EXHIBIT 10.88
AMENDED & RESTATED SECURITY AGREEMENT
THIS AMENDED & RESTATED SECURITY AGREEMENT (the "AGREEMENT"), is
entered into and made effective as of March 30, 2007, by and between U.S.
HELICOPTER CORPORATION, a Delaware corporation with its principal place of
business located at ▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Heliport,
New York, New York 10004 (the "COMPANY"), in favor of the BUYER(S) (the "SECURED
PARTY") listed on Schedule I attached to the Securities Purchase Agreement (the
"SECURITIES PURCHASE AGREEMENT") dated the date hereof between the Company and
the Secured Party.
WHEREAS, the Company issued to the Secured Party secured convertible
debentures (the "PRIOR CONVERTIBLE DEBENTURES") under Securities Purchase
Agreements between the Company and the Secured Party dated August 4, 2004,
August 23, 2005, March 31, 2006 and November 10, 2006, respectively;
WHEREAS, the Company has requested that the Secured Party make
additional financing available to the Company;
WHEREAS, the Secured Party is willing to proved such additional
financing on the condition that such additional financing is secured hereunder
and relates back to the UCC-1 Financing Statement filed in Delaware on August 5,
2004, file number 42203596 filed in connection with the Security Agreement
between the Company and the Secured Party originally entered into on August 4,
2004, and amended on August 23, 2005, March 31, 2006 and November 10, 2006 (the
"ORIGINAL SECURITY AGREEMENT").
WHEREAS, this Amended and Restated Security Agreement shall amend,
replace, and supersede the Original Security Agreement.
WHEREAS, all of the Company's Obligations (as defined below) to the
Secured Party are secured by the Pledged Property (as defined below) under this
Agreement as evidenced by the perfected UCC-1 Financing Statement filed in
Delaware on August 5, 2004, file number 42203596.
WHEREAS, The Company shall issue and sell to the Secured Party, as
provided in the Securities Purchase Agreement, and the Secured Party shall
purchase, up to One Million One Hundred Thousand Dollars ($1,100,000) of secured
convertible debentures (the "MARCH CONVERTIBLE DEBENTURES," and along with the
Prior Convertible Debentures, the "CONVERTIBLE DEBENTURES"), which shall be
convertible into shares of the Company's common stock, par value $0.001, in the
respective amounts set forth opposite each Buyer(s) name on Schedule I attached
to the Securities Purchase Agreement;
WHEREAS, to induce the Secured Party to enter into the transaction
contemplated by the Securities Purchase Agreement, the Convertible Debentures,
the Registration Rights Agreement of even date herewith between the Company and
the Secured Party (the "REGISTRATION RIGHTS AGREEMENT"), and the Irrevocable
Transfer Agent Instructions among the Company, the Secured Party, the Company's
transfer agent, and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq. (the "TRANSFER AGENT INSTRUCTIONS")
(collectively referred to as the "TRANSACTION DOCUMENTS"), each Company hereby
grants to the Secured Party a security interest in and to the pledged property
of each Company identified on EXHIBIT A hereto (collectively referred to as the
"PLEDGED PROPERTY") to secure all of the Obligations (as defined below).
NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, and for other good and valuable consideration, the
adequacy and receipt of which are hereby acknowledged, the parties hereto hereby
agree as follows:
ARTICLE 1.
DEFINITIONS AND INTERPRETATIONS
Section 1.1. RECITALS.
The above recitals are true and correct and are incorporated herein, in
their entirety, by this reference.
Section 1.2. INTERPRETATIONS.
Nothing herein expressed or implied is intended or shall be construed
to confer upon any person other than the Secured Party any right, remedy or
claim under or by reason hereof.
Section 1.3. OBLIGATIONS SECURED.
The security interest created hereby in the Pledged Property constitutes
continuing collateral security for all of the obligations of the Company now
existing or hereinafter incurred to the Buyers, whether oral or written and
whether arising before, on or after the date hereof including, without
limitation following obligations (collectively, the "OBLIGATIONS"):
(a) for so long as the Convertible Debentures are outstanding, the
payment by the Company, as and when due and payable (by scheduled maturity,
acceleration, demand or otherwise), of all amounts from time to time owing by it
in respect of the Securities Purchase Agreement, the Convertible Debentures, the
documents entered into in connection therewith, and the other Transaction
Documents; and
(b) for so long as the Convertible Debentures are outstanding, the due
performance and observance by the Company of all of its other obligations from
time to time existing in respect of any of the documents entered into in
connection therewith, and the Transaction Documents, including without
limitation, the Company's obligations with respect to any conversion or
redemption rights of the Secured Party under the Convertible Debentures.
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ARTICLE 2.
PLEDGED PROPERTY; EVENT OF DEFAULT
Section 2.1. PLEDGED PROPERTY.
(a) As collateral security for all of the Obligations, the
Company hereby pledges to the Secured Party, and creates in the Secured Party
for its benefit, a continuing security interest in and to all of the Pledged
Property whether now owned or hereafter acquired;.
(b) Simultaneously with the execution and delivery of this
Agreement, the Company shall make, execute, acknowledge, file, record and
deliver to the Secured Party any documents reasonably requested by the Secured
Party to perfect its security interest in the Pledged Property. Simultaneously
with the execution and delivery of this Agreement, the Company shall make,
execute, acknowledge and deliver to the Secured Party such documents and
instruments, including, without limitation, financing statements, certificates,
affidavits and forms as may, in the Secured Party's reasonable judgment, be
necessary to effectuate, complete or perfect, or to continue and preserve, the
security interest of the Secured Party in the Pledged Property, and the Secured
Party shall hold such documents and instruments as secured party, subject to the
terms and conditions contained herein.
Section 2.2. EVENT OF DEFAULT; RIGHTS; INTERESTS, ETC.
An "EVENT OF DEFAULT" shall be deemed to have occurred under
this Agreement upon an Event of Default under and as defined in the Convertible
Debentures. So long as no Event of Default shall have occurred and be
continuing:
(i) the Company shall be entitled to exercise any and
all rights pertaining to the Pledged Property or any part thereof for any
purpose not inconsistent with the terms hereof; and
(ii) the Company shall be entitled to receive and
retain any and all payments paid or made in respect of the Pledged Property.
ARTICLE 3.
ATTORNEY-IN-FACT; PERFORMANCE
Section 3.1. SECURED PARTY APPOINTED ATTORNEY-IN-FACT.
Upon the occurrence and during the continuance of an Event of Default:
(a) the Company hereby appoints the Secured Party as its attorney-in-fact, with
full authority in the place and stead of the Company and in the name of the
Company or otherwise, from time to time in the Secured Party's discretion to
take any action and to execute any instrument which the Secured Party may
reasonably deem necessary to accomplish the purposes of this Agreement,
including, without limitation, to receive and collect all instruments made
payable to the Company representing any payments in respect of the Pledged
Property or any part thereof and to give full discharge for the same; (b) the
Secured Party may demand, collect, receipt for, settle, compromise, adjust, ▇▇▇
for, foreclose, or realize on the Pledged Property as and when the Secured Party
may determine, and (c) to facilitate collection, the Secured Party may notify
account debtors and obligors on any Pledged Property to make payments directly
to the Secured Party.
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Section 3.2. SECURED PARTY MAY PERFORM.
If the Company fails to perform any agreement contained herein, the
Secured Party, at its option, may itself perform, or cause performance of, such
agreement, and the expenses of the Secured Party incurred in connection
therewith shall be included in the Obligations secured hereby and payable by the
Company under Section 8.3.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
Section 4.1. AUTHORIZATION; ENFORCEABILITY.
Each of the parties hereto represents and warrants that it has taken
all action necessary to authorize the execution, delivery and performance of
this Agreement and the transactions contemplated hereby; and upon execution and
delivery, this Agreement shall constitute a valid and binding obligation of the
respective party, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights or by the principles
governing the availability of equitable remedies.
Section 4.2. OWNERSHIP OF PLEDGED PROPERTY.
The Company represents and warrants that it is the legal and beneficial
owner of the Pledged Property free and clear of any lien, security interest,
option or other charge or encumbrance (each, a "Lien") except for the security
interest created by this Agreement and other Permitted Liens. For purposes of
this Agreement, "Permitted Liens" means: (1) the security interest created by
this Agreement, (2) existing Liens disclosed by the Company to the Secured
Party; (3) inchoate Liens for taxes, assessments or governmental charges or
levies not yet due, as to which the grace period, if any, related thereto has
not yet expired, or being contested in good faith and by appropriate proceedings
for which adequate reserves have been established in accordance with GAAP; (4)
Liens of carriers, materialmen, warehousemen, mechanics and landlords and other
similar Liens which secure amounts which are not yet overdue by more than 60
days or which are being contested in good faith by appropriate proceedings; (5)
licenses, sublicenses, leases or subleases granted to other Persons not
materially interfering with the conduct of the business of the Company; (6)
Liens securing capitalized lease obligations and purchase money indebtedness
incurred solely for the purpose of financing an acquisition or lease; (7)
easements, rights-of-way, restrictions, encroachments, municipal zoning
ordinances and other similar charges or encumbrances, and minor title
deficiencies, in each case not securing debt and not materially interfering with
the conduct of the business of the Company and not materially detracting from
the value of the property subject thereto; (8) Liens arising out of the
existence of judgments or awards which judgments or awards do not constitute an
Event of Default; (9) Liens incurred in the ordinary course of business in
connection with workers compensation claims, unemployment insurance, pension
liabilities and social security benefits and Liens securing the performance of
bids, tenders, leases and contracts in the ordinary course of business,
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statutory obligations, surety bonds, performance bonds and other obligations of
a like nature (other than appeal bonds) incurred in the ordinary course of
business (exclusive of obligations in respect of the payment for borrowed
money); (10) Liens in favor of a banking institution arising by operation of law
encumbering deposits (including the right of set-off) and contractual set-off
rights held by such banking institution and which are within the general
parameters customary in the banking industry and only burdening deposit accounts
or other funds maintained with a creditor depository institution; (11) usual and
customary set-off rights in leases and other contracts; and (12) escrows in
connection with acquisitions and dispositions.
ARTICLE 5.
DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL
Section 5.1 METHOD OF REALIZING UPON THE PLEDGED PROPERTY:
OTHER REMEDIES.
If any Event of Default shall have occurred and be continuing:
(a) The Secured Party may exercise in respect of the Pledged Property,
in addition to any other rights and remedies provided for herein or otherwise
available to it, all of the rights and remedies of a secured party upon default
under the Uniform Commercial Code (whether or not the Uniform Commercial Code
applies to the affected Pledged Property), and also may (i) take absolute
control of the Pledged Property, including, without limitation, transfer into
the Secured Party's name or into the name of its nominee or nominees (to the
extent the Secured Party has not theretofore done so) and thereafter receive,
for the benefit of the Secured Party, all payments made thereon, give all
consents, waivers and ratifications in respect thereof and otherwise act with
respect thereto as though it were the outright owner thereof, (ii) require the
Company to assemble all or part of the Pledged Property as directed by the
Secured Party and make it available to the Secured Party at a place or places to
be designated by the Secured Party that is reasonably convenient to both
parties, and the Secured Party may enter into and occupy any premises owned or
leased by the Company where the Pledged Property or any part thereof is located
or assembled for a reasonable period in order to effectuate the Secured Party's
rights and remedies hereunder or under law, without obligation to the Company in
respect of such occupation, and (iii) without notice except as specified below
and without any obligation to prepare or process the Pledged Property for sale,
(A) sell the Pledged Property or any part thereof in one or more parcels at
public or private sale, at any of the Secured Party's offices or elsewhere, for
cash, on credit or for future delivery, and at such price or prices and upon
such other terms as the Secured Party may deem commercially reasonable and/or
(B) lease, license or dispose of the Pledged Property or any part thereof upon
such terms as the Secured Party may deem commercially reasonable. The Company
agrees that, to the extent notice of sale or any other disposition of the
Pledged Property shall be required by law, at least ten (10) days' notice to the
Company of the time and place of any public sale or the time after which any
private sale or other disposition of the Pledged Property is to be made shall
constitute reasonable notification. The Secured Party shall not be obligated to
make any sale or other disposition of any Pledged Property regardless of notice
of sale having been given. The Secured Party may adjourn any public or private
sale from time to time by announcement at the time and place fixed therefor, and
such sale may, without further notice, be made at the time and place to which it
was so adjourned. The Company hereby waives any claims against the Secured Party
arising by reason of the fact that the price at which the Pledged Property may
have been sold at a private sale was less than the price which might have been
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obtained at a public sale or was less than the aggregate amount of the
Obligations, even if the Secured Party accepts the first offer received and does
not offer such Pledged Property to more than one offeree, and waives all rights
that the Company may have to require that all or any part of such Pledged
Property be marshaled upon any sale (public or private) thereof. The Company
hereby acknowledges that (i) any such sale of the Pledged Property by the
Secured Party may be made without warranty, (ii) the Secured Party may
specifically disclaim any warranties of title, possession, quiet enjoyment or
the like, and (iii) such actions set forth in clauses (i) and (ii) above shall
not adversely affect the commercial reasonableness of any such sale of Pledged
Property.
(b) Any cash held by the Secured Party as Pledged Property and all cash
proceeds received by the Secured Party in respect of any sale of or collection
from, or other realization upon, all or any part of the Pledged Property shall
be applied (after payment of any amounts payable to the Secured Party pursuant
to Section 8.3 hereof) by the Secured Party against, all or any part of the
Obligations in such order as the Secured Party shall elect, consistent with the
provisions of the Securities Purchase Agreement. Any surplus of such cash or
cash proceeds held by the Secured Party and remaining after the indefeasible
payment in full in cash of all of the Obligations shall be paid over to
whomsoever shall be lawfully entitled to receive the same or as a court of
competent jurisdiction shall direct.
(c) In the event that the proceeds of any such sale, collection or
realization are insufficient to pay all amounts to which the Secured Party is
legally entitled, the Company shall be liable for the deficiency, together with
interest thereon at the rate specified in the Convertible Debentures for
interest on overdue principal thereof or such other rate as shall be fixed by
applicable law, together with the costs of collection and the reasonable fees,
costs, expenses and other client charges of any attorneys employed by the
Secured Party to collect such deficiency.
(d) The Company hereby acknowledges that if the Secured Party complies
with any applicable state, provincial, or federal law requirements in connection
with a disposition of the Pledged Property, such compliance will not adversely
affect the commercial reasonableness of any sale or other disposition of the
Pledged Property.
(e) The Secured Party shall not be required to marshal any present or
future collateral security (including, but not limited to, this Agreement and
the Pledged Property) for, or other assurances of payment of, the Obligations or
any of them or to resort to such collateral security or other assurances of
payment in any particular order, and all of the Secured Party's rights hereunder
and in respect of such collateral security and other assurances of payment shall
be cumulative and in addition to all other rights, however existing or arising.
To the extent that the Company lawfully may, the Company hereby agrees that it
will not invoke any law relating to the marshaling of collateral which might
cause delay in or impede the enforcement of the Secured Party's rights under
this Agreement or under any other instrument creating or evidencing any of the
Obligations or under which any of the Obligations is outstanding or by which any
of the Obligations is secured or payment thereof is otherwise assured, and, to
the extent that it lawfully may, the Company hereby irrevocably waives the
benefits of all such laws.
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Section 5.2 DUTIES REGARDING PLEDGED PROPERTY.
The Secured Party shall have no duty as to the collection or protection
of the Pledged Property or any income thereon or as to the preservation of any
rights pertaining thereto, beyond the safe custody and reasonable care of any of
the Pledged Property actually in the Secured Party's possession.
ARTICLE 6.
AFFIRMATIVE COVENANTS
The Company covenants and agrees that, from the date hereof and until
the Obligations have been fully paid and satisfied or the Convertible Debentures
have been fully converted, unless the Secured Party shall consent otherwise in
writing (as provided in Section 8.4 hereof):
Section 6.1. EXISTENCE, PROPERTIES, ETC.
(a) The Company shall do, or cause to be done, all things, or
proceed with due diligence with any actions or courses of action, that may be
reasonably necessary (i) to maintain Company's due organization, valid existence
and good standing under the laws of its state of incorporation, and (ii) to
preserve and keep in full force and effect all qualifications, licenses and
registrations in those jurisdictions in which the failure to do so could have a
Material Adverse Effect (as defined below); and (b) the Company shall not do, or
cause to be done, any act impairing the Company's corporate power or authority
(i) to carry on the Company's business as now conducted, and (ii) to execute or
deliver this Agreement or any other document delivered in connection herewith,
including, without limitation, any UCC-1 Financing Statements required by the
Secured Party (which other loan instruments collectively shall be referred to as
the "LOAN INSTRUMENTS") to which it is or will be a party, or perform any of its
obligations hereunder or thereunder. For purpose of this Agreement, the term
"MATERIAL ADVERSE EFFECT" shall mean any material and adverse affect as
determined by Secured Party in its reasonable discretion, whether individually
or in the aggregate, upon (a) the Company's assets, business, operations,
properties or condition, financial or otherwise; (b) the Company's ability to
make payment as and when due of all or any part of the Obligations; or (c) the
Pledged Property.
Section 6.2. FINANCIAL STATEMENTS AND REPORTS.
The Company shall furnish to the Secured Party within a reasonable time
such financial data as the Secured Party may reasonably request.
Section 6.3. ACCOUNTS AND REPORTS.
The Company shall maintain a standard system of accounting in
accordance with generally accepted accounting principles consistently applied
("GAAP") and provide, at its sole expense, to the Secured Party the following:
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(a) as soon as available, a copy of any notice or other
communication alleging any nonpayment or other material breach or default, or
any foreclosure or other action respecting any material portion of its assets
and properties, received respecting any of the indebtedness of the Company in
excess of $500,000 (other than the Obligations), or any demand or other request
for payment under any guaranty, assumption, purchase agreement or similar
agreement or arrangement respecting the indebtedness or obligations of others in
excess of $500,000; and
(b) within fifteen (15) days after the making of each
submission or filing, a copy of any report, financial statement, notice or other
document, whether periodic or otherwise, submitted to the shareholders of the
Company, or submitted to or filed by the Company with any governmental authority
involving or affecting (i) the Company that could reasonably be expected to have
a Material Adverse Effect; (ii) the Obligations; (iii) any part of the Pledged
Property; or (iv) any of the transactions contemplated in this Agreement or the
Loan Instruments (except, in each case, to the extent any such submission,
filing, report, financial statement, notice or other document is posted on ▇▇▇▇▇
Online).
Section 6.4. MAINTENANCE OF BOOKS AND RECORDS; INSPECTION.
The Company shall maintain its books, accounts and records in
accordance with GAAP, and permit the Secured Party, its officers and employees
and any professionals designated by the Secured Party in writing, at any time
during normal business hours and upon reasonable notice to visit and inspect any
of its properties (including but not limited to the collateral security
described in the Transaction Documents and/or the Loan Instruments), corporate
books and financial records, and to discuss its accounts, affairs and finances
with any employee, officer or director thereof (it being agreed that, unless an
Event of Default shall have occurred and be continuing, there shall be no more
than two (2) such visits and inspections in any Fiscal Year).
Section 6.5. MAINTENANCE AND INSURANCE.
(a) The Company shall maintain or cause to be maintained, at
its own expense, all of its material assets and properties in good working order
and condition, ordinary wear and tear excepted, making all necessary repairs
thereto and renewals and replacements thereof.
(b) The Company shall maintain or cause to be maintained, at
its own expense, insurance in form, substance and amounts (including
deductibles), which the Company deems reasonably necessary to the Company's
business, (i) adequate to insure all assets and properties of the Company of a
character usually insured by persons engaged in the same or similar business
against loss or damage resulting from fire or other risks included in an
extended coverage policy; (ii) against public liability and other tort claims
that may be incurred by the Company; (iii) as may be required by the Transaction
Documents and/or applicable law and (iv) as may be reasonably requested by
Secured Party, all with financially sound and reputable insurers.
Section 6.6. CONTRACTS AND OTHER COLLATERAL.
The Company shall perform all of its obligations under or with respect
to each instrument, receivable, contract and other intangible included in the
Pledged Property to which the Company is now or hereafter will be party on a
timely basis and in the manner therein required, including, without limitation,
this Agreement, except to the extent the failure to so perform such obligations
would not reasonably be expected to have a Material Adverse Effect.
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Section 6.7. DEFENSE OF COLLATERAL, ETC.
The Company shall defend and enforce its right, title and interest in
and to any part of: (a) the Pledged Property; and (b) if not included within the
Pledged Property, those assets and properties whose loss would reasonably be
expected to have a Material Adverse Effect, each against all manner of claims
and demands on a timely basis to the full extent permitted by applicable law
(other than any such claims and demands by holders of Permitted Liens).
Section 6.8. TAXES AND ASSESSMENTS.
The Company shall (a) file all material tax returns and appropriate
schedules thereto that are required to be filed under applicable law, prior to
the date of delinquency (taking into account any extensions of the original due
date), (b) pay and discharge all material taxes, assessments and governmental
charges or levies imposed upon the Company, upon its income and profits or upon
any properties belonging to it, prior to the date on which penalties attach
thereto, and (c) pay all material taxes, assessments and governmental charges or
levies that, if unpaid, might become a lien or charge upon any of its
properties; PROVIDED, HOWEVER, that the Company in good faith may contest any
such tax, assessment, governmental charge or levy described in the foregoing
clauses (b) and (c) so long as appropriate reserves are maintained with respect
thereto if and to the extent required by GAAP.
Section 6.9. COMPLIANCE WITH LAW AND OTHER AGREEMENTS.
The Company shall maintain its business operations and property owned
or used in connection therewith in material compliance with (a) all applicable
federal, state and local laws, regulations and ordinances governing such
business operations and the use and ownership of such property, and (b) all
agreements, licenses, franchises, indentures and mortgages to which the Company
is a party or by which the Company or any of its properties is bound, except
where the failure to so comply would not reasonably be expected to have a
Material Adverse Effect.
Section 6.10. NOTICE OF DEFAULT.
The Company shall give written notice to the Secured Party of the
occurrence of any Event of Default.
Section 6.11. NOTICE OF LITIGATION.
The Company shall give notice, in writing, to the Secured Party of (a)
any actions, suits or proceedings wherein the amount at issue is in excess of
$250,000, instituted by any persons against the Company, or affecting any of the
assets of the Company, and (b) any dispute, not resolved within fifteen (15)
days of the commencement thereof, between the Company on the one hand and any
governmental or regulatory body on the other hand, which might reasonably be
expected to have a Material Adverse Effect on the business operations or
financial condition of the Company.
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Section 6.13. FUTURE SUBSIDIARIES.
If the Company shall hereafter create or acquire any subsidiary,
simultaneously with the creation or acquisition of such subsidiary, the Company
shall cause such subsidiary to grant to the Secured Party a security interest of
the same tenor as created under this Agreement.
ARTICLE 7.
NEGATIVE COVENANTS
The Company covenants and agrees that, from the date hereof until the
Obligations have been fully paid and satisfied, the Company shall not, unless
the Secured Party shall consent otherwise in writing:
Section 7.1. LIENS AND ENCUMBRANCES.
Except as permitted in Section 2.1(a) above, directly or indirectly
make, create, incur, assume or permit to exist any Lien in, to or against any
part of the Pledged Property other than Permitted Liens.
Section 7.2. RESTRICTION ON REDEMPTION AND CASH DIVIDENDS
Directly or indirectly, redeem, repurchase or declare or pay any cash
dividend or distribution on its capital stock without the prior express written
consent of the Secured Party.
Section 7.3. INCURRENCE OF INDEBTEDNESS.
Except as permitted in Section 2.1(a) above, directly or indirectly,
incur or guarantee, assume or suffer to exist any indebtedness, other than the
indebtedness evidenced by the Convertible Debentures and other Permitted
Indebtedness. "PERMITTED INDEBTEDNESS" means: (i) indebtedness evidenced by
Convertible Debentures; (ii) indebtedness described on the Disclosure Schedule
to the Securities Purchase Agreement; (iii) indebtedness incurred solely for the
purpose of financing the acquisition or lease of any equipment by the Company,
including capital lease obligations with no recourse other than to such
equipment; (iv) indebtedness (A) the repayment of which has been subordinated to
the payment of the Convertible Debentures on terms and conditions acceptable to
the Secured Party, including with regard to interest payments and repayment of
principal, (B) which does not mature or otherwise require or permit redemption
or repayment prior to or on the 91st day after the maturity date of any
Convertible Debentures then outstanding; and (C) which is not secured by any
assets of the Company; (v) indebtedness solely between the Company and/or one of
its domestic subsidiaries, on the one hand, and the Company and/or one of its
domestic subsidiaries, on the other which indebtedness is not secured by any
assets of the Company or any of its subsidiaries, provided that (x) in each case
a majority of the equity of any such domestic subsidiary is directly or
indirectly owned by the Company, such domestic subsidiary is controlled by the
Company and such domestic subsidiary has executed a security agreement in the
form of this Agreement and (y) any such loan shall be evidenced by an
intercompany note that is pledged by the Company or its subsidiary, as
applicable, as collateral pursuant to this Agreement; (vi) reimbursement
obligations in respect of letters of credit issued for the account of the
Company or any of its subsidiaries for the purpose of securing performance
obligations of the Company or its subsidiaries incurred in the ordinary course
of business so long as the aggregate face amount of all such letters of credit
does not exceed $500,000 at any one time; and (vii) renewals, extensions and
refinancing of any indebtedness described in clauses (i) or (iii) of this
subsection.
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Section 7.4. PLACES OF BUSINESS.
Change the location of its chief place of business, chief executive
office or any place of business disclosed to the Secured Party, unless such
change in location is to a different location within the United States and the
Company provides notice to the Secured Party of new location within 30 days' of
such change in location.
Section 7.5. COMPANY NAME. The Company and each Subsidiary shall not
change their respective names with out providing the Secured Party thirty (30)
calendar days prior written notice.
Section 7.6. BANK ACCOUNTS. The Company and each Subsidiary shall not
open, create, assume, establish or maintain any bank account with out having it
designated as a "Deposit Account" and complying with the term hereunder.
ARTICLE 8.
MISCELLANEOUS
Section 8.1. NOTICES.
All notices or other communications required or permitted to be given
pursuant to this Agreement shall be in writing and shall be considered as duly
given on: (a) the date of delivery, if delivered in person or by nationally
recognized overnight delivery service or (b) five (5) days after mailing if
mailed from within the continental United States by certified mail, return
receipt requested to the party entitled to receive the same:
If to the Secured Party: Cornell Capital Partners, LP
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▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Portfolio Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇ ▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Company, to: U.S. Helicopter Corporation
6 East River Piers
Downtown Manhattan Heliport
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to: Gallagher, Briody, and ▇▇▇▇▇▇
Princeton ▇▇▇▇▇▇▇▇▇ Village
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may change its address by giving notice to the other party
stating its new address. Commencing on the tenth (10th) day after the giving of
such notice, such newly designated address shall be such party's address for the
purpose of all notices or other communications required or permitted to be given
pursuant to this Agreement.
Section 8.2. SEVERABILITY.
If any provision of this Agreement shall be held invalid or
unenforceable, such invalidity or unenforceability shall attach only to such
provision and shall not in any manner affect or render invalid or unenforceable
any other severable provision of this Agreement, and this Agreement shall be
carried out as if any such invalid or unenforceable provision were not contained
herein.
Section 8.3. EXPENSES.
In the event of an Event of Default, the Company will pay to the
Secured Party the amount of any and all reasonable out-of-pocket expenses,
including the reasonable fees and expenses of its counsel, which the Secured
Party may incur in connection with: (i) the custody or preservation of, or the
sale, collection from, or other realization upon, any of the Pledged Property;
(ii) the exercise or enforcement of any of the rights of the Secured Party
hereunder or (iii) the failure by the Company to perform or observe any of the
provisions hereof.
Section 8.4. WAIVERS, AMENDMENTS, ETC.
The Secured Party's delay or failure at any time or times hereafter to
require strict performance by Company of any undertakings, agreements or
covenants shall not waive, affect, or diminish any right of the Secured Party
under this Agreement to demand strict compliance and performance herewith. Any
waiver by the Secured Party of any Event of Default shall not waive or affect
any other Event of Default, whether such Event of Default is prior or subsequent
thereto and whether of the same or a different type. None of the undertakings,
agreements and covenants of the Company contained in this Agreement, and no
Event of Default, shall be deemed to have been waived by the Secured Party, nor
may this Agreement be amended, changed or modified, unless such waiver,
amendment, change or modification is evidenced by an instrument in writing
specifying such waiver, amendment, change or modification and signed by the
Secured Party in the case of any such waiver, and signed by the Secured Party
and the Company in the case of any such amendment, change or modification.
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Section 8.5. CONTINUING SECURITY INTEREST; PARTIAL RELEASE.
(a) This Agreement shall create a continuing security interest in the
Pledged Property and shall: (i) remain in full force and effect until payment or
conversion in full of the Convertible Debentures; (ii) be binding upon the
Company and its successors and assigns; and (iii) inure to the benefit of the
Secured Party and its successors and assigns. Upon the payment or satisfaction
in full or conversion in full of the Convertible Debentures, this Agreement and
the security interest created hereby shall terminate, and, in connection
therewith, the Company shall be entitled to the return, at its expense, of such
of the Pledged Property as shall not have been sold in accordance with Section
5.2 hereof or otherwise applied pursuant to the terms hereof and the Secured
Party shall deliver to the Company such documents as the Company shall
reasonably request to evidence such termination.
(b) Effective upon the closing of a disposition of any Pledged
Property, provided the Secured Party consents in writing prior to such
disposition or such disposition is made in the ordinary course of business, the
security interest granted hereunder in the Pledged Property so disposed of shall
terminate and the Secured Party shall deliver such documents as the Company
shall reasonably request to evidence such termination; provided, however, the
security interest granted hereunder in all remaining Pledged Property shall
remain in full force and effect.
Section 8.6. INDEPENDENT REPRESENTATION.
Each party hereto acknowledges and agrees that it has received or has
had the opportunity to receive independent legal counsel of its own choice and
that it has been sufficiently apprised of its rights and responsibilities with
regard to the substance of this Agreement.
Section 8.7. APPLICABLE LAW: JURISDICTION.
This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New Jersey without regard to the principles of conflict
of laws. The parties further agree that any action between them shall be heard
in ▇▇▇▇▇▇ County, New Jersey, and expressly consent to the jurisdiction and
venue of the Superior Court of New Jersey, sitting in ▇▇▇▇▇▇ County and the
United States District Court for the District of New Jersey sitting in Newark,
New Jersey for the adjudication of any civil action asserted pursuant to this
Paragraph.
Section 8.8. WAIVER OF JURY TRIAL.
AS A FURTHER INDUCEMENT FOR THE SECURED PARTY TO ENTER INTO THIS
AGREEMENT AND TO MAKE THE FINANCIAL ACCOMMODATIONS TO THE COMPANY, THE COMPANY
HEREBY WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING RELATED IN ANY
WAY TO THIS AGREEMENT AND/OR ANY AND ALL OTHER DOCUMENTS RELATED TO THIS
TRANSACTION.
Section 8.9. ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement among the parties and
supersedes any prior agreement or understanding among them with respect to the
subject matter hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement as of the date first above written.
COMPANY:
U.S. HELICOPTER CORPORATION
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Executive Officer
SECURED PARTY:
CORNELL CAPITAL PARTNERS, L.P.
By: Yorkville Advisors, LLC
Its: Investment Manager
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Its: Managing Member
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EXHIBIT A
DEFINITION OF PLEDGED PROPERTY
For the purpose of securing prompt and complete payment and performance
by the Company of all of the Obligations, the Company unconditionally and
irrevocably hereby grants to the Secured Party a continuing security interest in
and to, and lien upon, the following Pledged Property of the Company:
(a) all goods of the Company, including, without limitation,
machinery, equipment, furniture, furnishings, fixtures, signs, lights, tools,
parts, supplies and motor vehicles of every kind and description, now or
hereafter owned by the Company or in which the Company may have or may hereafter
acquire any interest, and all replacements, additions, accessions, substitutions
and proceeds thereof, arising from the sale or disposition thereof, and where
applicable, the proceeds of insurance and of any tort claims involving any of
the foregoing;
(b) all inventory of the Company, including, but not limited
to, all goods, wares, merchandise, parts, supplies, finished products, other
tangible personal property, including such inventory as is temporarily out of
Company's custody or possession and including any returns upon any accounts or
other proceeds, including insurance proceeds, resulting from the sale or
disposition of any of the foregoing;
(c) all contract rights and general intangibles of the
Company, including, without limitation, goodwill, trademarks, trade styles,
trade names, leasehold interests, partnership or joint venture interests,
patents and patent applications, copyrights, deposit accounts whether now owned
or hereafter created;
(d) all documents, warehouse receipts, instruments and chattel
paper of the Company whether now owned or hereafter created;
(e) all accounts and other receivables, instruments or other
forms of obligations and rights to payment of the Company (herein collectively
referred to as "ACCOUNTS"), together with the proceeds thereof, all goods
represented by such Accounts and all such goods that may be returned by the
Company's customers, and all proceeds of any insurance thereon, and all
guarantees, securities and liens which the Company may hold for the payment of
any such Accounts including, without limitation, all rights of stoppage in
transit, replevin and reclamation and as an unpaid vendor and/or lienor;
(f) to the extent assignable, all of the Company's rights
under all present and future authorizations, permits, licenses and franchises
issued or granted in connection with the operations of any of its facilities;
and
(g) all products and proceeds (including, without limitation,
insurance proceeds) from the above-described Pledged Property.
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