be one and the same instrument.

This Assignment of Beneficial Interest and all non-contractual obligations arising out of or in connection therewith shall be governed by and construed in accordance with the laws of Ireland.

This Assignment of Beneficial Interest is executed and delivered as a deed.

SIGNED and DELIVERED as a Deed for and on behalf of
CONTRAIL AVIATION LEASING, LLC,
as Pledgor

by    
its duly authorized attorney
in the presence of: Signature:
Name: Address:

The above and foregoing Assignment of Beneficial Interest is hereby accepted and agreed to on the day and year first above written. By its execution and delivery to the Trustee of this Assignment of Beneficial Interest, the

Secured Party hereby covenants in favor of the Trustee that it will, with effect from the date hereof, be bound by the terms of the Trust Deed as Beneficial Owner, including, without limitation, clause 6 thereof (Indemnification). By its execution and delivery to the Trustee of this Assignment of Beneficial Interest, the Parent hereby confirms its consent to the assignment of the Beneficial Interest in the Trust Estate effected hereby and that it shall remain bound by the terms of the Trust Deed as Parent, including, without limitation, clause 6 thereof (Indemnification).

SIGNED and DELIVERED as a Deed for and on behalf of
OLD NATIONAL BANK,
as Secured Party

by                
its duly authorized attorney
in the presence of: Signature:
Name:
Address:


SIGNED and DELIVERED as a Deed for and on behalf of
CONTRAIL AVIATION SUPPORT, LLC,
as Parent

by                
its duly authorized attorney
in the presence of: Signature:
Name: Address:


Acknowledged by the Trustee

SIGNED and DELIVERED as a Deed for and on behalf of
WILMINGTON TRUST SP SERVICES (DUBLIN) LIMITED,
as Trustee

by                
its duly authorized attorney
in the presence of: Signature:
Name: Address:

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