The obligations of Contrail and CAL under the Loan Agreement are secured by a first-priority
security interest in all of the assets of Contrail and CAL, including a first-priority security interest in the Aircraft evidenced by separate Aircraft Security Agreements. The obligations of Contrail and CAL 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, 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 Contrail or CAL to ONB, including the Aircraft.
The Loan
Agreement contains affirmative and negative covenants, including covenants that restrict Contrail’s and CAL’s ability to make acquisitions or investments, make certain changes to their respective capital structures, and engage in any
business substantially different than they presently conduct, as well as financial covenants relating to, among other things, tangible net worth, quarterly cash flow coverage, and a required pay down period (unless, with respect to the pay down
period, Contrail and CAL maintain a minimum debt service coverage ratio).
The Loan Agreement contains Events of Default, as defined
therein, including, without limitation, nonpayment of principal, interest or other obligations, violation of covenants, bankruptcy and other insolvency events, false statements made in a warranty or representation, death or incompetency or any
guarantor or material adverse change in the borrower’s condition.
The foregoing summary of the terms of the Loan Agreement and
Promissory Note does not purport to be complete and is qualified in its entirety by reference to the Loan Agreement and Promissory Note, which are filed as Exhibit 10.13 hereto and is incorporated by reference herein.
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