EXHIBIT 10.86
SECURITIES PURCHASE AGREEMENT
THIS SECURITIES PURCHASE AGREEMENT (this "AGREEMENT"), dated as of
October 15, 2007, is entered into by and between U.S. HELICOPTER CORPORATION, a
Delaware corporation (the "COMPANY"), and the Buyer listed on Schedule I
attached hereto ("BUYER").
WITNESSETH:
WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in reliance upon an exemption from securities registration pursuant to
Section 4(2) of the Securities Act of 1933, as amended (the "SECURITIES ACT")
and/or Regulation S ("REGULATION S") as promulgated by the U.S. Securities and
Exchange Commission (the "SEC" or the "COMMISSION") under the Securities Act;
and
WHEREAS, the parties desire that, upon the terms and subject to the
conditions contained herein, the Company shall issue and sell to the Buyer, as
provided herein, and the Buyer shall purchase the number of shares of common
stock, par value $0.001 per share ("COMMON STOCK"), plus warrants exercisable at
$0.01 per share as set forth below for an aggregate purchase price of $6,600,000
(the "PURCHASE PRICE") at such times and upon the terms and conditions set forth
herein.
NOW, THEREFORE, in consideration of the mutual covenants and other
agreements contained in this Agreement, the Company and the Buyer hereby agree
as follows:
1. PURCHASE AND SALE OF COMMON STOCK AND WARRANTS
(a) PURCHASE OF SHARES AND WARRANTS. Subject to the satisfaction (or
waiver) of the terms and conditions of this Agreement, the Buyer agrees to
purchase and the Company agrees to sell and issue to the Buyer a total of
8,000,000 shares of Common Stock (the "SHARES"), plus warrants to purchase up to
14,000,000 shares of Common Stock (the "WARRANTS") on October 15, 2007 (the
"CLOSING DATE"). The Warrants shall have an exercise price of $0.01 per share,
shall have a cashless exercise provision and shall contain all other standard
terms and conditions as are set forth on Exhibit "B" attached hereto.
Upon execution hereof by the Buyer, the Buyer shall wire transfer the
Purchase Price for the Closing in same-day funds to the trust account of the
Company's legal counsel as provided on Exhibit "A" attached hereto.
(b) ADDITIONAL WARRANTS. The Company agrees to issue and deliver to the
Buyer at the Closing warrants to purchase an aggregate of 14,700,000 shares of
Common Stock (the "ADDITIONAL WARRANTS") in the form attached hereto as Exhibit
"B". The Additional Warrants shall have an exercise price equal to $0.01 per
share. The Additional Warrants shall be immediately exercisable and shall expire
five (5) years from the Closing Date. Any shares of Common Stock issuable upon
exercise of the Warrants or the Additional Warrants (and such shares when
issued) are herein referred to as the "WARRANT SHARES".
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(c) SUBSTITUTE SECURITIES. The Company reserves the right to issue
shares of a new series of Preferred Stock which shall be convertible into
non-voting Common Stock and/or Warrants in lieu of the issuance of the Shares
and Warrants referenced in (a) and (b) above.
(d) CLOSING DATE. The Closing of the purchase and sale of the
Securities shall take place at 10:00 a.m. Eastern Daylight Time on the Closing
Date set forth in Section 1(a) above, unless all conditions precedent to such
Closing have been satisfied by the Parties prior to such date. The Closing shall
take place at the offices of Xxxxxxxxx, Xxxxxx & Xxxxxx in Princeton, New Jersey
(or such other place as is mutually agreed to by the Company and the Buyer).
(e) FORM OF PAYMENT. On or prior to the date provided in Section 1(a)
above, the aggregate proceeds of the sale of the Securities to Buyer pursuant
hereto for such Closing shall be deposited via wire transfer to the trust
account of the Company's legal counsel described on Exhibit "A" attached hereto.
In the event that the Closing does not occur as provided herein, the aggregate
proceeds pertaining to such Closing shall be returned to the Buyer via wire
transfer to an account designated by the Buyer.
(f) FOREIGN OWNERSHIP REGULATIONS AND VOTING STATUS OF SHARES. In
accordance with the Foreign Ownership Regulations (as defined below) and Article
X, Section 3 of the Company's By-laws, the voting rights underlying the Shares
and the Warrant Shares shall be suspended until the earlier of (i) the transfer
of the Shares or Warrant Shares to a person who is a United States citizen or
(ii) the total number of shares of Common Stock owned or controlled by
non-United States citizens is less than 24.99% and the Shares or Warrant Shares
are eligible to be included on the Company's Foreign Stock Record in accordance
with the Company's By-laws.
2. BUYER'S REPRESENTATIONS AND WARRANTIES
The Buyer represents and warrants, severally and not jointly, that:
(a) INVESTMENT PURPOSE. The Buyer is acquiring the Shares, the
Warrants, the Additional Warrants and the Warrant Shares (together, the
"SECURITIES"), for its own account for investment only and not with a view
towards, or for resale in connection with, the public sale or distribution
thereof, except pursuant to sales registered or exempted under the Securities
Act.
(b) ACCREDITED INVESTOR STATUS. The Buyer is an "ACCREDITED INVESTOR"
as that term is defined in Rule 501(a) of Regulation D.
(c) RELIANCE ON EXEMPTIONS. The Buyer understands that the Securities
are being offered and sold to it in reliance on specific exemptions from the
registration requirements of United States federal and state securities laws and
that the Company is relying in part upon the truth and accuracy of the
representations and warranties OF Buyer set forth herein in order to determine
the availability of such exemptions and the eligibility of the Buyer to acquire
such securities.
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(d) INFORMATION. The Buyer and its advisors (and its counsel), if any,
have been furnished with all materials relating to the business, finances and
operations of the Company and information it has deemed material to making an
informed investment decision regarding its purchase of the Securities, in each
case which have been requested by the Buyer. The Buyer and its advisors, if any,
have been afforded the opportunity to ask questions of the Company and its
management. Neither such inquiries nor any other due diligence investigations
conducted by the Buyer or its advisors, if any, or its representatives shall
modify, amend or affect the Buyer's right to rely on the Company's
representations and warranties contained in Section 3 below. The Buyer
understands that its investment in the Securities involves a high degree of risk
and the Buyer has the financial wherewithal to lose its entire investment and
understands that it could lose its entire investment. The Buyer has sought such
accounting, legal and tax advice, as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Securities.
(e) NO GOVERNMENTAL REVIEW. The Buyer understands that no United States
federal or state agency or any other government or governmental agency has
passed on or made any recommendation or endorsement of the Securities, or the
fairness or suitability of the investment in the Securities nor have such
authorities passed upon or endorsed the merits of the offering of the
Securities. The Buyer understands and acknowledges that the Company has
undertaken and will undertake no efforts to comply with any laws of any
jurisdiction outside the United States relating to the issuance and sale of its
securities except as may be provided herein.
(f) RULE 144. The Buyer understands that the Securities must be held
indefinitely unless such Securities are registered under the Securities Act or
an exemption from registration is available. The Buyer acknowledges that such
Buyer is familiar with Rule 144, promulgated pursuant to the Securities Act
("RULE 144"), and that until the Securities are registered under the Securities
Act, Rule 144 permits resales of the Securities only under certain
circumstances. The Buyer understands that to the extent that Rule 144 is not
available, the Buyer will be unable to sell any Securities without either
registration under the Securities Act or the existence of another exemption from
such registration requirement.
(g) LEGENDS. The Buyer understands that until the Securities are
registered under the Securities Act, the certificates or other instruments
representing the Securities shall bear a restrictive legend in substantially the
following form (and a stop transfer order may be placed against transfer of such
certificates):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED OR
APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN
ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TOWARD RESALE AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS,
OR AN OPINION OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE
STATE SECURITIES LAWS.
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The legend set forth above shall be removed from the
Securities and the Company shall within two (2) business days issue
replacement securities without such legend to the holder of the Securities
upon which it is stamped, if, unless otherwise required by state securities
laws, (i) in connection with a sale transaction, provided the Securities are
registered under the Securities Act or (ii) in connection with a sale
transaction, after such holder provides the Company with an opinion of
counsel, which opinion shall be in form, substance and scope customary for
opinions of counsel in comparable transactions, to the effect that a public
sale, assignment or transfer of the Securities may be made without
registration under the Securities Act. The legend set forth above shall be
removed from the Securities and the Company shall issue a certificate without
such legend to the holder of the Securities immediately upon the registration
of the Securities under the Securities Act.
(h) AUTHORIZATION, ENFORCEMENT. The Buyer has full power and authority
to enter into this Agreement. This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Buyer and is a valid and
legally binding agreement of such Buyer enforceable in accordance with its
terms, except as such enforceability may be limited by general principles of
equity or applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors' rights and remedies. All necessary
corporate action has been taken with respect to the Buyer to authorize and
approve this Agreement and Buyer is under no obligation to obtain any approval,
consent, or other action from any third party in order for Buyer to consummate
the transaction contemplated hereby.
(i) RECEIPT OF DOCUMENTS. The Buyer and or its counsel has received and
read in their entirety: (i) this Agreement and each representation, warranty and
covenant set forth herein; (ii) all due diligence and other information provided
by the Company or made available to the Buyer at the SEC Website (defined
below); (iii) the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2006 as filed with the SEC on April 17, 2007; (iv) the
Company's Quarterly Reports on Form 10-QSB for the fiscal quarters ended March
31, 2007 and June 30, 2007 as filed with the SEC on June 1, 2007 and August 20,
2007, respectively; and (v) written answers to all questions the Buyer submitted
to the Company regarding an investment in the Company; and the Buyer has relied
on the information contained therein and has not been furnished any other
documents, literature, memorandum or prospectus. Buyer acknowledges and agrees
that the Company's representations and warranties are limited to exclusively
those expressly stated in this Agreement and exclude any and all statements made
in any other business plan, prospectus, projections, memorandum or other
document or in any oral communication.
(j) DUE FORMATION OF CORPORATE AND OTHER BUYERS. If the Buyer is a
corporation, trust, partnership or other entity that is not an individual
person, it has been formed and validly exists and has not been organized for the
specific purpose of purchasing the Securities and is not prohibited from doing
so.
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(k) NO LEGAL ADVICE FROM THE COMPANY. The Buyer is not relying on any
statements or representations of the Company or any of its representatives or
agents for legal, tax or investment advice with respect to this investment, the
transactions contemplated by this Agreement or the securities laws of any
jurisdiction.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Buyer that, except as set
forth in the SEC Documents (as defined herein):
(a) ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized and validly existing in good standing under the laws of the
jurisdiction in which it is incorporated, and has the requisite corporate power
and authority to own its properties and to carry on its business as presently
conducted. The Company is duly qualified to do business and is in good standing
in every jurisdiction in which the nature of the business conducted by it makes
such qualification necessary, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect on the
Company and its subsidiaries taken as a whole.
(b) AUTHORIZATION, ENFORCEMENT, COMPLIANCE WITH OTHER INSTRUMENTS. (i)
The Company has the requisite corporate power and authority to enter into and
perform this Agreement, and any related agreements, and to issue the Securities
in accordance with the terms hereof and thereof, (ii) the execution and delivery
of this Agreement and any related agreements by the Company and the consummation
by it of the transactions contemplated hereby and thereby, including, without
limitation, the issuance of the Securities have been duly authorized by the
Company's Board of Directors and no further consent or authorization is required
by the Company, its Board of Directors or its stockholders, (iii) this Agreement
and any related agreements have been duly executed and delivered by the Company,
(iv) this Agreement and any related agreements constitute the valid and legally
binding obligations of the Company enforceable against the Company in accordance
with their terms, except as such enforceability may be limited by general
principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the
enforcement of creditors' rights and remedies.
(c) CAPITALIZATION. The authorized capital stock of the Company
consists of 95,000,000 shares of Common Stock, par value $.001 per share and
5,000,000 shares of Preferred Stock. As of October 1, 2007, the Company had
36,737,936 shares of Common Stock and no shares of Preferred Stock issued and
outstanding. All of such outstanding shares of Common Stock and Preferred Stock
have been duly authorized and are validly issued fully paid and nonassessable.
Except as disclosed in the SEC Documents (as defined below) or the Disclosure
Schedule attached hereto as Exhibit "C", no shares of Common Stock are subject
to preemptive rights or any other similar rights or any liens or encumbrances
suffered or permitted by the Company. Except as disclosed in the SEC Documents
or the Disclosure Schedule, as of the date of this Agreement, (i) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares of capital stock of the Company, or contracts,
commitments, understandings or arrangements by which the Company is or may
become bound to issue additional shares of capital stock of the Company or
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options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, any
shares of capital stock of the Company, (ii) there are no outstanding debt
securities and (iii) there are no agreements or arrangements under which the
Company is obligated to register the sale of any of their securities under the
Securities Act (other than as provided herein) and (iv) there are no outstanding
registration statements and there are no outstanding comment letters from the
SEC or any other regulatory agency. Except as set forth on the Disclosure
Schedule, there are no securities or instruments containing anti-dilution or
similar provisions that will be triggered by the issuance of the Securities as
described in this Agreement. The Company has furnished to the Buyer or made
available through the SEC's website at XXXX://XXX.XXX.XXX (the "SEC WEBSITE")
true and correct copies of the Company's Certificate of Incorporation, as
amended and as in effect on the date hereof and as of the Closing Date (the
"CERTIFICATE OF INCORPORATION"), and the Company's By-laws, as in effect on the
date hereof and as of the Closing Date (the "BY-LAWS"), and the terms of all
securities convertible into or exercisable for Common Stock and the material
rights of the holders thereof in respect thereto other than stock options issued
to employees and consultants.
(d) ISSUANCE OF SECURITIES. The Securities to be issued at the Closing
have been and will be duly authorized by all necessary corporate action and the
Warrant Shares, when paid for and issued in accordance with the terms of the
Warrants and the Additional Warrants, shall be validly issued and outstanding,
fully paid and nonassessable, and the holders of the Warrant Shares, once
issued, shall be entitled to all rights accorded to a holder of Common Stock.
The Securities will be issued in compliance with all applicable federal and
state securities laws.
(e) NO CONFLICTS. Except as disclosed in the SEC Documents, the
execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby will not (i)
result in a violation of the Certificate of Incorporation, any certificate of
designations of any outstanding series of preferred stock of the Company or the
By-laws or (ii) conflict with or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company is a party, or result in
a violation of any law, rule, regulation, order, judgment or decree (including
federal and state securities laws and regulations and the rules and regulations
of The National Association of Securities Dealers Inc.'s OTC Bulletin Board on
which the Common Stock is to be quoted) applicable to the Company or by which
any property or asset of the Company is bound or affected. Except as disclosed
in the SEC Documents, the Company is not in violation of any term of or in
default under its Certificate of Incorporation or By-laws, or any material
contract, agreement, mortgage, indebtedness, indenture, instrument, judgment,
decree or order or any statute, rule or regulation applicable to the Company.
The business of the Company is not being conducted, and shall not be conducted
in material violation of any material law, ordinance, or regulation of any
governmental entity. Except as specifically contemplated by this Agreement and
as required under the Securities Act and any applicable state securities laws,
the Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency in order
for it to execute, deliver or perform any of its obligations under or
contemplated by this Agreement in accordance with the terms hereof or thereof.
Except as disclosed in the SEC Documents, all consents, authorizations, orders,
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filings and registrations which the Company is required to obtain pursuant to
the preceding sentence have been obtained or effected on or prior to the date
hereof. The Company is unaware of any facts or circumstance, which might give
rise to any of the foregoing.
(f) SEC DOCUMENTS; FINANCIAL STATEMENTS. The Company has filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the SEC under of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT") and has filed Post-Effective Amendments to Registration
Statements on Form SB-2 on May 10, 2007 (SEC File Nos. 333-124262 and
333-134063, respectively), and filed corresponding 424(b)(3) prospectuses on May
15, 2007 in connection with such registration statements (all of the foregoing
filed prior to the date hereof or amended after the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein, being hereinafter referred to as the "SEC
DOCUMENTS"). The Company has delivered to the Buyers or their representatives,
or made available through the SEC Website, true and complete copies of the SEC
Documents. As of their respective dates, the financial statements of the Company
disclosed in the SEC Documents (the "FINANCIAL STATEMENTS") complied as to form
in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto. Such financial
statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may
be otherwise indicated in such Financial Statements or the notes thereto, or
(ii) in the case of unaudited interim statements, to the extent they may exclude
footnotes or may be condensed or summary statements) and, fairly present in all
material respects the financial position of the Company as of the dates thereof
and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit
adjustments). No other information provided by or on behalf of the Company to
the Buyer which is not included in the SEC Documents, including, without
limitation, information referred to in this Agreement, contains any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(g) 10(B)-5. None of the representations and warranties in this
Agreement, any certificate to be furnished to the Buyer at any Closing or the
SEC Documents included (or will omit in the case of a Closing certificate) any
untrue statements of material fact, or omits (or will include in the case of
such Closing certificate to state any material fact required to be stated
therein necessary to make the statements made, in light of the circumstances
under which they were made, not misleading.
(h) ABSENCE OF LITIGATION. Except as disclosed in the SEC Documents,
there is no claim action, suit, proceeding, arbitration, complaint, charge,
inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or to the Company's
knowledge threatened against or affecting the Company or the Common Stock,
wherein an unfavorable decision, ruling or finding would (i) have a material
adverse effect on the transactions contemplated hereby (ii) adversely affect the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under, this Agreement or any of the documents
contemplated herein, or (iii) except as expressly disclosed in the SEC
Documents, have a material adverse effect on the business, operations,
properties, financial condition or prospects or results of operations of the
Company and its subsidiaries taken as a whole.
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(i) ACKNOWLEDGMENTS REGARDING BUYER'S PURCHASE OF THE SECURITIES. The
Company acknowledges and agrees that the Buyer is acting solely in the capacity
of an arm's length purchaser with respect to this Agreement and the transactions
contemplated hereby. The Company further acknowledges that the Buyer is not
acting as a financial advisor or fiduciary of the Company (or in any similar
capacity) with respect to this Agreement and the transactions contemplated
hereby and any advice given by the Buyer or any of their respective
representatives or agents in connection with this Agreement and the transactions
contemplated hereby is merely incidental to such Buyer's purchase of the
Securities.
(j) NO GENERAL SOLICITATION. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
the Securities.
(k) NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would require registration of the
Securities under the Securities Act or cause this offering of the Securities to
be integrated with prior offerings by the Company for purposes of the Securities
Act.
(l) EMPLOYEE RELATIONS. The Company is not involved in any labor
dispute or, to the knowledge of the Company, is any such dispute threatened.
None of the Company's employees is a member of a union and the Company believes
that relations with its employees are good.
(m) INTELLECTUAL PROPERTY RIGHTS. The Company owns or possesses or is
currently seeking to develop adequate rights or licenses to use all trademarks,
trade names, service marks, service xxxx registrations, service names, patents,
patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and rights necessary to conduct its business as
now conducted. The Company does not have any knowledge of any infringement by
the Company of trademark, trade name rights, patents, patent rights, copyrights,
inventions, licenses, service names, service marks, service xxxx registrations,
trade secret or other similar rights of others, and, to the knowledge of the
Company there is no claim, action or proceeding being made or brought against,
or to the Company's knowledge, being threatened against, the Company regarding
trademark, trade name, patents, patent rights, invention, copyright, license,
service names, service marks, service xxxx registrations, trade secret or other
infringement; and the Company is unaware of any facts or circumstances which
might give rise to any of the foregoing.
(n) ENVIRONMENTAL LAWS. The Company is, to the best of management's
knowledge, (i) in material compliance with any and all applicable foreign,
federal, state and local laws and regulations relating to the protection of
human health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) has received all
material permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and (iii) is in material compliance
with all terms and conditions of any such permit, license or approval.
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(o) TITLE. Any real property and facilities held under lease by the
Company are held by the Company under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company.
(p) INSURANCE. The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as
management of the Company believes to be reasonably prudent and customary in the
business in which the Company is engaged. The Company has neither been refused
any insurance coverage sought or applied for nor has any reason to believe that
it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not materially and
adversely affect the condition, financial or otherwise, or the earnings,
business or operations of the Company, taken as a whole.
(q) REGULATORY PERMITS. The Company possesses or is in the process of
applying for all material certificates, authorizations and permits issued or to
be issued by the appropriate federal, state or foreign regulatory authorities
necessary to conduct its business, and the Company has not received any notice
of proceedings relating to the revocation, modification or denial of any such
certificate, authorization or permit.
(r) INTERNAL ACCOUNTING CONTROLS. The Company maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability, and (iii) the
recorded amounts for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(s) NO MATERIAL ADVERSE BREACHES, ETC. Except as set forth in the
Disclosure Schedule or the SEC Documents, the Company is not subject to any
charter, corporate or other legal restriction, or any judgment, decree, order,
rule or regulation which in the judgment of the Company's officers has or is
expected in the future to have a material adverse effect on the business,
properties, operations, financial condition, results of operations or prospects
of the Company. Except as set forth in the Disclosure Schedule or the SEC
Documents, the Company is not in breach of any contract or agreement which
breach, in the judgment of the Company's officers, has or is expected to have a
material adverse effect on the business, properties, operations, financial
condition, results of operations or prospects of the Company.
(t) TAX STATUS. Except as set forth in the Disclosure Schedule or the
SEC Documents, the Company has made and filed all federal and state income and
all other tax returns, reports and declarations required by any jurisdiction to
which it is subject and (unless and only to the extent that the Company has set
aside on its books provisions reasonably adequate for the payment of all unpaid
and unreported taxes) has paid all taxes and other governmental assessments and
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charges that are material in amount, shown or determined to be due on such
returns, reports and declarations, except those being contested in good faith
and has set aside on its books provision reasonably adequate for the payment of
all taxes for periods subsequent to the periods to which such returns, reports
or declarations apply. There are no unpaid taxes in any material amount claimed
to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.
(u) CERTAIN TRANSACTIONS. Except as set forth in the SEC Documents or
the Disclosure Schedule, and except for arm's length transactions pursuant to
which the Company makes payments in the ordinary course of business upon terms
no less favorable than the Company could obtain from third parties and other
than the grant of stock options disclosed in the Disclosure Schedule, none of
the officers, directors, or employees of the Company is presently a party to any
transaction with the Company (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee or
partner.
(v) FEES AND RIGHTS OF FIRST REFUSAL. The Company is not obligated to
offer the securities offered hereunder on a right of first refusal basis or
otherwise to any third parties including, but not limited to, current or former
shareholders of the Company, underwriters, brokers, agents or other third
parties.
(w) RELIANCE ON REPRESENTATIONS. The Company acknowledges that the
Buyer is relying on the representations and warranties made by the Company
hereunder and that such representations and warranties are a material inducement
to the Buyer purchasing the Securities. The Company further acknowledges that
without such representations and warranties of the Company made hereunder, the
Buyer would not enter into this Agreement.
4. COVENANTS
(a) BEST EFFORTS. Each party shall use its commercially reasonable best
efforts timely to satisfy each of the conditions to be satisfied by it as
provided in Sections 5 and 6 of this Agreement.
(b) SALE OF SECURITIES; NOTICE FILING. The Company shall take any
necessary action and proceedings as may be required and permitted by applicable
law, rule and regulation, for the legal and valid issuance of the Securities to
the Buyers or subsequent holders pursuant to Regulation S as promulgated under
the Securities Act, or any other notice filings as may be required by the SEC.
(c) REPORTING STATUS. Until the date as of which the Buyer may sell all
of the Securities without restriction pursuant to Rule 144(k) promulgated under
the Securities Act (or successor thereto) (the "REGISTRATION PERIOD"), the
Company shall file in a timely manner all reports required to be filed with the
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SEC pursuant to the Exchange Act and the regulations of the SEC thereunder, and
the Company shall not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would otherwise permit such termination.
(d) FEES AND EXPENSES. Except as may be set forth elsewhere in this
Agreement, the Company and the Buyer shall be solely responsible for the
respective costs and expenses incurred by such party in connection with the
negotiation, investigation, preparation, execution and delivery of this
Agreement.
(e) USE OF PROCEEDS. The Company will use the proceeds from the sale of
the Securities for general corporate and working capital purposes and repayment
of a total of $1,700,000 of bridge loans to YA Global Investments, LP (formerly
known as Cornell Capital Partners, LP).
(f) RESERVATION OF SHARES. The Company shall take all action reasonably
necessary to at all times have authorized, and reserved for the purpose of
issuance, such number of shares of Common Stock as shall be necessary to effect
the issuance of the Shares and the Warrant Shares. If at any time the Company
does not have available such shares of Common Stock as shall from time to time
be sufficient to effect the conversion of all of the Shares or the Warrant
Shares, the Company shall call and hold a special meeting of the shareholders
within sixty (60) days of such occurrence, for the sole purpose of increasing
the number of shares authorized. The Company's management shall recommend to the
shareholders to vote in favor of increasing the number of shares of Common Stock
authorized. Management shall also vote all of its shares in favor of increasing
the number of authorized shares of Common Stock.
(g) LISTINGS OR QUOTATION. The Company shall use its best efforts to
maintain the listing or quotation of its Common Stock upon the Over-The-Counter
Bulletin Board ("OTCBB") maintained by the National Association of Securities
Dealers, Inc. The Company shall maintain the listing or quotation of the Common
Stock for so long as the Buyer is the beneficial owner of any Securities.
(h) FINANCIAL AND ACCOUNTING. For so long as Buyer is the beneficial
owner of any Securities, the Company shall maintain customary internal
accounting controls and methods in its business operations sufficient to provide
reasonable assurance that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions are recorded
as necessary to permit preparation or financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability,
and (iii) the recorded amounts for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any
differences.
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5. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
The obligation of the Company hereunder to issue and sell the
Securities to the Buyer at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that
these conditions are for the Company's sole benefit and may be waived by the
Company at any time in its sole discretion:
(a) The Buyer shall have executed this Agreement and delivered the same
to the Company.
(b) The Buyer shall have delivered to the Company the Purchase Price
for the Securities in the amounts set forth in Section 1(a) above.
(c) The representations and warranties of the Buyer shall be true and
correct in all material respects as of the date when made and as of such Closing
Date as though made at that time (except for representations and warranties that
speak as of a specific date), and the Buyer shall have performed, satisfied and
complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by the
Buyer at or prior to such Closing Date.
6. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE
The obligation of the Buyer hereunder to purchase the Securities at the
Closing is subject to the satisfaction, at or before the Closing Date, of each
of the following conditions, provided that these conditions are for the Buyer's
sole benefit and may be waived by the Buyer at any time in its sole discretion:
(a) The Company shall have executed this Agreement and delivered the
same to the Buyer.
(b) The representations and warranties of the Company shall be true and
correct in all material respects (except to the extent that any of such
representations and warranties are already qualified as to materiality in
Section 3 above, in which case, such representations and warranties shall be
true and correct without further qualification) as of the date when made and as
of such Closing Date as though made at that time (except for representations and
warranties that speak as of a specific date) and the Company shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Company at or prior to such Closing Date. If requested
by the Buyer, the Buyer shall have received a certificate, executed by the
President of the Company, dated as of the Closing Date, to the foregoing effect
and as to such other matters as may be reasonably requested by the Buyer
including, without limitation an update as of the Closing Date regarding the
representation contained in Section 3(c) above.
(c) The Company shall have executed and delivered to the Buyer the
Shares, the Warrants and the Additional Warrants in the amount(s) set forth in
Section 1 above.
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(d) The Buyer shall have received from Xxxxxxxxx, Xxxxxx & Xxxxxx,
counsel to the Company, an opinion, dated as of such Closing Date, in a form
satisfactory to the Buyer.
(e) The Secretary of the Company shall have delivered to the Buyer at
each Closing a certificate certifying (i) the By-Laws of the Company and (ii)
resolutions of the Board of Directors of the Company approving this Agreement
and the transactions contemplated hereby.
(f) The Company shall have provided to the Buyer a certificate of good
standing from the Secretary of State of Delaware.
(g) The Company shall have reserved out of its authorized and unissued
Common Stock, shares of Common Stock to effect the issuance of all Warrant
Shares then issuable.
7. REGISTRATION RIGHTS
The Buyer (and certain assignees thereof) shall have registration
rights as follows:
(a) PARTICIPATION IN REGISTERED OFFERINGS. If the Company proposes or
is required to register any of its shares or other equity securities for public
sale for cash under the Securities Act (other than on Forms S-4 or S-8 or
similar registration forms), it will at each such time or times give written
notice to the Buyer of its intention to do so. Upon the written request of the
Buyer given within twenty (20) days after receipt of any such notice, the
Company shall use its best efforts to cause to be included in such registration
any Shares or Warrant Shares (together, the "REGISTRABLE SECURITIES") held by
the Buyer requested to be registered; provided, that if the managing underwriter
advises that less than all of the shares requested to be registered should be
offered for sale so as not materially and adversely to affect the price or
salability of such offering being registered by the Company, the Buyer (but not
the Company to the extent it desires to include shares for its own account)
shall reduce the number of its Registrable Securities to be included in the
registration statement as required by the underwriter to the extent requisite of
all prospective sellers of the securities proposed to be registered (other than
the Company) on a pro rata basis according to the amounts of securities proposed
to be registered by all prospective sellers to permit the sale or other
disposition (in accordance with the intended method of disposition thereof as
aforesaid) by the prospective seller or sellers of the securities so registered.
The registration requested pursuant to this Section is referred to herein as the
"PIGGYBACK REGISTRATION".
(b) OBLIGATIONS OF THE BUYER. It shall be a condition precedent to the
obligation of the Company to register any Registrable Securities pursuant to
this Section 7 that the Buyer shall furnish to the Company such information
regarding the Registrable Securities held and the intended method of disposition
thereof and other information concerning the Buyer as the Company shall
reasonably request and as shall be required in connection with the registration
statement to be filed by the Company. If after a registration statement becomes
effective the Company advises the Buyer that the Company considers it
appropriate to amend or supplement the applicable registration statement, the
Buyer shall suspend further sales of the Registrable Securities until the
Company advises the Buyer that such registration statement has been amended or
supplemented.
(c) REGISTRATION PROCEEDINGS. Whenever the Company is required by the
provisions of this Section 7 to effect the registration of the Registrable
Securities under the Securities Act, the Company shall:
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(i) Prepare and promptly file with the SEC a registration
statement with respect to such securities and use its best efforts to cause such
registration statement to become effective within 90 days of filing and remain
effective;
(ii) Prepare and file with the SEC such amendments to such
registration statement and supplements to the prospectus contained therein as
may be necessary to keep such registration statement effective;
(iii) Furnish to the Buyer and to the underwriters of the
securities being registered such reasonable number of copies of the registration
statement, preliminary prospectus, final prospectus and such other documents as
such underwriters may reasonably request in order to facilitate the public
offering of such securities;
(iv) Use its best efforts to register or qualify the
securities covered by such registration statement under such state securities or
Blue Sky Laws of such jurisdictions as the Buyer may reasonably request within
twenty (20) days following the original filing of such registration statement,
except that the Company shall not for any purpose be required to execute a
general consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified;
(v) Notify the Buyer, promptly after it shall receive notice
thereof, of the time when such registration statement has become effective or a
supplement to any prospectus forming a part of such registration statement has
been filed;
(vi) Notify the Buyer promptly of any request by the SEC for
the amending or supplementing of such registration statement or prospectus or
for additional information; and
(vii) Prepare and promptly file with the SEC and promptly
notify the Buyer of the filing of such amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event shall
have occurred as the result of which any such prospectus or any other prospectus
as then in effect would include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in light of
the circumstances in which they were made, not misleading. Notwithstanding any
provision herein to the contrary, the Company shall not be required to amend,
supplement, or update a prospectus contained in any registration statement if to
do so would result in an unduly burdensome expense to the Company.
(d) EXPENSES. With respect to the inclusion of the Registrable
Securities in a registration statement pursuant to this Section 7, all
registration expenses, fees, costs and expenses of and incidental to such
registration, shall be borne by the Company; provided, however, that the Buyer
shall bear its own professional fees and pro rata share of the underwriting
discounts and commissions. The fees, costs and expenses of registration to be
borne by the Company shall include, without limitation, all registration,
filing, and printing expenses, fees and disbursements of counsel and accountants
for the Company, fees and disbursements of counsel for the underwriter or
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underwriters of such securities (if the Company and/or selling security holders
are required to bear such fees and disbursements), and all legal fees and
disbursements and other expenses of complying with state securities or Blue Sky
laws of any jurisdiction in which the securities to be offered are to be
registered or qualified.
(e) INDEMNIFICATION OF THE BUYER. Subject to the conditions set forth
below, in connection with any registration of the Registrable Securities
pursuant to this Section 7, the Company agrees to indemnify and hold harmless
the Buyer, any underwriter for the offering and each of their officers and
directors and agents and each other person, if any, who controls Buyer or their
underwriter (each, a "Buyer Indemnified Party"), within the meaning of Section
15 of the Securities Act, as follows:
(i) Against any and all loss, claim, damage and expense
whatsoever arising out of or based upon (including, but not limited to, any and
all expense whatsoever reasonably incurred in investigating, preparing or
defending any litigation, commenced or threatened, or any claim whatsoever based
upon) any untrue or alleged untrue statement of a material fact contained in any
preliminary prospectus (if used prior to the effective date of the registration
statement), the registration statement or the prospectus (as from time to time
amended and supplemented), or in any application or other document executed by
the Company or based upon written information furnished by the Company filed in
any jurisdiction in order to qualify the Company's securities under the
securities laws thereof, or the omission or alleged omission therefrom of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any other violation of applicable federal or state
statutory or regulatory requirements or limitations relating to action or
inaction by the Company in the course of preparing, filing, or implementing such
registered offering; provided, however, that the indemnity agreement contained
in this section shall not apply to any loss, claim, damage, liability or action
arising out of or based upon any untrue or alleged untrue statement or omission
made in reliance upon and in conformity with any information furnished in
writing to the Company by or on behalf of the Buyer expressly for use in
connection therewith or arising out of any action or inaction of the Buyer;
(ii) Subject to the proviso contained in Subsection (i) above,
against any and all loss, liability, claim, damage and expense whatsoever to the
extent of the aggregate amount paid in settlement of any litigation, commenced
or threatened, or of any claim whatsoever based upon any untrue statement or
omission (including, but not limited to, any and all expense whatsoever
reasonably incurred in investigating, preparing or defending against any such
litigation or claim) if such settlement is effected with the written consent of
the Company; and
(iii) In no case shall the Company be liable under this
indemnity agreement with respect to any claim made against any Buyer Indemnified
Party unless the Company shall be notified, by letter or by facsimile confirmed
by letter, of any action commenced against such Buyer Indemnified Party,
promptly after such person shall have been served with the summons or other
legal process giving information as to the nature and basis of the claim. The
failure to so notify the Company, if prejudicial in any material respect to the
Company's ability to defend such claim, shall relieve the Company from its
liability to the indemnified person under this Section 7(e), but only to the
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extent that the Company was prejudiced. The failure to so notify the Company
shall not relieve the Company from any liability which it may have otherwise
than on account of this indemnity agreement. The Company shall be entitled to
participate at its own expense in the defense of any suit brought to enforce any
such claim, but if the Company elects to assume the defense, such defense shall
be conducted by counsel chosen by it, provided such counsel is reasonably
satisfactory to the Buyer Indemnified Party in any suit so brought. In the event
the Company elects to assume the defense of any such suit and retain such
counsel, the Buyer Indemnified Party in the suit shall, after the date they are
notified of such election, bear the fees and expenses of any counsel thereafter
retained by them, as well as any other expenses thereafter incurred by them in
connection with the defense thereof; provided, however, that if the Buyer
Indemnified Party reasonably believes that there may be available to it any
defense or counterclaim different than those available to the Company or that
representation of the Buyer Indemnified Party by counsel for the Company
presents a conflict of interest for such counsel, then the Buyer Indemnified
Party shall be entitled to defend such suit with counsel of its own choosing and
the Company shall bear the fees, expenses and other costs of such separate
counsel.
(f) INDEMNIFICATION OF THE COMPANY. The Buyer agrees to indemnify and
hold harmless the Company, each underwriter for the offering, and each of their
officers and directors and agents and each other person, if any, who controls
the Company and the underwriter within the meaning of Section 15 of the
Securities Act and any other stockholder selling securities against any and all
such losses, liabilities, claims, damages and expenses as are indemnified
against by the Company under Section 7(e) (i), (ii) and (iii) above; provided,
however, that such indemnification by Buyer hereunder shall be limited to any
losses, liabilities, claims, damages, or expenses to the extent caused by any
untrue statement of a material fact or omission of a material fact (required to
be stated therein or necessary to make statements therein not misleading), if
any made (or in settlement of any litigation effected with the written consent
of such Buyers, alleged to have been made) in any preliminary prospectus, the
registration statement or prospectus or any amendment or supplement thereof or
in any application or other document in reliance upon, and in conformity with,
written information furnished in respect of such Buyer by or on behalf of such
Buyer expressly for use in any preliminary prospectus, the registration
statement or prospectus or any amendment or supplement thereof or in any such
application or other document or arising out of any action or inaction of such
Buyer in implementing such registered offering. In case any action shall be
brought against the Company, or any other person so indemnified, in respect of
which indemnity may be sought against any Buyer, such Buyer shall have the
rights and duties given to the Company, and each other person so indemnified
shall have the rights and duties given to Buyer, by the provisions of Section
7(e). The person indemnified agrees to notify the Buyer promptly after the
assertion of any claim against the person indemnified in connection with the
sale of securities.
(g) CONTRIBUTION. If the indemnification provided for in Sections 7(e)
and 8(f) above are unavailable or insufficient to hold harmless an indemnified
party in respect of any losses, claims, damages or liabilities (or actions in
respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative fault of the
indemnified party, on one hand, and such indemnifying party, on the other hand,
in connection with the statements or omissions which resulted in such losses,
claims, damages, or liabilities (or actions in respect thereof). The relative
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fault shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the
indemnified party, on one hand, or such indemnifying party, on the other hand,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. No person who has
committed fraudulent misrepresentation (within the meaning of the Securities
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this Section shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
(h) ASSIGNMENT OF REGISTRATION RIGHTS. The right to have the Company
register Registrable Securities pursuant to this Agreement shall be
automatically assignable to any transferee of all or any portion of the
Registrable Securities if: (a) the Buyer agrees in writing with the transferee
or assignee to assign such rights, and a copy of such agreement is furnished to
the Company within a reasonable time after such assignment, (b) the Company is,
within a reasonable time after such transfer or assignment, furnished with
written notice of (i) the name and address of such transferee or assignee, and
(ii) the securities with respect to which such registration rights are being
transferred or assigned, (c) following such transfer or assignment, the further
disposition of such securities by the transferee or assignee is restricted under
the 1933 Act and applicable state securities laws and, (d) at or before the time
the Company receives the written notice contemplated by clause (b) of this
sentence, the transferee or assignee agrees in writing with the Company to be
bound by all of the provisions contained herein (the foregoing a "PERMITTED
TRANSFEREE").
8. ADDITIONAL RIGHTS OF BUYER
(a) ANTI-DILUTION. In the event that the Company successfully completes
a financing transaction during the 12 month period immediately following the
Closing Date pursuant to which either (a) the purchase price per share of Common
Stock (or its equivalent) is less than the Purchase Price as calculated on a per
share basis, or (b) the investor in the subsequent financing receives warrant
coverage more favorable than the warrant coverage provided to the Buyer herein,
the Company shall issue to the Buyer additional shares of Common Stock or
additional Warrants, as appropriate, to make equal the purchase price or warrant
coverage provided to such subsequent investor.
(b) RIGHT OF PARTICIPATION IN FUTURE OFFERINGS. During the two-year
period immediately following the Closing Date, the Buyer shall have the option
to participate in any financing transaction involving the Company's securities
in an amount equal to an aggregate of 33% of the total gross proceeds received
by the Company pursuant to such future offering. In the event that the Buyer
elects to participate in such transaction, the closing of the Buyer's portion
shall occur on identical terms and conditions and upon the same date as the
Company's transaction with such future investor(s).
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(c) RIGHT TO APPOINT DIRECTOR NOMINEE. To the extent permissible under
the Foreign Ownership Regulations (as defined below), the Company agrees to (a)
increase the number of members of its Board of Directors by one additional
member in accordance with Section 1 of Article III of the Company's By-Laws and
(b) fill such vacancy on the Board of Directors by appointing Buyer's nominee
(the "DIRECTOR NOMINEE"), as a member of the Board of Directors of the Company
in accordance with Section 2 of Article III of the Company's By-Laws. The
Company shall provide the Director Nominee the same financial or other
information as is generally provided to the Company's other directors and
officers at the same time that such other directors and officers receive such
information. The Buyer and the Company acknowledge and agree that the Buyer's
director nominee shall be required to pass a standard background check as is
required by applicable Federal, State and local government agencies and
departments having jurisdiction over the Company's business and activities.
9. AMENDMENTS TO CORPORATE GOVERNANCE DOCUMENTS
(a) AMENDMENTS TO BY-LAWS. The Company agrees to take action to amend
its By-laws on or before the 45th day following the Closing Date to provide that
the following matters shall require the approval of a minimum of two-thirds
(2/3) of all directors eligible to vote at a duly called meeting of the
Company's Board of Directors (the "BOARD"):
(i) Issuance, sale or other disposition of the Company's
Common Stock, Warrants or other securities, or
modification of common shareholders' rights except in
the ordinary course of the Company's business such as
(a) the issuance of securities to employees,
management, officers, directors, consultants or other
professionals, (b) the issuance of securities to
finance fleet management; (c) expansion; (d) to
finance day-to-day operational requirements not
involving an equity capital raise, from time to time,
as deemed necessary and appropriate by the Company's
Board of Directors; and (e) the issuance of the
Company's Common Stock upon the exercise or
conversion of all convertible notes, warrants or
other convertible securities issued and outstanding
as of the date hereof including, but not limited to,
all convertible debentures and warrants held by YA
Global Investments, L.P. (formerly known as Cornell
Capital Partners, LP);
(ii) Any fundamental change in the Company's line of
business or cessation of a material part of its
existing business;
(iii) Amendment of the Company's By-laws relating to Board
committees or Board procedures.
(iv) Liquidation or dissolution of the Company; and
(v) Any declaration of bankruptcy.
(b) The Company agrees to act in accordance with Section 9(a) prior to
the By-Laws being so amended.
(c) NOMINATING COMMITTEE. On or before the 45th day following the
Closing Date, the Company agrees to take action to amend its Nominating
Committee procedures to require that the Nominating Committee approval of any
nominee as a director to the Company shall be unanimous. The Nominating
Committee shall at all times include one of the Buyer's director nominees.
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10. FOREIGN OWNERSHIP STATUS
(a) The Buyer recognizes and acknowledges that the Company is subject
to applicable Federal and State laws, including but not limited to 49 U.S.C.
xx.xx. 40102(a) (15) and 41102 and U.S. Department of Transportation regulations
and interpretations (collectively, the "FOREIGN OWNERSHIP REGULATIONS"), that
among other things, limit the ownership and control of the voting interest in
the Company by non-U.S. citizens to no more than 24.99%. Non-U.S. citizens from
countries with which the U.S. has an "Open Skies" bilateral agreement, such as
Kuwait, may, however, own up to 49% of the "economic interest" in the Company.
Non-U.S. citizens from countries with which the U.S. does not have an Open Skies
bilateral agreement may not own more than 24.99% of the "economic interest" in
the Company. As of the effective date of this Agreement, 24.7 percent of the
voting interest and 33.05 percent of the economic interest of the Company is
owned by non-U.S. citizens. Of the 33.05 percent of the economic interest held
by non-U.S. citizens, 13.42 percent is held by non-U.S. Open Skies citizens and
19.63 percent is held by non-U.S., non-Open Skies citizens. The Buyer hereby
agrees to provide the Company with no less than 60 days' written notice prior to
any change in its citizenship status. The Buyer acknowledges and agrees that its
voting rights underlying the Shares or the Warrant Shares may be suspended to
prevent a violation of the Foreign Ownership Regulations, and that the Company
will restore the Buyer's voting rights immediately once the non-U.S. and
non-Open Skies economic interest in the Company falls within the levels required
under the Foreign Ownership Regulations.
(b) The Buyer further agrees that it will not exercise the Warrants to
the extent such conversion or receipt of such interest payment would result in a
violation of the Foreign Ownership Regulations.
11. GOVERNING LAW: MISCELLANEOUS
(a) GOVERNING LAW. THIS AGREEMENT SHALL BE ENFORCED, GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICT OF LAWS. THE PARTIES HERETO HEREBY SUBMIT TO THE
EXCLUSIVE JURISDICTION OF THE UNITED STATES FEDERAL COURTS LOCATED IN NEW YORK,
NEW YORK WITH RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT, THE
AGREEMENTS ENTERED INTO IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. BOTH PARTIES IRREVOCABLY WAIVE THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH SUIT OR PROCEEDING. BOTH PARTIES FURTHER AGREE
THAT SERVICE OF PROCESS UPON A PARTY MAILED BY FIRST CLASS MAIL SHALL BE DEEMED
IN EVERY RESPECT EFFECTIVE SERVICE OF PROCESS UPON THE PARTY IN ANY SUCH SUIT OR
PROCEEDING. NOTHING HEREIN SHALL AFFECT EITHER PARTY'S RIGHT TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW. BOTH PARTIES AGREE THAT A FINAL
NON-APPEALABLE JUDGMENT IN ANY SUCH SUIT OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON SUCH JUDGMENT OR IN ANY OTHER
LAWFUL MANNER. THE PARTY WHICH DOES NOT PREVAIL IN ANY DISPUTE ARISING UNDER
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THIS AGREEMENT SHALL BE RESPONSIBLE FOR ALL FEES AND EXPENSES, INCLUDING
ATTORNEYS' FEES, INCURRED BY THE PREVAILING PARTY IN CONNECTION WITH SUCH
DISPUTE.
(b) COUNTERPARTS. This Agreement may be executed in two or more
identical counterparts, all of which shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each
party and delivered to the other party. In the event any signature page is
delivered by facsimile transmission, the party using such means of delivery
shall cause four (4) additional original executed signature pages to be
physically delivered to the other party within five (5) days of the execution
and delivery hereof.
(c) HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
(d) SEVERABILITY. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in
that jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.
(e) ENTIRE AGREEMENT, AMENDMENTS. This Agreement supersedes all other
prior oral or written agreements between the Buyer, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein and, except as specifically set forth herein or
therein, neither the Company nor the Buyer makes any representation, warranty,
covenant or undertaking with respect to such matters. No provision of this
Agreement may be waived or amended other than by an instrument in writing signed
by the party to be charged with enforcement.
(f) NOTICES. Any notices, consents, waivers, or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered (i) upon receipt, when
delivered personally; (ii) upon confirmation of receipt, when sent by facsimile;
(iii) three (3) days after being sent by U.S. certified mail, return receipt
requested, or (iv) one (1) day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:
If to the Company, to: U.S. Helicopter Corporation
0 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxx Xxxxxxxxx Heliport
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
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With a copy to: Xxxxxxxxx, Xxxxxx & Xxxxxx
Princeton Xxxxxxxxx Village
000 Xxxxxxx Xxxx. - Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
If to the Buyer, to its address and facsimile number on Schedule I,
with copies to the Buyer's counsel as set forth on Schedule I. Each party
shall provide five (5) days' prior written notice to the other party of any
change in address or facsimile number.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns.
Neither the Company nor the Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other party
hereto.
(h) NO THIRD PARTY BENEFICIARIES. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
(i) SURVIVAL. The representations and warranties of the Company and the
Buyer contained in Sections 2 and 3, the agreements and covenants set forth in
Sections 4 and 5 shall survive the Closing for a period of two (2) years
following the Closing Date. The Buyer shall be responsible only for its own
representations, warranties, agreements and covenants hereunder.
(j) FURTHER ASSURANCES. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
* * * *
-21-
IN WITNESS WHEREOF, the Buyer and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first written
above.
COMPANY:
U.S. HELICOPTER CORPORATION
By: /S/ XXXX X. XXXXXX
-------------------
Xxxx X. Xxxxxx
Chief Executive Officer and President
-22-
SCHEDULE I
ADDRESS/FACSIMILE
NAME OF BUYER SIGNATURE NUMBER OF BUYER
International Financial Advisors,
K.S.C.C. --------------------------------------
/s/ Xxxxxx X. Xx-Xxxxx
---------------------------------------
Name: Xxxxxx X. Xx-Xxxxx
Title: Chairman & Managing Director
