BRIDGE LOAN AGREEMENT
Agreement dated as of February 27, 1998, by and between BALTIA AIR LINES,
INC., a New York corporation ("BALTIA") and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & CO., INC.
("Lender") having an office at the address of its affiliate ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Securities Corp., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇.
BALTIA intends to have a public offering or a private placement of its
securities on or before September 30,1998 (collectively referred to as the
"Offering"), the proceeds of which are to be used first to repay this and
any other "bridge loans" BALTIA may secure, to purchase goods and services
necessary to commence BALTIA revenue flight service in time for the 1998
Summer Season between ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ International Airport in Jamaica, New
York, USA, and St. Petersburg, Russia ("Revenue Service"), and to provide
initial working capital;
While awaiting the closing of the Offering, BALTIA desires to obtain
certain goods and services itemized in the "Use of Proceeds" section of its
preliminary prospectus that forms a part of its registration statement no.
333-37409 (the "Registration Statement") to enable BALTIA to accelerate
commencement of Revenue Service; and
Lender is willing to lend BALTIA $250,000 to assist BALTIA commence
Revenue Service, and BALTIA is willing to borrow that amount (the "Bridge
Loan") under conditions that both parties consider reasonable and
commensurate with the associated risk as hereinafter set forth;
NOW THEREFORE, for and in consideration of the foregoing premises and the
mutual promises, agreements and covenants set forth herein, BALTIA and
Lender agree as follows:
(2) Bridge Loan. At the Closing as herein defined, Lender shall lend to
BALTIA and BALTIA shall borrow from Lender, the sum of TWO HUNDRED
FIFTY THOUSAND DOLLARS ($250,000.00) in lawful money of the United
States of American in immediately available funds wired to BALTIA's
account as set forth on Exhibit A annexed. BALTIA's Documents. For
and in consideration of the Bridge Loan and as a condition precedent to
Lender's making thereof, at the Closing, BALTIA shall deliver to
Lender:
(1) A promissory note substantially in the form annexed hereto as
Exhibit B (the"Promissory Note");
(2) A properly executed Warrant Certificate substantially in the
form of Exhibit C annexed ("Warrants"), for Two hundred fifty
Thousand (250,000) Warrants each entitling the holder thereof to
purchase one share of BALTIA common stock for $6.05 during the
four-year period commencing one year form the date BALTIA's common
stock commences trading in any recognized public market in the
United States of America (Effective Date). BALTIA may redeem
outstanding Warrants, once they become exercisable, at a price of
$.10 per Warrant on no less than thirty (30) days' prior written
notice, provided the closing bid quotations of BALTIA's shares
shall have exceeded $10 for 10 consecutive trading days ending on
the third day prior to the date on which notice is given;
(3) A certified copy of a resolution of BALTIA's Board of Directors,
in form and substance satisfactory to Lender and its counsel
approving the loan contemplated in this Agreement and the
execution and delivery of each and every document to be executed
and delivered pursuant there to and such other documents and
actions as may be necessary or appropriate to give full effect to
the intents and purposes of this Agreement. The resolution should
specifically authorize the officer signing any document to be
executed or delivered to Lender in connection with the Bridge Loan
to make such changes there to as he shall deem necessary or
appropriate to give effect to the transaction.
(4) An opinion of BALTIA's counsel, in form and substance
satisfactory to Lender and its counsel, that BALTIA has taken all
steps necessary and appropriate to authorize the execution and
delivery of this Agreement and each and every document, including
the Promissory Note, the Warrants, and any certificate delivered
hereunder and that the same are fully effective and enforceable
against BALTIA according to their terms and that such counsel, to
the best of its knowledge after due investigation, knows of no
material breach or any representation or warranty BALTIA or its
duly authorized officials have made in connection with this
Agreement, the Bridge Loan, the Warrants, or any document to be
delivered pursuant thereto or in connection therewith; and
(5) An incumbency certificate showing the current officers of BALTIA
and their genuine signatures.
(3) Closing. The Closing of the Bridge Loan shall take place at the
offices of Lender's counsel, ▇▇▇▇ and ▇▇▇▇▇, LLP, 200 ▇▇▇▇▇▇ Avenue,
Mineola, New York, or as such other place as Lender and BALTIA shall
agree on or about February 23, 1998, or as soon thereafter as BALTIA
notifies Lender or its counsel that BALTIA can deliver the documents
required of it under paragraph (2) hereof, but, in no event later than
February 27, 1998. If BALTIA is unable to close by that date, Lender
shall have no further obligation to BALTIA hereunder.
(4) BALTIA's Undertakings. BALTIA shall, at its sole cost and expense:
(1) register the Warrants in any registration statement it may file
with respect to any public offering of its common stock;
(2) diligently and continuously pursue until concluded a public
offering of its common stock in the United States of American for
trading on a recognized exchange or in a recognized trading market
in the United States of America and provide Lender with a copy of
any registration statement or other documents related thereto;
(3) provide Lender with monthly financial statements until the
Bridge Loan is repaid in full;
(4) give Lender's affiliate, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Securities Corp. a right
of first refusal to underwrite a public offering of its securities
until such time as the Bridge Loan is repaid in full;
(5) execute and deliver such other and further documents, at any
time, and from time to time, as Lender may reasonably require to
give full effect to the intents and purposes of this Agreement,
the Bridge Loan, the Promissory Note, the Warrants, or any other
document executed or delivered hereunder or in connection there
with; and
(6) BALTIA hereby terminates and discharges its letter of intent
with ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Securities Corp. and its predecessors in
interest which letter of intent called for ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Securities Corp. to pursue a public offering of BALTIA's
securities and releases ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Securities Corp., its
parents, subsidiaries, affiliates, successors, and assigns and its
officers, directors, agents, and employees from any and all claims
related to or arising out of that letter of intent or the
underwriting contemplated thereby.
(5) BALTIA's Representations and Warranties. BALTIA represents and
warrants to Lender:
(1) BALTIA's execution of this Agreement and any document required
of BALTIA hereunder does not, and will not with the passage of
time or otherwise, constitute an event of default or accelerate
any obligation under any other agreement, franchise, permission,
or right;
(2) BALTIA currently has all required licenses, franchises, rights,
and agreements necessary to commence Revenue Service, except as is
set forth on Exhibit D annexed, and BALTIA will maintain the same
until the Warrants are redeemed or exercised or expire according
to their terms;
(3) BALTIA is not now in default of any material obligation except
as is set forth on Exhibit E annexed, and, to the extent of the
existence of a default, BALTIA will first apply the proceeds of
the Bridge Loan to cure that default;
(4) BALTIA has taken all steps necessary to authorize its entry in
to the Bridge Loan, including, and not limited to, the execution
and delivery of this Agreement, the Promissory Note, the Warrants,
and any other document delivered pursuant thereto; and
(5) This Agreement, the Bridge Loan, the Promissory Note, the
Warrants, and any other document delivered pursuant hereto or
thereto constitute valid and binding obligations according to
their terms.
(6) Lender's Investment Representation. Lender represents to BALTIA that
Lender is an accredited investor as that term is commonly understood
within the meaning of the Securities Laws of the United States of
America. Lender further represents and warrants to BALTIA that Lender
is acquiring the Warrants for Lender's own account for an investment
and without any present intention of further distributing the same.
Lender consents to the placing of a suitable legend to the foregoing
effect on any certificates representing Warrants.
(7) Miscellaneous.
(1) This agreement shall be interpreted and construed according to
the internal laws of the State of New York without reference to
any conflict of laws provisions.
(2) BALTIA consents to jurisdiction and venue in the Federal and
State courts of the State of New York with respect to any matter
arising under this Agreement.
(3) BALTIA hereby appoints the Secretary of State of the State of
New York as its agent for the receipt of process in connection
with any action or proceeding brought in such courts.
(4) BALTIA may not assign this Agreement, in whole or in part,
without the prior written consent of Lender.
(5) This document is the whole and entire agreement regarding the
subject matter hereof, and there are no other agreements,
expressed or implied, regarding that subject matter, except as are
set forth herein. This Agreement may only be modified by a
writing signed by both parties hereto with the same formalities as
this Agreement.
IN WITNESS WHEREOF, each of BALTIA AIR LINES, INC., and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
& CO., INC., have caused this Agreement to be signed by it duly authorized
corporate officers as of the date above written
BALTIA AIR LINES, INC.
By:____________________________________
Igor Dmitrowsky, President
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & CO., INC.
By:___________________________________
Authorized Signatory
