EXHIBIT 10.89
NOTE PURCHASE AGREEMENT
THIS NOTE PURCHASE AGREEMENT ("Agreement") is made as of this 19th day
of November, 2008, between U.S. HELICOPTER CORPORATION (the "Company"), a
Delaware corporation, and 154 WEST AVIATION ENTERPRISES INC. (the "Purchaser").
RECITALS
WHEREAS, the Company has authorized the issuance and sale of the
Company's unsecured Promissory Notes to Purchaser in the aggregate principal
amount of $1,000,000.00, to be made in two separate tranches of $500,000 each,
having the terms set forth in Exhibit A attached hereto (each, a "Note" and
together, the "Notes") and certain warrants as described herein; and
WHEREAS, the Purchaser desires to purchase, and the Company desires to
issue, the Notes and Warrants on the terms set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and of the terms and
conditions contained in this Agreement, the Company and the Purchaser agree as
follows:
1. PURCHASE AND SALE OF THE NOTES.
1.1 Purchase; Closing. Subject to the terms and conditions
contained in this Agreement, at the Closing (as hereinafter defined) the
Purchaser shall purchase from the Company and the Company shall sell to the
Purchaser the Notes for $1,000,000.00 (ONE MILLION DOLLARS AND 00/100) (the
"Loan Amount") which shall be payable via wire transfer to the Company's
designated account as follows:
1.1.1 The Purchaser shall fund the sum of $500,000.00 (FIVE
HUNDRED THOUSAND DOLLARS AND 00/100), net of any prepaid interest, fees and
expenses as set forth herein to the Company on November 19, 2008, pursuant to
the bank wiring instructions provided separately to the Purchaser.
1.1.2 The Purchaser shall fund the sum of $500,000.00 (FIVE
HUNDRED THOUSAND DOLLARS AND 00/100), net of any prepaid interest, fees and
expenses as set forth herein to the Company on December 22, 2008, pursuant to
the bank wiring instructions provided separately to the Purchaser.
1.2 Maturity Date. The Notes shall be repaid, along with all
accrued and unpaid interest, on the earlier of (a) January 31, 2009 or (b) the
date upon which the Company receives at least $5.0 million in gross proceeds
pursuant to a sale of its securities in a private placement exempt from the
registration requirements of the Securities Act of 1933, as amended.
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1.3 Mandatory Payments of Customer Receipts. Notwithstanding
the repayment obligations of the Company set forth in Section 1.2 above and
subject to the conditions of this Section 1.3, the Purchaser shall have the
option to receive each month, and if the Purchaser so elects, the Company shall
be obligated to pay, all proceeds received by the Company from its highest
paying customer for such month within five business days of the Company's
receipt of such payments (each, a "Customer Receipts Payment"). Once received by
the Purchaser, Customer Receipts Payments shall be first applied to accrued but
unpaid interest, then to outstanding principal under the Notes until all
principal and interest under the Notes are repaid in full. The Purchaser's
option hereunder shall be exercisable (a) at any time following an Event of
Default, as defined in the Notes, and (b) in the event that, in the Purchaser's
reasonable judgment, it has reason to believe that (i) the financial condition
of the Company has experienced a material adverse change, or is reasonably
likely to experience a material adverse change in the immediate future, or (ii)
the Company has failed to make sufficient progress towards obtaining financing
from the potential investors identified by the Company as of the date hereof. In
the event that the Purchaser's option becomes exercisable by reason of an Event
of Default as provided in clause (a) of the preceding sentence, the Purchaser
may at any time thereafter provide the Company with written notice of its
election to receive Customer Receipts Payments (a "Notice"), and the Company
shall, after receiving a Notice, pay Customer Receipts Payments to Purchaser
each month thereafter (beginning with the month in which the Notice was
received, if it is received no later than 5:00 p.m. on the 20th of such month,
and otherwise beginning with the next following month) until all amounts owed
under the Notes have been paid in full. In the event that the Purchaser's option
becomes exercisable by reason of the circumstances set forth in clauses (b)(i)
or (b)(ii) above, the Purchaser shall provide the Company with Notice no later
than the 20th day of any given month in order to receive a Customer Receipts
Payment of the amounts received from the Company's highest paying customer
during such month; provided, however, no Notice shall be required of the
Purchaser in the event it does not elect to receive a Customer Receipts Payment
of the amounts received from the Company's highest paying customer during a
given month, and in the event that the Company does not receive a Notice by 5:00
p.m. on the 20th day of any given month, the Purchaser shall be deemed to have
declined to receive a Customer Receipts Payment for such month. The Company will
cause its senior management, and will use its reasonable best efforts to cause
its other representatives, agents or employees who are involved in raising
capital, to be available to the Purchaser to respond to questions of the
Purchaser regarding its investment if necessary.
1.4 Interest. The Notes shall bear interest at the rate of 15%
per annum based on a 365-day year, of which 60 days' worth of the amount funded
on each Closing Date shall be prepaid at each such Closing Date. Prepaid
interest paid shall be non-refundable in the event of early repayment.
1.5 Origination Fee. As additional consideration, the
Purchaser shall receive from the Company an origination fee equal to five
percent (5%) of the Loan Amount, equal to the sum of $50,000, which shall be
payable on a pro rata basis on each Closing Date.
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2. CLOSING. The closing of the purchase and sale of the Notes (the
"Closing") shall take place on the dates set forth in Section 1.1 above, or such
other days as agreed to by the parties (each, a "Closing Date").
3. INDUCEMENT WARRANTS. As an inducement to purchase the Notes, the
Purchaser shall be entitled to receive one warrant to purchase up to 1,000,000
shares of the Company's common stock on each Closing Date (together, the
"Warrants"). The Warrants shall contain an exercise price of $0.20 per share and
be exercisable for a period of five years from the date of issuance. The shares
issuable upon exercise of the Warrants (the "Warrant Shares") shall carry
piggyback registration rights as set forth below.
4. REPRESENTATIONS AND WARRANTIES.
4.1 Representations and Warranties of the Company. The Company
represents and warrants that as of the date of this Agreement:
(a) Existence. The Company is a corporation duly organized and
in good standing under the laws of the State of Delaware and is duly
qualified to do business and is in good standing in all states where
such qualification is necessary, except for those jurisdictions in
which the failure to qualify would not, in the aggregate, have a
material adverse effect on the Company's financial condition, results
of operations or business.
(b) Authority. The execution and delivery by the Company of
this Agreement, the Notes, the Warrants and the Registrable Securities
(as defined in Section 5(a)) (together, the "Securities"), and the
performance by the Company of the Agreement, the Notes and the Warrants
(i) are within the Company's corporate powers; (ii) are duly authorized
by the Company's board of directors; (iii) are not in contravention of
the terms of the Company's certificate of incorporation or bylaws; (iv)
are not in contravention of any law or laws; (v) except for the filing
of a Form D Notice with the Securities and Exchange Commission and any
exemption filing related thereto which may be required pursuant to
applicable state securities or "blue sky" laws, do not require any
governmental consent, registration or approval; (vi) do not contravene
any contractual or governmental restriction binding upon the Company;
(vii) except for the consent of YA Global Investments, L.P., do not
require the consent or waiver of any party, and (viii) will not result
in the imposition of any lien, charge, security interest or encumbrance
upon any property of the Company under any existing indenture,
mortgage, deed of trust, loan or credit agreement or other material
agreement or instrument to which the Company is a party or by which the
Company or any of the Company's property may be bound or affected.
(c) Binding Effect. This Agreement, the Notes and the Warrants
have been duly authorized, executed and delivered by the Company and
constitute the valid and legally binding obligation of the Company,
enforceable in accordance with their respective terms, subject to
bankruptcy, insolvency, reorganization and other laws of general
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applicability relating to or affecting creditors' rights and to general
equity principles. Upon issuance, the Warrant Shares shall be duly
authorized, validly issued, fully paid and nonassessable shares of the
Company's common stock.
(d) Capitalization. The authorized capital stock of the
Company consists of 500,000,000 shares of Common Stock, par value
$0.001 per share, 45,712,669 shares of which were issued and
outstanding as of November 1, 2008, and 25,000,000 shares of authorized
Preferred Stock, par value $0.001 per share, of which none were issued
and outstanding as of November 1, 2008.
(e) Disclosure Documents. The Company has furnished the
Purchaser or made available at the website of the Securities and
Exchange Commission (the "SEC") (xxxx://xxx.xxx.xxx) copies of the
Company's (i) Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2007 as filed with the SEC on April 15, 2008; (ii) the
Company's Quarterly Reports on Form 10-QSB for the fiscal quarters
ended March 31, 2008 and June 30, 2008 as filed with the SEC on May 20,
2008 and August 18, 2008, respectively, and (iii) the Company's reports
on Form 8-K as filed on September 4, 2008, September 18, 2008 and
October 10, 2008, respectively (together, the "SEC Documents"). Except
as set forth in the SEC Documents, the Company has no liabilities,
contingent or otherwise, other than liabilities incurred in the
ordinary course of business after June 30, 2008, which individually or
in the aggregate, are not material to the financial condition or
operating results of the Company.
(f) Securities Matters. Subject to the accuracy of the
representations of the Purchaser set forth in Section 4.2 hereof, the
offer, sale and issuance of the Securities as contemplated by this
Agreement are exempt from the registration requirements of the
Securities Act of 1933 as amended (the "Securities Act"). The Company
has complied and will comply with all applicable state "blue sky" or
securities laws in connection with the offer, sale and issuance of the
Securities as contemplated by this Agreement.
(e) Disclosure. No representation or warranty made by the
Company contained in this Agreement contains an untrue statement of a
material fact or omits to state a material fact necessary to make the
statements and facts contained herein or therein, in light of the
circumstances in which they were or are made, not misleading.
4.2 Representations and Warranties of the Purchaser. The
Purchaser represents and warrants that as of the date of the execution of this
Agreement:
(a) Authorization. This Agreement constitutes a valid and
legally binding obligation of the Purchaser.
(b) Investment Representations. The Purchaser has received and
reviewed the SEC Documents and the Purchaser or the Purchaser's
designated representatives have concluded a satisfactory due diligence
investigation of the Company and have had an opportunity to review the
documents provided by the Company and to have all of their questions
related thereto satisfactorily answered.
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(c) The Purchaser understands the fundamental risks of the
Securities; has determined that it can reasonably benefit from the
investment based upon net worth, income, overall investment objectives
and portfolio structure; that the Purchaser's overall commitment to
investments which are not readily marketable is not disproportionate to
the Purchaser's net worth, and that the Securities will not cause such
overall commitment to become excessive; and, that the Purchaser is able
to bear the economic risk of the Securities, including the loss of the
entire value of its investment. Additionally, the Purchaser understands
that that there are restrictions on the Purchaser's right to liquidate
the Securities.
(d) The Purchaser has reviewed the Risk Factors sections
included in the SEC Documents, and understands the Risk Factors
describing the fact that the Company (a) has substantial liabilities,
(b) may not be able to obtain sufficient funds to grow its business and
the subsequent financing may be on terms adverse to the Securities and
(c) is currently not profitable.
(e) The Purchaser (or its members and/or officers) has
previously invested in unregistered securities and has sufficient
financial and investing expertise to evaluate and understand the risks
of the Securities.
(f) The Purchaser has received from the Company, and is
relying on, no representations or projections (except as set forth in
this Agreement or the SEC Documents) with respect to the Company's
business and prospects.
(g) The Purchaser is an "accredited investor" within the
meaning of Regulation D under the Securities Act.
(h) The Purchaser is acquiring the Securities for investment
purposes only without intent to distribute the same, and acknowledges
that the Securities have not been registered under the Securities Act
and applicable state securities laws, and accordingly, constitutes
"restricted securities" for purposes of the Securities Act and such
state securities laws.
(i) The Purchaser acknowledges that it will not be able to
transfer the Securities except upon compliance with the registration
requirements of the Securities Act and applicable state securities laws
or exemptions therefrom.
(j) The certificates and/or instruments evidencing the
Securities will contain a legend to the foregoing effect.
5. REGISTRATION RIGHTS. The initial holder of the Warrants (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 Purchaser of its
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intention to do so. Upon the written request of the Purchaser 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 Warrant Shares (the "Registrable Securities") held by the Purchaser
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 Purchaser (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 5(a) is referred to herein as the "Piggyback
Registration".
(b) Obligations of Purchaser. It shall be a condition
precedent to the obligation of the Company to register any Registrable
Securities pursuant to this Section 5 that the Purchaser shall furnish
to the Company such information regarding the Registrable Securities
held and the intended method of disposition thereof and other
information concerning the Purchaser 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 Purchaser that the Company
considers it appropriate to amend or supplement the applicable
registration statement, the Purchaser shall suspend further sales of
the Registrable Securities until the Company advises the Purchaser that
such registration statement has been amended or supplemented.
(c) Registration Proceedings. Whenever the Company is required
by the provisions of this Section 5 to effect the registration of the
Registrable Securities under the Securities Act, the Company shall:
(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 Purchaser 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;
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(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 Purchaser 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 Purchaser, 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 Purchaser 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 Purchaser 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 5, all
registration expenses, fees, costs and expenses of and incidental to
such registration, shall be borne by the Company; provided, however,
that Purchaser 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 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.
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(e) Indemnification of the Purchaser. Subject to the
conditions set forth below, in connection with any registration of the
Registrable Securities pursuant to this Section 5, the Company agrees
to indemnify and hold harmless the Purchaser, any underwriter for the
offering and each of their officers and directors and agents and each
other person, if any, who controls Purchaser or their underwriter
(each, a "Purchaser 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
Purchaser expressly for use in connection therewith
or arising out of any action or inaction of the
Purchaser;
(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 Purchaser Indemnified Party unless
the Company shall be notified, by letter or by
facsimile confirmed by letter, of any action
commenced against such Purchaser 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
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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 5(e), but only to the 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
Purchaser 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
Purchaser 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 Purchaser
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 Purchaser Indemnified Party by
counsel for the Company presents a conflict of
interest for such counsel, then the Purchaser
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 Purchaser 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 5(e) (i), (ii) and (iii) above; provided,
however, that such indemnification by Purchaser 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 Purchasers,
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
Purchaser by or on behalf of such Purchaser 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 Purchaser 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 Purchaser, such
Purchaser shall have the rights and duties given to the Company, and
each other person so indemnified shall have the rights and duties given
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to Purchaser, by the provisions of Section 5(e). The person indemnified
shall notify the Purchaser promptly after the assertion of any claim
against the person indemnified in connection with the sale of
securities. The failure to so notify the Purchaser, if prejudicial in
any material respect to the Purchaser's ability to defend such claim,
shall relieve the Purchaser from its liability to the indemnified
person under this Section 5(f), but only to the extent that the
Purchaser was prejudiced.
(g) Contribution. If the indemnification provided for in
Sections 5(e) and 5(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 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 Purchaser 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.
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6. MISCELLANEOUS.
6.1 Confidentiality.
(a) The Purchaser agrees to keep confidential any and all
non-public information delivered or made available to the Purchaser by
the Company except for disclosures, as necessary, made by the Purchaser
to the Purchaser's officers, directors, employees, agents, counsel and
accountants each of whom shall be notified by the Purchaser of this
confidentiality covenant and for whom the Purchaser shall be liable in
the event of any breach of this covenant by any such individual or
individuals; provided, however, that nothing herein shall prevent the
Purchaser from disclosing such information (a) upon the order of any
court or administrative agency, (b) upon the request or demand of any
regulatory agency or authority having jurisdiction over the Purchaser,
(c) which has been publicly disclosed or (d) to any of its members
provided that any such members agree in writing (with a copy provided
to the Company) to be bound by confidentiality provisions in form and
substance substantially as are contained herein. In the event of a
mandatory disclosure as described in clause (a) and/or (b) of the
preceding sentence, the Purchaser shall promptly notify the Company in
writing of any applicable order, request or demand for such
information, cooperate with the Company if and to the extent that the
Company elects to seek an appropriate protective order or other relief
from such order, request, or demand, and disclose only the minimal
amount of information ultimately required to be disclosed. The
Purchaser shall not use for its own benefit, nor permit any other
person to use for such person's benefit, any of the Company's
non-public information including, without limitation, in connection
with the purchase and/or sale of the Company's securities.
(b) The Company shall in no event disclose non-public
information to the Purchaser, advisors to or representatives of the
Purchaser unless prior to disclosure of such information the Company
marks such information as "Non-Public Information - Confidential" and
provides the Purchaser, such advisors and representatives with the
opportunity to accept or refuse to accept such non-public information
for review. The Company may, as a condition to disclosing any
non-public information hereunder, require the Purchaser's advisors and
representatives to enter into a confidentiality agreement in form
reasonably satisfactory to the Company and the Purchaser.
(c) Nothing herein shall require the Company to disclose
non-public information to the Purchaser or its advisors or
representatives, and the Company represents that it does not
disseminate non-public information to any Purchasers who purchase stock
in the Company in a public offering, to money managers or to securities
analysts.
6.2 Legends. To the extent applicable, each note, certificate
or other document evidencing the Securities to be purchased and sold pursuant to
this Agreement shall be endorsed with the legends set forth below, and the
Purchaser on behalf of itself and each holder of the Securities covenants that,
except to the extent such restrictions are waived by the Company, it shall not
transfer the Securities without complying with the restrictions on transfer
described in the legends endorsed on such Securities:
(a) The following legend under the Securities Act:
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"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED,
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, OR
HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH
ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL,
IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY
AND ITS COUNSEL AND FROM ATTORNEYS REASONABLY ACCEPTABLE TO
THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED."
(b) If required by the authorities of any state in connection
with the issuance or sale of the Securities, the legend required by
such state authority.
(c) The legend set forth above shall be removed from the
Securities and the Company shall within two (2) business days issue a
certificate 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 replacement Securities without such legend
to the holder of the Securities immediately upon the registration of
the Securities under the Securities Act.
6.3 Fees and Expenses. The Company shall reimburse Purchaser
for its reasonable legal fees and expenses in connection with the purchase of
the Securities. The Company shall be responsible for all of its fees and
expenses in connection with this transaction.
6.4 Assignability; Successors. The provisions of this
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of the parties hereto.
6.5 Survival. All agreements, covenants, representations and
warranties made by the Company or by the Purchaser herein shall survive the
execution and delivery of this Agreement.
6.6 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED ACCORDING
TO THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES
THEREOF RELATING TO CONFLICTS OF LAWS.
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6.7 WAIVER OF JURY TRIAL. THE COMPANY AND THE PURCHASER HEREBY
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATIONS,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.
6.8 Counterparts: Headings. This Agreement may be executed in
several counterparts, each of which shall be deemed an original, but such
counterparts shall together constitute but one and the same agreement. The
descriptive headings in this Agreement are inserted for convenience of reference
only and shall not affect the construction of this Agreement.
6.9 Legal Representation.
(a) Each party hereto represents and warrants that it has
carefully read this Agreement and knows the contents hereof and that it
has signed this Agreement freely and voluntarily and that each party
has obtained independent counsel in reviewing this document and further
acknowledges that the law firm of Xxxxxxxxx, Xxxxxx & Xxxxxx has
memorialized the within Agreement and has provided legal advice solely
to the Company with respect to this Agreement.
(b) The Purchaser was provided the opportunity to retain
individual counsel, and has retained or waived the right to retain
individual counsel to review this Agreement.
6.10 Entire Agreement, Amendments. This Agreement and the
Exhibits contain the entire understanding of the parties with respect to the
subject matter hereof, and supersede all other representations and
understandings, oral or written, with respect to the subject matter hereof. No
amendment, modification, alteration, or waiver of the terms of this Agreement or
consent required under the terms of this Agreement shall be effective unless
made in a writing, which makes specific reference to this Agreement and which
has been signed by the Company and the Purchaser. Any such amendment,
modification, alteration, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
6.11 Notices. All communications or notices required or
permitted by this Agreement shall be in writing and shall be deemed to have been
given or made when delivered in hand, deposited in the mail, or sent by
facsimile, with confirmation (if sent by facsimile on a non-business day,
receipt shall be deemed to have occurred on the next succeeding business day).
Communications or notices shall be delivered personally or by certified or
registered mail, postage, or by facsimile and addressed as follows, unless and
until either of such parties notifies the other in accordance with this Section
of a change of address:
IF TO THE COMPANY: U.S. Helicopter Corporation
0 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxx Xxxxxxxxx Heliport
Xxx Xxxx, XX 00000
Attn.: Xxxx X. Xxxxxx, CEO and President
Telephone: 000-000-0000
Fax: 000-000-0000
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WITH A COPY TO: Xxxxxxxxx, Xxxxxx & Xxxxxx
000 Xxxxxxx Xxxxxxxxx
0xx Xxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
Telephone: 000-000-0000
Fax: 000-000-0000
IF TO THE PURCHASER: 154 West Aviation Enterprises Inc.
000 X. XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx, President
Telephone: 000-000-0000
6.12 Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
6.13 Maximum Interest. It is expressly stipulated and agreed
to be the intent of the Company and the Purchaser at all times to comply with
the applicable law governing the maximum rate of interest payable on or in
connection with all indebtedness and transactions hereunder (or applicable
United States federal law to the extent that it permits Purchaser to contract
for, charge, take, reserve or receive a greater amount of interest). If the
applicable law is ever judicially interpreted so as to render usurious any
amount of money or other consideration called for hereunder, or contracted for,
charged, taken, reserved or received with respect to any loan or advance
hereunder, or if acceleration of the maturity of the Notes results in the
Company's having paid any interest in excess of that permitted by law, then it
is the Company's and the Purchaser's express intent that all excess cash amounts
theretofore collected by Purchaser be credited on the principal balance of the
Notes (or if the Notes have been or would thereby be paid in full, refunded to
the Company), and the provisions of this Agreement immediately be deemed
reformed and the amounts thereafter collectible hereunder reduced, without the
necessity of the execution of any new document, so as to comply with the
applicable law, but so as to permit the recovery of the fullest amount otherwise
called for hereunder. The right to accelerate maturity of the Notes does not
include the right to accelerate any interest which has not otherwise accrued on
the date of such acceleration, and the Purchaser does not intend to collect any
unearned interest in the event of acceleration.
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-14-
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
U. S. HELICOPTER
CORPORATION
By:
-------------------------------
Xxxxxx X. Xxxx, Xx.
Chief Financial Officer
154 WEST AVIATION ENTERPRISES INC.
By:
-------------------------------
Name: ______________________________
Title: ______________________________
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EXHIBIT A
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF
UNDER SUCH ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY
SATISFACTORY TO THE COMPANY AND ITS COUNSEL AND FROM ATTORNEYS REASONABLY
ACCEPTABLE TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.
PROMISSORY NOTE
__________, 2008
FIVE HUNDRED THOUSAND DOLLARS
15% NOTE
FOR VALUE RECEIVED, U.S. HELICOPTER CORPORATION, a Delaware corporation
(the "Company") hereby promises to pay to the order of 154 WEST AVIATION
ENTERPRISES INC. (the "Holder"), or its registered assigns, the principal sum of
FIVE HUNDRED THOUSAND DOLLARS AND 00/100 ($500,000.00), and to pay interest from
the date hereof on the outstanding principal sum at the rate of 15% per annum
(the "Interest Rate") based on a 365-day year, such interest to accrue from the
date hereof (the "Closing Date"), of which 60 days' worth shall be prepaid on
the Closing Date. The principal and accrued but unpaid interest shall be paid in
full on the earlier of (a) January 31, 2009 or (b) the date upon which the
Company receives at least $5.0 million in gross proceeds pursuant to a sale of
its securities in a private placement exempt from the registration requirements
of the Securities Act of 1933, as amended (the "Maturity Date").
This Note is an authorized issue of a 15% Note of the Company (the
"Note") issued pursuant to a Note Purchase Agreement dated as of the date hereof
between the Company and the Holder (the "Note Purchase Agreement"). The Holder
of this Note is entitled to the benefits of the Note Purchase Agreement and to
enforce the agreements of the Company contained therein. Capitalized terms used
herein and not otherwise defined shall have the meaning ascribed thereto in the
Note Purchase Agreement. All payments shall be paid in lawful money of the
United States of America at the principal office of the Holder or at such other
place as the Holder may designate from time to time in writing to the Company.
-1-
1. MANDATORY PAYMENTS OF CUSTOMER RECEIPTS. Notwithstanding
the repayment obligations of the Company set forth above and subject to the
conditions of this Section 1, the Holder shall have the option to receive each
month, and if the Holder so elects, the Company shall be obligated to pay, all
proceeds received by the Company from its highest paying customer for such month
within five business days of the Company's receipt of such payments (each, a
"Customer Receipts Payment"). Once received by the Holder, Customer Receipts
Payments shall be first applied to accrued but unpaid interest, then to
outstanding principal under the Notes until all principal and interest under the
Notes are repaid in full. The Holder's option hereunder shall be exercisable (a)
at any time following an Event of Default, as defined in the Notes, and (b) in
the event that, in the Holder's reasonable judgment, it has reason to believe
that (i) the financial condition of the Company has experienced a material
adverse change, or is reasonably likely to experience a material adverse change
in the immediate future, or (ii) the Company has failed to make sufficient
progress towards obtaining financing from the potential investors identified by
the Company as of the date hereof. In the event that the Holder's option becomes
exercisable by reason of an Event of Default as provided in clause (a) of the
preceding sentence, the Holder may at any time thereafter provide the Company
with written notice of its election to receive Customer Receipts Payments (a
"Notice"), and the Company shall, after receiving a Notice, pay Customer
Receipts Payments to the Holder each month thereafter (beginning with the month
in which the Notice was received, if it is received no later than 5:00 p.m. on
the 20th of such month, and otherwise beginning with the next following month)
until all amounts owed under the Notes have been paid in full. In the event that
the Holder's option becomes exercisable by reason of the circumstances set forth
in clauses (b)(i) or (b)(ii) above, the Holder shall provide the Company with
Notice no later than the 20th day of any given month in order to receive a
Customer Receipts Payment of the amounts received from the Company's highest
paying customer during such month; provided, however, no Notice shall be
required of the Holder in the event it does not elect to receive a Customer
Receipts Payment of the amounts received from the Company's highest paying
customer during a given month, and in the event that the Company does not
receive a Notice by 5:00 p.m. on the 20th day of any given month, the Holder
shall be deemed to have declined to receive a Customer Receipts Payment for such
month. The Company will cause its senior management, and will use its reasonable
best efforts to cause its other representatives, agents or employees who are
involved in raising capital, to be available to the Holder to respond to
questions of the Holder regarding its investment if necessary.
2. DEFAULT. The Company shall be in default under this Note upon the
occurrence of any of the following events ("Event of Default"):
(a) Failure to make any principal or interest payment required
under this Note within ten days of the date such payment is due;
(b) Any material default, breach or misrepresentation under
the terms and provisions of the Note Purchase Agreement that is not
cured after 30 days written notice by Holder to the Company;
(c) Any of the Company's lenders accelerates any of the
Company's indebtedness to such lender in an amount not less than
$100,000 in outstanding principal; or
-2-
(d) An assignment for the benefit of creditors by or the
filing of a petition under bankruptcy, insolvency or debtor's relief
law, or for any readjustment of indebtedness, composition or extension
by the Company, or commenced against the Company which is not
discharged within sixty (60) days.
3. REMEDIES UPON EVENT OF DEFAULT.
(a) Upon the occurrence of an Event of Default:
(i) specified in clauses (c) or (d) of Section 2,
then the Note shall be automatically accelerated and
immediately due and payable without notice or demand;
(ii) specified in clauses (a) or (b) of Section 2,
then the Holder may declare the Note immediately accelerated
and due and payable;
(iii) the Interest Rate under this Note shall
automatically, without demand or notice, increase from 15% to
18%;
(iv) the Holder may provide a Notice to the Company
in accordance with Section 1 above, requiring the Company to
make Customer Receipts Payments of the amounts received from
the Company's highest paying customer each month thereafter
until all amounts owed under the Note have been paid in full;
and
(v) the Holder shall have all of the rights and
remedies, at law and in equity, by statute or otherwise, and
no remedy herein conferred upon the Holder is intended to be
exclusive of any other remedy and each remedy shall be
cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law, in,
equity, by statute or otherwise.
(b) The Company will pay on demand all reasonable costs and
expenses, including reasonable attorneys' fees, incurred or paid by the
Lender in enforcing or collecting any of the obligations of the Company
hereunder. The Company agrees to immediately provide the Lender with
written notice of any event giving rise to an Event of Default
described in Sections 2(c) and 2(d) above.
4. PREPAYMENT. The Company may at any time and from time to time
prepay, without premium or penalty, all or a portion of the amount due under
this Note. The amount of any such payment would be applied first to accrued and
unpaid interest and then to unpaid principal balance. Prepaid interest paid
shall be non-refundable in the event of prepayment or acceleration of the
Maturity Date.
-3-
5. CHANGES; PARTIES. This Note can only be changed by an agreement in
writing signed by the Company and the Holder. This Note shall inure to the
benefit of and be binding upon the Company and the Holder and their respective
successors and assigns.
6. WAIVER OF PRESENTMENT, ETC. The Company hereby waives presentment,
demand, notice, protest and all other demands, notices and defenses (including
any defense based on Holder's performance under the Note Purchase Agreement) in
connection with the delivery, acceptance, performance, default or enforcement of
this Note.
7. MAXIMUM RATE OF INTEREST. It is expressly stipulated and agreed to
be the intent of the Company and Holder at all times to comply with the
applicable law governing the maximum rate of interest payable on or in
connection with all indebtedness and transactions hereunder (or applicable
United States federal law to the extent that it permits Holder to contract for,
charge, take, reserve or receive a greater amount of interest). If the
applicable law is ever judicially interpreted so as to render usurious any
amount of money or other consideration called for hereunder, or contracted for,
charged, taken, reserved or received with respect to any loan or advance
hereunder, or if acceleration of the maturity of this Note or the indebtedness
hereunder or if any prepayment by the Company results in the Company's having
paid any interest in excess of that permitted by law, then it is the Company's
and Holder's express intent that all excess cash amounts theretofore collected
by Holder be credited on the principal balance of this Note (or if this Note has
been or would thereby be paid in full, refunded to the Company), and the
provisions of this Note immediately be deemed reformed and the amounts
thereafter collectible hereunder reduced, without the necessity of the execution
of any new document, so as to comply with the applicable law, but so as to
permit the recovery of the fullest amount otherwise called for hereunder. The
right to accelerate maturity of this Note does not include the right to
accelerate any interest which has not otherwise accrued on the date of such
acceleration, and Holder does not intend to collect any unearned interest in the
event of acceleration.
8. NO IMPLIED WAIVER. No failure or delay on the part of Holder in
exercising any right, power or privilege under this Note and no course of
dealing between the Company and Holder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise of any right, power or privilege Holder
would otherwise have. No notice to, or demand on, the Company in any case shall
entitle the Company to any other or further notice or demand in similar or other
circumstances or constitute a waiver of the right of Holder to any other or
further action in any circumstances without notice or demand.
9. GOVERNING LAW. THIS NOTE SHALL BE CONSTRUED ACCORDING TO THE LAWS OF
THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF RELATING
TO CONFLICTS OF LAWS.
10. WAIVER OF JURY TRIAL. THE COMPANY AND THE HOLDER HEREBY IRREVOCABLY
WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS NOTE OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATIONS, ADMINISTRATION,
PERFORMANCE OR ENFORCEMENT THEREOF.
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-5-
IN WITNESS WHEREOF, the Company has executed this Note as of the day
and year set forth above.
U.S. HELICOPTER CORPORATION
By: _____________________________
Xxxxxx X. Xxxx, Xx.
Chief Financial Officer
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