Promissory Note dated January 11, 2007 from DPMG, Inc. to Key Equipment Finance Inc., in the amount of $3,900,000.00

EX-10.19 20 ex10-19.htm EXHIBIT 10.19 KEY BANK PROMISSORY NOTE ex10-19.htm

Exhibit 10.19

C#: 000522170

L#: 000521641

PN#: 8800545597

	Promissory Note Aircraft Loan
$3,900,000.00	Funding Date: January 11, 2007

FOR VALUE RECEIVED, DPMG, INC., ("Maker"), promises to pay to the order of Key Equipment Finance Inc., ("Holder"), the sum of $3,900,000.00 in lawful money of the United States of America (the "Principal"), with interest thereon as hereafter provided ("Interest"), to be paid in the manner set forth herein. This Note is executed pursuant to and is secured by, the Collateral pledged under that certain aircraft security agreement (the "Aircraft Security Agreement") dated as of January 11, 2007 between Maker as grantor and Holder as secured party. Capitalized terms used herein without definition shall have the meaning given them in the Aircraft Security Agreement.

1. Interest Rate; Closing Rate Adjustment; Place of Payment. (a) Interest on the balance of the Principal outstanding on this Note shall accrue from the Funding Date of this Note and shall be due and payable at a rate of 6.83% per annum (the "Interest Rate") which rate shall be immediately and correspondingly adjusted (pursuant to 2(b) hereof) with each change in the Actual Index (as hereinafter defined). Interest shall be calculated on the basis of a 360-day year consisting of twelve 30-day months.

(b) The Interest Rate has been calculated on the assumption that the LIBOR Rate as reported in the Wall Street Journal on the Funding Date (the “Assumed LIBOR Rate”) will be 5.32%. If the LIBOR rate on the Funding Date is different from the Assumed LIBOR Rate, Holder shall make a one time adjustment to the Interest Rate on the Funding Date by increasing or decreasing, as applicable, the Interest Rate by one (1) basis point for every one (1) basis point change in the LIBOR Rate from the Assumed LIBOR Rate. Maker authorizes Holder to change the amount of the Interest Rate in the Note accordingly. Holder shall notify Maker in writing of such adjustment which shall remain in effect while any indebtedness exists under the Note.

(c) Payment of the Principal and Interest hereunder shall be made to Holder at 66 South Pearl Street, Post Office Box 1865, Albany, NY ###-###-####, or at such other place as Holder may designate from time to time in writing. Holder reserves the right to require payment on this Note to be made by wired federal funds or other immediately available funds.

2. Repayment Terms. (a) Maker shall repay the Principal and Interest hereunder in the installments set forth below. Each installment shall be due and payable on the first day of each month during which any amount remains outstanding hereunder (each such date being a "Note Payment Date") as follows:

(i) If the Funding Date occurs on the first day of the month, Maker shall pay Holder 84 consecutive Monthly installments payable in arrears, each in an amount equal to $34,916.63 commencing and payable on the next Note Payment Date after the Funding Date and on each succeeding Note Payment Date thereafter;

(ii) If the Funding Date occurs on any day other than the first day of the month, then (A) on the first Note Payment Date after the Funding Date, an amount equal to $739.92 per day as interim interest for the period from the Funding Date through and including the last day of the month in which the Funding Date occurs, which interim interest was calculated by Holder using the Assumed Index plus 151 basis points and is expressly not subject to adjustment pursuant to Section 2(b) hereof; plus (B) 84 consecutive Monthly installments payable in arrears, each in an amount equal to $34,916.63 commencing and payable on the second Note Payment Date following the Funding Date and on each succeeding Note Payment Date thereafter;

PLUS

(iii) On the 84 and final Note Payment Date, the Balloon Payment. In addition, Maker will pay a late payment charge of five percent of any payment due hereunder that is not paid on or before ten (10) days after the date due hereunder.

(b) Maker and Holder agree that each monthly installment hereunder will be increased or decreased (but not below zero), as the case may be, by the Rate Differential as follows: if, as of any Note Payment Date, (i) the Rate Differential is greater than zero, the amount due on such Note Payment Date shall be increased by such Rate Differential, and (ii) if the Rate Differential is less than zero, the amount of the Note Payment due on such Note Payment Date shall be decreased by such Rate Differential.

(i) “Assumed Index” means 5.32%

(ii) “Actual Index” means, as of the date of determination, the London interbank offered rate for deposits in United States dollars having a maturity of one month which appears in the "Money Rates" section of The Wall Street Journal, published on the business day on, or immediately prior to, the 28th day of the month immediately preceding such calendar month. If the Actual Index is no longer available, Holder will choose a new index which is based upon comparable information and will give Maker notice of such new "Actual Index."

(iii) “Balloon Payment” means $2,535,000.00.

(iv) “Net Investment Balance” means, as of the date of determination, the outstanding balance (calculated using the Assumed Index plus 151 basis points) reflected on Holder’s accounting system (which assumes a 360 day year consisting of twelve 30 day months), for the Note Payment Date immediately preceding such day or, if such day is a Note Payment Date, for such Note Payment Date.

(v) “Rate Differential” means, with respect to any Note Payment Date, the product of the following formula:

Rate Differential = Actual Index - Assumed Index x Net Investment Balance

3. Security. Payment of the Principal and Interest hereunder, and the performance and observance by Maker of all agreements, covenants and provisions contained herein, is secured by a first priority security interest in the Collateral.

4. Prepayment. Except as contemplated by Section 3.1 of Article 3 of the Aircraft Security Agreement, Maker may not prepay, in whole or in part, the Principal outstanding hereunder; provided, however, Maker may prepay, on any Note Payment Date and in whole but not in part, the Principal outstanding hereunder including the Balloon Payment by paying to Holder such outstanding Principal, together with all accrued and unpaid interest thereon as of the date of payment, plus all fees or charges incurred by Holder in connection with such prepayment, including, without limitation, Holder’s reasonable attorney fees and expenses, FAA counsel fees and expenses, filing, registration and recording fees or charges of the FAA, International Registry and the UCC and any applicable taxes (but excluding internal costs to Holder related to such prepayment), plus a prepayment premium ("Prepayment Premium") equal to a percentage of the outstanding Principal including the Balloon Payment calculated as follows:

Months	Prepayment Premium
1 - 12	1.00%
13 – 24	0.50%
25 – End of Term	0.00%

Notwithstanding anything to the contrary contained herein or in the Aircraft Security Agreement, Holder will waive its right to require payment of the Prepayment Premium if (a) Maker wishes to prepay the outstanding principal hereunder in connection with Maker’s acquisition of a new aircraft, and (i) Maker wishes to finance the purchase of such new aircraft through Holder, and (ii) Holder in its sole discretion determines that it approves of the then credit-worthiness of Maker, the new aircraft, and all aspects of the financing of the new aircraft, and (iii) Maker enters into a new promissory note and aircraft security agreement for the benefit of and on terms satisfactory to Holder to finance such new aircraft; or (b) after the twelfth (12th) Note Payment Date, Maker exercises the option to make no more than one (1) annual additional principal reduction payment without penalty, provided that such payment shall be equal to or greater than five percent (5%) of the original Principal balance of this Note and the cumulative amount of all such prepayments under this Section 4 (b) during the term hereof, shall not exceed twenty-five percent (25%) of the original Principal balance of this Note.

5. Transfer or Assignment. Holder may at any time assign or otherwise transfer or negotiate this Note in whole or in part, without any notice to Maker. The rights and obligations of Maker may not be assigned or delegated.

6. Application of Payments. Prior to an Event of Default, each payment received on this Note shall be applied first to all costs of collection, then to unpaid late payment charges (if any) and Prepayment Premium (if any) hereunder, then to Interest as of the payment due date and the balance, if any, to the outstanding Principal as of the date received. Upon the occurrence, and during the continuance, of an Event of Default, any payments in respect of the Liabilities and any proceeds of the Collateral when received by Holder in cash or its equivalent, will be applied first to costs of collection and, thereafter, in reduction of the Liabilities in such order and manner as Holder may direct in its sole discretion, and Maker irrevocably waives the right to direct the application of such payments and proceeds and acknowledges and agrees that Holder shall have the continuing and exclusive right to apply any and all such payments and proceeds in the Holder's sole discretion, notwithstanding any entry to the contrary upon any of its books and records.

7. Events of Default. (a) Maker shall be in default if any of the following happens (an "Event of Default"): (1) Maker fails to make any installment of the Principal or Interest, or any other payment due and owing, under this Note within ten (10) days after the same becomes due and payable; or (2) Maker fails to perform any other obligation required to be performed by Maker under this Note, the Aircraft Security Agreement or any of the other Loan Documents for thirty (30) days after written notice from Holder of such failure; or (3) any representation, warranty or other statement by or on behalf of Maker in connection with this Note is false or misleading in any material respect; or (4) an Event of Default has occurred and is continuing under the Aircraft Security Agreement.

(b) Notwithstanding anything to the contrary contained herein, upon the occurrence of an Event of Default, Holder may declare the entire outstanding balance of the Principal, together with all accrued and unpaid Interest thereon, immediately due and payable without notice or demand which amounts shall, together with all other sums due hereunder, accrue interest from such acceleration until the date of actual payment at the Default Rate ("Default Rate" shall mean an annual interest rate equal to the lesser of 18% or the maximum interest rate permitted by Applicable Law). Should there occur an Event of Default, and if a voluntary or involuntary petition under the United States Bankruptcy Code is filed by or against Maker while such default remains uncured, the entire outstanding balance of the Principal automatically shall be accelerated and due and payable with interest thereon at the Default Rate and Holder may exercise any and all of its remedies hereunder, under the other Loan Documents and under Applicable Law ("Applicable Law" shall mean all applicable Federal, state, local and foreign laws, ordinances, judgments, decrees, injunctions, writs, rules, regulations, orders, licenses, and permits of any governmental agency). The remedies of Holder provided herein, in the Aircraft Security Agreement and under Applicable Law shall be cumulative and concurrent and may be pursued singly, successively or concurrently at the sole discretion of Holder and may be exercised as often as occasion therefor shall occur. The failure to exercise, or any delay in the exercise of, any right or remedy shall in no event be construed as a waiver, release or exhaustion of any such remedies.

8. Collection Costs. In addition to the Principal, Interest, Prepayment Premium (if any), and late payment charges (if any), Maker shall pay Holder on demand, and Holder shall be entitled to collect all costs and expenses of collection, including, without limitation, reasonable attorneys' fees, incurred in connection with enforcement of its rights and remedies hereunder and under the other Loan Documents, the protection or realization of the Collateral or in connection with Holder's collection efforts, or in connection with any bankruptcy or other judicial proceeding, whether or not suit on this Note or any foreclosure proceeding is filed. All such costs and expenses shall be payable on demand and, until paid, shall be Liabilities secured by the security interest granted under the Aircraft Security Agreement and all other collateral, if any, held by Holder as security for Maker's obligations under this Note.

9. Governing Law; Binding Agreement. The provisions of this Note shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and assigns. THIS NOTE, THE AIRCRAFT SECURITY AGREEMENT AND OTHER LOAN DOCUMENTS ARE BEING DELIVERED IN THE STATE OF NEW YORK AND SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAWS PROVISION OR RULE (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.

10. More than One Signer. If more than one person or entity signs this Note as a Maker, the obligations contained herein shall be deemed joint and several and all references to "Maker" shall apply both jointly and severally.

11. General. Maker represents and warrants that this Note evidences a loan for business or commercial purposes. Prior to signing this Note, Maker read and understood the provisions hereof, and agrees to all terms and conditions contained herein.

12. Waiver. MAKER AND ALL ENDORSERS, SURETIES, AND GUARANTORS HEREOF HEREBY JOINTLY AND SEVERALLY WAIVE PRESENTMENT FOR PAYMENT, DEMAND, NOTICE OF NON-PAYMENT OR DISHONOR, NOTICE OF INTENTION TO ACCELERATE THE MATURITY, NOTICE OF PROTEST AND PROTEST OF THIS NOTE. HOLDER AND MAKER HEREBY EACH WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS NOTE, THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION OR PROCEEDING TO WHICH HOLDER OR MAKER MAY BE PARTIES, WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE, INCLUDING WITHOUT LIMITATION ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY, OF THIS NOTE OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER IS MADE KNOWINGLY, WILLINGLY AND VOLUNTARILY BY HOLDER AND THE MAKER WHO EACH ACKNOWLEDGE THAT NO REPRESENTATIONS HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS NOTE AND THE OTHER LOAN DOCUMENTS.

13. Usury; Partial Invalidity. (a) At no time shall the Interest Rate (or the Default Rate or other amounts paid or collected hereunder) exceed the highest rate allowed by applicable law for this type of loan. Should Holder ever collect interest at a rate that exceeds such applicable legal limit, such excess will be credited to the Principal.

(b) Whenever possible, each provision of this Note shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Note shall be prohibited by or invalid under the laws of any applicable jurisdiction, such provision, as to such jurisdiction, shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Note in any other jurisdiction.

14. Notices. All notices and other communications under this Note shall be in writing and shall be addressed: (a) if to Maker, 2817 Crain Hwy, Upper Marlboro, MD 20774-8968; and (b) if to Holder Key Equipment Finance Inc., 7th Floor, 66 South Pearl Street, Albany, NY 12207, Attention: Customer Service, or such other address as either party hereto shall communicate to the other party at its address specified above. All such notices and other communications shall be deemed to have been duly given if delivered by hand, overnight courier or if sent by certified mail, return receipt requested, to the party to whom such notice is intended to be given, and shall be effective upon receipt.

15. Funding Date. The Funding Date for this Note shall be the date on which Holder disburses funds hereunder. TO THE EXTENT THE FUNDING DATE IS LEFT BLANK ABOVE, OR DOES NOT REFLECT THE ACTUAL DATE THAT HOLDER DISBURSES FUNDS HEREUNDER, MAKER HEREBY AUTHORIZES HOLDER TO WRITE IN THE CORRECT DATE AT THE TIME OF DISBURSEMENT.

(Signature Page Follows)

IN WITNESS WHEREOF, Maker, intending to be legally bound, has caused this Note to be duly executed on the day and year first above written.

MAKER:

DPMG, INC.

Signature: /S/ JOE OLREE

Print Name: Joe Olree

Title: Vice President