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") (http://www.sec.gov) 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
