exv10w3



 






Exhibit 10.3




CONVERTIBLE NOTE PURCHASE AGREEMENT




     THIS AGREEMENT (“Agreement”) is made as of this 26th day of October, 2005, between
U.S. HELICOPTER CORPORATION (the “Company”), a Delaware corporation, and PORTFOLIO LENDERS II, LLC,
a New Jersey limited liability company (the “Purchaser”).



RECITAL




     WHEREAS, the Company has authorized the issuance and sale of the Company’s Promissory Note to
Purchaser in the aggregate principal amount of $250,000.00, having the terms set forth in Exhibit A
attached hereto (the “Note”); and



     WHEREAS, the Purchaser desires to purchase, and the Company desires to issue, the Note 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 NOTE.



     1.1 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 Note for $250,000.00 (TWO HUNDRED FIFTY THOUSAND DOLLARS AND 00/100) (the “Loan
Amount”) which shall be payable via wire transfer to the Company’s designated account (not later
than the Closing Date).



     1.2 The Note shall be repaid, along with all accrued and unpaid interest, as follows:




          1.2.1 $150,000 shall be repaid by the Company within two business days after the
closing date of an investment of at least $2 million in the Company by a potential investor
currently in negotiations with the Company; and




          1.2.2 All remaining sums due and payable shall be repaid by the Company on the earliest
of (1) two business days after the closing date of a second investment of at least $2
million by a second potential investor currently in negotiations with the Company; (2) the
date which the Company draws down its first advance under an Amended & Restated Standby
Equity Distribution Agreement with Cornell Capital Partners, LP; and (3) 120 days from the
Closing Date (the “Maturity Date”).



     1.3 The Note shall bear interest at the rate of 15% per annum based on a 360-day year,
which shall be paid by the Company in advance on the Closing Date. The interest paid shall be
non-refundable in the event of early repayment. Upon the occurrence
of an Event of Default as defined in



 









 





the Note, the Note shall bear interest at the rate of 20% per annum based on a
360-day year, from the date of such Event of Default.



     1.4 As additional consideration, the Purchaser shall receive the sum of $12,500 by the
Company, which shall be payable on the Closing Date, representing five (5) points of the total
amount of the Note.



     1.5 The Purchaser shall have the right to convert the Loan Amount plus any accrued but unpaid
interest in whole or in part into shares of the Company’s common stock, par value $0.001 per share
(“Common Stock”) at a conversion rate of $0.50 per share (such shares, the “Conversion Shares”).



     2. INDUCEMENT WARRANT. As an inducement to purchase the Note, the Purchaser shall be
entitled to receive a warrant to purchase up to 100,000 shares of Common Stock (the “Warrant”).
The Warrant shall contain an exercise price of $0.50 per share and be exercisable for a period of
five years from the Closing Date. The shares issuable upon exercise of the Warrant (the “Warrant
Shares”) shall contain registration rights identical to those of the Conversion Shares as described
below.



     3. CLOSING. The closing of the purchase and sale of the Note (the “Closing”) shall
take place on October 26, 2005, or such other day as agreed to by the parties (the “Closing Date”).



     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 and
the Note (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; and (vii) 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



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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 Note and the Warrant 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 applicability
relating to or affecting creditors’ rights and to general equity principles.




          (d) Capitalization. The authorized capital stock of the Company consists of
95,000,000 shares of Common Stock, par value $0.001 per share, 24,545,723 shares of which
were issued and outstanding as of October 21, 2005, and 5,000,000 shares of authorized
Preferred Stock, par value $0.001 per share, of which 316,000 are issued and outstanding as
of October 21, 2005. The shares of Common Stock issuable pursuant to this Agreement and the
Warrant (together, the “Shares”) have been duly and validly authorized and reserved for
issuance and, when issued and delivered in accordance with the terms of this Agreement and
the Warrant, will be duly and validly issued, fully paid and non-assessable.




          (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) a copy of the Company’s prospectus filed on September 20, 2005 (the
“Prospectus”), and a registration statement on Form SB-2 as filed with the SEC on April 22,
2005, as amended on June 27, 2005, July 21, 2005, August 17, 2005, August 31, 2005 and on
September 2, 2005 (together, the “SEC Documents”).




          (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 Note and the
Shares 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 Note and the Shares as contemplated by this Agreement.



     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. (i) 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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          (ii) The Purchaser understands the fundamental risks of the Note and the
Shares; has determined that he/she/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 Note
and the shares of Common Stock will not cause such overall commitment to become
excessive; and, that the Purchaser is able to bear the economic risk of the Note
and the shares of Common Stock, including the loss of the entire value of its
investment. Additionally, the Purchaser understands that the Note and the Company’s
Common Stock are not listed on any Stock Exchange in the United States, Canada or
elsewhere; that there is currently no market through which the Note or the shares of
Common Stock may be traded; and, that there are restrictions on the Purchaser’s
right to liquidate the Note and the Shares.




          (iii) The Purchaser has reviewed the Risk Factors section included in the
Prospectus, 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 Note
and the Shares and (c) is currently not profitable.




          (iv) 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 Note and the Shares.




          (v) 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.




          (vi) The Purchaser is an “accredited investor” within the meaning of Regulation
D under the Securities Act.




          (vii) The Purchaser is acquiring the Note and the Shares for investment
purposes only without intent to distribute the same, and acknowledges that the Note
and the Shares have not been registered under the Securities Act and applicable
state securities laws, and accordingly, constitute “restricted securities” for
purposes of the Securities Act and such state securities laws until such time as a
registration statement covering the Shares is declared effective by the SEC and the
states in which the registration statement is filed.




          (viii) The Purchaser acknowledges that it will not be able to transfer the Note
and the Shares except upon compliance with the registration requirements of the
Securities Act and applicable state securities laws or exemptions therefrom.



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          (ix) The certificates and/or instruments evidencing the Note and the Shares
will contain a legend to the foregoing effect until such time as a registration
statement covering the Shares is declared effective by the SEC.



     5. REGISTRATION RIGHTS.



          5.1 Subject to the terms and conditions of this Agreement, the Company shall prepare and file,
no later than forty five (45) days from the Closing Date (the “Scheduled Filing Deadline”), with
the SEC a registration statement on Form S-1 or SB-2 (or, if the Company is then eligible, on Form
S-3) under the 1933 Act (the “Initial Registration Statement”) for the registration for the resale
by the Purchaser of the Shares (together, the “Registrable Securities”). The Company shall cause
the Registration Statement to remain effective until the earlier of (i) the Registrable Securities
have been sold, or (ii) the date the Registrable Securities become eligible for sale without
restriction under Rule 144(k) promulgated under the Securities Act of 1933.




          5.2 Effectiveness of the Initial Registration Statement. The Company shall use its
best efforts (i) to have the Initial Registration Statement declared effective by the SEC no later
than one hundred eighty (180) days after the filing thereof (the “Scheduled Effective Deadline”)
and (ii) to ensure that the Initial Registration Statement and any subsequent Registration
Statement remains in effect until all of the Registrable Securities have been sold, subject to the
terms and conditions of this Agreement, but not later than the point in time that Section 144(k)
becomes available for resale of the Registrable Securities.




          5.3 If and whenever the Company is required by the provisions of this Section 5 to effect the
registration of the Shares under the Securities Act, the Company will:




               Furnish to the Purchaser such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as the Purchaser may reasonably
request in order to facilitate the sale of such shares;



               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;



               Notify the Purchaser promptly of any request by the Commission for the amending or
supplementing of such registration statement or prospectus or for additional information;



               Prepare and promptly file with the Commission 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



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untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances in which they were
made, not misleading; and



               Advise the Purchaser, promptly after it shall receive notice or obtain knowledge thereof, of
the issuance of any stop order by the Commission suspending the effectiveness of such registration
statement or the initiation or threatening of any proceeding for that purpose and promptly use its
best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop
order should be issued.



          5.4 With respect to a registration required pursuant to this Section 5, all fees, costs and
expenses of and incidental to such registration, shall be borne by the Company, including all
registration, filing, printing expenses, fees and disbursements of counsel and accountants for the
Company, and all legal fees and disbursements and other expenses of complying with state securities
or blue sky laws of any jurisdictions in which the Shares to be offered are to be registered and
qualified. Fees and disbursements of counsel and accountants for the participating Purchaser and
any other expenses incurred by the Purchaser shall be borne by the Company; provided that
the fees and disbursements of counsel to the Purchaser shall not exceed $5,000 in connection with a
registration required under this Section 5.




          5.5 The Company will indemnify and hold harmless the Purchaser and any underwriter for such
Purchaser from and against, and will reimburse such Purchaser and each such underwriter with
respect to, any and all loss, damage, liability, cost and expense to which such Purchaser or any
such underwriter may become subject under the Securities Act or otherwise, insofar as such losses,
damages, liabilities, costs or expenses are caused by any untrue statement or alleged untrue
statement of any material fact contained in such registration statement, any prospectus contained
therein or any amendment or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances in which they were made, not misleading;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, damage, liability, cost or expenses arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission so made in conformity
with information furnished by such Purchaser or such underwriter in writing for use in the
preparation thereof.




          5.6 The Purchaser will indemnify and hold harmless the Company, any successor entity of the
Company, its directors and officers, any controlling person and any underwriter from and against,
and will reimburse the Company, its directors and officers, any controlling person and any
underwriter with respect to, any and all loss, damage, liability, cost or expense to which the
Company or any controlling person and/or any underwriter may become subject under the Securities
Act or otherwise, insofar as such losses, damages, liabilities, costs or expenses are caused by any
untrue statement or alleged untrue statement of any material fact contained in such registration
statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be




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stated therein or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading, in each case to the extent
that such untrue statement or alleged untrue statement or omission or alleged omission was so made
in reliance upon and in conformity with written information furnished by or on behalf of such
Purchaser for use in the preparation thereof. The maximum aggregate liability of each Purchaser
pursuant to its indemnification obligations under this Section 5 shall not exceed the portion of
the Purchase Price paid by such Purchaser hereunder.



          Promptly after receipt by an indemnified party pursuant to the provisions of Sections 5.5 or
5.6 above of notice of the commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to be made against the
indemnifying party pursuant to the provisions of said Sections 5.5 or 5.6, promptly notify the
indemnifying party of the commencement thereof; but the omission to so notify the indemnifying
party will not relieve it from any liability which it may have to any indemnified party otherwise
than hereunder. In case such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall have the right to
assume the defense thereof, with counsel reasonably satisfactory to such indemnified party.




     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



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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 Note to be purchased and sold pursuant to this Agreement and any Shares issued shall
be endorsed with the legends set forth below, and the Purchaser on behalf of itself and each holder
of the Note covenants that, except to the extent such restrictions are waived by the Company, it
shall not transfer the Note or Shares without complying with the restrictions on transfer described
in the legends endorsed on such Note or certificate:




     (a) The following legend under the Securities Act:



“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 Note or the Shares, the legend required by such state authority.




     (c) The legend set forth above shall be removed from the Shares and the Company shall
within two (2) business days issue a certificate without such legend to the holder of the
Shares upon which it is stamped, if, unless otherwise required by state securities laws, (i)
in connection with a sale transaction, provided the Shares 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 Shares may be made without
registration under the Securities Act. The legend set forth above shall be removed from the
Shares and the Company shall



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issue a certificate without such legend to the holder of the
Shares immediately upon the registration of the Shares under the Securities Act in
accordance with this Agreement.



     6.3 Costs and Expenses. The Company shall reimburse Purchaser for its reasonable
legal fees and expenses in connection with the purchase of the Note. 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.



     6.7 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.



     6.8 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 Gallagher, Briody & Butler 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.



     6.9 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.



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     6.10 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	 	 
	 

	 	 	 	6 East River Piers, Suite 216	 	 
	 

	 	 	 	Downtown Manhattan Heliport	 	 
	 

	 	 	 	New York, NY 10004	 	 
	 

	 	 	 	Attn.: John G. Murphy, President	 	 
	 

	 	 	 	Telephone: 212-248-2002	 	 
	 

	 	 	 	Fax: 212-248-0940	 	 
	 
	 	 	 	 	 	 
	 

	 	With a copy to:
	 	Gallagher, Briody & Butler	 	 
	 

	 	 	 	155 Village Boulevard	 	 
	 

	 	 	 	2nd Floor	 	 
	 

	 	 	 	Princeton, New Jersey 08540	 	 
	 

	 	 	 	Attn: Thomas P. Gallagher, Esq.	 	 
	 

	 	 	 	Telephone: 609-452-6000	 	 
	 

	 	 	 	Fax: 609-452-0090	 	 
	 
	 	 	 	 	 	 
	 

	 	If to the Purchaser:
	 	Portfolio Lenders II, LLC	 	 
	 

	 	 	 	c/o Gallagher, Briody & Butler	 	 
	 

	 	 	 	155 Village Boulevard	 	 
	 

	 	 	 	2nd Floor	 	 
	 

	 	 	 	Princeton, New Jersey 08540	 	 
	 

	 	 	 	Attn: Thomas P. Gallagher, Esq.	 	 
	 

	 	 	 	Telephone: 609-452-6000	 	 
	 

	 	 	 	Fax: 609-452-0090	 	 






     6.11 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.



     6.12 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



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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 Note 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 Note (or if the Note has 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 Note 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.



[The remainder of this page is intentionally left blank.]




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     IN WITNESS WHEREOF, this Agreement has been duly executed as of the day and year first above
written.



	 	 	 	 	 
	 	U. S. HELICOPTER CORPORATION

 	 
	 	By:  	   /s/ John G. Murphy
 	 
	 	 	John G. Murphy 	 
	 	 	Chief Executive Officer and President 	 
	 



	 	 	 	 	 
	 	PORTFOLIO LENDERS II, LLC

 	 
	 	By:  	/s/ Thomas P. Gallagher
 	 
	 	 	Thomas P. Gallagher 	 
	 	 	Authorized Officer 	 
	 




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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




October 26, 2005




Two Hundred Fifty Thousand Dollars

15% NOTE





     FOR VALUE RECEIVED, U.S. HELICOPTER CORPORATION, a Delaware corporation (the “Company”) hereby
promises to pay to the order of PORTFOLIO LENDERS II, LLC (the “Holder”), or its registered
assigns, the principal sum of TWO HUNDRED FIFTY THOUSAND DOLLARS AND 00/100 ($250,000.00), and to
pay interest from the date hereof on the outstanding principal sum at the rate of 15% per annum
based on a 360-day year, such interest to accrue from the date hereof (the “Closing Date”). The
Note shall bear interest at the rate of 15% per annum based on a 360-day year, which shall be paid
by the Company in advance on the Closing Date. The interest paid shall be non-refundable in the
event of early repayment. The principal and accrued but unpaid interest shall be paid in full as
follows: (a) $150,000 shall be repaid by the Company within two business days after the closing
date of an investment of at least $2 million in the Company by a potential investor currently in
negotiations with the Company; and (b) all remaining sums due and payable shall be repaid by the
Company on the earliest of (1) two business days after the closing date of a second investment of
at least $2 million by a second potential investor currently in negotiations with the Company; (2)
the date which the Company draws down its first advance under an Amended & Restated Standby Equity
Distribution Agreement with Cornell Capital Partners, LP; and (3) 120 days from the Closing Date
(the “Maturity Date”).



     This Note is an authorized issue of a $250,000 15% Note of the Company (the “Note”) issued
pursuant to a Note Purchase Agreement dated as of October 26, 2005 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. CONVERSION RIGHTS. The principal and any and all interest payable on this Note
shall be convertible, at the option of either the Holder, at any time into shares of Company Common
Stock at $0.50 per share.



     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
three 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; or




     (c) 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. Upon the occurrence of an Event of Default:




     (a) specified in clause (c) of Section 2, then the Note shall be automatically
accelerated and immediately due and payable at the option of Holder, without notice or
demand;




     (b) specified in clauses (a) or (b) of Section 2, then the Holder may declare the Note
immediately accelerated due and payable; and




     (c) 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.




     (d) Upon the occurrence of an Event of Default, the outstanding principal under the
Note shall bear interest at a rate of 20% per annum, based on a 360-day year and calculated
from the date of the Event of Default.



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     4. REGISTRATION RIGHTS. The Holder of this Note shall have the registration rights
pertaining to the shares issuable upon conversion of this Note as described in the Note Purchase
Agreement.



     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. The Company hereby waives presentment, demand, notice,
protest and all other demands and notices 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 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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     IN WITNESS WHEREOF, the Company has executed this Note as of the day and year set forth above.



	 	 	 	 	 	 	 
	 	 	U.S. HELICOPTER CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

John G. Murphy
	 	 
	 

	 	 	 	Chief Executive Officer and President	 	 






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