THIS NOTE AND ANY SECURITIES TO BE ISSUED UPON THE CONVERSION HEREOF HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAWS OF ANY STATE OR JURISDICTION AND MAY NOT BE SOLD,
OFFERED FOR SALE OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER
SAID ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY RECEIVES AN
OPINION, IN REASONABLY ACCEPTABLE FORM AND SCOPE, OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT REGISTRATION, QUALIFICATION OR OTHER SUCH
ACTIONS ARE NOT REQUIRED UNDER ANY SUCH LAWS. ANY SECURITIES ISSUED UPON THE
CONVERSION HEREOF MAY BEAR A COMPARABLE LEGEND.
AIM AIRCRAFT, INC.
CONVERTIBLE PROMISSORY NOTE
$5,000,000 September 30, 2001
FOR VALUE RECEIVED, and in consideration for the full and prompt
performance of the Holders' (as defined herein) obligations under the agreements
listed in SCHEDULE A attached hereto (the "Lease Agreements"), and except as
such performance may have been extinguished pursuant to the terms of the Lease
Agreements or that certain Purchase Agreement (as defined below), AIM Aircraft,
Inc., (the "COMPANY"), a Colorado corporation with its principal office at 0000
Xxxxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxx 00000 promises to pay to the
order of Air Response Medical Transport Corp., a Delaware corporation ("ARMT"),
Global Air Rescue, Inc., a Delaware corporation and Air Response North, Inc., a
Florida corporation (the "HOLDERS"), the principal sum of FIVE MILLION DOLLARS
($5,000,000.00), together with interest on the unpaid balance of principal
hereof accruing from September 30, 2001, at the rate of 6% per year, simple
interest. All interest due under this Note shall be calculated at a daily rate
equal to 1/365th of such annual rate. All payments of principal and interest
shall be made in lawful money of the United States of America at the following
address: Air Response North, Inc., 0000 Xxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx,
Xxxxxxxx, 00000, or such other address as the Holders shall indicate to the
Company in writing. Each of the Holders agrees that ARMT shall act as the
Representative for each of the Holders, with full authority to act hereunder on
behalf of each of the Holders, thereby binding each of the Holders to such
action.
This Note is non-negotiable but may be transferred to CyberCare, Inc., a
Florida corporation, located at 0000 Xxxxxxx Xxxxx Xxxxx, Xxxxx 0000, Xxxxxxx
Xxxxx, Xxxxxxx, 00000 ("CC") and is issued by the Company in connection with the
Purchase Agreement (the "PURCHASE AGREEMENT") dated effective September 30, 2001
among the Company, the Holders, CC and Global Air Charter, Inc., a Florida
corporation. Capitalized terms not otherwise defined herein shall have the
meaning given to them in the Purchase Agreement.
1. MATURITY DATE. Unless converted into the Conversion Ownership
Percentage pursuant to SECTION 4, fully prepaid pursuant to SECTION 2, or
terminated pursuant to SECTION 5,
the then unpaid principal and interest balance of this Note shall be due and
payable on September 30, 2011 (the "MATURITY DATE").
2. PREPAYMENT. The Company may prepay the entire amount due
hereunder, or any portion thereof, without prepayment penalty or premium,
at any time prior to the Conversion Date (as defined in SECTION 4(a)).
3. DEBT SERVICE PAYMENTS.
(a) During the term of this Note, beginning no later than March 1st
of each year and until the earlier of (i) the Maturity Date, or (ii) the date on
which this Note is converted by the Holders into the Conversion Ownership
Percentage (as defined herein) pursuant to the terms of SECTION 4 hereof, or
(iii) the date on which this Note is fully prepaid pursuant to SECTION 2 hereof,
or (iv) the date on which this Note is terminated by the Company pursuant to the
terms of SECTION 5 hereof, there shall be calculated by the Company a payment
from the Company to the Holders of an amount initially equal to 19.9%, subject
to adjustment from time to time in accordance with SECTIONS 4(b) and (c) (the
"PAYMENT PERCENTAGE"), of the Company's "Net Distributable Profits" (as defined
herein) for the prior calendar year, which payment shall become due and payable
no later than April 15 in each year in which that particular year's Payment
Percentage shall be calculated, unless extended by consent of the Holders, which
consent shall not be unreasonably withheld. In no event shall the Payment
Percentage made pursuant to this SECTION 3(a) FALL BELOW 1% OF THE COMPANY'S Net
Distributable Profits.
(b) The payments set forth in SECTION 3(a) shall be applied first to
accrued interest as of the due date of such payment and then to the principal
amount of this Note.
(c) As used in SECTION 3(a), "NET DISTRIBUTABLE PROFITS" means total
revenue MINUS:
(i) expenses, depreciation, interest and taxes determined in
accordance with generally accepted accounting principles;
(ii) reasonable reserves and capital expenditures (including, but not
limited to, equity payments required for the acquisition of new equipment or
aircraft), and
(iii) unless already deducted under sub-paragraph (i) above, Available
Cash (as that term is defined in the Purchase Agreement) used to pay
pre-closing payables.
4. CONVERSION.
(a) The unpaid principal amount and accrued interest under this Note
may be converted at any time prior to the Maturity Date (unless this Note is
fully prepaid pursuant to SECTION 2 or terminated pursuant to SECTION 5) at the
option of the Holders into a non-voting percentage ownership interest of the
Company initially equal to 19.9%, subject to adjustment from time to time in
accordance with (b) and (c) of this SECTION 4 (the "CONVERSION OWNERSHIP
PERCENTAGE"); PROVIDED, HOWEVER, that the Holders must deliver written notice to
the Company of the Holders' intention to convert not less than Thirty (30) days
prior to the contemplated date of conversion (the date of conversion is referred
to herein as the "CONVERSION DATE").
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(b) In the event that the Company issues any additional ownership
interest from time to time in a manner that dilutes the ownership percentages of
the Company's owners and Holders pursuant to this Note existing immediately
prior to such issuance, each of the Payment Percentage and the Conversion
Ownership Percentage shall be reduced according to the following formula:
W = X - (X x Y)
where:
W = The Payment Percentage and the Conversion Ownership
Percentage immediately after the adjustment under this
Subsection (b).
X = The Payment Percentage and the Conversion Ownership
Percentage immediately prior to the issuance of such
additional ownership interest (as previously adjusted, if
necessary, under this Subsection (b) and/or Subsection (c)).
Y = The percentage by which each of the Company's owners is
diluted by the issuance of such additional ownership interest.
(c) In addition to the adjustment to the Payment Percentage and the
Conversion Ownership Percentage which may occur pursuant to SECTION 4(b), in the
event that the Note is reduced in any manner, the Payment Percentage and the
Conversion Ownership Percentage shall be reduced according to the following
formula:
W = X - (X x Y/Z)
where:
W = The Payment Percentage and the Conversion Ownership
Percentage immediately after the adjustment under this
Subsection (c).
X = The Payment Percentage and the Conversion Ownership
Percentage immediately prior to such reduction of the amount
due under this Note (as previously adjusted, if necessary,
under Subsection (b) and/or this Subsection (c)).
Y = The aggregate amount of reductions of the amount due under
this Note since the date of the most recent adjustment to The
Payment Percentage and the Conversion Ownership Percentage
pursuant to the terms of this Section 4.
Z = The aggregate amount due under this Note immediately prior
to such reduction in the amount due under this Note.
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(d) By way of example only of the dilution provisions set forth in
(b) and (c) above, suppose: (i) the Company has two (2) ownership percentage
owners immediately following the date hereof, each of whom owns 50%; (ii) the
Company accepts a third owner or a new employee, and such third owner or new
employee receives a 10% ownership percentage; and (iii) this is the first
dilutive action following the date hereof. The formula set forth in (b) would be
applied as follows:
W = 19.9% - (19.9% x 10%)
W = 19.9% - 2%
W = 18%
Suppose further that following the actions set forth above, the
amount due under this Note is reduced due to partial prepayment, in accordance
with the payments described in SECTION 3 or otherwise, from $5,000,000 to
$4,000,000. The formula in Subsection (c) would be applied as follows:
W = 18% - (18% x 1,000,000/5,000,000)
W = 18% - 3.6%
W = 14.4%
(e) Before the Holders shall be entitled to receive the Conversion
Ownership Percentage, (i) the Holders must surrender this Note at the executive
offices of the Company, together with such instruments and agreements necessary
to evidence, to the satisfaction of counsel for the Company, compliance with
appropriate exemptions from registration or qualification under federal and
state securities laws, and (ii) the Holders must execute all documents necessary
to join the Company's Stockholders Agreement as a Stockholder (as defined in the
Stockholders Agreement). Upon the issuance of such Conversion Ownership
Percentage, this Note, and all collateralization and collateralization
obligations shall be cancelled.
(f) Notwithstanding anything contained herein to the contrary, if at
any time during the one year period following the Holders's conversion under
SECTION 4 hereof, any of the events set forth below in SECTION 5(i) and (ii)
occurs, then, within 90 days following the occurrence of such event, the Company
shall have the right to purchase from the Holders, their successors or assigns,
the equity interest of the Holders, their successors or assigns, in the Company,
for a purchase price of $100.00.
5. TERMINATION OF OBLIGATIONS OF THE COMPANY.
The right of the Holders to receive principal and accrued interest under
the terms of this Note, and to convert this Note into the Conversion Ownership
Percentage under the provisions of SECTION 4 hereof, shall terminate, and the
Company shall not be obligated under the terms of this Note to make further
payments of outstanding principal and accrued interest to the Holders, including
the payments described in SECTION 3 hereof, upon the earlier of (i) a Material
Uncured
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Breach as that term is generally described in Section 2.4(c) of the Purchase
Agreement and defined below by any of CC or any of the Holders; (ii) the
insolvency of, general assignment for the benefit of creditors by, initiation
of any proceedings under any state or federal bankruptcy, insolvency,
moratorium or reorganization law or regulation by or against, the appointment
of a receiver for all or any portion of the property of, the issuance of any
writ or order of attachment or garnishment against the property of, or the
entry of judgment (unless stayed within sixty (60) days from the entry
thereof) against any of CC or any of the Holders, or (iii) the failure by CC
or Global Air Rescue, Inc. ("GAR"), as applicable, to make timely payments
pursuant to the terms of the Promissory Note entered into between GAR and
Textron dated June 22, 2000, or the Term Loan Agreement entered into between
GAR and Bombardier Capital, Inc., dated June 25, 2001. Upon any such
termination, this Note, and all collateralization and collateralization
obligations for such Note, shall be cancelled.
A Material Uncured Breach shall be deemed to exist when the Company has
provided the Holders with written Notice of a material breach and Holders does
not cure such breach (or cause such breach to be cured) within five days after
the receipt of such Notice; provided, however, that if the Holders informs the
Company, in writing within five days after the receipt of such Notice, that it
does not agree that there has been a material breach, then the issue of whether
there has been a material breach shall be submitted to arbitration pursuant to
Section 10.4 of the Purchase Agreement, and the Holders shall have until five
days after an adverse decision of the arbitrators has been rendered within which
to cure (or cause to be cured) such material default; and further provided that
any failure by CC or any of the Holders to pay the Air Response Accounts Payable
or the GAC Accounts Payable shall constitute a Material Uncured Breach.
6. EVENT OF DEFAULT. An Event of Default shall be deemed to exist
when the Holders have provided the Company with written Notice of a failure to
pay debt service when due or a failure to pay the outstanding principal and
interest when due and Company does not cure such breach (or cause such breach
to be cured) within five days after the receipt of such Notice; provided,
however, that if the Company informs the Holders, in writing within five days
after the receipt of such Notice, that it does not agree that there has been
an Event of Default, then the issue of whether there has been an Event of
Default shall be submitted to arbitration pursuant to Section 10.4 of the
Purchase Agreement, and the Company shall have until five days after an
adverse decision of the arbitrators has been rendered within which to cure (or
cause to be cured) such Event of Default.
7. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Colorado without regard to its
rules of conflict of laws. The Company and the Holders hereby absolutely and
irrevocably consent and submit to the exclusive jurisdiction of the courts of
the State of Colorado and of any federal court located in the States of
Colorado in connection with any actions or proceedings brought against the
Company or the Holders arising out of or relating to this Agreement. In any
such action or proceeding, the Company and the Holders hereby absolutely and
irrevocably waive personal service of any summons, complaint, declaration or
other process and hereby absolutely and irrevocably agree that service thereof
may be made by certified or registered first class mail directed to the
Company or the Holders, as the case may be, at their respective addresses.
Notwithstanding the foregoing, any disputes between the Parties hereto
concerning a Material Uncured Breach as defined in Section 2.4(c) of the
Purchase Agreement or an Event of Default
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as defined in SECTION 6 herein shall be submitted to arbitration in a manner
consistent with the terms of Section 10.4 of the Purchase Agreement, but on an
accelerated basis.
8. SECURITY. The payment of this Note is secured by a Security
Agreement of even date herewith, executed by the Company in favor of the
Holders, on the Collateral described therein.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be duly executed as of the date and year first above written.
AIM AIRCRAFT, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------------------
Name: Xxxxxx Xxxxxx
---------------------------
Title: President
--------------------------
AIR RESPONSE MEDICAL TRANSPORT CORP.
By: /s/ Xxxxxx Xxxxxx
-----------------------------
Name: Xxxxxx Xxxxxx
---------------------------
Title: President
--------------------------
GLOBAL AIR RESCUE, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------------------
Name: Xxxxxx Xxxxxx
---------------------------
Title: President
--------------------------
AIR RESPONSE NORTH, INC.
By: /s/ Xxxxxx Xxxxxx
-----------------------------
Name: Xxxxxx Xxxxxx
---------------------------
Title: President
--------------------------
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