8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities and Exchange Act of 1934

Date of report (Date of earliest event reported): September 20, 2018

PHI, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Louisiana	0-9827	72-0395707
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)

2001 SE Evangeline Thruway, Lafayette, Louisiana	70508
(Address of Principal Executive Offices)	(Zip Code)

(337) 235-2452

(Registrant’s Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 1.01 Entry into a Material Definitive Agreement.

A.    New Term Loan. On September 28, 2018, PHI, Inc. (“PHI” or the “Company”) entered into a term loan agreement (the “Term Loan Agreement”) by and among the Company, as borrower, PHI Air Medical, L.L.C. and PHI Tech Services, Inc., as guarantors (the “Subsidiary Guarantors”), and Thirty Two, L.L.C., as lender (the “Lender”). The Lender is wholly-owned by Al A. Gonsoulin, the Company’s Chairman of the Board, Chief Executive Officer and controlling shareholder. The Subsidiary Guarantors are wholly-owned subsidiaries of the Company.

Contemporaneously with entering into the Term Loan Agreement, the Company borrowed $130.0 million under a senior secured term loan (the “Loan”) evidenced by a promissory note payable to the Lender (the “Note”). The proceeds from the Loan were applied to (i) repay approximately $122.7 million of principal and accrued interest under the Company’s senior secured revolving credit facility, which was terminated in connection with such repayment, and (ii) cash collateralize approximately $7.7 million of the Company’s outstanding letters of credit, which will remain outstanding following consummation of the transactions described herein.

The Company is required to pay interest on the Note quarterly in arrears, beginning on December 31, 2018, with a balloon payment of all principal and all accrued but unpaid interest due on September 28, 2020. The Company is permitted to prepay any outstanding amount of the Loan at any time without penalty or premium. The Loan will accrue interest at a rate per annum of 6%, computed on the basis of the actual number of days elapsed over a 360-day year comprised of twelve 30-day calendar months. Pursuant to the terms of the Note, after maturity of the Loan or following the occurrence of an event of default under the terms of the Loan Agreement, interest will accrue on the outstanding principal amount of the Loan at a rate per annum that is 2% in excess of the interest rate otherwise payable, or 8% (the “Default Rate”), subject to applicable law.

Obligations under the Loan Agreement are jointly, severally, solidarily and unconditionally guaranteed by the Subsidiary Guarantors pursuant to a guaranty agreement dated September 28, 2018, entered into by the Subsidiary Guarantors in favor of the Lender (the “Guaranty Agreement”). The Company’s obligations under the Term Loan Agreement and the Subsidiary Guarantors’ guaranty obligations under the Guaranty Agreement are secured by a perfected security interest in all of their respective inventory, spare parts and accounts receivable located in the U.S., in each case now owned or later acquired by them and including all interest, income and fruits thereof, pursuant to a security agreement dated September 28, 2018, entered into by the Company and the Subsidiary Guarantors in favor of the Lender (the “Security Agreement”).

The Term Loan Agreement contains customary restrictive covenants that, subject to certain exceptions and limitations, limit or restrict the Company’s ability to, among other things, (i) purchase, retire or redeem any shares of its capital stock; (ii) incur indebtedness; (iii) mortgage or encumber its assets; (iv) make loans to, or guarantee the indebtedness of, any individual or entity; (v) effect a change of control of the Company; (vi) consolidate with or merge into any other corporation, or permit any other corporation to merge into the Company; (vii) sell or lease all or substantially all of the Company’s assets; or (viii) acquire all or a substantial part of the assets or capital stock of another entity. The Term Loan Agreement contains no financial covenants.

The Term Loan Agreement contains customary representations and warranties, affirmative covenants and events of default. Upon an event of default, in addition to the imposition of the Default Rate, the Lender is entitled, subject to certain limitations, to declare the Loan, the Note and all other obligations of the Company to the Lender immediately due and payable and to take all actions permitted to be taken by a secured creditor.

In connection with unanimously approving the Term Loan Agreement, the Company’s independent directors received an opinion issued by a nationally-recognized financial advisory firm that the Loan is fair to the Company from a financial point of view.

Over the past several months, the Company discussed its refinancing alternatives with various financial advisory firms and potential lenders or investors, but was unable to identify any unaffiliated party willing to unconditionally lend funds to the Company on terms as advantageous to it as those offered by the Lender.

For additional information about the Company’s affiliations with Mr. Gonsoulin, who controls the Lender, please see the Company’s Information Statement filed on Schedule 14C on April 10, 2018 with the U.S. Securities and Exchange Commission.

The full text of each of the Term Loan Agreement, the Note, the Guaranty Agreement and the Security Agreement is filed as Exhibits 10.1, 10.2, 10.3 and 10.4, respectively, to this current report on Form 8-K, and each is incorporated into this Item 1.01 by reference. The foregoing description of the Term Loan Agreement, the Loan, the Note, the Guaranty Agreement and the Security Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of Exhibit 10.1, 10.2, 10.3 or 10.4, respectively.

B.    Other Information. In reviewing the Term Loan Agreement, the Guaranty Agreement and the Security Agreement included as exhibits to this report, please note that such agreements are included to provide you with information regarding the terms of the Loan and are not intended to provide any other factual or disclosure information about the Company. The Term Loan Agreement, the Guaranty Agreement and the Security Agreement contain representations and warranties by one or more of the parties thereto. These representations and warranties have been made solely for the benefit of the other parties to the Term Loan Agreement, the Guaranty Agreement and the Security Agreement and:

• should not in any instance be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;

• may have been qualified by disclosures that were made to the other parties in connection with the negotiation of such agreement, which disclosures are not necessarily reflected in the agreement filed herewith;

• may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and

• were made only as of the date of the agreement or such other date or dates as may be specified therein and are subject to more recent developments.

Accordingly, you should be aware that these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time.

Item 1.02 Termination of Material Definitive Agreement.

As noted in Item 1.01 above, on September 28, 2018, the Company terminated its Second Amended and Restated Loan Agreement dated as of September 18, 2013, as amended, by and among the Company, PHI Air Medical, L.L.C, successor to Air Evac Services, Inc., PHI Tech Services, Inc. (formerly Evangeline Airmotive, Inc.), International Helicopter Transport, Inc. and Whitney National Bank.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information set forth in Item 1.01 above is incorporated by reference into this Item 2.03.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

(e) In an effort to ensure continuity of its business and senior leadership teams through the completion of the strategic alternatives review process discussed below in Item 7.01, the Company has adopted retention programs for certain officers and key employees of the Company and its subsidiaries. Included in these arrangements is a retention plan that was approved by the Compensation Committee (the “Committee”) of the Company’s Board of Directors on September 20, 2018 (the “Plan”). The Committee has designated each of the Company’s five named executive officers – Al A. Gonsoulin, Chairman of the Board and Chief Executive Officer; Lance F. Bospflug, President and Chief Operating Officer; Trudy P. McConnaughhay, Chief Financial Officer and Secretary; James Hinch, Chief Administrative Officer; and David F. Stepanek, President – PHI Oil & Gas, Gulf of Mexico (together, the “Named Executive Officers”) – as a participant in the Plan.

Under the Plan, upon certain changes of control of the Company (as defined in the Plan, a “Change of Control”), each participant would be entitled to full acceleration of any outstanding equity awards and a pro rata payout of his or her annual bonus for the year in which the Change of Control occurs. For the pro rata bonus and any performance-based equity awards, the payout would be calculated assuming target performance was achieved.

In addition, the Plan provides each participant with certain employment protections for a designated period of time following a Change of Control (as defined in the Plan, the “Protected Period”). The Protected Period for each of Messrs. Gonsoulin and Bospflug is 36 months while the Protected Period for each other Named Executive Officer is 24 months. Among other things, the participant’s base salary, annual bonus opportunity, long-term incentive awards, and health and welfare benefits may not be decreased during the Protected Period. Further, the participant’s title, duties, authority, and reporting relationship may not be materially diminished and the participant may not be required to relocate more than 50 miles from his or her primary pre-Change of Control work location without his or her written consent.

Under the Plan, if either the Company terminates a participant without cause or he or she terminates employment with good reason, the participant will be entitled to receive a lump sum severance payment. This severance payment, which would be payable within 30 days following termination of employment, would be equal to three (in the case of Messrs. Gonsoulin and Bospflug) or two (in the case of each other Named Executive Officers) times the sum of (i) the participant’s annual base salary, (ii) the participant’s annual target bonus, and (iii) the annual value of the employer portion of the participant’s health and welfare premiums.

The Plan stipulates that participants are not entitled to any tax gross-ups for excise taxes that may be triggered under Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended. However, each participant would be entitled to receive the “best net” treatment, which means that if the total of all change of control payments due the participant exceeds the threshold that would trigger the imposition of excise taxes, the participant will either (1) receive all payments and benefits due him or her and be responsible for paying all such taxes or (2) have the payments and benefits reduced such that imposition of the excise taxes is no longer triggered, depending on which method provides the participant with the better after-tax result.

The full text of the Plan is filed as Exhibit 10.5 to this current report on Form 8-K, and is incorporated into this Item 5.02 by reference. The foregoing description of the Plan does not purport to be complete and is qualified in its entirety by reference to the full text of Exhibit 10.5.

Item 7.01 Regulation FD Disclosure

On September 28, 2018, the Company issued a press release announcing that it has engaged Houlihan Lokey Capital, Inc. as its financial advisor to assist the Company in exploring and evaluating a broad range of potential strategic alternatives to improve the Company’s liquidity and enhance shareholder value.

At this time, the Company’s Board has not set a timetable for the completion of this process, nor has it made any decisions related to specific strategic alternatives. There is no assurance that this process will result in any particular outcome. The Company does not intend to provide any updates on its process unless or until it determines that further disclosure is necessary or appropriate.

A copy of the press release is attached to this current report on Form 8-K as Exhibit 99.1 and is incorporated into this Item 7.01 by reference.

Forward-Looking Statements

All statements other than statements of historical fact contained in this current report on Form 8-K are “forward-looking” statements, as defined by (and subject to the “safe harbor” protections under) the federal securities laws. When used herein, the words “anticipates,” “expects,” “believes,” “seeks,” “hopes,” “intends,” “plans,” “projects,” “views,” “will” and similar words and expressions are intended to identify forward-looking statements. Forward-looking statements are based on a number of judgments and assumptions as of the date such statements are made about future events, many of which are beyond PHI’s control. These forward-looking statements, and the assumptions on which they are based, (i) are not guarantees of future events, (ii) are inherently speculative and (iii) are subject to significant risks, uncertainties. Actual events and results may differ materially from those anticipated, estimated, projected or implied by us in those statements if one or more of these risks or uncertainties materialize, or if PHI’s underlying assumptions prove incorrect. All of PHI’s forward-looking statements are qualified in their entirety by reference to PHI’s discussion of certain important factors that could cause PHI’s actual results to differ materially from those anticipated, estimated, projected or implied by us in those forward looking statements.

Factors that could cause PHI’s results to differ materially from the expectations expressed in such forward-looking statements include, but are not limited to, the failure of our strategic review to identify attractive alternatives; changes in the capital markets or other market or financial conditions; corporate developments that could preclude, impair or delay any of the above-described transactions due to restrictions under the federal securities laws; changes in the credit ratings of PHI; changes in PHI’s cash requirements, financial position, financing plans or investment plans; changes in general market, economic, tax, regulatory or industry conditions that impact the ability or willingness of PHI to pursue or consummate any of the above-described transactions on the terms described above or at all; and other risks referenced from time to time in PHI’s filings with the U.S. Securities and Exchange Commission. There can be no assurances that any of the above-described transactions will be consummated on the terms described above or at all.

Additional factors or risks that PHI currently deems immaterial, that are not presently known to us, that arise in the future or that are not specific to us could also cause PHI’s actual results to differ materially from its expected results. Given these uncertainties, investors are cautioned not to unduly rely upon PHI’s forward-looking statements, which speak only as of the date made. PHI undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or developments, changed circumstances, or otherwise. Further, PHI may make changes to its plans at any time and without notice, based on any changes in the above-listed factors, PHI’s assumptions or otherwise.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits.

10.1	Loan Agreement., dated as of September 28, 2018, by and among Thirty Two, L.L.C., PHI, Inc., PHI Air Medical, L.L.C., and PHI Tech Services, Inc.
10.2	Promissory Note due September 28, 2020.
10.3	Guaranty Agreement, dated and effective as of September 28, 2018, by PHI Air Medical, L.L.C. and PHI Tech Services, Inc., in favor of Thirty Two, L.L.C.
10.4	Security Agreement, dated and effective as of September 28, 2018, by PHI, Inc., PHI Air Medical, L.L.C. and PHI Tech Services, Inc., in favor of Thirty Two, L.L.C.
10.5	PHI, Inc. Retention Plan
99.1	Press Release issued by PHI, Inc., dated September 28, 2018.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this Current Report to be signed on its behalf by the undersigned hereunto duly authorized.

	PHI, Inc.
Date: September 28, 2018	By:	/s/ Trudy P. McConnaughhay
		Trudy P. McConnaughhay
		Chief Financial Officer and Secretary

EX-10.1

Exhibit 10.1

EXECUTION VERSION

LOAN AGREEMENT

This LOAN AGREEMENT (this “Agreement”), dated and effective as of September 28, 2018 (the “Effective Date”), is by and among Thirty Two, L.L.C., a Nevada limited liability company (“Lender”), PHI, Inc., a Louisiana corporation, as borrower (“PHI”), PHI Air Medical, L.L.C., a Louisiana limited liability company, and PHI Tech Services, Inc., a Louisiana corporation, as guarantors (individually, collectively and interchangeably, the “Subsidiary Guarantors”).

The parties hereto agree as follows:

A. THE LOAN. On the date hereof Lender shall make available to PHI a secured term loan (the “Loan”) in the principal amount of ONE HUNDRED THIRTY MILLION AND NO/100 DOLLARS ($130,000,000.00). The Loan shall be evidenced by a promissory note (as amended, supplemented, restated or otherwise modified from time to time, the “Note”) payable to Lender and shall contain additional terms and conditions and be identified with this Agreement.

B. USE OF PROCEEDS. The proceeds from the Loan are to be used for the following purposes: refinance or repay existing debt and/or provide for general corporate purposes and other working capital expenditures. PHI is not engaged in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulation U). No proceeds of any advance will be used to purchase or carry any margin stock.

C. REPRESENTATIONS, WARRANTIES AND COVENANTS. PHI and, to the extent applicable, the Subsidiary Guarantors, represent, warrant and covenant to Lender that as of the date hereof and so long as the Loan shall be outstanding, that:

(1) Organization and Authorization.

(a) PHI is a validly organized corporation duly existing and in good standing under the laws of the State of Louisiana and is duly qualified as a foreign corporation in all jurisdictions wherein the property owned or the business transacted by it make such qualifications necessary, except where the failure to be so qualified would not have a material and adverse effect on the business or property of PHI. Within the last ten (10) years, PHI has not done business under any other name. PHI’s tax identification number is 72-0395707 and its domicile is 2001 SE Evangeline THWY, Lafayette, Louisiana 70508. PHI’s corporate charter number with the Secretary of State of Louisiana is 34472577D.

(b) PHI Tech Services, Inc. is a validly organized corporation duly existing and in good standing under the laws of the State of Louisiana and is duly qualified as a foreign corporation in all jurisdictions wherein the property owned or the business transacted by it make such qualifications necessary, except where the failure to be so qualified would not have a material and adverse effect on the business or property of PHI Tech Services, Inc. Within the last ten (10) years, PHI Tech Services, Inc. has not done business under any other name. PHI Tech Services, Inc.’s tax identification number is 72-0835089 and its domicile is 2001 SE Evangeline THWY, Lafayette, Louisiana 70508. PHI Tech Services, Inc.’s corporate charter number with the Secretary of State of Louisiana is 3236190D.

(c) PHI Air Medical, L.L.C. is a validly organized limited liability company duly existing and in good standing under the laws of the State of Louisiana and is duly qualified as a foreign limited liability company in all jurisdictions wherein the property owned or the business transacted by it make such qualifications necessary, except where the failure to be so qualified would not have a material and adverse effect on the business or property of PHI Air Medical, L.L.C. Within the last ten (10) years, PHI Air Medical, L.L.C. has

not done business under any other name except PHI Air Medical, Inc. and Air Evac Services, Inc. PHI Air Medical, L.L.C.’s tax identification number is 72-1404705 and its domicile is 2001 SE Evangeline THWY, Lafayette, Louisiana 70508. PHI Air Medical, L.L.C.’s corporate charter number with the Secretary of State of Louisiana is 34601740K.

(d) The execution, delivery and performance of this Agreement and all other documents delivered to Lender by PHI and the Subsidiary Guarantors, as applicable, have been duly authorized and do not violate their respective articles of incorporation, bylaws, articles of organization, operating agreements (or other governing documents), material contracts or any applicable law or regulations. PHI and PHI Air Medical, L.L.C. are each an air carrier certificated under 49 U.S.C. 44705 and shall comply with all rules and regulations of the Federal Aviation Administration.

(2) Compliance with Tax and Other Laws.

(a) PHI, the Subsidiary Guarantors and their respective subsidiaries shall comply with all laws that are applicable to its business activities, including, without limitation, all laws regarding (i) the collection, payment and deposit of employees’ income, unemployment, Social Security, sales and excise taxes, (ii) the filing of returns and payment of taxes, (iii) pension liabilities including ERISA requirements, (iv) environmental protection, and (iv) occupational safety and health.

(b) PHI, the Subsidiary Guarantors and their respective subsidiaries shall not permit or suffer any violation of any Environmental Law (as defined below) affecting the property it owns or leases, (collectively, the “Property”), and agree that upon discovery, or in the event, of any discharge, spill, injection, escape, emission, disposal, leak or any other-release of hazardous substances on, in, under, onto, or from the Property, which is not authorized by a currently valid permit or other approval issued by the appropriate governmental agencies, promptly notify Lender, and the appropriate governmental agencies, and shall take all steps necessary to promptly clean-up such discharge, spill, injection, escape, emission, disposal, leak or any other release in accordance with the provisions of all applicable Environmental Laws, and shall receive a certification from the Louisiana Department of Environmental Quality or federal Environmental Protection Agency, that the Property and any other property affected has been cleaned-up to the satisfaction of those agencies. The terms “Environmental Law” or “Environmental Laws” as used in this Agreement include any and all current and future federal, state and local environmental laws, statutes, rules, regulations and ordinances, as the same shall be amended and modified from time to time, including but not limited to the federal Comprehensive Environmental Response, Compensation and Liability Act, as amended from time to time, the Federal Resource Conservation and Recovery Act, as amended from time to time, and the federal Toxic Substances Control Act, as amended from time to time.

(3) Indenture. PHI represents, warrants and covenants to the Lender that the terms and conditions of this Agreement do not violate the Indenture, dated as of March 17, 2014, by PHI, as issuer, the guarantors party thereto, and U.S. Bank National Association, as trustee, governing the senior notes issued thereunder in the aggregate principal amount of up to FIVE HUNDRED MILLION and NO/100 DOLLARS ($500,000,000.00) (as amended, supplemented, restated, refinanced, replaced or otherwise modified from time to time, the, the “Senior Notes”), or any other document executed or to be executed in connection therewith (as all of the foregoing may be amended, supplemented, restated, refinanced, replaced or otherwise modified from time to time, the “Indenture”).

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(4) Litigation. To the best of PHI’s knowledge, after due inquiry, and except as disclosed in PHI’s most recently filed annual report on Form 10-K or any quarterly or current report filed thereafter on Form 10-Q or Form 8-K, no litigation or governmental proceedings are pending or threatened against PHI or any of its subsidiaries, the results of which might materially affect PHI or such subsidiaries’ financial condition or operations. Other than any liability incident to such litigation or proceedings or provided for or disclosed in the financial statements submitted to Lender, PHI does not have any material contingent liabilities. No subsidiaries have any material contingent liability other than those imposed by the security documents granted by PHI in favor of Lender and the Indenture.

(5) Pension Plans. Each of PHI and its subsidiaries are in compliance with all statutes and governmental rules and regulations applicable to it, including, without limitation, the Employee Reimbursement Income Security Act of 1974, as amended (“ERISA”). No Termination Event (as defined herein) has occurred with respect to any Plan (as defined herein), and, except for any failure that could not reasonably be expected to cause a material adverse change, each Plan has complied with and been administered in all material respects in accordance with applicable provisions of ERISA and the Internal Revenue Code of 1986, as amended (the “Code”), and no condition exists or event or transaction has occurred in connection with any Plan, maintained by PHI or its subsidiaries, which could result in PHI or its subsidiaries incurring any material liabilities, fine, or penalty. No “accumulated funding deficiency” (as defined in Section 302 of ERISA) has occurred with respect to any Plan and there has been no excise tax imposed with respect to any Plan under Section 4971 of the Code. The present value of all benefits vested under each Plan (based on the assumptions used to fund such Plan) did not, as of the last annual valuation date applicable thereto, exceed the value of the assets of such Plan allocable to such vested benefits in any amount that would reasonably be expected to cause a material adverse change. Based upon GAAP existing as of the effective date of this Agreement and current factual circumstances, PHI has no reason to believe that the annual cost during the term of this Agreement to PHI for postretirement benefits to be provided to the current and former employees of PHI under welfare benefit plans (as defined in Section 3(1) of ERISA) could, in- the aggregate, reasonably be expected to cause a material adverse change.

For purposes of this section, the term “Plan” means an employee benefit plan covered by Title IV of ERISA or subject to minimum funding standards under Section 412 of the Code and the term “Termination Event” means (a) the occurrence of a reportable event with respect to a Plan, as described In Section 4043 of ERISA and the regulations issued thereunder (other than a reportable event not subject to the provision for 30-day notice to the PBGC under such regulations); (b) the giving of a notice of intent to terminate a Plan under Section 4041 (c) of ERISA; (c) the institution of proceedings to terminate a Plan by the PBGC; or (d) any other event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan.

(6) Financial Information. From the date of this Agreement and so long as the Loan shall be outstanding, unless compliance shall have been waived in writing by Lender, PHI shall furnish to Lender:

(a) promptly after the sending or filing thereof, copies of all reports which PHI sends to any of its public security holders, and copies of all Forms 10-K, and 10-Q (including all exhibits filed therewith) and registration statements and any other filings or statements that PHI files with the Securities and Exchange Commission or any national securities exchange;

(b) together with all Forms of 10-K and 10-Q, a certificate of the President or Chief Financial Officer of PHI to the effect that no Default with respect to PHI, or event which might mature into a Default with respect to PHI, has occurred and is continuing, as of the end of the relevant reporting period;

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(c) upon the occurrence of a Default, a certificate of the President or Chief Financial Officer of PHI specifying the nature and the period of existence thereof and what action PHI proposes to take with respect thereto;

(d) if not previously disclosed in PHI’s most recently filed annual report on Form 10-K or any quarterly or current report filed thereafter on Form 10-Q or Form 8-K, written notice of any and all litigation affecting PHI, directly or indirectly; provided, however, this requirement shall not apply to litigation involving PHI and any other party if such litigation involves, in the aggregate, less than $500,000; and

(e) from time to time, such other information as Lender may reasonably request.

(7) Insurance. Each of PHI and its subsidiaries shall maintain with financially sound and reputable insurance companies workmen’s compensation insurance, liability insurance and insurance on PHI’s and its subsidiaries property, assets and business at least to such extent and against such hazards and liabilities as is commonly maintained by similar companies and, in addition to the foregoing insurance, such insurance as may be reasonably required by Lender. In the case of property (whether owned by PHI or its subsidiaries) on which Lender has a lien, PHI shall provide Lender with duplicate originals or certificates of such policies of insurance naming Lender as additional lender loss payee and as additional insured as its interests may appear, and providing that such policies will not be canceled without thirty (30) days’ prior written notice to Lender.

(8) Mergers, etc. Without the prior written consent of Lender, PHI shall not consolidate with, or merge into, any other corporation, or permit any other corporation to merge into it, or sell or lease all, or substantially all, of its assets or acquire all or a substantial part of the assets or capital stock of any other partnership, firm or corporation, or enter into any other transaction that would materially alter the balance sheet of PHI. PHI will not permit any material changes to be made in the character of its business as carried on at the date of this Agreement.

(9) Stock Redemption. PHI will not purchase, retire or redeem any shares of its capital stock (other than pursuant to executive or employee compensation plans) without the prior written consent of Lender, provided PHI will be allowed to purchase, retire or redeem capital stock from its employees in an aggregate amount not to exceed $25,000,000.00.

(10) Indebtedness and Liens. Except (i) as contemplated in this Agreement or as otherwise permitted by the Lender in writing, (ii) in connection with credit card agreements which shall not have outstanding balances in excess of $3,000,000.00, (iii) with respect to the pledge of cash or other liquid assets as security for letters of credits issued by PHI or any of its subsidiaries in an aggregate amount not to exceed $30,000,000.00, (iv) under the Senior Notes and as contemplated in the Indenture, (v) as otherwise permitted in the Indenture, and (vi) debt in an aggregate principal amount denominated in US dollars not to exceed $5,000,000.00 for a working capital line of credit for an international subsidiary of PHI (one whose principal office is outside of the United States and who is chartered in a country other than the United States) in connection with the acquisition of HNZ Group, Inc., neither PHI nor any of its subsidiaries (a) shall create any additional obligations for borrowed money, or (b) mortgage or encumber any of their assets or suffer any liens or indebtedness to exist on any of their assets.

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(11) Other Liabilities. Other than with respect to its subsidiaries, PHI shall not lend to or guarantee, endorse or otherwise become contingently liable in connection with the obligations, stock or dividends of any person, firm or corporation.

(12) Change of Control. Without the prior written consent of Lender, there shall not be a Change of Control (as defined in the Indenture).

(13) Additional Documentation. Upon the written request of Lender, PHI shall promptly and duly execute and deliver all such further instruments and documents and take such further action as Lender, may deem reasonably necessary to obtain the full benefits of this Agreement and of the rights and powers granted in this Agreement.

(14) Notice of Default. PHI shall notify Lender immediately upon becoming aware of the occurrence of any event constituting, or which with the passage of time or the giving of notice, could constitute, a Default.

(15) Indemnity. PHI shall indemnify, defend and hold Lender and its respective directors, officers, agents, attorneys and employees harmless from and against all claims, demands, causes of action, liabilities, losses, costs and expenses (including, without limitation, costs of suit, reasonable legal fees and fees of expert witnesses) arising from or in connection with (a) the presence in, on or under any property of PHI (including, without limitation, the Property) of any hazardous substance or solid waste, or any releases or discharges (as the terms “release” and “discharge” are defined under any applicable environmental law) of any hazardous substance or solid waste on, under or from such property, (b) any activity carried on or undertaken on or off such property of PHI, whether prior to or during the term of this Agreement, and whether PHI or any predecessor in title to PHI’s property or any officers, employees, agents, contractors or subcontractors of PHI or any predecessor in title to the property of PHI, or any third persons at any time occupying or present on such property, in connection with the handling, use, generation, manufacture, treatment, removal, storage, decontamination, clean-up, transportation or disposal of any hazardous substance or solid waste at any time located or present on or under any of the afore-described property, or (c) any breach of any representation, warranty or covenant under the terms of this Agreement or applicable security agreements; provided that such indemnity shall not, as to any indemnitee, be available to the extent that such claims, demands, causes of action, liabilities, losses, costs and expenses are (i) determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the gross negligence, bad faith or willful misconduct of such indemnitee or (ii) in connection with any disputes solely among indemnitees and not arising out of any act or omission of PHI. The foregoing indemnity shall further apply to any residual contamination on or under any or all of the afore-described property, or affecting any natural resources, and to any contamination of any property or natural resources arising in connection with the use, handling, storage, transportation or disposal of any hazardous substance or solid waste, and irrespective of whether any of such activities were or will be undertaken in accordance with applicable laws, regulations, codes and ordinances. The indemnity described of this Section shall survive the termination of this Agreement for any reason whatsoever.

D. COLLATERAL. As security for the payment and performance of the Loan and all other obligations of PHI owed to Lender under this Agreement and the Note, whether now existing or hereafter arising, PHI and the Subsidiary Guarantors will provide to Lender through validly recorded security documents, including but not limited to a Security Agreement (as amended, supplemented, restated or otherwise modified from time to time, the “Security Agreement”) financing statements, a first priority perfected lien and security interest in favor of Lender in all of PHI’s and the Subsidiary Guarantors’ Inventory (as such term is defined in Article 9 of the Uniform Commercial Code (La. R.S. 10: 9-101 et seq.), as enacted in the State of Louisiana from time to time (“Louisiana Commercial Laws”)), including Parts (as herein defined), and all Accounts (as defined in Louisiana Commercial Laws); provided that the provisions of this Section D will not apply to any Inventory, including Parts of PHI and the Subsidiary Guarantors, located in any jurisdiction outside of the United States of America.

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“Parts” shall mean, until installed in any aviation unit or aircraft, all aircraft engines, propellers, rotors, appliances, tires, airframes, spare parts, radios, and other communication equipment together with all other aircraft appliances, instruments, electronics, mechanisms, appurtenances, accessories, equipment and parts or component parts thereof, of such person wherever maintained, now or hereafter existing, whether acquired by purchase or otherwise and whether held by such person for use in its business or held by such person for sale or lease or to be furnished by such person under contracts of service, and all proceeds thereof and accessories thereto. Parts shall be valued at the lower of (i) the average cost of each item or (ii) its market value. All Parts shall be maintained and records kept as are customary for any replacement or maintenance parts or accessories of any aircraft, aviation unit and/or helicopter.

E. GUARANTIES. The Loan shall be guaranteed by each of the Subsidiary Guarantors by separate guaranty agreements (as amended, supplemented, restated or otherwise modified from time to time, the “Guaranty”).

F. RATE OF INTEREST. The Loan shall accrue interest at a rate of six percent (6%) per annum. All interest accruing under the Loan shall be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, with the first interest payment being due on December 31, 2018. All interest shall be computed on the basis of the actual number of days elapsed over a 360-day year comprised of twelve 30-day months.

G. PREPAYMENT. The Loan may be prepaid in any amount at any time without penalty or premium.

H. CONDITIONS PRECEDENT TO LOAN. Lender shall have no obligation to advance the Loan under this Agreement until and unless the following conditions have been satisfied:

(1) Lender shall have received duly executed copies of this Agreement, the Note, the Guaranty, the Security Agreement and all other collateral documents contemplated by this Agreement in form and substance satisfactory to Lender;

(2) All representations and warranties made by PHI to Lender shall be true and correct as of the date of the funding of the Loan;

(3) Lender shall have received a copy of the fairness opinion with respect to the Loan and the transactions contemplated hereunder issued to Borrower from an Independent Financial Advisor (as defined in the Indenture); and

(4) There exists no Default (or event which with notice or lapse of time or both could constitute a Default) under this Agreement or any other agreement between PHI and Lender.

I. DEFAULT. The occurrence of any one or more of the following events shall constitute a default (a “Default”) under this Agreement:

(1) a default under the Note;

(2) the failure of PHI to observe or perform promptly when due any covenant, agreement or obligation due to Lender under this Agreement or otherwise;

(3) the inaccuracy at any time, in any material respect, of any warranty, representation or statement made to Lender by PHI under this Agreement or otherwise;

(4) the filing by or against PHI of a proceeding for bankruptcy, reorganization, arrangement, or any other relief afforded debtors or affecting the rights of creditors generally under the law of any state or country or under the United States Bankruptcy Code;

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(5) should any default occur and be continuing under the terms and conditions of any other material credit agreement or evidence of indebtedness, including, without limitation, the Indenture, after the expiration of any applicable notice and cure provisions as may be contained therein.

Upon the occurrence of a Default, except for payment of principal at maturity, and such Default continues for a period of fifteen (15) days, after Lender has mailed written notice of such Default to PHI specifying the nature of the Default and the steps necessary to cure the Default (but with no notice or delay required in the event of a Default under paragraphs (1) and (5) of this Section (I)), Lender, at its option, may declare all of the Loan, the Note and all other obligations of PHI and/or the Subsidiary Guarantors to Lender to be immediately due and payable without further notice.

J. CONSENT TO PARTICIPATION. Lender may sell all or a portion of its interest in the Loan and the security therefor. Lender shall give PHI notice of any sale of all or a portion of its interests in the Loan, upon which PHI shall perform all of its obligations hereunder in favor of each participant or assignee as though such participant or assignee were a party or parties to this Agreement.

K. MISCELLANEOUS PROVISIONS. PHI agrees to pay all of the costs, expenses and fees incurred in connection with the Loan, including reasonable attorneys’ fees, appraisal fees, and environmental assessment fees. This Agreement is not assignable by PHI and no parties other than PHI and the Subsidiary Guarantors are entitled to rely on this Agreement. In no event shall PHI or Lender be liable to the other for indirect, special or consequential damages, including the loss of anticipated profits that may arise out of or are in any way connected with the issuance of this Agreement. This Agreement, the Note, all other promissory notes evidencing the Loan under this Agreement and all documents creating security interests shall be governed by Louisiana law. This Agreement may be executed in two or more counterparts, and it shall not be necessary that the signatures of all parties hereto be contained on any one counterpart hereof; each counterpart shall be deemed an original, but all of which together shall constitute one and the same instrument. In the event of actual conflict in the terms and provisions of this Agreement and the Note and/or any of the security agreements, the terms and provisions of this Agreement will control.

All accounting terms used herein shall be interpreted, all accounting determinations hereunder shall be made, and all financial statements required to be delivered hereunder shall be prepared in accordance with generally accepted accounting principles as in effect from time to time in the United States of America, on a consistent basis (“GAAP”). If at any time any change in GAAP would affect the computation of any requirement or provision set forth in the Agreement or any related loan document, and either PHI or Lender shall so request, Lender and PHI shall negotiate in good faith to amend such requirement or provision to preserve the original intent thereof in light of such change in GAAP; provided that, until such request has been withdrawn or such requirement or provision so amended, (i) such requirement or provision shall continue to be computed in accordance with GAAP prior to such change therein and (ii) PHI shall provide to Lender financial statements and other documents required under this Agreement or as reasonably requested hereunder setting forth a reconciliation between calculations of such requirement or provision made before and after giving effect to such change in GAAP.

All notices and other communications provided for in this Agreement shall be given in writing and made by telecopy or mailed by certified mail return receipt requested, or delivered to the intended recipient at the “Address for Notices” specified below its name on the signature pages hereof; or, as

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to any party at such other address as shall be designated by such party in a notice to the other party given in accordance with this section. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when transmitted by telecopy, subject to mechanical confirmation of receipt, or when personally delivered or, in the case of a mailed notice, when duly deposited in the mail, in each case given or addressed as aforesaid.

L. TERRORISM LAWS. PHI and each of its subsidiaries are in compliance, in all material respects, with (i) the Trading with the Enemy Act, as amended, and each of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating thereto, and (ii) the Uniting And Strengthening America By Providing Appropriate Tools Required To Intercept And Obstruct Terrorism (USA Patriot Act of 2001). No part of the proceeds of the Loan will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended. Neither PHI nor any of its subsidiaries, and no individual or entity owning directly or indirectly a controlling interest in PHI, whether now or in the future, is or shall be an individual or entity whose property or interests are presently being or in the future become “blocked” under any of the Terrorism Laws or is or shall otherwise become in violation of any of the Terrorism Laws.

“Terrorism Laws” shall mean Executive Order 13224 issued by the President of the United States of America (66 Fed. Reg. 49079 (2001)), the Terrorism Sanctions Regulations (Title 31 Part 595 of the U.S. Code of Federal Regulations), the Terrorism List Governments Sanctions Regulations (Title 31 Part 596 of the U.S. Code of Federal Regulations), and the Foreign Terrorist Organizations Sanctions Regulations, (Title 31 Part 597 of the U.S. Code of Federal Regulations), and all other present and future federal regulations, policies and any other requirements of any federal Governmental Authority (including, without limitation, the United States Department of Treasury Office of Foreign Assets Control) addressing, relating to, or attempting to eliminate, terrorist acts and acts of war, each as hereafter supplemented, amended or modified from time to time and the present and future rules, regulations and guidance documents promulgated under any of the foregoing.

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IN WITNESS WHEREOF, this Agreement is executed as of the Effective Date.

PHI: PHI, INC.
By:	/s/ Trudy P. McConnaughhay
Name: Trudy P. McConnaughhay
Title: Chief Financial Officer, Treasurer and Secretary

SUBSIDIARY GUARANTORS: PHI AIR MEDICAL, L.L.C.
By:	/s/ Trudy P. McConnaughhay
Name:  Trudy P. McConnaughhay
Title:    Vice President and Treasurer

PHI TECH SERVICES, INC.
By:	/s/ Trudy P. McConnaughhay
Name:  Trudy P. McConnaughhay
Title:    Chief Financial Officer, Vice President and Secretary

Address for Notices:

2001 S. E. Evangeline Thruway

Lafayette, LA 70508

Attention: Chief Financial Officer

Signature Page to Loan Agreement

LENDER: THIRTY TWO, L.L.C.
By:	/s/ Al A. Gonsoulin
Name:  Al A. Gonsoulin
Title:    Managing Member

Address for Notices:

4655 Sweetwater Blvd., Suite 300

Sugar Land, TX 77479

Attention: Al Gonsoulin

Signature Page to Loan Agreement

EX-10.2

Exhibit 10.2

EXECUTION VERSION

Promissory Note

$130,000,000.00 September 28, 2018

For value received, PHI, Inc., a Louisiana corporation (“Borrower”), promises to pay to the order of Thirty Two, L.L.C., a Nevada limited liability company (“Lender”), at its address of 4655 Sweetwater, Suite 300, Sugarland, Texas 77479, a term loan in the principal amount of ONE HUNDRED THIRTY MILLION AND NO/100 DOLLARS ($130,000,000.00) together with interest thereon in accordance with the terms set forth in this Promissory Note (this “Note”).

The terms and conditions of that certain Loan Agreement dated as of the date hereof (as amended, supplemented, restated or otherwise modified from time to time, the “Loan Agreement”), by and among Borrower, PHI Air Medical, L.L.C., and PHI Tech Services, Inc., as Subsidiary Guarantors, and Lender are incorporated herein by reference and are a part of the terms and conditions of this Note. Capitalized terms used herein but not defined herein shall have the meanings ascribed to them in the Loan Agreement.

REPAYMENT: The principal amount shall be due at maturity, with all accrued but unpaid interest, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, with the first interest payment being due on December 31, 2018, and the final payment of all principal and accrued but unpaid interest due on September 28, 2020.

INTEREST: Interest shall accrue on the outstanding principal amount at the rate per annum equal to six percent (6%) in accordance with the terms of the Loan Agreement. All interest shall be computed on the basis of the actual number of days elapsed over a 360-day year comprised of twelve 30-day months.

DEFAULT RATE: After maturity, whether that maturity results from acceleration or otherwise, and after the declaration of a Default, interest shall, to the extent permitted by law, accrue at the Default Rate. Additionally, upon the occurrence of any Event of Default (and from and after the date of such occurrence) and following the declaration of a Default, interest shall, to the extent permitted by law, accrue at the Default Rate. The “Default Rate” shall be two percent (2%) per annum in excess of the interest rate otherwise payable under this Note and in no event more than allowed by applicable law.

Borrower and each Subsidiary Guarantor waive presentment for payment, demand, notice of dishonor, protest, pleas of discussion and division and are bound jointly, severally and solidarily for the full and timely payment of this Note in accordance with its terms.

If the proceeds of any collateral for this Note are insufficient to pay this Note in full, Borrower shall remain fully obligated for any deficiency. Borrower and each Subsidiary Guarantor releases Lender from any obligation to collect any proceeds of or preserve any of Borrower’s and each Subsidiary Guarantor’s rights, including, without limitation, rights against prior parties, in any collateral in which Lender possesses a security interest. Any responsibility of Lender with respect to any collateral in which Lender possesses a security interest, whether arising contractually or as a matter of law, is hereby expressly waived.

If any of the following events shall occur (each such event being referred to herein as an “Event of Default”): (a) the non-payment of any principal on this Note on the date when due; (b) the non-payment of any interest on this Note on the date when due for a period of fifteen (15) days after Lender has mailed written notice of such to Borrower; (c) the occurrence and continuance of any Default as defined in the Loan Agreement; or (d) any discontinuance or termination of any guaranty of all or any portion of this Note by any Subsidiary Guarantor; then, at the option of Lender, the full amount of this Note and all other obligations and liabilities, direct or contingent, of Obligor to Lender shall be immediately due and payable without notice or demand except as required under the Loan Agreement.

Without releasing or affecting any of its rights, Lender may, one or more times, in its sole discretion, without notice to or the consent of any third party or Subsidiary Guarantor, take any one or more of the following actions: (a) release, renew or modify the obligations of Borrower or any Subsidiary Guarantor; (b) release, exchange, modify, or surrender in whole or in part Lender’s rights with respect to any collateral for this Note; (c) modify or alter the term, interest rate or due date of any payment of this Note; or (d) grant any postponements, compromises, indulgences, waivers, surrenders or discharges or modify the terms of its agreements with Borrower or any Subsidiary Guarantor.

Borrower may prepay any principal on this Note in whole or in part and any prepayments made on this Note shall be applied to the principal payment(s) due on this Note in the inverse order of their maturity. Each advance under this Note and each payment on this Note shall be evidenced by entries in Lender’s internal records, which shall be prima facie evidence of (a) the amount of principal and interest owing on this Note from time to time; (b) the amount of each advance made to Borrower under this Note; and (c) the amount of each principal and/or interest payment received by Lender on this Note. The failure of Lender to make an accurate entry of advances and payments shall not limit or otherwise affect the obligation of Borrower to repay funds actually advanced by Lender hereunder. Borrower agrees to pay the reasonable fees and costs of any attorney-at-law employed by Lender to recover sums owed or to protect Lender’s interests with regard to this Note. Borrower further agrees to pay any and all charges, fees, costs and/or taxes levied or assessed against Lender in connection with this Note or against any collateral provided for this Note. If any payment on this Note is eleven (11) days or more late, Borrower agrees to pay to the Lender, in addition to the amount otherwise due hereunder, a delinquency charge of 5.00% of the unpaid amount of such payment, or $15.00, whichever is greater. Late charges will not be assessed following declaration of default and acceleration of maturity of this Note. In the event that any payment under this Note by check or preauthorized charge is later dishonored or returned to Lender unpaid due to nonsufficient funds, Borrower agrees to pay Lender an additional NSF check charge equal to $15.00.

The provisions of this Note may not be waived or modified except in writing, signed by Lender and Borrower. No failure or delay of Lender in exercising its rights shall be construed as a waiver. If any provision of this Note shall be held to be legally invalid or unenforceable by any court of competent jurisdiction, all remaining provisions of this Note shall remain in full force and effect. This Note shall be governed by the internal laws of the State of Louisiana.

THIS NOTE, THE LOAN AGREEMENT AND ALL OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT OF BORROWER AND LENDER AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY ANY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR A SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF BORROWER AND LENDER. THERE ARE NO ORAL AGREEMENTS BETWEEN THE BORROWER AND LENDER. IN THE EVENT OF ACTUAL CONFLICT IN THE TERMS AND PROVISIONS OF THIS NOTE AND THE LOAN AGREEMENT, THE TERMS AND PROVISIONS OF THE LOAN AGREEMENT WILL CONTROL.

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BORROWER: PHI, INC.
By:	/s/ Trudy P. McConnaughhay

Name:	Trudy P. McConnaughhay
Title:	Chief Financial Officer, Treasurer and Secretary

Signature Page to Promissory Note

EX-10.3

Exhibit 10.3

EXECUTION VERSION

GUARANTY AGREEMENT

This Guaranty Agreement (this “Guaranty”), dated and effective as of September 28, 2018 (the “Effective Date”), is made by PHI Air Medical, L.L.C., a Louisiana limited liability company, and PHI Tech Services, Inc., a Louisiana corporation (individually and collectively, “Guarantor”) in favor of Thirty Two, L.L.C., a Nevada limited liability company (“Lender”). Guarantor agrees as follows:

The terms and conditions of that certain Loan Agreement dated as of the date hereof (as amended, supplemented, restated or otherwise modified from time to time, the “Loan Agreement”), by and among PHI, Inc., a Louisiana corporation (“Borrower”), Guarantor, as Subsidiary Guarantors, and Lender, are incorporated herein by reference and are a part of the terms and conditions of this Guaranty. Capitalized terms used herein but not defined herein shall have the meanings ascribed to them in the Loan Agreement. In the event of actual conflict in the terms and provisions of this Guaranty and the Loan Agreement, the terms and provisions of the Loan Agreement will control.

1. Guarantor jointly, severally, solidarily, and unconditionally guarantees to Lender the prompt performance and payment in full of the Loan and all other obligations and liabilities of Guarantor and Borrower, and of any one or more of them, to Lender, arising under the Loan Agreement, the Note, this Guaranty, the Security Agreement and all other loan and collateral documents contemplated by the Loan Agreement, direct or contingent, due or to become due, now existing or hereafter arising, including, without limitation, all future advances, with interest, attorneys’ fees, expenses of collection and costs, and further including, without limitation, obligations to Lender on promissory notes, checks, overdrafts, letter-of-credit agreements, loan agreements, security documents, endorsements, continuing guaranties and agreements with respect to any swap, forward, future, or derivative transaction or option or similar agreement involving, or settled by reference to, one or more interest rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value (collectively, the “Obligations”); provided that, in no event shall Guarantor’s liability in the aggregate under this Guaranty exceed the principal amount of ONE HUNDRED THIRTY MILLION DOLLARS AND NO/100 DOLLARS ($130,000,000.00), (the “Guarantied Principal Amount”) plus interest, attorneys’ fees, and other fees and charges owed by Borrower to Lender on the Guarantied Principal Amount. Borrower, Guarantor and any other parties obligated on the Obligations from time to time are referred to herein collectively and individually as “Obligor”.

2. Guarantor shall be bound by all of the terms and conditions of any notes, agreements, or other obligations in favor of Lender signed or incurred by Borrower with respect to the Obligations. Guarantor hereby waives all notice and pleas of presentment, demand, dishonor, protest, discussion and division. Guarantor shall not have any rights of subrogation until the payment in full of all Obligations and any subrogation rights shall relate only to the collateral then held by Lender.

3. This Guaranty is a continuing guaranty and shall remain in full force and effect until payment and performance in full of the Obligations have been satisfied, at which time this Guaranty shall automatically terminate.

4. Guarantor covenants and agrees that, as long as the Obligations or any part thereof is outstanding, Guarantor will furnish promptly to Lender such additional information concerning any Guarantor as Lender may reasonably request.

5. This is a guaranty of payment and not a guarantee of collection, and will not be affected by the release or discharge of Borrower from, or impairment or modification of, Borrower’s obligations with respect to any of the Obligations in any bankruptcy, receivership, or other insolvency proceeding or otherwise. In the event of a Default by Borrower in payment or performance of the Obligations, or any part thereof, when such Obligations become due, whether by its terms, by acceleration, or otherwise, Guarantor shall promptly pay the amount due thereon to Lender without notice or demand

in lawful money of the United States of America and it shall not be necessary for Lender, in order to enforce such payment by Guarantor, first to institute suit or exhaust its remedies against Borrower or others liable on such Obligations, or to enforce any rights against any collateral which shall ever have been given to secure such Obligations. Notwithstanding anything to the contrary contained in this Guaranty, Guarantor hereby irrevocably subordinates and abates, until the Obligations have been repaid in full, any and all rights it may now or hereafter have under any agreement or at law or in equity (including, without limitation, any law subrogating Guarantor to the rights of Lender) to assert any claim against or seek contribution, indemnification or any other form of reimbursement from Borrower or any other party liable for payment of any or all of the Obligations for any payment made by Guarantor under or in connection with this Guaranty or otherwise. Notwithstanding the foregoing, if Guarantor is or becomes an “insider” (as defined from time to time in Section 101 of the U.S. Bankruptcy Code) with respect to Borrower, then Guarantor irrevocably and absolutely waives any and all rights or subrogation, contribution, indemnification, reimbursement or similar rights against Borrower with respect to the Obligations and this Guaranty, whether such rights arise under an express or implied contract or by operation of law, it being the intention of Guarantor and Lender that Guarantor will not be deemed to be a “creditor” (as defined in Section 101 of the U.S. Bankruptcy Code) of Borrower by reason of the existence of this Guaranty in the event that Borrower becomes a debtor in any proceeding under the U.S. Bankruptcy Code.

6. Each Guarantor is jointly, severally and solidarily liable for the payment in full of the Obligations as if such Guarantor was the only Guarantor executing this Guaranty. This Guaranty is exclusive of and in addition to any other endorsements, guaranties, or obligations with respect to Borrower that are separate and apart from this instrument, whether signed by Guarantor or by any other Obligor. This Guaranty shall not be affected or limited by the amount of any other such endorsements, guaranties, or obligations with respect to Borrower. To the extent permitted by law, Guarantor’s obligations under this Guaranty shall continue notwithstanding any set-off, counterclaim, reduction, or diminution of the Obligations or any defense of any kind or nature (other than performance by Guarantor of its obligations hereunder) that Borrower may have or assert against Lender.

7. Without releasing or affecting Guarantor’s obligations hereunder, Lender may, one or more times, in its sole discretion, without notice to or the consent of Guarantor or any third party Obligor, take any one or more of the following actions: (a) release, renew or modify the obligations of Borrower or any other Obligor; (b) release, exchange, modify, or surrender in whole or in part Lender’s rights with respect to any collateral for the Obligations; (c) modify or alter the term, interest rate or due date of any payment of any of the Obligations; (d) grant any postponements, compromises, indulgences, waivers, surrenders or discharges or modify the terms of its agreements with Guarantor, Borrower or any other Obligor; (e) change its manner of doing business with Guarantor, Borrower or any other party; (f) impute payments or proceeds of any collateral furnished for any of the Obligations, in whole or in part, to any of the Obligations, or retain the payments or proceeds as collateral for the Obligations without applying same toward payment of the Obligations; or (g) make loans to Borrower in excess of the present amount of the Obligations, and Guarantor hereby expressly waives any defenses arising from any such actions. The release of liability of any person shall not affect the liability hereunder of any Guarantor who is not specifically released.

8. Guarantor hereby agrees that the Subordinated Indebtedness (as hereinafter defined) shall be subordinate and junior in right of payment to the prior payment in full of all Obligations, and Guarantor hereby assigns the Subordinated Indebtedness to Lender as security for the Obligations. If any sums shall be paid to Guarantor by Borrower or any other person or entity on account of the Subordinated Indebtedness, such sums shall be held in trust by Guarantor for the benefit of Lender and shall forthwith be paid to Lender without affecting the liability of Guarantor under this Guaranty and may be applied by Lender against the Obligations in such order and manner as Lender may determine in its sole discretion. Upon the request of Lender, Guarantor shall execute, deliver, and endorse to Lender such documents and instruments as Lender may request to perfect, preserve, and enforce its rights hereunder.

For purposes of this Guaranty, the term “Subordinated Indebtedness” means all indebtedness, liabilities, and obligations of Borrower to Guarantor, other than salary and reimbursements of

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expenses incurred in the ordinary course of business, whether such indebtedness, liabilities, and obligations now exist or are hereafter incurred or arise, or whether the obligations of Borrower thereon are direct, indirect, contingent, primary, secondary, several, joint and several, or otherwise, and irrespective of whether such indebtedness, liabilities, or obligations are evidenced by a note, contract, open account, or otherwise, and irrespective of the person or persons in whose favor such indebtedness, obligations, or liabilities may, at their inception, have been, or may hereafter be created, or the manner in which they have been or may hereafter be acquired by Guarantor.

(a) Guarantor agrees that any and all liens, security interests, judgment liens, charges, or other encumbrances upon Borrower’s assets securing payment of any Subordinated Indebtedness shall be and remain inferior and subordinate to any and all liens, security interests, judgment liens, charges, or other encumbrances upon Borrower’s assets securing payment of the Obligations or any part thereof, regardless of whether such encumbrances in favor of Guarantor or Lender presently exist or are hereafter created or attached. Without the prior written consent of Lender, no Guarantor shall (i) file suit against Borrower or exercise or enforce any other creditor’s right it may have against Borrower, or (ii) foreclose, repossess, sequester, or otherwise take steps or institute any action or proceedings (judicial or otherwise, including without limitation the commencement of, or joinder in, any liquidation, bankruptcy, rearrangement, debtor’s relief or insolvency proceeding) to enforce any liens, security interests, collateral rights, judgments or other encumbrances held by Guarantor on assets of Borrower.

(b) In the event of any receivership, bankruptcy, reorganization, rearrangement, debtor’s relief, or other insolvency proceeding involving Borrower as debtor, Lender shall have the right to prove and vote any claim under the Subordinated Indebtedness and to receive directly from the receiver, trustee or other court custodian all dividends, distributions, and payments made in respect of the Subordinated Indebtedness. Lender may apply any such dividends, distributions, and payments against the Obligations in such order and manner as Lender may determine in its sole discretion.

(c) Guarantor agrees that all promissory notes, accounts receivable, ledgers, records, or any other evidence of Subordinated Indebtedness shall contain a specific written notice thereon that the indebtedness evidenced thereby is subordinated under the terms of this Guaranty.

9. No amendment or waiver of any provision of this Guaranty nor consent to any departure by Guarantor therefrom shall in any event be effective unless the same shall be in writing and signed by Lender. No failure on the part of Lender to exercise, and no delay in exercising any right, power, or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise of any right, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, power, or privilege. The remedies herein provided are cumulative and not exclusive of any remedies provided by law.

10. Guarantor recognizes that Lender is relying upon this Guaranty and the undertakings of Guarantor hereunder in making extensions of credit to Borrower and further recognizes that the execution and delivery of this Guaranty is a material inducement to Lender advancing the Loan to Borrower. Guarantor represents and warrants to Lender that Guarantor’s guaranty hereunder of the Obligations reasonably benefits or may be expected to benefit directly or indirectly, Guarantor. Each Guarantor hereby acknowledges that there are no conditions to the full effectiveness of this Guaranty.

11. Guarantors jointly and severally agree to pay on demand all reasonable attorneys’ fees and all other costs and expenses incurred by Lender in connection with the preparation, administration, enforcement, or collection of this Guaranty.

12. Guarantor hereby represents and warrants to Lender that such Guarantor has adequate means to obtain from Borrower on a continuing basis information concerning the financial condition and assets of Borrower and that no Guarantor is relying upon Lender to provide (and Lender shall have no duty to provide) any such information to any Guarantor either now or in the future.

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13. THIS GUARANTY EMBODIES THE FINAL, ENTIRE AGREEMENT OF GUARANTOR AND LENDER WITH RESPECT TO GUARANTOR’S GUARANTY OF THE OBLIGATIONS AND SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF. THIS GUARANTY IS INTENDED BY GUARANTOR AND LENDER AS A FINAL AND COMPLETE EXPRESSION OF THE TERMS OF THE GUARANTY, AND NO COURSE OF DEALING BETWEEN GUARANTOR AND LENDER, NO COURSE OF PERFORMANCE, NO TRADE PRACTICES, AND NO EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OR OTHER EXTRINSIC EVIDENCE OF ANY NATURE SHALL BE USED TO CONTRADICT, VARY, SUPPLEMENT OR MODIFY ANY TERM OF THIS GUARANTY. THERE ARE NO ORAL AGREEMENTS BETWEEN GUARANTOR AND LENDER.

14. This Guaranty shall be binding on Guarantor and Guarantor’s successors and assigns and shall inure to the benefit of Lender, its successors, assigns, endorsees, and any person or persons, or entities, including, without limitation, any banking or other financial institution, to whom Lender may grant an interest in the Obligations, or any of them, and this Guaranty shall be binding on Guarantor to the extent of such assignment or interest. Any such assignment or grant of interest shall not operate to release Guarantor from any obligation to Lender hereunder with respect to any unassigned Obligations.

15. If Lender receives any payment or proceeds of collateral, which payment or proceeds or any part thereof are subsequently required, by any court of competent jurisdiction, to be repaid to Borrower, Borrower’s estate, trustee, or any other party, then to the extent of such repayment by Lender, the Obligations or part thereof which has been paid, reduced or satisfied by such amount shall be reinstated and continued in full force and effect as of the date the initial payment, reduction or satisfaction occurred, and Guarantor shall remain solidarily liable to Lender for the repayment of such amount reinstated. Guarantor shall defend and indemnify Lender from any claim or loss to Lender arising under this paragraph, including, without limitation, Lender’s reasonable attorneys’ fees and expenses in the defense of any such action or suit, WHETHER THE SAME IS A RESULT OF LENDER’S ORDINARY NEGLIGENCE (BUT NOT ITS GROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OR OTHERWISE.

16. All notices and other communications provided for in this Guaranty shall be given and deemed delivered in the manners set forth in the Loan Agreement.

17. This Guaranty shall be governed and interpreted under the internal laws of the State of Louisiana. If any provision of this Guaranty shall be held to be legally invalid or unenforceable by any court of competent jurisdiction, all remaining provisions of this Guaranty shall remain in full force and effect. This Guaranty is signed on and effective as of the date shown below.

18. This Guaranty may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Lender may also, at its sole election, rely upon a photocopy of this Guaranty. Should Lender elect to rely upon a photocopy, it shall never be required to produce an original.

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IN WITNESS WHEREOF, this Guaranty is executed as of the Effective Date.

GUARANTORS: PHI AIR MEDICAL, L.L.C.
By:	/s/ Trudy P. McConnaughhay

Name:	Trudy P. McConnaughhay
Title:	Vice President and Treasurer

PHI TECH SERVICES, INC.
By:	/s/ Trudy P. McConnaughhay

Name:	Trudy P. McConnaughhay
Title:	Chief Financial Officer, Vice President and Secretary

Signature Page to Guaranty Agreement

EX-10.4

Exhibit 10.4

EXECUTION VERSION

SECURITY AGREEMENT

This Security Agreement (this “Security Agreement”), dated and effective as of September 28, 2018 (the “Effective Date”), is made by PHI, Inc., a Louisiana corporation, PHI Air Medical, L.L.C., a Louisiana limited liability company, and PHI Tech Services, Inc., a Louisiana corporation (individually and collectively, “Grantor”) in favor of Thirty Two, L.L.C., a Nevada limited liability company (“Secured Party”).

The terms and conditions of that certain Loan Agreement dated as of the date hereof (as amended, supplemented, restated or otherwise modified from time to time, the “Loan Agreement”), by and among PHI, Inc., a Louisiana corporation (“Borrower”), PHI Air Medical, L.L.C., and PHI Tech Services, Inc., as Subsidiary Guarantors, and Secured Party, as Lender, are incorporated herein by reference and are a part of the terms and conditions of this Security Agreement. Capitalized terms used herein but not defined herein shall have the meanings ascribed to them in the Loan Agreement. In the event of actual conflict in the terms and provisions of this Security Agreement and the Loan Agreement, the terms and provisions of the Loan Agreement will control.

To secure payment and performance of the Loan and all other obligations and liabilities of Grantor and Borrower, and of any one or more of them, to Secured Party, arising under the Loan Agreement, the Note, the Guaranty, this Security Agreement and all other loan and collateral documents contemplated by the Loan Agreement, direct or contingent, due or to become due, now existing or hereafter arising, including, without limitation, all future advances, with interest, attorneys’ fees, expenses of collection and costs, and further including, without limitation, obligations to Secured Party on promissory notes, checks, overdrafts, letter-of-credit agreements, loan agreements, security documents, endorsements, continuing guaranties and agreements with respect to any swap, forward, future, or derivative transaction or option or similar agreement involving, or settled by reference to, one or more interest rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or pricing indices or measures of economic, financial or pricing risk or value (collectively, the “Obligations”), Grantor pledges to Secured Party, and grants to Secured Party a continuing security interest in, and a right of set-off and compensation against, the following described property, now or hereafter owned by Grantor and wherever located (collectively, the “Collateral”):

(i) all accounts of Grantor;

(ii) all inventory of Grantor;

(iii) all Spare Parts (as hereinafter defined) maintained by or on behalf of Grantor; and

(iv) all property added to or substituted for any of the foregoing, and all interest, income, fruits, returns, accessions, profits, products and proceeds of any of the foregoing.

Notwithstanding the foregoing, any inventory or Spare Parts located in any jurisdiction outside of the United States of America shall not constitute Collateral.

The Spare Parts are located at the locations identified on Exhibit A annexed hereto. The Spare Parts are being maintained by or on behalf of PHI, Inc. and PHI Air Medical, L.L.C., each an air carrier certificated under 49 U.S.C. 44705.

The term “Spare Parts” shall mean, until installed in any aviation unit or aircraft, all aircraft engines, propellers, rotors, appliances, tires, airframes, spare parts, radios, and other communication equipment together with all other aircraft appliances, instruments, electronics, mechanisms, appurtenances, accessories, equipment and parts or component parts thereof, of such person wherever maintained, now or hereafter existing, whether acquired by purchase or otherwise and whether held by such person for use in its business or held by such person for sale or lease or to be furnished by such person under contracts of service, and all proceeds thereof and accessories thereto.

The terms “accounts,” “account debtor,” “chattel paper,” “documents,” “equipment,” “instruments,” “inventory,” and “proceeds” shall have the meanings provided in the Louisiana Commercial Laws.

Grantor further authorizes Secured Party at any time and without further consent from Grantor to file a carbon, photographic or other reproduction of this Security Agreement or Grantor’s financing statement as a financing statement. All Collateral shall remain subject to this Security Agreement until all of the Obligations have been indefeasibly paid in full. Secured Party may renew any renewable items included in the Collateral. All interest, income, fruits, returns, accessions, profits and proceeds with respect to the Collateral shall be delivered upon receipt to Secured Party in negotiable form. Grantor shall execute any endorsements, assignments and financing statements with respect to the Collateral, in form and substance satisfactory to Secured Party that Secured Party may reasonably request. Grantor represents and warrants that (a) Secured Party shall at all times have a perfected first priority security interest in the Collateral free of all other security interests, liens and claims other than as expressly permitted by the Loan Agreement, and (b) the description and identification of the Collateral, Grantor’s name, taxpayer identification number, and chief executive office, and the location of the Spare Parts are correctly stated herein. Grantor shall prevent the accrual of prescription or statute of limitations with respect to the Collateral no later than sixty (60) days prior to the date on which enforcement would be barred, and shall execute any additional documents reasonably required to perfect the security interest of Secured Party in the Collateral. Should any Collateral decline in value after the date of this Security Agreement in a manner that would be reasonably expected to have a material adverse effect on the Grantors, taken as a whole, Grantor shall, within five (5) days after receiving notice from Secured Party of such decline in value, grant a security interest in additional property satisfactory to Secured Party. Grantor authorizes Secured Party, in its sole discretion during the continuance of a Default (a) to notify the obligor on any Collateral to make payments directly to Secured Party; (b) to receive and recover any money or other property at any time due with respect to the Collateral and in connection therewith, endorse notes, checks, drafts or other evidence of payments; and (c) to settle, adjust and compromise, in Secured Party’s sole discretion, all present and future claims arising with respect to the Collateral. Secured Party is not obligated to take any of the foregoing actions or to preserve Grantor’s rights with respect to the Collateral including, without limitation, rights against prior parties and shall not be liable in any manner with respect to the Collateral. Any responsibility of Secured Party with respect to the Collateral, whether arising contractually or as a matter of law, is hereby expressly waived.

Grantor agrees to administer its accounts and the proceeds thereof in a prudent manner in accordance with this Security Agreement and take all actions reasonably necessary to collect the accounts. Upon request by Secured Party and upon the occurrence and continuance of a Default, Grantor shall (a) furnish to Secured Party a list of the accounts, showing the name, address and the amount owed by each account debtor, and (b) notify all account debtors that its accounts are subject to a security agreement with Secured Party and is payable to Secured Party at Secured Party’s address. If Grantor accepts chattel paper or instruments in payment of accounts, goods or services, Grantor shall promptly deliver all such chattel paper and instruments to Secured Party in negotiable form.

Grantor shall at all times during business hours with reasonable prior notice permit Secured Party, its officers and agents, access to the Collateral and to all books, records and data relating to the Collateral, for inspection and for verification of the existence, condition and value of the Collateral. Grantor shall furnish all assistance and information that Secured Party may require to conduct such inspections and verifications.

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All corporeal (tangible) Collateral shall be insured by solvent insurance companies for full replacement value under policies acceptable to Secured Party, designating Secured Party as lender loss payee. Grantor shall not alienate or encumber the Collateral, except for sales of inventory, goods or services in the ordinary course of Grantor’s business and as otherwise expressly permitted by the Loan Agreement. Grantor shall not create or permit to exist any lien, claim or security interest on the Collateral except in favor of Secured Party and as otherwise expressly permitted by the Loan Agreement. Grantor shall not, without the prior written consent of Secured Party (a) change Grantor’s domicile, name, legal form or taxpayer identification number, (b) move the location of its principal place of business or chief executive office, or (c) move the Spare Parts from the locations set forth on Exhibit A or store any Spare Parts at new location(s) not otherwise listed on Exhibit A. If there are any new locations, Borrower shall promptly notify Secured Party and amend Exhibit A to this Security Agreement to include such new locations and file such amendment with the Federal Aviation Administration.

Grantor’s taxpayer identification number, mailing address and chief executive office are as set forth on Schedule 1.

Upon the occurrence and continuance of a Default as specified in Section (I) of the Loan Agreement, then, at the option of Secured Party, the Obligations shall be immediately due and payable in full without notice or demand, and Secured Party, to the extent permitted by applicable law, (a) may sell, assign, transfer and effectively deliver all or any part of the Collateral at public or private sale, without recourse to judicial proceedings and without demand, appraisement or advertisement, all of which are hereby expressly waived by Grantor to the fullest extent permitted by law, and (b) may cause all or any part of the Collateral to be seized and sold, under executory process, under writ of fieri facias issued in execution of an ordinary judgment obtained upon the Obligations, or under other legal procedure. For purposes of executory process, Grantor acknowledges the indebtedness owed under the Obligations, confesses judgment in favor of Secured Party for the full amount of the Obligations, and agrees to enforcement by executory process. Grantor waives (a) the benefit of appraisal provided in Art. 2723 of the Louisiana Code of Civil Procedure and (b) the demand provided by Article 2721, Louisiana Code of Civil Procedure. Grantor grants to Secured Party an irrevocable mandate and power of attorney (coupled with an interest) to exercise, after Default has occurred and is continuing, at Secured Party’s sole discretionary option and without any obligation to do so, all rights that Grantor has with respect to the Collateral, including, without limitation, the right to exercise all rights of inspection, deriving from Grantor’s ownership of or other interest in the Collateral. If the proceeds from the sale or enforcement of the Collateral are insufficient to satisfy all of the Obligations in full, all parties obligated thereon shall remain fully obligated for any deficiency. The rights and remedies of Secured Party hereunder are cumulative, may be exercised singly or concurrently, and are in addition to any rights and remedies of Secured Party under applicable law.

Without releasing or affecting any of its rights, Secured Party may, one or more times, in its sole discretion, without notice to or the consent of any third party obligor, including Grantor or Borrower, as applicable, take any one or more of the following actions: (a) release, renew or modify the obligations of Grantor, Borrower or any other party; (b) release, exchange, modify, or surrender in whole or in part Secured Party’s rights with respect to any collateral for the Obligations; (c) modify or alter the term, interest rate or due date of any payment of any of the Obligations; (d) grant any postponements, compromises, indulgences, waivers, surrenders or discharges or modify the terms of its agreements with Grantor or Borrower; (e) change its manner of doing business with Grantor, Borrower or any other party; or (f) impute payments or proceeds of any collateral furnished for any of the Obligations, in whole or in part, to any of the Obligations, or retain the payments or proceeds as collateral for the Obligations without applying same toward payment of the Obligations, and Grantor hereby expressly waives any defenses arising from any such actions.

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The obligations of Grantor hereunder shall be joint, several and solidary and shall bind and obligate Grantor’s successors and assigns. Secured Party may assign and transfer the Collateral to an assignee of any of the Obligations, whereupon such transferee shall become vested with all powers and rights granted to Secured Party under this Security Agreement.

This Security Agreement shall be governed by the internal laws of the State of Louisiana, provided that where Collateral is located in a jurisdiction other than Louisiana, remedies available to Secured Party hereunder and under the laws of such jurisdiction shall be available to Secured Party without regard to any restriction of Louisiana law.

All notices and other communications provided for in this Security Agreement shall be given and deemed delivered in the manners set forth in the Loan Agreement.

If any provision of this Security Agreement shall be held to be legally invalid or unenforceable by any court of competent jurisdiction, all remaining provisions of this Security Agreement shall remain in full force and effect.

Secured Party hereby accepts this Security Agreement.

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EXECUTION VERSION

IN WITNESS WHEREOF, this Security Agreement is executed as of the Effective Date.

GRANTOR:
PHI, INC.
By:	/s/ Trudy P. McConnaughhay
Name:	Trudy P. McConnaughhay
Title:	Chief Financial Officer, Treasurer
	and Secretary
PHI AIR MEDICAL, L.L.C.
By:	/s/ Trudy P. McConnaughhay
Name:	Trudy P. McConnaughhay
Title:	Vice President and Treasurer
PHI TECH SERVICES, INC.
By:	/s/ Trudy P. McConnaughhay
Name:	Trudy P. McConnaughhay
Title:	Chief Financial Officer, Vice President and Secretary

Signature Page to Security Agreement

SECURED PARTY:
THIRTY TWO, L.L.C.
By:	/s/ Al A. Gonsoulin
Name:	Al A. Gonsoulin
Title:	Managing Member

Signature Page to Security Agreement

SCHEDULE 1

Grantor’s mailing address and chief executive office: 2001 S. E. Evangeline Thruway, Lafayette, LA 70508

Grantor’s tax identification numbers are as follows: [intentionally omitted]

EXHIBIT A

SPARE PARTS

[attached schedule intentionally omitted]

EX-10.5

Exhibit 10.5

PHI, INC.

RETENTION PLAN

In order to encourage the continued employment of certain officers and key employees of PHI, Inc. (“PHI”) and its subsidiaries (collectively, the “Company”), and to alleviate concerns about any possible loss of employment upon certain changes in control of the Company, PHI has adopted this Retention Plan (this “Plan”), effective September 20, 2018 (the “Effective Date”). This Plan is intended to qualify as a top hat welfare benefit plan under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Capitalized terms used but not defined in this Plan have the respective meanings provided in Appendix A.

ARTICLE I

ADMINISTRATION AND PARTICIPATION

1.1    Administration of the Plan. The Plan will be administered by the Committee (the “Administrator”). The Administrator has plenary authority to administer the Plan. Specifically, the Administrator will have full and final authority and discretion over the Plan including, but not limited to, the right, power, and authority to: (a) designate Participants in accordance with, and subject to, Section 1.2; (b) administer the Plan according to its terms and to resolve all questions of interpretation or application of Plan provisions; (c) process and approve or deny all claims for benefits under the Plan in accordance with Article VI; (d) correct any defect, address any omission, or reconcile any inconsistency in the Plan in the manner and to the extent it deems necessary or desirable to further the Plan’s objectives; (d) establish, amend, and rescind any rules, regulations, or policies relating to the administration of the Plan that it determines to be appropriate; and (e) make any other determination that it believes necessary or advisable for the proper administration of the Plan. The Administrator’s decisions in matters relating to the Plan will be final, binding, and conclusive on all Persons, including, but not limited to, the Company, its Affiliates, and Participants. Subject to the limitations of Section 1.2, the Committee may delegate its authority to add, subtract, or reclassify Participants to one or more officers of PHI; provided, however, that the Committee may not delegate such authority with respect to any Participant who is a “Covered Employee” as defined in the Committee’s charter.

1.2    Participation. Participation in the Plan is limited to a select group of the Company’s management or highly-compensated employees within the meaning of Sections 201, 301, and 404 of ERISA; provided, however, that such Persons have no rights under the Plan unless and until designated as a Participant in the Plan by the Administrator. Each individual who is designated as a Participant will be identified by name and position on Appendix B, which provides for a specific Protected Period for each Participant. The Administrator may, in its discretion, amend Appendix B to add, remove, or reclassify Participants from time to time; provided, however, that upon or after a Change of Control, no Participant may be removed from the Plan or reclassified to a different Protected Period without his or her consent.

ARTICLE II

EFFECT OF A CHANGE OF CONTROL OF THE COMPANY

2.1    Payment of Annual Bonus. Upon a Change of Control, each Participant who (a) is employed with the Company immediately prior to the Change of Control and (b) is a current participant in an annual or short-term incentive plan sponsored by the Company or its Affiliates, will be entitled to receive a Pro-Rata Bonus for the year in which the Change of Control occurs. Such Pro-Rata Bonus will be paid to the Participant in a single lump sum as soon as practicable following the Change of Control, but no later than five business days afterward.

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2.2    Equity Award Treatment. Upon a Change of Control, each Participant who (a) is employed with the Company immediately prior to the Change of Control and (b) holds unvested equity awards denominated in shares of PHI, Inc. common stock, will receive automatic accelerated vesting of all such unvested equity awards, effective upon the occurrence of the Change of Control, with performance on any performance-based awards deemed achieved at target levels.

ARTICLE III

COMPENSATION AND BENEFITS DURING THE PROTECTED PERIOD

3.1    Protected Period. For each Participant who is employed with the Company immediately prior to a Change of Control, his or her employment shall continue on the terms and conditions provided in this Article III for a specific Protected Period as provided on Appendix B. If the Participant experiences a Qualifying Termination during the applicable Protected Period, he or she will be entitled to the compensation and benefits provided in Article IV.

3.2    Conditions of Employment. Upon a Change of Control and during the applicable Protected Period, (a) each Participant’s position, authority, duties, responsibilities, and reporting relationship must be at least comparable in all material respects with the most significant of those held, exercised, and assigned at any time during the 120-day period immediately preceding the Change of Control, (b) each Participant’s service will be performed during normal business hours at the location where the Participant was employed immediately preceding the Change of Control or any office or location less than 50 miles from such location, and (c) to the maximum extent possible, each Participant will receive full seniority credit for his or her pre-Change of Control service to the Company.

3.3    Base Salary. During the applicable Protected Period, each Participant is entitled to receive an annual base salary, paid in installments in accordance with the Company’s regular payroll practices but no less frequently than monthly, at least equal to 12 times the highest monthly base salary paid or payable by the Company and its Affiliates to such Participant at any time during the 120-day period immediately preceding the Change of Control (as increased from time to time in accordance with this Section 3.3, the “Base Salary”). A Participant’s Base Salary may not be decreased during the applicable Protected Period without his or her written consent.

3.4    Annual Bonus. In addition to Base Salary, each Participant will be eligible to earn an annual or short-term incentive for each fiscal year during the applicable Protected Period (the “Bonus”). For each such Bonus, the target annual bonus opportunity, expressed as a percentage of Base Salary then in effect (the “Target Opportunity”), will be at least equal to the target opportunity for which the Participant is eligible for the year in which the Change of Control occurs, as such target opportunity has been established by the Company for such year under the applicable incentive plan or any comparable successor plan. If the Company has not yet established a Target Opportunity for a Participant for the fiscal year in which the Change of Control occurs, then the Target Opportunity shall be at least equal to the last such target opportunity established by the Company for such Participant. Each such Bonus, when earned, will be paid to the Participant in cash no later than two and one half months following the end of the fiscal year for which the Bonus is awarded, unless the Participant has elected to defer receipt of all or part of the Bonus pursuant to a deferral plan sponsored by the Company.

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3.5    Long-term Incentive, Savings, and Retirement Plans.    During the applicable Protected Period, each Participant will be entitled to participate in all equity incentive, savings and retirement plans, practices, policies and programs applicable generally to other peer employees of the Company, but in no event shall such plans, practices, policies, and programs provide the Participant with equity incentive grants, savings opportunities, and retirement benefit opportunities, in each case, less favorable than the most favorable of those provided by the Company to the Participant under any agreements, plans, practices, policies and programs as in effect at any time during the 120-day period immediately preceding the Change of Control or, if more favorable to the Participant, those provided generally at any time after the Change of Control to other peer employees of the Company and its Affiliates.

3.6    Health and Welfare Benefit Plans. During the applicable Protected Period, each Participant (and his or her family members or beneficiaries, as the case may be) will be eligible for participation in, and will receive all benefits under, any and all health and welfare benefit plans, practices, policies, and programs provided by the Company (which may include, without limitation, medical, prescription drug, dental, disability, employee life, group life, accidental death, and travel accident insurance plans and programs) to the extent applicable generally to other peer employees of the Company, but in no event shall such plans, practices, policies, and programs provide the Participant with benefits, in each case, less favorable than the most favorable of any agreements, plans, practices, policies and programs in effect for the Participant at any time during the 120-day period immediately preceding the Change of Control or, if more favorable to the Participant, those provided generally at any time after the Change of Control to other peer employees of the Company and its Affiliates.

ARTICLE IV

TERMINATION OF EMPLOYMENT DURING PROTECTED PERIOD

4.1    Termination of Employment Generally. In the event that a Participant dies during the applicable Protected Period, his or her employment will terminate automatically upon death. During the applicable Protected Period, (a) the Company may terminate a Participant’s employment with or without Cause and (b) a Participant may terminate his or her employment with or without Good Reason. Any termination of a Participant’s employment during the Protected Period, other than as a result of the Participant’s death, must be communicated by written notice of termination to the other party in accordance with Section 5.5, indicating the specific termination provision relied upon and the effective date of the termination.

4.2    Accrued Obligations. Upon termination of a Participant’s employment for any reason during the applicable Protected Period, he or she will be entitled to receive promptly, and in addition to any other benefits specifically provided by this Plan, (a) any earned but unpaid Base Salary through the Termination Date, (b) any accrued but unpaid vacation pay, and (c) any other amounts or benefits required to be paid or provided or which the Participant, his or her family members, beneficiaries, heirs, or legal representatives is entitled to receive under any plan, program, policy, practice, or agreement of the Company (collectively, the “Accrued Obligations”).

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4.3    Termination of Employment due to Death. If, during the Protected Period, a Participant dies, then, in addition to the Accrued Obligations, such Participant’s beneficiaries, heirs, or legal estate, will be entitled to receive a Pro Rata Bonus for the year in which the Termination Date occurred, assuming target performance, which will be paid in a lump sum within 30 days of the Termination Date.

4.4    Qualifying Termination. If a Participant experiences a Qualifying Termination, then, in addition to the Accrued Obligations, the Participant will be entitled to receive (a) a cash payment equal to the sum of (i) the Participant’s Base Salary multiplied by the applicable Severance Multiple, (ii) the Target Bonus multiplied by the applicable Severance Multiple, and (iii) the Annual Employer Premiums multiplied by the applicable Severance Multiple (without regard to whether the Participant elects COBRA coverage), all of which will be paid to him or her in a lump sum within 30 days following the Termination Date; and (b) immediate vesting of any outstanding equity or long-term incentive awards, with performance deemed to have been achieved at target performance levels for any performance-based awards.

4.5    All Other Terminations of Employment. If, during the Protected Period, a Participant’s employment is terminated by the Company with Cause or by the Participant without Good Reason, then his or her participation in this Plan will terminate without further obligation to the Participant, his or her family members, beneficiaries, or legal representatives, other than the Accrued Obligations.

4.6    Set-Off; Mitigation. Upon and after a Change of Control, the Company’s and its Affiliates’ obligations to make the payments provided for in this Plan and otherwise to perform their obligations under this Plan will not be affected by any set-off for compensation from new employment or otherwise, counterclaim, recoupment, defense or other claim, right or action which the Company or its Affiliates may have against the Participant or others. It is the intent of this Plan that in no event will a Participant be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Participant under any of the provisions of this Plan.

ARTICLE V

MISCELLANEOUS

5.1    Successors.

(a)    The Company will require that any successor to or assignee of (whether direct or indirect, by purchase, merger, consolidation or otherwise) all or substantially all of its assets or businesses in writing (i) assume unconditionally and expressly this Plan and (ii) agree to perform or to cause to be performed all of the obligations under this Plan in the same manner and to the same extent as would have been required of the Company had no assignment or succession occurred.

(b)    The Company will also require all entities that control or that after the transaction will control (directly or indirectly) the Company or any such successor or assignee to agree to cause to be performed all of the obligations under this Plan.

5.2    Status as Unfunded Plan. This Plan is an unfunded plan. All payments pursuant to the Plan will be made from the general funds of the Company and no special or separate fund will be established or other segregation of assets made to assure payment. No Participant or other Person has any interest in any particular property or assets of the Company as a result of participating in the Plan.

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5.3    Plan Amendment or Termination. Subject to Section 1.2, PHI reserves the right to amend or terminate this Plan at any time and without advance notice. Any amendment must be made in writing, executed by an officer of PHI, as authorized by the Committee. No benefits will be paid to anyone whose employment is terminated after the Plan is terminated or amended to exclude that Participant. Notwithstanding the foregoing, no amendment or termination of the Plan may be made following a Change of Control unless approved in writing by eighty percent (80%) of the Participants.

5.4    Severability. In the event any portion of the Plan or any action taken pursuant to the Plan is held to be illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provisions had not been included, and the illegal or invalid action will be null and void.

5.5    Notices. All notices under this Plan must be in writing and will be deemed to have been given upon receipt of delivery by: (a) hand (against a receipt for such delivery), (b) certified or registered mail, postage prepaid, return receipt requested, or (c) a nationally recognized overnight courier service (against a receipt for such service). All notices to PHI related to this Plan should be sent to PHI’s principal business address. All notices to a Participant should be delivered to the most recent address as provided by such Participant to the human resources department of PHI.

5.6    Governing Law. The Plan will be governed by the laws of the State of Louisiana to the extent not preempted by ERISA.

5.7    Company’s Reservation of Rights. Each Participant is employed at the pleasure of the Company and the Company has the right at any time to terminate the Participant’s status as an employee of the Company, to change or diminish his or her status during the Protected Period (subject to the rights of the Participant to claim the benefits conferred by this Plan), and to add to or remove positions from the list of Participants set forth on Appendix B. Only employees of the Company who are listed on Appendix B at the time of a Change of Control will be entitled to claim the benefits conferred on Participants by the Plan.

5.8    Withholding. The Company has the right to withhold from any amount payable to a Participant under the Plan any federal, state, and local taxes that the Company is required to withhold from such Participant to satisfy any withholding tax obligations it may have under any applicable law or regulation.

5.9    Code Section 409A. Notwithstanding any other provision of this Plan:

(a)    This Plan is intended to comply with Code Section 409A and the payments and benefits provided under this Plan are intended to either comply with, or be exempt from, Code Section 409A, and this Plan should be construed and interpreted accordingly.

(b)    If, as of a Participant’s Termination Date, such Participant is a “specified employee” (as defined and determined under Code Section 409A) and any payment or benefit

5

provided to him or her in connection with his termination of employment constitutes “non-qualified deferred compensation” subject to Code Section 409A, then the payments and benefits that may be paid to such Participant during the six-month period following the Termination Date will be limited to (i) medical benefits that are allowed to be provided during such time pursuant to Code Section 409A, (ii) any amounts that qualify for the short-term deferral exception to Code Section 409A, (iii) any amounts that qualify for the involuntary separation from service exception to Code Section 409A, and (iv) any other payments to the extent they are covered by an exception to such six-month delay applicable to specified employees. All other payments and benefits will not be paid to such Participant until the first business day that is six months after the Termination Date or, if earlier, on his or her death.

5.10    Code Section 280G. Notwithstanding any other provision of this Plan or any other plan, arrangement, or agreement to the contrary, if any of the payments or benefits provided or to be provided by the Company or its Affiliates to or for the benefit of a given Participant pursuant to the terms of this Plan or otherwise (together, the “Covered Payments”) constitute parachute payments within the meaning of Code Section 280G and would, but for this Section 5.10, be subject to Excise Tax, then prior to making the Covered Payments, a calculation must be made comparing (a) the After-Tax Benefit to the affected Participant of the Covered Payments after payment of the Excise Tax to (b) the After-Tax Benefit to such Participant if the Covered Payments are limited to the extent necessary to avoid being subject to the Excise Tax. Only if the amount calculated under (a) above is less than the amount under (b) above will the Covered Payments be reduced to the minimum extent necessary to ensure that no portion of the Covered Payments is subject to the Excise Tax. Any such reduction will be made by the Administrator in its sole discretion consistent with the requirements of Code Section 409A. Any determinations required under this Section 5.10, including whether any payments or benefits are parachute payments, will be made by the Administrator in its sole discretion.

ARTICLE VI

CLAIMS FOR BENEFITS

6.1    Claims Procedure. Claims for benefits may be made to the Administrator at the following address: 2001 SE Evangeline Thruway, Lafayette, Louisiana 70508, or such other address as the Administrator provides to Participants in writing in accordance with Section 5.5. Payments of the amounts provided in this Plan will ordinarily be made without the need for demand at the discretion of the Company. Nevertheless, a Participant who claims entitlement to a benefit may file a written claim for benefits with the Administrator within 90 days after the Participant’s employment is terminated. The Administrator will accept or reject the claim within 30 days of its receipt. If the claim is denied, the Administrator will give the reason for denial in a written notice in plain English so as to be understood by the claimant, referring to the Plan provisions that provide the basis for the denial. If any additional information or material is necessary to perfect the claim, the Administrator will identify these items and explain why such additional material is necessary.

6.2    Claim Denial and Appeal. Upon denial of a claim, the claimant may file a written request for review of the denied claim to the Administrator within 60 days of the denial. The claimant will have the opportunity to be represented by counsel and may request to be heard at a hearing. The claimant will have the opportunity to review the pertinent documents and the opportunity to submit written reasons opposing the denial. The decision upon the appeal will be made within 60 days of receipt of the requested review unless special circumstances (such as a

6

need to hold a hearing) require an extension of time for processing, in which case a decision will be made as soon as possible, but no later than 120 days after receipt of a request for review. If such extension of time for review is required, because of special circumstances, written notice of the extension will be furnished to the claimant prior to the commencement of the extension. If the appeal is denied, the denial must be made in writing.

7

PHI, Inc. has adopted this Retention Plan effective as of the Effective Date.

PHI, Inc.
By:	/s/ C. Russell Luigs
	C. Russell Luigs
	Chairman, Compensation Committee of the Board of Directors

8

Appendix A

Definitions

Unless otherwise defined in this Plan (including the preamble), the following terms (and capitalized variants of such terms) have the meanings indicated, unless the context clearly indicates otherwise:

“Accrued Obligations” has the meaning provided in Section 4.2.

“Administrator” has the meaning provided in Section 1.1.

“Affiliate” means a Person that controls, or is controlled by, or is under common control with, another specified Person, either directly or indirectly.

“Annual Employer Premiums” means, with respect to a given Participant, the highest monthly value of the employer portion of all health and welfare benefit premiums paid by the Company and its Affiliates on behalf of such Participant at any time during the 120-day period immediately preceding the Termination Date, multiplied by 12.

“Base Salary” has the meaning provided in Section 3.3.

“Bonus” has the meaning provided in Section 3.4.

“Cause” means, with respect to a given Participant, any of the following:

(a)    the willful and continued failure of the Participant to substantially perform his or her duties with the Company (other than any such failure resulting from the Participant’s incapacity due to physical or mental illness), after a written demand for substantial performance is delivered to the Participant by the Committee that (i) specifically identifies the manner in which the Committee believes that the Participant has not substantially performed his or her duties and (ii) with respect to conduct that is susceptible of cure (as determined by the Committee in its sole discretion), provides the Participant with a reasonable opportunity (but in no event more than 30 days) to cure;

(b)    the willful engaging by the Participant in conduct which is demonstrably and materially injurious to the Company or its Affiliates, monetarily or otherwise;

(c)    the Participant’s indictment for, conviction of, or guilty or no contest plea to, a felony or any crime involving dishonesty; or

(d)    the Participant’s willful misappropriation of Company funds, or any other willful act of personal dishonesty that is a material violation of the Company’s policies.

For purposes of this definition of “Cause,” no act or failure to act, on the part of the Participant, will be considered “willful” unless it is done, or omitted to be done, by the Participant in bad faith or without reasonable belief that his or her action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the board of directors of PHI or one of its committees will be conclusively presumed to be done, or omitted to be done, by the Participant in good faith and in the best interests of the Company.

A-1

“Change of Control” means any of the following:

(a)    a consolidation, merger, or similar transaction or series of related transactions, including, without limitation, (i) a sale or other disposition of equity interests, in which PHI is not the surviving entity; or (ii) an event that results in the acquisition of all or substantially all of the equity interests in PHI by a Person or group of Persons acting in concert who were not Affiliates of the Company as of the Effective Date;

(b)    a sale or transfer of all or substantially all of the Company’s assets, in either case, taken as a whole, to a Person or group of Persons acting in concert who were not Affiliates of the Company as of the Effective Date; or

(c)    a dissolution or liquidation of PHI;

provided, in each case, that the transaction constitutes a “change in control event” for purposes of Code Section 409A.

“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, including any regulations and guidance issued under the applicable section.

“Committee” means the compensation committee of the board of directors of PHI, Inc.

“Company” means the Company as defined in the preamble and any successor to or assignee of (whether direct or indirect, by purchase, merger, consolidation or otherwise) all or substantially all of the assets or business of the Company.

“Covered Payments” has the meaning provided in Section 5.10.

“Effective Date” has the meaning provided in the preamble.

“ERISA” has the meaning provided in the preamble.

“Excise Tax” means the excise tax imposed under Code Section 4999, any similar tax imposed by state or local law, and any interest or penalties with respect to such taxes.

“Good Reason” means the existence of any of the following, without the Participant’s written consent:

(a)    a material diminution in the Participant’s Base Salary or Target Opportunity;

(b)    a material diminution in the Participant’s authority, duties, responsibilities, or reporting relationship;

A-2

(c)    a change to the Participant’s primary work location requiring the Participant to be based more than 50 miles from the location at which he or she provided services to the Company immediately prior to the Change of Control; or

(d)    a material breach of the Agreement by the Company including, but not limited to, the failure of the Company or its Affiliates to obtain the assumption of their obligations under this Agreement by any successor or assign as contemplated in Section 6.1.

For purposes of this definition, a Participant’s termination will not be considered to have been with Good Reason unless (x) he or she provides written notice to the Company of the condition constituting Good Reason within 90 days of the Participant having knowledge of its initial existence, (y) such condition remains uncured for at least 30 days following the Company’s receipt of the Participant’s notice, and (z) the Participant actually terminates employment following the expiration of any cure period but within two years of the initial occurrence of such condition.

“Net Benefit” means the present value of all Covered Payments to a given Participant, net of all federal, state, local, foreign income, employment and Excise Tax.

“Participant” means an individual who has been designated to participate in the Plan by the Administrator in accordance with Section 1.2.

“Person” means a natural person or company, and also means the group or syndicate created when two or more Persons act as a syndicate or other group (including, without limitation, a partnership or limited partnership) for the purpose of acquiring, holding, or disposing of a security, except that “Person” does not include an underwriter temporarily holding a security pursuant to an offering of the security.

“PHI” means PHI as defined in the preamble and any successor to or assignee of (whether direct or indirect, by purchase, merger, consolidation or otherwise) all or substantially all of the assets or business of PHI.

“Plan” has the meaning provided in the preamble.

“Pro-Rata Bonus” means a Bonus for the fiscal year in which a Change of Control and/or the Termination Date occurs, calculated as provided in the applicable annual or short-term incentive plan based on target performance, pro-rated for the portion of the fiscal year between January 1 and, as applicable, the effective date of the Change of Control or the Termination Date.

“Protected Period” means, for a given Participant, the period of time beginning on the effective date of a Change of Control and continuing for the number of full months specified on Appendix B.

“Qualifying Termination” means the termination of a Participant’s employment (a) by the Company without Cause or (b) by the Participant with Good Reason, in either case during the Protected Period or the thirty-day period prior to the occurrence of the Change of Control.

“Severance Multiple” means, for a given Participant, the numerical value of his or her Protected Period as provided on Appendix B, divided by 12.

A-3

“Target Bonus” means the target Bonus for which the Participant is eligible for a given fiscal year, as established by the Company for such year, or, if no target Bonus has been established as of the applicable date, the Base Salary multiplied by the Target Opportunity.

“Target Opportunity” has the meaning provided in Section 3.4.

“Termination Date” means the date that the Participant has a “separation of service,” as such term is used in Section 409A, regardless of the reason for termination of employment.

A-4

Appendix B

Schedule of Participants

Name	Title	Protected Period     (Months)
Al Gonsoulin	Chairman/CEO	36
Lance Bospflug	President/COO	36
Trudy McConnaughhay	CFO, Treasurer, Secretary	24
James Hinch	CAO	24
David Stepanek	President, Domestic Oil & Gas	24

[remainder of participants intentionally omitted]

B-1

EX-99.1

Exhibit 99.1

PRESS RELEASE

FOR IMMEDIATE RELEASE

PHI PROVIDES UPDATE ON ITS REFINANCING AND STRATEGIC PLANS

LAFAYETTE, LOUISIANA, September 28, 2018 – PHI, Inc. (The Nasdaq Select Global Market: PHII (voting); PHIIK (non-voting)) announced today several steps related to its long-term financial and strategic positioning, including the refinancing of its senior secured revolving credit facility and a review of the Company’s potential strategic alternatives.

Refinancing of Secured Debt

On September 28, 2018, the Company borrowed $130 million from the financing affiliate of Al A. Gonsoulin, the Company’s Chairman, CEO and controlling shareholder. The loan bears interest at a rate of 6% per year, and matures on September 28, 2020. The proceeds of this loan were used to repay and terminate the Company’s senior secured revolving credit facility (the “Terminated Facility”) and to cash collateralize letters of credit that will remain outstanding.

The loan from Mr. Gonsoulin’s affiliate is guaranteed by two of the Company’s principal subsidiaries. The obligations of the Company and the two guarantors are secured by their domestic inventory, spare parts and accounts receivable. These guaranties and collateral match the guaranties and collateral that previously secured the Terminated Facility. Unlike the Terminated Facility, the loan from Mr. Gonsoulin’s affiliate includes no financial covenants.

In connection with unanimously approving the new loan, the Company’s independent directors received an opinion issued by a nationally-recognized financial advisory firm that the loan is fair to the Company from a financial point of view.

Retainment of Financial Advisor

The Company also announced its engagement of Houlihan Lokey as its financial advisor to assist the Company in exploring and evaluating a broad range of potential strategic alternatives to improve the Company’s liquidity and enhance shareholder value. At this time, the Company’s Board has not set a timetable for the completion of this process, nor has it made any decisions related to specific strategic alternatives. There is no assurance that this process will result in any particular outcome. The Company does not intend to provide any updates on its process unless or until it determines that further disclosure is necessary or appropriate.

Retention Arrangements

The Company further announced the adoption of new retention plans providing potential benefits in the event of certain change of control transactions. These arrangements are designed to ensure continuity of its business and senior leadership teams through the completion of the strategic alternatives review and any potential outcome of that process.

About PHI, Inc.

PHI, Inc. is one of the world’s leading helicopter services companies, operating over 240 aircraft in over 70 locations around the world. Known industry wide for the relentless pursuit of safe, reliable helicopter transportation, PHI offers services to the offshore Oil and Gas, Air Medical applications, and Technical Services applications around the world. PHI’s professional staff gives the company a great depth in all areas of operation and is composed of highly skilled, dedicated, hardworking and loyal employees. In addition to operations in the United States, the company has operated in 43 foreign countries and continues to operate for customers across the globe. PHI’s Headquarters are in Lafayette, Louisiana USA and PHI employs approximately 2,400 personnel globally.

Additional information about the above-described transactions can be found in the Current Report on Form 8-K that the Company intends to file on the date hereof with the U.S. Securities and Exchange Commission.

Forward-Looking Statements

All statements other than statements of historical fact contained in this press release are “forward-looking” statements, as defined by (and subject to the “safe harbor” protections under) the federal securities laws. When used herein, the words “anticipates,” “expects,” “believes,” “seeks,” “hopes,” “intends,” “plans,” “projects,” “views,” “will” and similar words and expressions are intended to identify forward-looking statements. Forward-looking statements are based on a number of judgments and assumptions as of the date such statements are made about future events, many of which are beyond PHI’s control. These forward-looking statements, and the assumptions on which they are based, (i) are not guarantees of future events, (ii) are inherently speculative and (iii) are subject to significant risks, uncertainties. Actual events and results may differ materially from those anticipated, estimated, projected or implied by us in those statements if one or more of these risks or uncertainties materialize, or if PHI’s underlying assumptions prove incorrect. All of PHI’s forward-looking statements are qualified in their entirety by reference to PHI’s discussion of certain important factors that could cause PHI’s actual results to differ materially from those anticipated, estimated, projected or implied by us in those forward looking statements.

Factors that could cause PHI’s results to differ materially from the expectations expressed in such forward-looking statements include, but are not limited to, the failure of our strategic review to identify attractive alternatives; changes in the capital markets or other market or financial conditions; corporate developments that could preclude, impair or delay any of the above-described transactions due to restrictions under the federal securities laws; changes in the credit ratings of PHI; changes in PHI’s cash requirements, financial position, financing plans or investment plans; changes in general market, economic, tax, regulatory or industry conditions that impact the ability or willingness of PHI to pursue or consummate any of the above-described transactions on the terms described above or at all; and other risks referenced from time to time in PHI’s filings with the U.S. Securities and Exchange Commission. There can be no assurances that any of the above-described transactions will be consummated on the terms described above or at all.

Additional factors or risks that PHI currently deems immaterial, that are not presently known to us, that arise in the future or that are not specific to us could also cause PHI’s actual results to differ materially from its expected results. Given these uncertainties, investors are cautioned not to unduly rely upon PHI’s forward-looking statements, which speak only as of the date made. PHI undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or developments, changed circumstances, or otherwise. Further, PHI may make changes to its plans at any time and without notice, based on any changes in the above-listed factors, PHI’s assumptions or otherwise.

CONTACTS

PHI, Inc.

Trudy McConnaughhay

Chief Financial Officer and Secretary

337-272-4452