Date: 

This is a draft and should not be signed.

Acquisition of USAC Airways 699 LLC

USAC Airways 699 LLC is an FAA certified air carrier authorized to conduct on-demand charter as specified in 14 CFR Part 135. The Company is being offered with its FAA air carrier certificate and related manuals and documents as specified herein. Proving and validation test flights shall be accomplished at the Buyer's cost.

Summary of Expectations

We expect that the Buyer wishes to:

• Operate under the planned air carrier configuration with:
  • Desired operation: ;
  • Maximum planned passenger seating: ;
  • Planned fleet size: ;
  • Desired Hazmat authorization: ; and
  • Additional areas of operation: .
• Provide management personnel as early as possible:
  • Director of Operations: ;
  • Chief Pilot: ; and
  • Director of Maintenance: .
• Add authorizations to customize the certificate and Operations Specifications:
  • Desired Authorizations: .
  • Desired OpSpecs / Capabilities: .

Ownership Requirements

Ownership requirements are:

• At closing, Buyer is required to satisfy applicable United States citizenship and ownership/control requirements.
• Buyer has sufficient monetary funds for the acquisition, proving and validation test flights, training, aircraft conformity, and other activities necessary to achieve operational goals.
• Buyer owns, purchases, or leases an appropriate exclusive-use aircraft in accordance with applicable Part 135 requirements.
• Exclusive-use aircraft identified for this transaction: .

Summary Schedule of Events

• Agree and document requirements and sign a Letter of Intent along with the deposit.
• Buyer provides the $200,000 nonrefundable deposit, and then:
  • Buyer provides or identifies the exclusive-use aircraft.
  • Seller provides a copy of the approved company manuals.
  • Seller prepares a draft Purchase Agreement.
• Finalize the terms and conditions in the Purchase Agreement.
• Closing involves transfer of ownership documents and transfer of final payment.

Summary and Company Assets

• FAA certified air carrier, certificate number .
• FAA approved company manuals.
• FAA authorized Operations Specifications.
• A General Maintenance Manual is approved to support aircraft with 10 or more passenger seats.
• The certificate includes authorized geographic areas under its Operations Specifications.
• The Company is intended to remain operational through the transition.
• Aircraft, management, manuals, training programs, and OpSpecs will be revised as required to support the Buyer's planned operation.

Summary of Terms and Conditions

Included in the Sale/Purchase of USAC Airways 699 LLC: The acquisition includes:

• The air carrier company, company name, rights, and licenses transferred at closing as provided by the Purchase Agreement.
• Air carrier certificate:
  • FAA Air Carrier Certificate.
  • FAA approved manuals and authorizations.
• Transition Support:
  • Company training and support to the 14 CFR Part 119 management personnel.
  • Company training, if desired, to company instructors and check airmen.
  • General subjects indoctrination training at Buyer's expense.
  • Flight training and required pilot checks at Buyer's expense.
  • Oversight to maintain continuity of operations.

Operational and Business Development tasks required for adding aircraft and pilots and customizing the certificate will be developed from the Acquisition Record. Seller will be available to provide direction. Buyer is responsible for expenses and resources associated with these tasks unless otherwise stated in the Purchase Agreement.

Short-term tasks include, but are not limited to, the following:

• Certificate Changes
  • Amend applicable registration and economic-authority records.
  • Revise compliance documentation.
  • Revise the GOM, GMM, Training Program, and training material as required.
• Aircraft Specific
  • Aircraft-specific training supplement.
  • Minimum Equipment List and NEF, as applicable.
  • Aircraft conformity documentation and physical inspection.
  • Cockpit checklists and passenger briefing cards.
• Company Specific
  • Revise company and maintenance indoctrination training material.
  • Deliver required company training.
  • Prepare company records for FAA review.

Operational and Business Development - Continued

• Revise authorizations and Operations Specifications to support the Buyer's planned operation:
  • Desired Authorizations: .
  • Desired OpSpecs / Capabilities: .
• Customize operations software, scheduling, dispatch, compliance tracking, electronic recordkeeping, electronic flight bag, TSA passenger checks, and other operational functions as applicable.
• Seller may provide management and transition support until the Buyer's aircraft, management personnel, and pilots are established on the certificate, subject to the Purchase Agreement.
• Additional work that may be supported at Buyer's expense includes:
  • Flight Attendant Program, if required.
  • Additional manuals and programs.
  • Proving and validation test flights.
  • Pilot training and check rides.
  • Aircraft conformity inspection and MEL development.
  • Customs, drug-testing, training, and other operating requirements as applicable.
  • Economic-authority and registration support.

Buyer

• Buyer will provide documentation required to establish eligibility to own and control the air carrier at closing.
• Buyer will provide or arrange an aircraft that can qualify for exclusive-use requirements.
• Buyer will provide appropriate lease or ownership documentation for the aircraft.
• Buyer will provide management personnel who meet applicable qualification and experience requirements.

Terms and Details

Purchase Agreement

1. LOI will have been signed along with the $200,000 nonrefundable deposit.
2. The Purchase Agreement shall be signed within days after the LOI is signed.
3. Upon signing the Purchase Agreement, the remaining purchase amount of $750,000 shall be paid to escrow by Buyer, and applicable ownership-transfer documents shall be delivered as provided by the Purchase Agreement.
4. Closing shall occur within days after signing the Purchase Agreement, unless extended by mutual agreement or as provided by the Purchase Agreement.
5. Seller retains ownership of the Company until closing.
6. Upon closing, Buyer and Seller execute the required closing documents and funds and ownership documents are released in accordance with the Purchase Agreement.
7. Adding aircraft and pilots to the certificate may proceed as mutually agreed during the transaction.

Upon Closing

Buyer receives the Company assets identified in the Purchase Agreement and Seller receives full payment.

Divested Assets

• Cash on hand.
• Accounts receivable.

Agreements and Leases

Agreements and leases that are to remain available during transition will be identified and confirmed in the Purchase Agreement.

Liabilities / Free and Clear

Representations concerning liabilities, encumbrances, taxes, agreements, claims, compliance, and other matters will be stated in and governed by the Purchase Agreement.

Seller Support

• Maintain continuity of certificate operations during the transition as agreed.
• Support transition to the Buyer's exclusive-use aircraft.
• Provide company indoctrination and transition support for new management personnel.
• Assist with aircraft, pilot, training, conformity, and authorization work as specified in the Purchase Agreement.

Inspection

• Buyer may review records that pertain to the Company and its operation.
• Buyer may perform additional reviews and analyses reasonably necessary to evaluate the Company.

Schedule

• LOI Date: .
• Purchase Agreement: within days after the LOI is signed.
• Closing: within days after the Purchase Agreement is signed, unless otherwise agreed in writing.

Confidentiality

Information, records, books, and data made available to Buyer or its representatives will be used for evaluating the acquisition and treated as confidential. Information provided by Buyer to Seller will likewise be treated as confidential during the transaction and for a period of three years after closing, subject to the Purchase Agreement.

This Letter of Intent shall be superseded by the executed Purchase Agreement.

Binding Agreement

Accepted and agreed this .

--- END ---