Second Amended and Restated CREDIT AGREEMENT among AEROCENTURY CORP. and Certain Banking Institutions Named Herein with NATIONAL CITY BANK as Agent April 17, 2007
Second
Amended and Restated
among
and
Certain
Banking Institutions Named Herein
with
NATIONAL
CITY BANK
as
Agent
April
17, 2007
Second
Amended and Restated
This
Second Amended and Restated Credit Agreement, dated April 17, 2007 (the
"Agreement"), is entered into by and between AeroCentury
Corp.,
a
Delaware corporation ("AeroCentury"),
the
banking institutions signatories hereto and named in Exhibit A attached hereto
and such other institutions that hereafter become a "Bank" pursuant to §10.4
hereof (collectively the "Banks"
and
individually a "Bank")
and
National
City Bank,
a
national banking association, as agent for the Banks under this Agreement
("National
City"
which
shall mean in its capacity as agent unless specifically stated
otherwise).
Preliminary
Statement
WHEREAS,
AeroCentury desires to have available to it a credit facility the proceeds
of
which may be used for (a) the purchase of Equipment (as defined herein) for
lease to unaffiliated persons, said Equipment and related leases to constitute
part of the Collateral (as defined herein), (b) working capital needs and
(c) general corporate purposes.
WHEREAS,
AeroCentury has requested that the Bank or Banks, as applicable, make available
to it such credit facility and make loans to it under the terms and conditions
hereinafter set forth.
WHEREAS,
the Bank or Banks, as applicable, is or are willing to make available such
credit facility and to make loans to AeroCentury under the terms and conditions
hereinafter set forth.
NOW,
THEREFORE, in consideration of the premises and promises hereinafter set forth
and intending to be legally bound hereby, the parties hereto agree as
follows:
| 1. |
Certain
Definitions
|
| 1.1. |
Definitions.
|
"Additional
Amount"
shall
have the meaning set forth in §2.1(h).
"Affiliate"
shall
mean any Person: (1) which directly or indirectly controls, or is
controlled by, or is under common control with AeroCentury; (2) which
directly or indirectly beneficially owns or holds ten percent (10%) or more
of
any class of voting stock of AeroCentury; or (3) of which ten percent (10%)
or more of the voting stock is directly or indirectly beneficially owned or
held
by AeroCentury. The term "Control" means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies
of
a Person, whether through the ownership of voting securities, by contract,
or
otherwise.
"Agent"
shall
mean National City Bank.
"Aggregate
Revolving Loan Commitment"
shall
have the meaning set forth in §2.1(a).
"Agreement"
shall
mean this Credit Agreement, as amended, supplemented, modified, replaced,
substituted for or restated from time to time and all exhibits and schedules
attached hereto.
"Alternate
Base Rate"
shall
mean, for any day, the higher of the Federal Funds Rate plus ½ of 1% or the
prime commercial lending rate of National City Bank, as announced from time
to
time at its head office, calculated on the basis of the actual number of days
elapsed in a year of 365 or 366 days, in the case of a leap year.
"Amended
and Restated Credit Agreement"
shall
mean the Credit Agreement, dated June 28, 2000 as amended March 7, 2002, January
1, 2003, June 28, 2003, August 28, 2003, August 30, 2003, January 4, 2004,
October 28, 2004, November 4, 2004, October 31, 2005, November 9, 2005, December
19, 2005 and May 15, 2006, among AeroCentury, the banking institutions
signatories thereto and named in Exhibit A attached thereto and National City
Bank, as Agent.
"Applicable
Borrowing Margin"
shall
have the meanings set forth in Schedule 2 attached to this Agreement as it
pertains to Base Rate Loans and LIBO Rate Loans.
"Base
Rate Loans"
shall
mean Revolving Credit Loans accruing interest based on the Alternate Base Rate
plus the Applicable Borrowing Margin.
"Borrowing"
shall
mean a borrowing hereunder consisting of Loans made to AeroCentury by the Banks
on a given occasion.
"Borrowing
Base"
shall
mean 75% of the lowest of (1) the acquisition cost of each item of Equipment
included in Eligible Collateral, or (2) the net book value of each item of
Equipment included in Eligible Collateral, or (3) the aggregate appraised value
of all items of Equipment included in Eligible Collateral based on the most
recent independent appraisal completed on behalf of AeroCentury. Net book value
shall be calculated using AeroCentury’s then current depreciation practices and
both (1) and (2) above shall be calculated in accordance with GAAP. The
foregoing test shall be determined separately for each item of Equipment
included in Eligible Collateral. Notwithstanding the foregoing, Equipment
subject to Eligible Leases which have remaining lease terms of less than three
months shall not at any time be included in the Borrowing Base to the extent
such Equipment constitutes more than 20% of the Borrowing Base. Remaining lease
terms shall not include renewal options.
"Borrowing
Base Certificate"
shall
mean a certificate in substantially the form attached hereto as Exhibit C which
shall be signed by the chief executive officer, chief operating officer, chief
financial officer or a Senior Vice President of AeroCentury.
"Business
Day"
shall
mean any day other than a Saturday, Sunday, or other day on which commercial
banks are authorized or required to close under the laws of the Commonwealth
of
Pennsylvania or the State of California and, if the applicable day relates
to a
LIBO Rate Loan, or notice with respect to a LIBO Rate Loan, a day on which
dealings in Dollar deposits are also carried on in the London interbank market
and banks are open for business in London ("London Business Day").
"Capitalized
Lease"
shall
mean all lease obligations of any Person for any property (whether real,
personal or mixed) which have been or should be capitalized on the books of
the
lessee in accordance with Generally Accepted Accounting Principles.
"Capitalized
Lease Obligations"
with
respect to any Person, shall mean the aggregate amount which, in accordance
with
GAAP, is required to be reported as a liability on the balance sheet of such
Person at such time in respect of such Person's interest as lessee under a
Capitalized Lease.
"Closing"
shall
mean the consummation of all requirements set forth in this Agreement such
that
AeroCentury shall be entitled to request and receive Loans
hereunder.
"Closing
Date"
shall
mean the first date on which both (i) this Agreement shall have been
executed and delivered by AeroCentury and each Bank, and (ii) the
conditions to the first loan as set forth in §4.2 shall have been
met.
"Code"
shall
mean the Internal Revenue Code of 1986, as amended from time to time, and all
rules and regulations with respect thereto in effect from time to
time.
"Collateral"
shall
mean those assets defined as "Collateral" in the Security Agreement (including
but not limited to the Equipment and the related leases therefor).
"Covenant
Compliance Certificate"
shall
mean a certificate in substantially the form attached hereto as Exhibit D,
or
such other form as National City shall request from time to time, which shall
be
signed by the chief executive officer, chief operating officer, chief financial
officer or a Senior Vice President of AeroCentury.
"Debt"
shall
mean, as of any date of determination with respect to AeroCentury, without
duplication, (i) all items which in accordance with GAAP would be included
in determining total liabilities as shown on the liability side of a balance
sheet of AeroCentury as of the date on which Debt is to be determined,
(ii) all indebtedness of others with respect to which AeroCentury has
become liable by way of a guarantee or endorsement (other than for collection
or
deposit in the ordinary course of business), (iii) all contingent
liabilities of AeroCentury, including letters of credit, required to be either
accrued or disclosed in accordance with GAAP, (iv) lease obligations that,
in conformity with GAAP, have been capitalized on AeroCentury's balance sheet,
and (v) the present value of any outstanding Operating Lease payments
discounted at 10%, LESS (vi) Non-Recourse Debt and (vii) Subordinated
Debt.
"Debt
Service" shall
mean the sum of (i) current maturities (amounts due within the next twelve
months) of all Recourse Debt, excluding any lump sum payments due at the
expiration of any Recourse Debt, (ii) current amounts due (within the next
twelve months) in respect of all leases, but excluding any lump sum payments
due
at the expiration of any lease, and (iii) 1/12th of the average principal
balance of the Notes outstanding for the four most recent Fiscal
Quarters.
"Default
Rate"
on any
Loan shall mean 2% per annum above the Alternate Base Rate plus Applicable
Borrowing Margin then in effect. In the case of Letter of Credit fees such
fees
shall be fees then payable plus 2% per annum in addition thereto calculated
on
the same base as such fees.
"Dollars"
shall
mean the lawful currency of the United States of America.
"EBITDA"
shall
mean the sum of Net Income plus the amounts deducted from Net Income as expenses
for interest, taxes, depreciation and amortization.
"Eligible
Collateral"
shall
mean the sum of (1) Equipment included in the Collateral which is subject
to an Eligible Lease, and (2) Equipment included in the Collateral which is
not subject to a lease, provided that
(a) the aggregate of such Equipment shall not at any time exceed 10% of the
Aggregate Revolving Loan Commitment, and (b) the maximum period for which
any item of such Equipment shall not have been subject to an Eligible Lease
does
not exceed four months. In order to be Eligible Collateral, National City as
Agent shall possess a first priority security interest in said Collateral to
secure the payment, promptly when due, and the punctual performance of all
of
the "Liabilities" as defined in the Security Agreement.
"Eligible
Lease Receivables"
shall
mean a lease for Equipment to an unaffiliated Person in which
(i) AeroCentury is the sole lessor or lessor of the Equipment,
(ii) the lease arose in the ordinary course of business of AeroCentury,
(iii) the Equipment has been delivered to the lessee and is currently
subject to the lease, (iv) neither the lease nor the Equipment is subject
to any currently outstanding assignment, claim, lien, security interest or
other
limitation on the absolute title of AeroCentury, (v) the lease payments are
not more than 30 days past due with respect to any payment required thereby
(based on the contractual terms in existence at the date the lease was included
in the Collateral and not including any subsequent amendment or modification
thereof, unless National City has specifically consented thereto in writing),
(vi) the lease is freely assignable by the lessor (with any notices or
consents required in connection therewith having been previously obtained,
and
subject to any lease requirements concerning the net worth of the assignee),
(vii) the lease and the Equipment being leased constitute Collateral,
(viii) the remaining lease term at the time of assignment to the Bank is
for a period of seven years or less, (ix) the lease is a noncancellable,
triple net lease in which the lessee may not assert, as an offset, any defenses
or claims against the lessor arising from the condition or the intended use
of
the subject matter, except in the case of leases with terms of less than twelve
months in which AeroCentury may be responsible for maintenance and except in
the
case of a lease where AeroCentury assumes the obligation to pay some or all
of
the cost of engine overhaul, airworthiness directives or manufacturer or
government ordered modifications required during the term of the lease, so
long
as the lease states that such obligation is solely that of AeroCentury and
imposes no obligation on the Banks (whether as secured parties or successor
in
interest to AeroCentury's ownership interest in the leased aircraft) and
lessee's only remedy for breach of the obligation is an independent action
against AeroCentury, and lessee waives any and all right to offset such
obligation against lease payments owed AeroCentury, and (x) the lessee is
not a resident of, and the Equipment will not be subject to the laws of any,
foreign jurisdiction in which, in the sole determination of National City,
the
ability of the Bank to perfect a first priority security interest in the
Equipment is unsatisfactory or the ability of National City to foreclose upon
the Equipment and receive possession to or sell said Equipment is
unsatisfactory.
"Environmental
Control Statutes"
shall
mean each and every applicable federal, state, county or municipal environmental
statute, ordinance, rule, regulation, order, directive or requirement, together
with all successor statutes, ordinances, rules, regulations, orders, directives
or requirements, of any Governmental Authority, including without limitation
laws in any way related to hazardous substances.
"Equipment"
shall
mean new and used regional aircraft and related aircraft engines each of which
is either subject to an existing lease or is intended to be leased or re-leased
within four months immediately following the date in question. The aircraft
or
the aircraft engine, as applicable, shall have been manufactured within 28
years
immediately preceding the date in question, shall be in good working order
immediately or within a reasonable period of time, as determined by National
City, and shall be usable for commercial flight purposes immediately or within
a
reasonable period of time, as determined by National City.
"ERISA"
shall
mean the Employee Retirement Income Security Act of 1974, as it may be amended
from time to time.
"ERISA
Affiliate"
shall
mean any corporation which is a member of the same controlled group of
corporations as AeroCentury within the meaning of §414(b) of the Code, or any
trade or business which is under common control with AeroCentury within the
meaning of §414(c) of the Code.
"Event
of Default"
shall
have the meaning set forth in §8.1.
"Federal
Funds Rate"
shall
mean, for any day, the rate per annum (rounded upwards, if necessary, to the
nearest 1/100 of 1%) equal to the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers on such day, as published by the Federal Reserve Bank
of New York on the Business Day next succeeding such day, provided that if
the
day for which such rate is to be determined is not a Business Day, the Federal
Funds Rate for such day shall be such rate on such transactions on the next
preceding Business Day as so published on the next succeeding Business
Day.
"Fiscal
Quarter"
shall
mean a fiscal quarter of AeroCentury, which shall be any quarterly period ending
on March 31, June 30, September 30 or December 31 of any year.
"Fiscal
Year"
shall
mean a fiscal year of AeroCentury, which shall end on the last day of
December.
"Generally
Accepted Accounting Principles" or "GAAP"
shall
mean generally accepted accounting principles as in effect from time to time
in
the United States, consistently applied.
"Governmental
Authority"
shall
mean the federal, state, county or municipal government, or any department,
agency, bureau or other similar type body obtaining authority therefrom or
created pursuant to any laws.
"Intangible
Assets"
shall
mean all assets which would be classified as intangible assets under GAAP
consistently applied, including, without limitation, goodwill (whether
representing the excess of cost over book value of assets acquired or
otherwise), patents, trademarks, trade names, copyrights, franchises, and
deferred charges (including, without limitation, unamortized debt discount
and
expense, organization costs, and research and development costs). For purposes
of this definition, prepayments of taxes, license fees and other expenses shall
not be deemed Intangible Assets.
"Interest"
shall
mean that amount of interest expense with respect to a Fiscal Quarter as
calculated in accordance with GAAP.
"Interest
Period"
shall
mean with respect to any LIBO Rate Loan, each period commencing on the date
any
such Loan is made, or, with respect to a Loan being renewed, the last day of
the
next preceding Interest Period with respect to a Loan, and ending on the
numerically corresponding day (or, if there is no numerically corresponding
day,
on the last day of the calendar month) in the first, second, third or sixth
calendar month thereafter as selected under the procedures specified in § 2.3,
if the Banks are then offering LIBO Rate Loans for such period; provided that
each LIBO Rate Loan Interest Period which would otherwise end on a day which
is
not a Business Day (or, for purposes of Loans to be repaid on a London Business
Day, such day is not a London Business Day) shall end on the next succeeding
Business Day (or London Business Day, as appropriate) unless such next
succeeding Business Day (or London Business Day, as appropriate) falls in the
next succeeding calendar month, in which case the Interest Period shall end
on
the next preceding Business Day (or London Business Day, as
appropriate).
"Investment"
in any
Person shall mean (a) the acquisition (whether for cash, property, services
or securities or otherwise) of capital stock, bonds, notes, debentures,
partnership or other ownership interests or other securities of such Person;
(b) any deposit with, or advance, loan or other extension of credit to,
such Person (other than any such deposit, advance, loan or extension of credit
having a term not exceeding 90 days in the case of unaffiliated Persons and
120
days in the case of Affiliates representing the purchase price of inventory
or
supplies purchased in the ordinary course of business) or guarantee or
assumption of, or other contingent obligation with respect to, Recourse Funded
Debt or other liability of such Person; and (c) (without duplication of the
amounts included in (a) and (b)) any amount that may, pursuant to the terms
of
such investment, be required to be paid, deposited, advanced, lent or extended
to or guaranteed or assumed on behalf of such Person.
"JMC"
shall
have the meaning set forth in §6.6.
"Letter
of Credit"
shall
mean only those letters of credit issued pursuant to a completed application
on
the form of letter of credit application required by National City Bank at
the
time of the request for each Letter of Credit.
"LIBO
Rate"
shall
mean, for the applicable Interest Period, (i) the rate, rounded upwards to
the next one-sixteenth of one percent, determined by National City two London
Business Days prior to the date of the corresponding LIBO Rate Loan, at which
National City is offered deposits in dollars at approximately 11:00 a.m., London
time by leading banks in the interbank eurodollar or eurocurrency market for
delivery on the date of such Loan in an amount and for a period comparable
to
the amount and Interest Period of such Loan and in like funds, divided by
(ii) a number equal to one (1.0) minus the LIBO Rate Reserve Percentage.
The LIBO Rate shall be adjusted automatically with respect to any LIBO Rate
Loan
outstanding on the effective date of any change in the LIBO Rate Reserve
Percentage, as of such effective date. LIBO Rate shall be calculated on the
basis of the number of days elapsed in a year of 360 days.
"LIBO
Rate Reserve Percentage"
shall
mean, for any LIBO Rate Loan for any Interest Period, the daily average of
the
stated maximum rate (expressed as a decimal) at which reserves (including any
marginal, supplemental, or emergency reserves) are required to be maintained
during such Interest Period under Regulation D by any Bank against "Eurocurrency
liabilities" (as such term is used in Regulation D) but without benefit of
credit proration, exemptions, or offsets that might otherwise be available
to
any Bank from time to time under Regulation D. Without limiting the effect
of
the foregoing, the LIBO Rate Reserve Percentage shall reflect any other reserves
required to be maintained by National City against (1) any category of
liabilities which includes deposits by reference to which the rate for LIBO
Rate
Loans is to be determined; or (2) any category of extension of credit or
other assets which include LIBO Rate Loans.
"LIBO
Rate Loans"
shall
mean Revolving Credit Loans accruing interest based on the LIBO Rate plus the
Applicable Borrowing Margin.
"Lien"
shall
mean any lien, mortgage, security interest, chattel mortgage, pledge or other
encumbrance (statutory or otherwise) of any kind securing satisfaction of any
obligation to any Person, including any agreement to give any of the foregoing,
any conditional sales or other title retention agreement, any lease in the
nature thereof, and the filing of or the agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction or similar
evidence of any encumbrance, whether within or outside the United
States.
"Loan"
or "Loans"
shall
have the meanings set forth in §2.1.
"Loan
Documents"
shall
mean this Agreement, the Notes, the Security Agreement, and all other documents
directly related or incidental to said documents, the Loans or the Collateral,
but shall not include any Swap Agreement.
"Management
Agreement"
shall
have the meaning set forth in §6.6.
"Material
Adverse Change"
shall
mean any event or condition which (a) is reasonably likely to result, in
the determination of National City or the Required Banks, in a material adverse
change in the financial condition, business, properties or prospects of
AeroCentury, or (b) gives reasonable grounds to conclude that AeroCentury
will not be able to perform or observe (in the normal course) its existing
obligations under the Loan Documents to which it is a party, including but
not
limited to the Notes.
"Material
Adverse Effect"
shall
mean a material adverse effect on (i) the financial condition, business,
properties, or prospects of AeroCentury, (ii) the ability of AeroCentury to
perform its existing obligations under this Agreement, the Notes and the other
Loan Documents, or (iii) the legality, validity or enforceability of this
Agreement or the Notes or the rights and remedies of the holders of the
Loans.
"Monthly
Lease Portfolio"
shall
mean a report in summary form of the status of accounts receivable in respect
of
all leases which are part of the Collateral in form and substance reasonably
satisfactory to the Required Banks.
"Multiemployer
Plan"
shall
mean a multiemployer plan as defined in ERISA §4001(a)(3), which covers
employees of AeroCentury or any ERISA Affiliate.
"Net
Income"
shall
mean net income after income taxes as shown on the income
statement.
"Net
Worth"
shall
mean the sum of capital stock, plus paid-in-capital, plus retained earnings,
plus the portion of unsecured subordinated debt which is due and payable after
the Revolver Termination Date, minus the net worth of any Unrestricted
Subsidiaries.
"Non-Recourse
Debt"
shall
mean Debt with respect to which the creditor or lender does not have recourse
against AeroCentury by reason of any guaranty or other obligation on the part
of
AeroCentury.
"Note"
or "Notes"
shall
have the meaning set forth in §2.2.
"Obligations"
shall
mean all now existing or hereafter arising debts, obligations, covenants, and
duties of payment or performance of every kind, matured or unmatured, direct
or
contingent, owing, arising, due, or payable to the Banks or National City,
as
Agent, by or from AeroCentury arising out of this Agreement or any other Loan
Document, including, without limitation, all obligations to repay principal
of
and interest on the Loans, and to pay interest, fees, costs, charges, expenses,
professional fees, and all sums chargeable to AeroCentury or for which
AeroCentury is liable as indemnitor under the Loan Documents, whether or not
evidenced by any note or other instrument as well as any and all existing and
future obligations of AeroCentury under or in connection with Swap Agreements
with any one or more of the Banks, including but not limited to National City,
pertaining to the Loans hereunder.
"Operating
Lease",
with
respect to any Person, shall mean the aggregate amount which, in accordance
with
GAAP, is not required to be reported as a liability on the balance sheet of
such
Person at such time in respect of such Person's interest as lessee under an
Operating Lease.
"PBGC"
shall
mean the Pension Benefit Guaranty Corporation and any successor
thereto.
"Pension
Plan"
shall
mean, at any time, any Plan (including a Multiemployer Plan), the funding
requirements of which (under ERISA §302 or Code §412) are, or at any time within
the six years immediately preceding the time in question, were in whole or
in
part, the responsibility of AeroCentury or any ERISA Affiliate.
"Permitted
Debt"
shall
mean (a) Debt of AeroCentury under this Agreement and the Notes,
(b) Debt incurred in the ordinary course of AeroCentury's business which is
unsecured and does not constitute Recourse Funded Debt, (c) Debt of the Issuer
existing as of the Initial Closing Date and included on Schedule 1 hereto,
(d) Debt which is subordinated to Debt under this Agreement and the Notes
on terms and conditions acceptable to the Banks, in their sole discretion,
including the Satellite Notes, (e) Debt of an Unrestricted Subsidiary for
which AeroCentury is not a guarantor in whole or in part or otherwise liable,
(f) Debt for which the Issuer is a guarantor but which the only recourse to
the
Issuer in connection with such Debt is limited solely to the equity interests
of
such Unrestricted Subsidiary owned by the Issuer so long as in either case
the
aggregate principal amount of such Debt does not exceed an amount equal to
75%
of the aggregate book value of the assets of such Unrestricted
Subsidiary.
"Permitted
Liens"
shall
mean (a) any Liens for current taxes, assessments and other governmental
charges not yet due and payable or being contested in good faith by AeroCentury
by appropriate proceedings and for which adequate reserves have been established
by AeroCentury as reflected in AeroCentury's financial statements; (b) any
mechanic's, materialman's, carrier's, warehousemen's or similar Liens for sums
not yet due or being contested in good faith by AeroCentury by appropriate
proceedings and for which adequate reserves have been established by AeroCentury
as reflected in AeroCentury's financial statements; (c) easements,
rights-of-way, restrictions and other similar encumbrances on the real property
or fixtures of AeroCentury incurred in the ordinary course of business which
individually or in the aggregate are not substantial in amount and which do
not
in any case materially detract from the value or marketability of the property
subject thereto or interfere with the ordinary conduct of the business of
AeroCentury; (d) Liens (other than Liens imposed on any property of
AeroCentury pursuant to ▇▇▇▇▇ ▇▇ §▇▇▇ of the Code) incurred or deposits made in
the ordinary course of business, including Liens in connection with workers'
compensation, unemployment insurance and other types of social security and
Liens to secure performance of tenders, statutory obligations, surety and appeal
bonds (in the case of appeal bonds such Lien shall not secure any reimbursement
or indemnity obligation in an amount greater than $250,000), bids, leases that
are not Capitalized Leases, performance bonds, sales contracts and other similar
obligations, in each case, not incurred in connection with the obtaining of
credit or the payment of a deferred purchase price, and which do not, in the
aggregate, result in a Material Adverse Effect; (e) Liens, if any, existing
on the date hereof and listed in Schedule 1 hereto; and (f) Liens on the
assets of Unrestricted Subsidiaries.
"Person"
shall
mean any individual, corporation, partnership, joint venture, association,
company, business trust or entity, or other entity of whatever
nature.
"Plan"
shall
mean an employee benefit plan as defined in §3(3) of ERISA, other than a
Multiemployer Plan, whether formal or informal and whether legally binding
or
not.
"Potential
Default"
shall
mean an event, condition or circumstance that with the giving of notice or
lapse
of time or both would become an Event of Default.
"Prohibited
Transaction"
shall
mean a transaction that is prohibited under Code §4975 or ERISA §406 and not
exempt under Code §4975 or ERISA §408.
"Recourse
Debt"
shall
mean Debt with respect to which the creditor or lender has or may have recourse
against AeroCentury by reason of any guaranty or other obligation on the part
of
AeroCentury.
"Recourse
Funded Debt"
shall
mean (i) all indebtedness, liabilities, and obligations, now existing or
hereafter arising, for money borrowed by AeroCentury on a recourse basis whether
or not evidenced by any note, indenture, or agreement (including, without
limitation, the Note, any indebtedness for money borrowed from an Affiliate
and
all outstanding letters of credit) and (ii) all indebtedness of others for
money
borrowed (including indebtedness of an Affiliate) with respect to which
AeroCentury has become liable on a recourse basis by way of a guarantee or
indemnity. For the avoidance of doubt, Recourse Funded Debt shall not include
unsecured Subordinated Debt.
"Regulation"
shall
mean any statute, law, ordinance, regulation, order or rule of any United States
or foreign, federal, state, local or other government or governmental body,
including, without limitation, those covering or related to banking, financial
transactions, securities, public utilities, environmental control, energy,
safety, health, transportation, bribery, record keeping, zoning,
antidiscrimination, antitrust, wages and hours, employee benefits, and price
and
wage control matters.
"Regulation
D"
shall
mean Regulation D of the Board of Governors of the Federal Reserve System,
as it
may be amended from time to time.
"Regulatory
Change"
shall
mean any change after the date of this Agreement in any Regulation (including
Regulation D) or the adoption or making after such date of any interpretations,
directives or requests of or under any Regulation (whether or not having the
force of law) by any court or governmental or monetary authority charged with
the interpretation or administration thereof applying to a class of banks
including any one of the Banks but excluding any foreign office of any
Bank.
"Reportable
Event"
shall
mean, with respect to a Pension Plan: (a) Any of the events set forth in
ERISA Sections 4043(b) (other than a reportable event as to which the provision
of 30 days' notice to the PBGC is waived under applicable regulations) or
4063(a) or the regulations thereunder, (b) an event requiring any
AeroCentury or any ERISA Affiliate to provide security to a Pension Plan under
Code §401 (a)(29) and (c) any failure by any AeroCentury or any ERISA
Affiliate to make payments required by Code §412(m).
"Request
for Advance"
shall
have the meaning set forth in §2.3.(a).
"Required
Banks" at
any
time shall mean Banks whose Revolving Loan Commitments equal or exceed 66 2/3
%
of the total of such Revolving Loan Commitments if no Loans are outstanding
or,
if Loans are outstanding, Banks whose outstanding Loans equal or exceed 66
2/3 %
of the Loans.
"Revolver
Termination Date"
shall
have the meaning set forth in §2.1(a).
"Revolving
Loan Commitment"
shall
have the meaning set forth in §2.1(a).
"Revolving
Loan Commitment Percentage"
shall
mean with respect to each Bank the percentage set forth opposite its name in
Exhibit A hereto.
"Revolving
Credit Loan"
shall
have the meaning set forth in §2.1(a).
"Revolving
Credit Note"
shall
have the meaning set forth in §2.2.
“Satellite
Notes" shall
mean the senior subordinated notes issued by AeroCentury from time to time,
pursuant to that certain Note Purchase Agreement, dated as of April 17, 2007,
in
the aggregate principal amount of up to $28,000,000.00, in favor of the
purchasers listed on Schedule I thereto.
"Security
Agreement"
shall
mean all writings, agreements, and documents in any jurisdiction, whether within
the United States or outside of the United States, the intended purpose of
which
is to grant a security interest in property, whether then owned by AeroCentury
or thereafter acquired, and all replacements of said property, as collateral
security for the payment and performance of the Obligations, including but
not
limited to (1) the Mortgage and Security Agreement, dated August 11, 1998
by First Security Bank, N.A. trustee under Trust Agreement (N272EP) dated as
of
October 31, 1991 in favor of First Union National Bank, as Agent, which has
been
assigned to National City, as successor Agent, (2) the Mortgage and
Security Agreement, dated August 11, 1998 by First Security Bank, N.A. trustee
under Trust Agreement (N272EP) dated as of October 31, 1991 and trustee under
Trust Agreement (N12303) dated as of November 15, 1989, First Union National
Bank, as Agent, which has been assigned to National City, as successor Agent,
(3) the Mortgage and Security Agreement, dated March 31, 1999 by
AeroCentury First Union National Bank, as Agent, which has been assigned to
National City, as successor Agent, (4) the Security Agreement dated June 28,
2000 (which amends, restates and supersedes that certain Security Agreement,
dated December 21, 1998) between AeroCentury Corp., as debtor, and National
City
Bank, as Agent, as further amended on April 17, 2007, and (5) all amendments,
modifications, supplements, amendments and restatements, replacements and
substitutions of each of the foregoing.
"Solvent"
shall
mean, with respect to any Person, that the aggregate present fair saleable
value
of such Person's assets is in excess of the total amount of its probable
liabilities on its existing debts as they become absolute and matured, such
Person has not incurred debts beyond its foreseeable ability to pay such debts
as they mature, and such Person has capital adequate to conduct the business
it
is presently engaged in or is about to engage in.
"Subordinated
Debt"
shall
mean the Satellite Notes and any other Debt which is subordinated in right
of
payment and all other respects to the Obligations, including but not limited
to
the Notes, pursuant to a written subordination agreement in form and substance
satisfactory to the Banks.
"Subsidiary"
shall
mean a corporation, limited liability company or other entity the shares of
stock, membership interests or other equity interests of which having ordinary
voting power (other than stock, membership interests or other equity interests
having such power only by reason of the happening of a contingency) to elect
a
majority of the board of directors or other managers of such corporation are
at
the time owned, or the management of which is otherwise controlled, directly
or
indirectly through one or more intermediaries or both, by
AeroCentury.
"Swap
Agreement"
shall
have the meaning set forth in 11 U.S.C. § 101 and shall include but not be
limited to interest rate swap agreements, interest rate cap agreements, interest
collar agreements, interest rate hedging agreements, interest rate floor
agreements or other similar agreements or arrangements.
"Tangible
Net Worth"
shall
mean Net Worth, minus Intangible Assets.
"Termination
Event"
shall
mean, with respect to a Pension Plan: (a) a Reportable Event, (b) the
termination of a Pension Plan, or the filing of a notice of intent to terminate
a Pension Plan, or the treatment of a Pension Plan amendment as a termination
under ERISA §4041(c), (c) the institution of proceedings to terminate a
Pension Plan under ERISA §4042 or (d) the appointment of a trustee to
administer any Pension Plan under ERISA §4042.
"Unfunded
Pension Liabilities"
shall
mean, with respect to any Pension Plan at any time, the amount determined by
taking the accumulated benefit obligation, as disclosed in accordance with
Statement of Accounting Standards No. 87, over the fair market value of Pension
Plan assets.
"Unrecognized
Retiree Welfare Liability"
shall
mean, with respect to any Plan that provides postretirement benefits other
than
pension benefits, the amount of the accumulated post-retirement benefit
obligation, as determined in accordance with Statement of Financial Accounting
Standards No. 106, as of the most recent valuation date. Prior to the date
such
statement is applicable to AeroCentury, such amount of the obligation shall
be
based on an estimate made in good faith.
"Unrestricted
Subsidiaries"
shall
mean Subsidiaries which are special purpose or bankruptcy remote that have
debt
on their respective balance sheets which when consolidated with AeroCentury
is
deemed to be Non-Recourse Debt to AeroCentury.
“Unrestricted
Subsidiary Investment"
shall
have the meaning specified in §6.6.
“Unrestricted
Subsidiary Investment Amount"
shall
mean, at any time with respect to any Unrestricted Subsidiary, an amount equal
to 5% of the net book value of the assets of such Unrestricted Subsidiary at
such time.
1.2. Accounting
Terms.
All
accounting terms not specifically defined herein shall be construed in
accordance with Generally Accepted Accounting Principles consistent with those
applied in the preparation of the financial statements referred to in §3.5, and
all financial data submitted pursuant to this Agreement shall be prepared in
accordance with such principles.
| 2. |
The
Credit
|
| 2.1. |
The
Loans.
|
(a) Revolving
Credit Loans; Commitment.
(i)
Subject to the terms and conditions herein set forth, each Bank agrees,
severally and not jointly, to make revolving credit loans (collectively, the
"Revolving
Credit Loans"
or the
"Loans",
and
individually a "Revolving
Credit Loan"
or a
"Loan")
to
AeroCentury from time to time during the period beginning on the date hereof
and
ending on March 31, 2010 or on the earlier date of termination in full, pursuant
to §2.6 or §8.1 hereof, of the obligations of such Bank under this §2.1 (March
31, 2010 or such earlier date of termination being herein called the
"Revolver
Termination Date")
in
amounts not to exceed at any time outstanding, in the aggregate, the commitment
amount set forth opposite the name of such Bank on Exhibit A hereto (each such
amount, as the same may be reduced pursuant to §2.6 hereof or increased pursuant
to §2.1(a)(ii) hereof, being hereinafter called such Bank's "Revolving
Loan Commitment").
The
Banks' collective commitment to make Loans shall be the "Aggregate
Revolving Loan Commitment".
All
Loans shall be made by the Banks simultaneously and pro rata
in
accordance with their respective Commitments. All Loans shall be made to
AeroCentury at the principal office of National City in Cleveland,
Ohio.
(ii)
AeroCentury may at any time and from time to time, upon prior written notice
by
AeroCentury to National City, increase the Aggregate Revolving Loan Commitment
by up to an additional $30,000,000.00, with additional Revolving Loan
Commitments from any existing Bank or new Revolving Loan Commitments from any
other Person selected by AeroCentury and approved by the Agent; provided
that:
(A) any
such
increase shall be in a minimum principal amount of $5,000,000.00 and in integral
multiples of $5,000,000.00 in excess thereof;
(B) no
Event
of Default shall have occurred and be continuing at the time of any such
increase;
(C) no
existing Bank shall be under any obligation to increase its Revolving Loan
Commitment and any such decision whether to increase its Revolving Loan
Commitment shall be in such Bank’s sole and absolute discretion;
and
(D) any
new
Person providing a Revolving Loan Commitment shall join this Agreement by
executing such joinder documents reasonable required by the Agent, whereupon
such Person shall be a “Bank” hereunder.
In
connection with any such increase in the Aggregate Revolving Loan Commitments,
Exhibit A shall be revised by the Agent to reflect the new Revolving Loan
Commitments and distributed to the Banks.
(b) Interest
Rate Options.
AeroCentury may request Revolving Credit Loans to bear interest at the Alternate
Base Rate or LIBO Rate options (described in §2.4). The Loans outstanding at any
one time may involve any combination of such interest rate options in such
amounts as AeroCentury may determine, subject to the terms and conditions
hereof, including the requirements concerning minimum Loan requests and the
requirements that (i) no request may be made which would require more than
one interest rate option or more than one Interest Period to apply to Loans
made
on any single date, and (ii), in the case of LIBO Rate Loans, (a) not
more than six such Loans may be outstanding at any one time, unless there shall
not be any Base Rate Loans outstanding in which case the number may be seven,
and (b) no LIBO Rate Loan may have an Interest Period extending beyond the
Revolver Termination Date.
(c) Maximum
Loans Outstanding.
AeroCentury shall not be entitled to any new Revolving Credit Loan if, after
giving effect to such Loan, the unpaid amount of the then outstanding Loans
would exceed the lesser of (i) the Aggregate Revolving Loan Commitment or
(ii) the then current Borrowing Base, as stated in the most recent
Borrowing Base Certificate furnished to National City as provided herein. For
purposes of determining the amount of Revolving Credit Loans outstanding, the
Letters of Credit issued pursuant to §2.1(i) hereof shall be deemed Revolving
Credit Loans and shall be added to the Revolving Credit Loans outstanding to
determine the aggregate Revolving Credit Loans outstanding.
(d) Minimum
Loan Amount.
Except
for Loans which exhaust the full remaining amount of the Aggregate Revolving
Loan Commitment and conversions which result in the conversion of all Loans
subject to a particular interest rate option, each of which may be in lesser
amounts, (i) each LIBO Rate Loan when made (and each conversion of Base
Rate Loans into LIBO Rate Loans) shall be in an amount at least equal to
$3,000,000 or, if greater, then in such minimum amount plus $100,000 multiples,
and (ii) each Base Rate Loan when made (and each conversion of LIBO Rate
Loans into Base Rate Loans) shall be in an amount at least equal to $250,000
or,
if greater, then in such minimum amount plus $25,000 multiples.
(e) Prepayment
and Reborrowing.
Prior to
the Revolver Termination Date and within the limits of the Aggregate Revolving
Loan Commitment and the Borrowing Base, AeroCentury may borrow, prepay and
reborrow Revolving Credit Loans. All Revolving Credit Loans shall mature and
be
due and payable on the Revolver Termination Date.
(f) Revolving
Loan Commitment Percentages.
The
obligation of each Bank to make a Loan to AeroCentury at any time shall be
limited to its percentage (the "Revolving
Loan Commitment Percentage")
as set
forth opposite its name on Exhibit A hereto multiplied by the aggregate
principal amount of the Loan requested. The principal amounts of the respective
Loans made by the Banks on the occasion of each Borrowing shall be pro rata
in
accordance with their respective Revolving Loan Commitment Percentages. No
Bank
shall be required or permitted to make any Loan if, immediately after giving
effect to such Loan, and the application of the proceeds of a Loan to the extent
applied to the repayment of the Loans, the sum of such Bank's Loans outstanding
would exceed such Bank's Revolving Loan Commitment.
(g) Several
Obligations.
The
failure of any one or more Banks to make Loans in accordance with its or their
obligations shall not relieve the other Banks of their several obligations
hereunder, but in no event shall the aggregate amount at any one time
outstanding which any Bank shall be required to lend hereunder exceed its
Revolving Loan Commitment.
(h) Payment
of Additional Amount.
If any
principal of a LIBO Rate Loan shall be repaid (whether upon prepayment,
reduction of the Aggregate Revolving Loan Commitment after acceleration or
for
any other reason) or converted to a Base Rate Loan prior to the last day of
the
Interest Period applicable to such LIBO Rate Loan or if AeroCentury fails for
any reason to borrow a LIBO Rate Loan after giving irrevocable notice pursuant
to §2.3, it shall pay to each Bank, in addition to the principal and interest
then to be paid, such additional amounts as maybe necessary to compensate each
Bank for all direct and indirect costs and losses (including losses resulting
from redeployment of prepaid or unborrowed funds at rates lower than the cost
of
such funds to such Bank, and including lost profits incurred or sustained by
such Bank) as a result of such repayment or failure to borrow (the "Additional
Amount").
The
Additional Amount (which each Bank shall take reasonable measures to minimize)
shall be specified in a written notice or certificate delivered to AeroCentury
by National City, as Agent, in the form provided by each Bank sustaining such
costs or losses. Such notice or certificate shall contain a calculation in
reasonable detail of the Additional Amount to be compensated and shall be
conclusive as to the facts and the amounts stated therein, absent manifest
error.
(i) Letters
of Credit.
National
City, as Agent, under the terms and subject to the conditions of this Agreement,
on behalf of itself and each other Bank in the same proportions as each Bank's
Revolving Loan Commitment bears to the Aggregate Revolving Loan Commitment,
shall provide Letters of Credit to AeroCentury, from time to time prior to
the
Revolver Termination Date, as requested by AeroCentury, provided that
(A) the aggregate amount of Letters of Credit outstanding at any one time
shall not exceed $5,000,000 or such lesser amount, if any, as will, when added
to the amount of the Revolving Credit Loans then outstanding, aggregate more
than the Aggregate Revolving Loan Commitment (or such lesser amount as
AeroCentury is entitled to borrow hereunder at such time by reason of the
limitation of the Borrowing Base or otherwise), and (B) no Letter of Credit
shall be for a term longer than 180 days.
AeroCentury
shall request a Letter of Credit by delivering a completed letter of credit
application to National City on such form as may be specified by National City
not less than three Business Days prior to the date specified by AeroCentury
as
the date the Letter of Credit is to be issued. The standard form of National
City letter of credit application as currently in effect shall be
used.
Letters
of Credit shall not bear interest until drawn upon but shall each be subject
to
an annual charge, payable quarterly in arrears from the date of issuance, equal
to (a) the Applicable Borrowing Margin for LIBO Rate Loans as in effect
from time to time times the aggregate amount of all Letters of Credit
outstanding which shall be shared among the Banks pro rata in the same
proportions that each Bank's Loan Commitment bears to the Aggregate Loan
Commitment, and (b) 25 basis points (1/4 of 1%) times the face amount of
each Letter of Credit outstanding which shall be payable to the issuing
Bank.
If
any
obligation of AeroCentury to pay money in connection with any Letter of Credit
is not met when requested by National City, as Agent, as permitted by the
applicable letter of credit application and the reimbursement agreement
contained therein, the amount due shall be funded automatically by a Revolving
Credit Loan which Loan shall be made without regard to any minimum borrowing
requirement, condition precedent herein, or Event of Default hereunder which
would otherwise entitle any Bank or the Banks not to provide such Revolving
Credit Loan, and each Bank shall make its proportionate share of such Revolving
Credit Loan. Any obligation of AeroCentury to pay money in connection with
any
Letter of Credit or the application therefor shall be deemed secured as if
made
as a Loan hereunder. In the event AeroCentury shall terminate the Aggregate
Revolving Loan Commitment as provided in §2.6 and shall pay the outstanding
principal amount of the Revolving Credit Loans in full and with interest or
the
Revolver Termination Date shall occur at a time when one or more Letters of
Credit remain outstanding, then AeroCentury shall furnish to National City,
as
Agent, within two Business Days such amount of cash, to be held as cash
collateral and invested in certificates of deposit of National City with
interest payable to AeroCentury, as will pay the maximum amount which may be
drawn by beneficiaries of Letters of Credit outstanding at the date of such
termination or the Revolver Termination Date, as applicable.
2.2. The
Notes.
The
Revolving Credit Loans made by each Bank shall all be evidenced by a single
promissory note of AeroCentury (each such promissory note as it may be amended,
extended, modified or renewed a "Revolving
Credit Note"
or a
"Note"
and
together the "Revolving
Credit Notes"
or the
"Notes")
in
principal face amount equal to such Bank's Revolving Loan Commitment, payable
to
the order of such Bank and otherwise in the form attached hereto as Exhibit
B.
The Revolving Credit Notes shall be dated the Closing Date (or as to any
Revolving Credit Note issued pursuant to an increase in any Revolving Loan
Commitment or the addition of a new Bank pursuant to §2.1(a)(ii) hereof, the
date of such increase or addition), shall bear interest at the rate per annum
and be payable as to principal and interest in accordance with the terms hereof.
The Revolving Credit Notes shall mature upon the Revolver Termination Date
and,
upon maturity, each outstanding Revolving Credit Loan evidenced thereby shall
be
due and payable. Notwithstanding the stated amount of any Revolving Credit
Note,
the liability of AeroCentury under each Revolving Credit Note shall be limited
at all times to the outstanding principal amount of the Revolving Credit Loans
by each Bank evidenced thereby, plus all interest accrued thereon and the amount
of all costs and expenses then payable hereunder, as established by each such
Bank's books and records, which books and records shall be conclusive absent
manifest error.
2.3. Funding
Procedures.
(a) Request
for Advance.
Each
request for a Revolving Credit Loan or the conversion or renewal of an interest
rate with respect to a Loan shall be made not later than 1:00 p.m. EST on a
Business Day by delivery to National City of a written request signed by
AeroCentury or, in the alternative, a telephone request followed promptly by
written confirmation of the request (a "Request
for Advance"),
specifying the date and amount of the Loan to be made, converted or renewed,
selecting the interest rate option applicable thereto, and in the case of LIBO
Rate Loans, specifying the Interest Period applicable to such Loans. The form
of
request to be used in connection with the making, conversion or renewal of
Revolving Credit Loans shall be that form provided to AeroCentury by National
City. Each request shall be received not less than one Business Day prior to
the
date of the proposed borrowing, conversion or renewal in the case of Base Rate
Loans, and three London Business Days prior to the date of the proposed
borrowing, conversion or renewal in the case of LIBO Rate Loans. No request
shall be effective until actually received in writing by National City, as
the
Agent.
(b) Actions
by Agent.
Upon
receipt of a Request for Advance and if the conditions precedent provided herein
shall be satisfied at the time of such request, National City promptly shall
notify each Bank of such request and of such Bank's ratable share of such Loan.
Upon receipt by National City of a Request for Advance, the request shall not
be
revocable by AeroCentury.
(c) Availability
of Funds.
Not
later than 2:00 p.m. EST on the date of each Loan, each Bank shall make
available (except as provided in clause (d) below) its ratable share of such
Loan, in immediately available funds, to National City at the address set forth
opposite its name on the signature page hereof or at such account in London
as
National City shall specify to AeroCentury and the Banks. Unless National City
knows that any applicable condition specified herein has not been satisfied,
it
will make the funds so received from the Banks immediately available to
AeroCentury on the date of each Loan by a credit to the account of AeroCentury
at National City at the aforesaid address.
(d) Funding
Assumptions.
Unless
National City shall have been notified by any Bank at least one Business Day
prior to the date of the making, conversion or renewal of any LIBO Rate Loan,
or
by 3:00 p.m. EST on the date a Base Rate Loan is requested, that such Bank
does
not intend to make available to National City, such Bank's portion of the total
amount of the Loan to be made, converted or renewed on such date, National
City
may assume that such Bank has made such amount available to National City on
the
date of the Loan and National City may, in reliance upon such assumption, make
available to AeroCentury a corresponding amount. If and to the extent such
Bank
shall not have so made such funds available to National City, such Bank agrees
to repay National City forthwith on demand such corresponding amount together
with interest thereon, for each day from the date such amount is made available
to AeroCentury until the date such amount is repaid to National City, at the
Federal Funds Rate plus 50 basis points for three Business Days, and thereafter
at the Alternate Base Rate plus the Applicable Borrowing Margin. If such Bank
shall repay to National City such corresponding amount, such amounts so repaid
shall constitute such Bank's Loan for purposes of this Agreement. If such Bank
does not repay such corresponding amount forthwith upon National City's demand
therefor, National City shall promptly notify AeroCentury, and AeroCentury
shall
immediately pay such corresponding amount to National City, without any
prepayment penalty or premium, but with interest on the amount repaid, for
each
day from the date such amount is made available to AeroCentury until the date
such amount is repaid to National City, at the rate of interest applicable
at
the time to such Loan. Nothing herein shall be deemed to relieve any Bank of
its
obligation to fulfill its Revolving Loan Commitment hereunder or to prejudice
any rights which AeroCentury may have against any Bank as a result of any
default by such Bank hereunder.
(e) Proceeds
of Loan Being Repaid.
If the
Banks make a Loan on a day on which all or any part of an outstanding Loan
from
the Banks is to be repaid, each Bank shall apply the proceeds of its new Loan
to
make such repayment and only an amount equal to the difference (if any) between
the amount being borrowed and the amount being repaid shall be made available
by
such Bank to National City as provided in clause (c).
2.4. Interest
Rates.
(a) Alternate
Base Rate.
Each
Base Rate Loan shall bear interest on the principal amount thereof from the
date
made until such Loan is paid in full or converted, at a rate per annum equal
to
the Alternate Base Rate determined from time to time plus the Applicable
Borrowing Margin for Base Rate Loans.
(b) LIBO
Rate.
Each
LIBO Rate Loan shall bear interest on the principal amount thereof from the
date
made until such Loan is paid in full, renewed, or converted, at a rate per
annum
equal to the LIBO Rate plus the Applicable Borrowing Margin for LIBO Rate Loans.
After receipt of a request for a LIBO Rate Loan, National City shall proceed
to
determine the LIBO Rate to be applicable thereto. National City shall give
prompt notice by telephone or facsimile to AeroCentury and to each Bank of
the
LIBO Rate thus determined in respect of each LIBO Rate Loan or any change
therein. In the event AeroCentury fails or is not permitted to select an
Interest Period for any LIBO Rate Loan which is maturing within the time period
and otherwise as provided herein, such Loan shall be automatically converted
into a Base Rate Loan on the last day of the Interest Period for such
Loan.
(c) Renewals
and Conversions.
AeroCentury shall have the right to convert Base Rate Loans into LIBO Rate
Loans, and vice versa, and to renew LIBO Rate Loans from time to time, provided
that: (i) AeroCentury shall give National City notice of each permitted
conversion or renewal; (ii) LIBO Rate Loans may be converted or renewed
only as of the last day of the applicable Interest Period for such Loans;
(iii) without the consent of each of the Banks, no Base Rate Loan may be
converted into a LIBO Rate Loan, and no Interest Period may be renewed if on
the
proposed date of conversion an Event of Default, or Potential Default exists
or
would thereby occur. National City shall use its best efforts to notify
AeroCentury of the effectiveness of such conversion or renewal, and the new
interest rate to which the converted or renewed Loan is subject, as soon as
practicable after the conversion; provided, however, that any failure to give
such notice shall not affect AeroCentury's obligations or the Banks' rights
and
remedies hereunder in any way whatsoever.
(d) Reinstatements.
The
liability of AeroCentury under this §2.4 shall continue to be effective or be
automatically reinstated, as the case may be, if at any time payment, in whole
or in part, of any of the payments to the Banks is rescinded or must otherwise
be restored or returned upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of AeroCentury or any other person, or upon or
as
a result of the appointment of a custodian, receiver, trustee or other officer
with similar powers with respect to AeroCentury or any other Person or any
substantial part of its property, or otherwise, all as though such payment
had
not been made.
2.5. Fees.
(a) Commitment
Fee.
AeroCentury agrees to pay to National City, as the Agent, for the account of
each Bank, a commitment fee (the "Commitment
Fee")
computed on the basis of a year of 365 days or 366 days, in the case of a leap
year, for the actual number of days elapsed at the rate per annum set forth
in
Schedule 2 attached to this Agreement times the average daily amount of the
unused portion of the Aggregate Revolving Loan Commitment. The Commitment Fee
shall be payable commencing with the date hereof and shall continue to and
including the Revolver Termination Date. The unused portion of the Aggregate
Revolving Loan Commitment shall mean the Aggregate Revolving Loan Commitment
less the unpaid principal amount of all Loans. The Commitment Fee shall be
payable in quarterly installments on the last Business Day of each calendar
quarter and on the Revolver Termination Date.
(b) Structuring
and Arranging Fee; Administrative Fee.
A
Structuring and Arranging Fee as well as an Administrative Fee shall be payable
to National City as set forth in a separate letter agreement between National
City and AeroCentury.
2.6. Termination
or Reduction of Aggregate Revolving Loan Commitment.
(a) Voluntary.
AeroCentury may at any time, on not less than three Business Days' written
notice, terminate or permanently reduce the Aggregate Revolving Loan Commitment
pro rata among the Banks, provided that any reduction shall be in the minimum
amount of $5,000,000 and that no such reduction shall cause the principal amount
of Loans outstanding to exceed the Aggregate Revolving Credit Commitment as
reduced or the Borrowing Base, whichever is less.
(b) Termination.
In the
event the Aggregate Revolving Loan Commitment is terminated, the Revolver
Termination Date shall accelerate and AeroCentury shall, simultaneously with
such termination, repay the Base Rate Loans and LIBO Rate Loans in accordance
with §2.8.
2.7. Loan
Prepayments (Optional and Mandatory).
(a) Base
Rate Loans.
On one
Business Day's notice to the Banks, AeroCentury may, at its option, prepay
the
Base Rate Loans in whole at any time or in part from time to time, provided
that
each partial prepayment shall be in at least the principal amount of $25,000
or,
if greater, then in $10,000 multiples.
(b) LIBO
Rate Loans.
AeroCentury may, at its option prepay any LIBO Rate Loan provided that if it
shall prepay a LIBO Rate Loan prior to the last day of the applicable Interest
Period, or shall fail to borrow any LIBO Rate Loan on the date such Loan is
to
be made, it shall pay to each Bank, in addition to the principal and interest
then to be paid in the case of a prepayment, on such date of prepayment, the
Additional Amount incurred or sustained by such Bank as a result of such
prepayment or failure to borrow as provided in §2.1(h).
(c) Mandatory
Prepayments.
AeroCentury shall prepay Base Rate Loans and LIBO Rate Loans, in such order
and
combination as it may elect, in an amount equal to 100% of the net proceeds
received by it from the sale of any assets which sale was not made in the
ordinary course of the business of AeroCentury and the aggregate proceeds from
any individual assets or group of assets sold at the same approximate time
was
at least equal to $100,000. Such prepayment shall be made promptly but in no
event later than three Business Days following the receipt of any said net
proceeds.
2.8. Payments.
(a) Base
Rate Loans.
Accrued
interest on all Base Rate Loans shall be due and payable on the last Business
Day of each calendar quarter and upon the Revolver Termination
Date.
(b) LIBO
Rate Loans.
Accrued
interest on LIBO Rate Loans with Interest Periods of one, two or three months
shall be due and payable on the last day of such Interest Period. Accrued
interest on LIBO Rate Loans with Interest Periods of six months shall be due
and
payable at the end of the third month and on the last day of the Interest
Period.
(c) Form
of Payments, Application of Payments, Payment Administration,
Etc.
Provided
that no Event of Default or Potential Default then exists, all payments and
prepayments shall be applied to the Loans in such order and to such extent
as
shall be specified by AeroCentury, by written notice to National City at the
time of such payment or prepayment. Except as otherwise provided herein, all
payments of principal, interest, fees, or other amounts payable by AeroCentury
hereunder shall be remitted to National City on behalf of the Banks at the
address set forth opposite its name on the signature page hereof or at such
office or account as National City shall specify to AeroCentury and the Banks,
in immediately available funds not later than 2:00 p.m. EST on the day when
due.
National City will promptly distribute to each Bank by wire transfer in
immediately available funds each Bank's pro rata share of such payment based
upon such Bank's Revolving Loan Commitment Percentage. Whenever any payment
is
stated as due on a day which is not a Business Day, the maturity of such payment
shall, except as otherwise provided in the definition of "Interest Period",
be
extended to the next succeeding Business Day and interest and commitment fees
shall continue to accrue during such extension. AeroCentury authorizes National
City to deduct from any account of AeroCentury maintained at National City
or
over which National City has control any amount payable under this Agreement,
the Notes or any other Loan Document which is not paid in a timely manner.
National City's failure to deliver any ▇▇▇▇, statement or invoice with respect
to amounts due under this Section or under any Loan Document shall not affect
AeroCentury's obligation to pay any installment of principal, interest or any
other amount under this Agreement when due and payable.
(d) Net
Payments.
All
payments made to the Banks and National City, as the Agent, by AeroCentury
hereunder, under any Note or under any other Loan Document will be made without
set off, counterclaim or other defense. All such payments will be made free
and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or any political subdivision or
taxing authority thereof or therein (but excluding, except as provided below,
any tax imposed on or measured by the gross or net income of a Bank (including
all interest, penalties or similar liabilities related thereto) pursuant to
the
laws of the United States of America or any political subdivision thereof,
or
taxing authority of the United States of America or any political subdivision
thereof, in which the principal office or applicable lending office of such
Bank
is located), and all interest, penalties or similar liabilities with respect
thereto (collectively, together with any amounts payable pursuant to the next
sentence, "Taxes").
AeroCentury shall also reimburse each Bank, upon the written request of such
Bank, for Taxes imposed on or measured by the gross or net income of such Bank
pursuant to the laws of the United States of America (or any State or political
subdivision thereof), or the jurisdiction (or any political subdivision or
taxing authority thereof) in which the principal office or applicable lending
office of such Bank is located as such Bank shall determine are payable by
such
Bank due to the amount of Taxes paid to or on behalf of such Bank pursuant
to
this or the preceding sentence. If any Taxes are so levied or imposed,
AeroCentury agrees to pay the full amount of such Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due hereunder,
under any Note or under any other Loan Document, after withholding or deduction
for or on account of any Taxes, will not be less than the amount provided for
herein or in such Note. AeroCentury will furnish to National City upon request
certified copies of tax receipts evidencing such payment by AeroCentury.
AeroCentury will indemnify and hold harmless National City and each Bank, and
reimburse National City or such Bank upon its written request, for the amount
of
any Taxes so levied or imposed and paid or withheld by such Bank.
Notwithstanding
the preceding paragraph, AeroCentury shall be entitled, to the extent required
to do so by law, to deduct or withhold Taxes imposed by the United States of
America (or any political subdivision or taxing authority thereof) from
interest, fees or other amounts payable hereunder for the account of any Person
other than a Bank (x) that is a domestic corporation (as such term is
defined in Section 7701 of the Code) for federal income tax purposes (but
excluding any foreign office of any Bank) or (y) that has necessary forms
on file with AeroCentury for the applicable year to the extent deduction or
withholding of such Taxes is not required as a result of the filing of such
forms, provided that if AeroCentury shall so deduct or withhold any such Taxes,
it shall provide a statement to National City and such Bank, setting forth
the
amount of such Taxes so paid or withheld, the applicable rate and any other
information or documentation which such Bank may reasonably request for
assisting such Bank to obtain any allowable credits or deductions for the taxes
so deducted or withheld in the jurisdiction or jurisdictions in which such
Bank
is subject to tax.
(e) Demand
Deposit Account.
AeroCentury shall maintain at least one demand deposit account with National
City for purposes of this Agreement. AeroCentury authorizes National City (but
National City shall not be obligated) to deposit into said account all amounts
to be advanced to AeroCentury hereunder. AeroCentury authorizes National City
(but National City shall not be obligated) to deduct from said account, or
any
other account maintained by AeroCentury at National City, as the Agent, any
amount payable hereunder on or after the date upon which it is due and payable.
Such authorization shall include but not be limited to amounts payable with
respect to principal, interest, fees and expenses.
2.9. Change
in Circumstances, Yield Protection.
(a) Certain
Regulator Chances.
If any
Regulatory Change or compliance by the Banks with any request made after the
date of this Agreement by the Board of Governors of the Federal Reserve System
or by any Federal Reserve Bank or other central bank or fiscal, monetary or
similar authority (in each case whether or not having the force of law) shall
(i) impose, modify or make applicable any reserve, special deposit, Federal
Deposit Insurance Corporation premium or similar requirement or imposition
against assets held by, or deposits in or for the account of, or loans made
by,
or any other acquisition of funds for loans or advances by, the Banks;
(ii) impose on the Banks any other condition regarding the Notes;
(iii) subject the Banks to, or cause the withdrawal or termination of any
previously granted exemption with respect to, any tax (including any withholding
tax but not including any income tax not currently causing the Banks to be
subject to withholding) or any other levy, impost, duty, charge, fee or
deduction on or from any payments due from AeroCentury; or (iv) change the
basis of taxation of payments from AeroCentury to the Banks (other than by
reason of a change in the method of taxation of a Bank's net income); and the
result of any of the foregoing events is to increase the cost to a Bank of
making or maintaining any Loan or to reduce the amount of principal, interest
or
fees to be received by the Bank hereunder in respect of any Loan, National
City
will immediately so notify AeroCentury. If a Bank determines in good faith
that
the effects of the change resulting in such increased cost or reduced amount
cannot reasonably be avoided or the cost thereof mitigated, then upon notice
by
National City to AeroCentury, AeroCentury shall pay to such Bank on each
interest payment date of the Loan, such additional amount as shall be necessary
to compensate the Bank for such increased cost or reduced amount.
(b) Capital
Adequacy.
If any
Bank shall determine that any Regulation regarding capital adequacy or the
adoption of any Regulation regarding capital adequacy, which Regulation is
applicable to banks (or their holding companies) generally and not such Bank
(or
its holding company) specifically, or any change therein, or any change in
the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by such Bank (or its holding company) with any such
request or directive regarding capital adequacy (whether or not having the
force
of law) of any such authority, central bank or comparable agency, has the effect
of reducing the rate of return on such Bank's capital as a consequence of its
obligations hereunder to a level below that which such Bank could have achieved
but for such adoption, change or compliance (taking into consideration such
Bank's policies with respect to capital adequacy) by an amount deemed by such
Bank to be material, AeroCentury shall promptly pay to National City for the
account of such Bank, upon the demand of such Bank, such additional amount
or
amounts as will compensate such Bank for such reduction.
(c) Ability
to Determine LIBO Rate.
If
National City shall determine (which determination will be made after
consultation with any Bank requesting same and shall be, in the absence of
fraud
or manifest error, conclusive and binding upon all parties hereto) that by
reason of abnormal circumstances affecting the interbank eurodollar or
applicable eurocurrency market adequate and reasonable means do not exist for
ascertaining the LIBO Rate to be applicable to the requested LIBO Rate Loan
or
that eurodollar or eurocurrency funds in amounts sufficient to fund all the
LIBO
Rate Loans are not obtainable on reasonable terms, National City shall give
notice of such inability or determination by telephone to AeroCentury and to
each Bank at least two Business Days prior to the date of the proposed Loan
and
thereupon the obligations of the Banks to make, convert other Loans to, or
renew
such LIBO Rate Loan shall be excused, subject, however, to the right of
AeroCentury at any time thereafter to submit another request.
(d) Yield
Protection.
Determination by a Bank for purposes hereof of the effect of any Regulatory
Change or other change or circumstance referred to above on its costs of making
or maintaining Loans or on amounts receivable by it in respect of the Loans
and
of the additional amounts required to compensate such Bank in respect of any
additional costs, shall be made in good faith and shall be evidenced by a
certificate, signed by an officer of such Bank and delivered to AeroCentury,
as
to the fact and amount of the increased cost incurred by or the reduced amount
accruing to the Bank owing to such event or events. Such certificate shall
be
prepared in reasonable detail and shall be conclusive as to the facts and
amounts stated therein, absent manifest error.
(e) Notice
of Events.
The
affected Bank will notify AeroCentury of any event occurring after the date
of
this Agreement that will entitle such Bank to compensation pursuant to this
Section as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation. Said notice shall be in writing, shall
specify the applicable Section or Sections of this Agreement to which it relates
and shall set forth the amount or amounts then payable pursuant to this Section.
AeroCentury shall pay such Bank the amount shown as due on such notice within
10
days after its receipt of the same.
2.10. Illegality.
Notwithstanding any other provision in this Agreement, if the adoption of any
applicable Regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank, or comparable agency charged with the interpretation or administration
thereof, or compliance by the Banks with any request or directive (whether
or
not having the force of law) of any such authority, central bank, or comparable
agency shall make it unlawful or impossible for the Banks to (1) maintain
their Revolving Loan Commitments, then upon notice to AeroCentury by National
City, the Revolving Loan Commitments shall terminate; or (2) maintain or
fund their LIBO Rate Loans, then upon notice to the Borrower of such event,
the
Borrower's outstanding LIBO Rate Loans shall be converted into Base Rate
Loans.
2.11. Discretion
of Bank as to Manner of Funding.
Notwithstanding any provision of this Agreement to the contrary, each Bank
shall
be entitled to fund and maintain its funding of all or any part of its Loans
in
any manner it sees fit, it being understood, however, that for the purposes
of
this Agreement all determinations hereunder shall be made as if each Bank had
actually funded and maintained each LIBO Rate Loan during each Interest Period
for such Loan through the purchase of deposits in the relevant interbank market
having a maturity corresponding to such Interest Period and bearing an interest
rate equal to the LIBO Rate plus the Applicable Borrowing Margin for such
Interest Period.
3.
Representations and Warranties
AeroCentury
represents and warrants to the Banks that:
3.1. Organization,
Standing.
It
(i) is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, (ii) has the
corporate power and authority necessary to own its assets, carry on its business
and enter into and perform its obligations hereunder, under each Loan Document
to which it is a party, and (iii) is qualified to do business and is in
good standing in each jurisdiction where the nature of its business or the
ownership of its properties requires such qualification, except where the
failure to be so qualified would not have a Material Adverse
Effect.
3.2. Corporate
Authority, Validity, Etc.
The
making and performance of the Loan Documents to which it is a party are within
its power and authority and have been duly authorized by all necessary corporate
action. The making and performance of the Loan Documents do not and under
present law will not require any consent or approval of any of AeroCentury's
shareholders or any other person, do not and under present law will not violate
any law, rule, regulation order, writ, judgment, injunction, decree,
determination or award, do not violate any provision of its charter or by-laws,
do not and will not result in any breach of any material agreement, lease or
instrument to which it is a party, by which it is bound or to which any of
its
assets are or may be subject, and do not and will not give rise to any Lien
upon
any of its assets. The number of shares and classes of the capital stock of
AeroCentury and the ownership thereof are accurately set forth on Schedule
1
attached hereto; all such shares are validly issued, fully paid and
non-assessable, and the issuance and sale thereof are in compliance with all
applicable federal and state securities and other applicable laws. AeroCentury
is not in default under any such agreement, lease or instrument except to the
extent such default reasonably could not have a Material Adverse Effect. No
authorizations, approvals or consents of, and no filings or registrations with,
any governmental or regulatory authority or agency are necessary for the
execution, delivery or performance by AeroCentury of any Loan Document to which
it is a party or for the validity or enforceability thereof. Each Loan Document,
when executed and delivered, will be the legal, valid and binding obligation
of
AeroCentury enforceable against each in accordance with its terms.
3.3. Litigation.
Except
as disclosed on Schedule 1, there are no actions, suits or proceedings pending
or, to its knowledge, threatened against or affecting it or any of its assets
before any court, government agency, or other tribunal which if adversely
determined reasonably could have a Material Adverse Effect or upon the ability
of it to perform under the Loan Documents. If there is any disclosure on
Schedule 1, the status (including the tribunal, the nature of the claim and
the
amount in controversy) of each such litigation matter as of the date of this
Agreement is set forth in Schedule 1.
3.4. ERISA.
(a) AeroCentury and each ERISA Affiliate are in compliance in all material
respects with all applicable provisions of ERISA and the regulations promulgated
thereunder; and, neither AeroCentury, nor any ERISA Affiliate maintains or
contributes to or has maintained or contributed to any multiemployer plan (as
defined in §4001 of ERISA) under which AeroCentury or any ERISA Affiliate could
have any withdrawal liability; (b) neither AeroCentury nor any ERISA
Affiliate, sponsors or maintains any Plan under which there is an accumulated
funding deficiency within the meaning of §412 of the Code, whether or not
waived; (c) the aggregate liability for accrued benefits and other
ancillary benefits under each Plan that is or will be sponsored or maintained
by
AeroCentury or any ERISA Affiliate (determined on the basis of the actuarial
assumptions prescribed for valuing benefits under terminating single-employer
defined benefit plans under Title IV of ERISA) does not exceed the aggregate
fair market value of the assets under each such defined benefit pension Plan;
(d) the aggregate liability of AeroCentury and each ERISA Affiliate arising
out of or relating to a failure of any Plan to comply with the provisions of
ERISA or the Code, will not have a Material Adverse Effect; and (e) there
does not exist any unfunded liability (determined on the basis of actuarial
assumptions utilized by the actuary for the plan in preparing the most recent
Annual Report) of AeroCentury or any ERISA Affiliate under any plan, program
or
arrangement providing post-retirement life or health benefits.
3.5. Financial
Statements.
The
consolidated financial statements of AeroCentury as of and for the Fiscal Year
ending December 31, 2005 and the consolidated and consolidating financial
statements of AeroCentury and its subsidiaries as of and for the Fiscal Year
ending December 31, 2006, consisting in each case of a balance sheet, statement
of income, a statement of shareholders’ equity (except in the case of any
interim financial statements), statement of cash flows, and accompanying notes
to financial statements, furnished to the Banks in connection herewith, present
fairly, in all material respects, the financial position, and results of
operations of AeroCentury as of the dates and for the periods referred to,
in
conformity with Generally Accepted Accounting Principles. Except as set forth
on
Schedule 1 hereto, there are no liabilities, fixed or contingent, which are
not
reflected in such financial statements, other than liabilities which are not
required to be reflected in such balance sheets. There has been no Material
Adverse Change since December 31, 2006.
3.6. Not
in Default, Judgments, Etc.
No Event
of Default or Potential Default under any Loan Document has occurred and is
continuing. AeroCentury has satisfied all judgments and is not in default with
respect to any judgment, writ, injunction, decree, rule, or regulation of any
court, arbitrator, or federal, state, municipal, or other governmental
authority, commission, board bureau, agency, or instrumentality, domestic or
foreign.
3.7. Taxes.
AeroCentury has filed all federal, state, local and foreign tax returns and
reports which it is required by law to file and as to which its failure to
file
would have a Material Adverse Effect, and has paid all taxes, including wage
taxes, assessments, withholdings and other governmental charges which are
presently due and payable, other than those being contested in good faith by
appropriate proceedings, if any, and disclosed on Schedule 1. The tax charges,
accruals and reserves on the books of AeroCentury are adequate to pay all such
taxes that have accrued but are not presently due and payable.
3.8. Permits,
Licenses, Etc.
AeroCentury possesses all permits, licenses, franchises, trademarks, trade
names, copyrights and patents necessary to the conduct of its business as
presently conducted or as presently proposed to be conducted, except where
the
failure to possess the same would not have a Material Adverse
Effect.
3.9. Compliance
with Laws, Etc.
AeroCentury is in compliance in all material respects with all Regulations
applicable to its business (including obtaining all authorizations, consents,
approvals, orders, licenses, exemptions from, and making all filings or
registrations or qualifications with, any court or governmental department,
public body or authority, commission, board, bureau, agency, or
instrumentality), the noncompliance with which reasonably could have a Material
Adverse Effect.
3.10. Solvency.
AeroCentury is, and after giving effect to the transactions contemplated hereby,
will be, Solvent.
3.11. No
Burdensome Agreements.
AeroCentury is not subject to any charter, corporate or other legal restriction,
or any judgment, decree, order, rule or regulation which in the judgment of
its
directors or officers has or is expected in the future to have a materially
adverse effect on its operations, business, assets, liabilities or upon the
ability of AeroCentury to perform under the Loan Documents. AeroCentury is
not a
party to any contract or agreement which in the judgment of its directors or
officers has or is expected to have any materially adverse effect on its
business, except as otherwise reflected in adequate reserves.
3.12. Subsidiaries,
Etc.
AeroCentury has no Subsidiaries except for special purpose entities formed
in
connection with financings which are non-recourse to AeroCentury. Set forth
in
Schedule 1 hereto is a complete and correct list, as of the date of this
Agreement, of all special purpose entities owned by AeroCentury and all
Investments held by AeroCentury in any joint venture or other
Person.
3.13. Title
to Properties, Leases.
AeroCentury has good and marketable title to all assets and properties reflected
as being owned by it in its financial statements as well as to all assets and
properties acquired since said date (except property disposed of since said
date
in the ordinary course of business). Except for the Liens set forth in Schedule
1 hereto and any other Permitted Liens, there are no Liens on any of such assets
or properties. It has the right to, and does, enjoy peaceful and undisturbed
possession under all material leases under which it is leasing property as
a
lessee. All such leases are valid, subsisting and in full force and effect,
and
none of such leases is in default, except where such default, either
individually or in the aggregate, could not have a Material Adverse
Effect.
3.14. Public
Utility Holding Company; Investment Company.
AeroCentury is not a "public utility company" or a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", as such terms
are
defined in the Public Utility Holding Company Act of 1935, as amended; or a
"public utility" within the meaning of the Federal Power Act, as amended.
Further, AeroCentury is not an "investment company" or an "affiliated person"
of
an "investment company" or a company "controlled" by an "investment company"
as
such terms are defined in the Investment Company Act of 1940, as
amended.
3.15. Margin
Stock.
AeroCentury is not and will not be engaged principally or as one of its
important activities in the business of extending credit for the purpose of
purchasing or carrying or trading in any margin stocks or margin securities
(within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System as amended from time to time). AeroCentury will not use or permit
any proceeds of the Loans to be used, either directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of buying or carrying margin
stocks or margin securities.
3.16. Use
of Proceeds.
AeroCentury will use the proceeds of each Loan to be made pursuant hereto for
(a) the purchase or financing of Equipment to be leased to unaffiliated
persons and the warehouse financing of the lease of that Equipment,
(b) working capital needs, and/or (c) general corporate
purposes.
3.17. Depreciation
Policies.
AeroCentury's current depreciation policies are as set forth in Exhibit E.
These
policies have been in effect without change since January 1, 1997.
3.18. Anti-Terrorism
Laws. AeroCentury
is not an “enemy” nor an “ally of the enemy” within the meaning of Section 2 of
the Trading with the Enemy Act of the United States of America (50 U.S.C. App.
§§ 1 et seq.), as amended. AeroCentury is not in violation of (a) the Trading
with the Enemy Act, as amended, (b) any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto or (c) the Patriot Act (as defined in Section 10.22). AeroCentury (i)
is
not a blocked person described in Section 1 of the Anti-Terrorism Order or
(ii)
to the best of its knowledge, does not engage in any dealings or transactions,
or is otherwise associated, with any such blocked person.
3.19. Compliance
with OFAC Rules and Regulations.
AeroCentury (a) is not a Sanctioned Person, (b) does not have more than 15%
of
its assets in Sanctioned Countries, and (c) does not derive more than 15% of
its
operating income from investments in, or transactions with Sanctioned Persons
or
Sanctioned Countries. No part of the proceeds of the Loans will be used directly
or indirectly to fund any operations in, finance any investments or activities
in or make any payments to, a Sanctioned Person or a Sanctioned
Country
3.20. Compliance
with FCPA.
AeroCentury is in compliance with the Foreign Corrupt Practices Act, 15 U.S.C.
§§ 78dd-1, et seq., and any foreign counterpart thereto. AeroCentury has not
made a payment, offering, or promise to pay, or authorized the payment of,
money
or anything of value (a) in order to assist in obtaining or retaining business
for or with, or directing business to, any foreign official, foreign political
party, party official or candidate for foreign political office, (b) to a
foreign official, foreign political party or party official or any candidate
for
foreign political office, or (c) with the intent to induce the recipient to
misuse his or her official position to direct business wrongfully to AeroCentury
or to any other Person, in violation of the Foreign Corrupt Practices Act,
15
U.S.C. §§ 78dd-1, , et seq.
3.21. Disclosure
Generally.
The
representations and statements made by AeroCentury or on its behalf in
connection with this credit facility and the Loans, including representations
and statements in each of the Loan Documents, do not and will not contain any
untrue statement of a material fact or omit to state a material fact or any
fact
necessary to make the representations made not materially misleading. No written
information, exhibit, report, brochure or financial statement furnished by
AeroCentury or on its behalf to the Bank in connection with this credit
facility, the Loans, or any Loan Document contains or will contain any material
misstatement of fact or omit to state a material fact or any fact necessary
to
make the statements contained therein not misleading.
4.
Conditions Precedent
4.1. All
Loans.
The
obligation of each Bank to make any Loan (including but not limited to the
first
Loan hereunder) or National City, as Agent, to issue any Letter of Credit,
is
conditioned upon the following:
(a) Documents.
AeroCentury shall have delivered and the Bank shall have received a Request
for
Advance in such form as National City may request from time to
time.
(b) Borrowing
Base Certificate.
AeroCentury shall have delivered and National City shall have received a
Borrowing Base Certificate dated the date of the Loan requested under this
Agreement.
(c) Covenants;
Representations.
AeroCentury shall be in compliance with all covenants, agreements and conditions
in each Loan Document and each representation and warranty contained in each
Loan Document shall be true with the same effect as if such representation
or
warranty had been made on the date such Loan or Letter of Credit, as applicable,
is made or issued.
(d) Defaults.
Immediately prior to and after giving effect to such transaction, no Event
of
Default or Potential Default shall exist.
(e) Material
Adverse Change.
Since
December 31, 2006, there shall not have been any Material Adverse Change with
respect to AeroCentury, and there shall not be any other event or circumstance
which gives National City, as the Agent, or any Bank reasonable grounds to
conclude that AeroCentury may not or will not be able to perform or observe
(in
the normal course) its obligations hereunder and under the Notes or the other
Loan Documents.
(f) Required
Consent.
At
least
twenty (20) days prior to the purchase of Equipment or entering into leasing
arrangements with lessees of Equipment, AeroCentury shall notify National City
and provide National City with such information as it shall require with respect
to such anticipated purchase or lease arrangements. AeroCentury hereby agrees
it
will not purchase Equipment or enter into such leasing arrangements with lessees
until such time as National City and the Banks shall provide their unanimous
written consent to AeroCentury.
4.2. Conditions
to First Loan.
In
addition to the conditions to all Loans and Letters of Credit as provided in
§4.1, the obligation of each Bank to make the first Loan is conditioned upon
the
following:
(a) Articles,
Bylaws.
Each
Bank shall have received copies of the Articles or Certificate of Incorporation
and Bylaws of AeroCentury certified by its Secretary or Assistant Secretary;
together with Certificate of Good Standing from any jurisdiction where the
nature of its business or the ownership of its properties requires such
qualification except where the failure to be so qualified would not have a
Material Adverse Effect.
(b) Evidence
of Authorization.
Each
Bank shall have received copies certified by the Secretary or Assistant
Secretary of AeroCentury or any other appropriate official (in the case of
a
Person other than AeroCentury) of all corporate or other action taken by each
Person other than the Banks who is a party to any Loan Document to authorize
its
execution and delivery and performance of the Loan Documents and to authorize
the Loans, together with such other related papers as National City, as the
Agent, shall reasonably require.
(c) Legal
Opinions.
Each
Bank shall have received a favorable written opinion in form and substance
satisfactory to the Bank from ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., General Counsel to
AeroCentury, which shall be addressed to the Bank and be dated the date of
the
first Loan.
(d) Incumbency.
National
City, as the Agent, shall have received a certificate signed by the secretary
or
assistant secretary of AeroCentury together with the true signature of the
officer or officers authorized to execute and deliver the Loan Documents and
certificates thereunder, upon which the Banks shall be entitled to rely
conclusively until it shall have received a further certificate of the secretary
or assistant secretary of AeroCentury amending the prior certificate and
submitting the signature of the officer or officers named in the new certificate
as being authorized to execute and deliver Loan Documents and certificates
thereunder.
(e) Notes.
Each
Bank shall have received a Revolving Credit Note duly executed, completed and
issued in accordance herewith.
(f) Documents.
National
City, as the Agent, shall have received all certificates, instruments and other
documents then required to be delivered pursuant to any Loan Documents, in
each
instance in form and substance reasonably satisfactory to it.
(g) Consents.
AeroCentury shall have provided to each Bank evidence satisfactory to it that
all governmental, shareholder and third party consents and approvals necessary
in connection with the transactions contemplated hereby have been obtained
and
remain in effect.
(h) Other
Agreements.
AeroCentury shall have executed and delivered each other Loan Document required
hereunder.
(i) Fees,
Expenses.
AeroCentury shall simultaneously pay or shall have paid all fees and expenses
due hereunder or any other Loan Document.
(j) JMC
Subordination Agreement.
Each
Bank shall have received a subordination agreement signed by JMC and in form
and
substance satisfactory to the Banks.
(k) Evidence
of Issuance of Satellite Notes.
National
City, as the Agent, shall have received evidence of the issuance of the
Satellite Notes on the terms and conditions, and pursuant to documents and
agreements, satisfactory to National City and the Banks.
5.
Affirmative Covenants
AeroCentury
covenants and agrees that, without the prior written consent of the Required
Banks, from and after the date hereof and so long as the Revolving Loan
Commitments are in effect or any Obligation remains unpaid or outstanding,
it
will:
5.1. Financial
Statements and Reports.
Furnish
to the Banks the following financial information:
(a) Annual
Statements.
As soon
as available but no later than ninety (90) days after the end of each Fiscal
Year, the consolidated and consolidating balance sheet of AeroCentury as of
the
end of such year and the prior year in comparative form, and related
consolidated and consolidating statements of income, shareholders' equity,
and
cash flows for the Fiscal Year and the prior Fiscal Year in comparative form
(except in the case of the balance sheet which shall be only for the current
year). The financial statements shall be in reasonable detail with appropriate
notes and be prepared in accordance with Generally Accepted Accounting
Principles. The annual financial statements shall be certified (without any
qualification or exception) by BDO ▇▇▇▇▇▇▇, LLP or
other
independent public accountants acceptable to the Required Banks. Such financial
statements shall be accompanied by a report of such independent certified public
accountants stating that, in the opinion of such accountants, the consolidated
financial statements present fairly, in all material respects, the financial
position, and the results of operations and the cash flows of AeroCentury for
the period then ended in conformity with Generally Accepted Accounting
Principles, except for inconsistencies resulting from changes in accounting
principles and methods agreed to by such accountants and specified in such
report, and that, in the case of such financial statements, the examination
by
such accountants of such financial statements has been made in accordance with
generally accepted auditing standards and accordingly included examining, on
a
test basis, evidence supporting the amounts and disclosures in the financial
statements and assessing the accounting principles used and significant
estimates made, as well as evaluating the overall financial statement
presentation. In addition to the annual financial statements, AeroCentury shall,
promptly upon receipt thereof, furnish to the Bank a copy of each other report
submitted to its board of directors by its independent accountants in connection
with any annual, interim or special audit made by them of the financial records
of AeroCentury. The
timely filing of AeroCentury’s Annual Report on Form 10-KSB with the SEC over
the ▇▇▇▇▇ system shall be deemed to satisfy this covenant in respect of the
consolidated financials.
(b) Quarterly
Statements.
As soon
as available but no later than sixty (60) calendar days after the end of each
Fiscal Quarter of each Fiscal Year, the consolidated and consolidating balance
sheet and related statements of income, and cash flows of AeroCentury for such
quarterly period and for the period from the beginning of such fiscal year
to
the end of such Fiscal Quarter and a corresponding statement of income and
cash
flow for the same period in the preceding Fiscal Year, certified by the chief
executive officer, chief operating officer or chief financial officer of
AeroCentury as having been prepared in accordance with Generally Accepted
Accounting Principles (subject to changes resulting from audits and year-end
adjustments). The
timely filing of AeroCentury’s Quarterly Report on Form 10-QSB with the SEC over
the ▇▇▇▇▇ system shall be deemed to satisfy this covenant in respect of the
consolidated financials.
(c) No
Default.
Within
sixty (60) calendar days after the end of each of the first three Fiscal
Quarters of each Fiscal Year and within ninety (90) calendar days after the
end
of each Fiscal Year, a certificate signed by the chief executive officer, chief
operating officer or chief financial officer of AeroCentury certifying that,
to
the best of such officer's knowledge, after due inquiry, (i) AeroCentury
has complied with all covenants, agreements and conditions in each Loan Document
and that each representation and warranty contained in each Loan Document is
true and correct with the same effect as though each such representation and
warranty had been made on the date of such certificate (except to the extent
such representation or warranty related to a specific prior date), and
(ii) no event has occurred and is continuing which constitutes an Event of
Default or Potential Default, or describing each such event and the remedial
steps being taken by AeroCentury.
(d) ERISA.
All
reports and forms filed with respect to all Plans, except as filed in the normal
course of business and that would not result in an adverse action to be taken
under ERISA, and details of related information of a Reportable Event, promptly
following each filing.
(e) Material
Changes.
Notification to National City, as the Agent, and each other Bank, of any
litigation, administrative proceeding, investigation, business development,
or
change in financial condition which could reasonably have a Material Adverse
Effect, promptly following its discovery.
(f) Other
Information.
AeroCentury will provide to National City, as the Agent, and each other Bank
(i) all shareholder and Securities and Exchange Commission notices, reports
and filings (excluding Forms 3, 4, 5, 13-D and 13-G under the Securities
Exchange Act of 1934), (ii) any material press releases simultaneously with
their release, (iii) by December 31 of each fiscal year, budgets and forecasts
for the ensuing fiscal year (iv) the annual “desktop” appraisal of all
aircraft owned by AeroCentury. In addition, promptly, upon request by National
City or any other Bank from time to time (which may be on a monthly or other
basis), AeroCentury shall provide such other information and reports regarding
its operations, business affairs, prospects and financial condition as National
City, as the Agent, or the Banks may reasonably request.
(g) Borrowing
Base Certificates.
In the
event AeroCentury shall not have delivered a Borrowing Base Certificate to
the
Banks during any calendar month, it will deliver to the Banks, no later than
30
days after the end of such calendar month as of the last day of the preceding
calendar month, a Borrowing Base Certificate signed by the chief executive
officer, chief operating officer, chief financial officer or a Senior Vice
President of AeroCentury.
(h) Covenant
Compliance Certificate.
AeroCentury will deliver to the Banks, no later than 60 days after the end
of
each calendar quarter, a Covenant Compliance Certificate.
(i) Monthly
Lease Portfolio and Receivables Report.
AeroCentury will deliver to the Banks, no later than 30 days after the end
of
each calendar month, a lease portfolio listing and lease receivables aging
report (in form and substance reasonably satisfactory to National City)
applicable to all leases included in the Collateral.
(j) Maintenance
of Current Depreciation Policies.
AeroCentury will maintain its method of depreciating its assets substantially
consistent with past practices as set forth in Exhibit E and will promptly
notify the Bank of any deviation from such practices.
5.2. Corporate
Existence.
Preserve
its corporate existence and all material franchises, licenses, patents,
copyrights, trademarks and trade names consistent with good business practice;
and maintain, keep, and preserve all of its properties (tangible and intangible)
necessary or useful in the conduct of its business in good working order and
condition, ordinary wear and tear excepted.
5.3. ERISA.
Comply
in all material respects with the provisions of ERISA to the extent applicable
to any Plan maintained for the employees of AeroCentury or any ERISA Affiliate;
do or cause to be done all such acts and things that are required to maintain
the qualified status of each Plan and tax exempt status of each trust forming
part of such Plan; not incur any material accumulated funding deficiency (within
the meaning of ERISA and the regulations promulgated thereunder), or any
material liability to the PBGC (as established by ERISA); not permit any event
to occur as described in §4042 of ERISA or which may result in the imposition of
a lien on its properties or assets; notify the Banks in writing promptly after
it has come to the attention of senior management of AeroCentury of the
assertion or threat of any "reportable event" or other event described in §4042
of ERISA (relating to the soundness of a Plan) or the PBGC's ability to assert
a
material liability against it or impose a lien on its, or any ERISA Affiliates',
properties or assets; and refrain from engaging in any Prohibited Transactions
or actions causing possible liability under §5.02 of ERISA.
5.4. Compliance
with Regulations.
Comply
in all material respects with all Regulations applicable to its business, the
noncompliance with which reasonably could have a Material Adverse
Effect.
5.5. Conduct
of Business; Permits and Approvals, Compliance with
Laws.
Continue
to engage in an efficient and economical manner in a business of the same
general type as conducted by it on the date of this Agreement; maintain in
full
force and effect, its franchises, and all licenses, patents, trademarks, trade
names, contracts, permits, approvals and other rights necessary to the
profitable conduct of its business.
5.6. Maintenance
of Insurance.
Maintain
insurance with financially sound and reputable insurance companies or
associations in such amounts and covering such risks as are usually carried
by
companies engaged in the same or a similar business and similarly situated,
which insurance may provide for reasonable deductibility from coverage
thereof.
5.7. Payment
of Debt; Payment of Taxes, Etc.
Where
the amount involved exceeds $250,000 or where the non-payment or non-discharge
would otherwise have a Material Adverse Effect on AeroCentury or any of its
assets: promptly pay and discharge (a) all of its Debt in accordance with
the terms thereof; (b) all taxes, assessments, and governmental charges or
levies imposed upon it or upon its income and profits, upon any of its property,
real, personal or mixed, or upon any part thereof, before the same shall become
in default; (c) all lawful claims for labor, materials and supplies or
otherwise, which, if unpaid, might become a lien or charge upon such property
or
any part thereof; provided, however, that so long as AeroCentury first notifies
National City, as the Agent, of its intention to do so, AeroCentury shall not
be
required to pay and discharge any such Debt, tax, assessment, charge, levy
or
claim so long as the failure to so pay or discharge does not constitute or
result in an Event of Default or a Potential Default hereunder and so long
as no
foreclosure or other similar proceedings shall have been commenced against
such
property or any part thereof and so long as the validity thereof shall be
contested in good faith by appropriate proceedings diligently pursued and it
shall have set aside on its books adequate reserves with respect
thereto.
5.8. Notice
of Events.
Promptly
upon discovery of any of the following events, AeroCentury shall provide
telephone notice to National City (confirmed within three (3) calendar days
by
written notice), describing the event and all action AeroCentury proposes to
take with respect thereto:
(a) an
Event
of Default or Potential Default under this Agreement or any other Loan
Document;
(b) any
default or event of default under a contract or contracts and the default or
event of default involves payments by AeroCentury in an aggregate amount equal
to or in excess of $200,000;
(c) a
default
or event of default under or as defined in any evidence of or agreements for
Recourse Funded Debt under which AeroCentury's liability is equal to or in
excess of $200,000, singularly or in the aggregate, whether or not an event
of
default thereunder has been declared by any party to such agreement or any
event
which, upon the lapse of time or the giving of notice or both, would become
an
event of default under any such agreement or instrument or would permit any
party to any such instrument or agreement to terminate or suspend any commitment
to lend to AeroCentury or to declare or to cause any such indebtedness to be
accelerated or payable before it would otherwise be due;
(d) the
institution of, any material adverse determination in, or the entry of any
default judgment or order or stipulated judgment or order in, any suit, action,
arbitration, administrative proceeding, criminal prosecution or governmental
investigation against AeroCentury in which the amount in controversy is in
excess of $200,000, singularly or in the aggregate; or
(e) any
change in any Regulation, including, without limitation, changes in tax laws
and
regulations, which would have a Material Adverse Effect.
5.9. Inspection
Rights; Collateral Appraisal.
At any
time during regular business hours and as often as requested of AeroCentury
by
National City, permit National City or any Bank, or any authorized officer,
employee, agent, or representative of any of them to examine and make abstracts
from the records and books of account of AeroCentury, wherever located, and
to
visit the properties of AeroCentury; and to discuss the affairs, finances,
and
accounts of AeroCentury with its chief executive officer, chief operating
officer, chief financial officer or independent accountants. In addition,
National City shall cause an appraisal and audit of the Collateral to be made
annually commencing with the Fiscal Year ending December 31, 2007. If no Event
of Default or Potential Default shall be in existence, AeroCentury shall
reimburse National City for the reasonable expense of the Collateral appraisal
and audit not to exceed $7,500 in any calendar year whether the examination
is
performed by National City or a third party approved by National City. If any
inspection or collateral appraisal and audit shall be made during the
continuance of a Potential Default or an Event of Default, AeroCentury shall
reimburse National City for the reasonable expense of such inspection or
collateral appraisal and audit without limit. At all times, it is understood
and
agreed by AeroCentury that all expenses in connection with any such inspection
which may be incurred by AeroCentury, any officers and employees thereof and
the
attorneys and independent certified public accountants therefor shall be
expenses payable by AeroCentury and shall not be expenses of the
Banks.
5.10. Generally
Accepted Accounting Principles.
Maintain
books and records at all times in accordance with Generally Accepted Accounting
Principles.
5.11. Compliance
with Material Contracts.
It will
comply in all material respects with all obligations, terms, conditions and
covenants, as applicable, in all Debt applicable to it and all instruments
and
agreements related thereto, and all other instruments and agreements to which
it
is a party or by which it is bound or any of its properties is affected and
in
respect of which the failure to comply reasonably could have a Material Adverse
Effect.
5.12. Use
of Proceeds.
AeroCentury will use the proceeds of each Loan for (a) the purchase or
financing of Equipment to be leased to unaffiliated persons and the warehouse
financing of the lease of that Equipment, (b) working capital needs, and/or
(c) general corporate purposes.
5.13. Further
Assurances.
Do such
further acts and things and execute and deliver to National City, as the Agent,
such additional assignments, agreements, powers and instruments, as the Banks
may reasonably require or reasonably deem advisable to carry into affect the
purposes of this Agreement or to better assure and confirm unto the Banks their
rights, powers and remedies hereunder.
5.14. Restrictive
Covenants in Other Agreements.
In the
event that AeroCentury shall be or become subject to or suffer to exist any
agreement pertaining to Debt (including without limitation the Securities
Purchase Agreement, dated as of April 17, 2007, by and among AeroCentury and
the
purchasers named on Schedule I thereto) which contains covenants or restrictions
that are more restrictive on it than the covenants and restrictions contained
in
this Agreement, each and every such covenant and restriction shall be deemed
incorporated herein by reference as fully as if set forth herein for so long
as
and in such form as such covenants or restrictions shall remain in effect.
If
and to the extent that any such covenant or restriction shall be inconsistent
with or otherwise be in conflict with any covenant or restriction set forth
herein (other than by reason of its being more restrictive), this Agreement
shall govern.
6.
Negative Covenants
AeroCentury
covenants and agrees that, without the prior written consent of the Required
Banks, from and after the date hereof and so long as the Revolving Loan
Commitments are in effect or any Obligation remains unpaid or outstanding,
it
will not:
6.1. Merger,
Consolidation.
Merge or
consolidate with or into any corporation except, if no Potential Default or
Event of Default shall have occurred and be continuing either immediately prior
to or upon the consummation of such transaction, any Person may be merged into
AeroCentury as long as AeroCentury is the surviving entity.
6.2. Debt.
Create,
assume or permit to exist any Debt except for Permitted Debt.
6.3. Liens.
Create,
assume or permit to exist any Lien on any of its property or assets, whether
now
owned or hereafter acquired, or upon any income or profits therefrom, except
Permitted Liens.
6.4. Guarantees.
Guarantee or otherwise in any way become or be responsible for indebtedness
or
obligations (including working capital maintenance, take-or-pay contracts)
of
any other Person, contingently or otherwise, other than guarantees in the nature
of performance guarantees which arise in the ordinary course of AeroCentury's
business.
6.5. Margin
Stock.
Use or
permit any proceeds of the Loans to be used, either directly or indirectly,
for
the purpose, whether immediate, incidental or ultimate, of buying or carrying
margin stock within the meaning of Regulation U of The Board of Governors of
the
Federal Reserve System, as amended from time to time.
6.6. Acquisitions
and Investments.
Except
as may arise in the ordinary course of AeroCentury's aircraft leasing business,
purchase or otherwise acquire (including without limitation by way of share
exchange) any part or amount of the capital stock or assets of, or make any
Investments in any other Person; or enter into any new business activities
or
ventures not directly related to its present business; or create any Subsidiary,
except (a) it may acquire and hold stock, obligations or securities
received in settlement of debts (created in the ordinary course of business)
owing to it, (b) it may make and own (i) Investments in certificates
of deposit or time deposits having maturities in each case not exceeding one
year from the date of issuance thereof and issued by a Bank, or any FDIC-insured
commercial bank incorporated in the United States or any state thereof having
a
combined capital and surplus of not less than $150,000,000,
(ii) Investments in marketable direct obligations issued or unconditionally
guaranteed by the United States of America, any agency thereof, or backed by
the
full faith and credit of the United States of America, in each case maturing
within one year from the date of issuance or acquisition thereof,
(iii) Investments in commercial paper issued by a corporation incorporated
in the United States or any State thereof maturing no more than one year from
the date of issuance thereof and, at the time of acquisition, having a rating
of
A-1 (or better) by Standard & Poor's Corporation or P-1 (or better) by
▇▇▇▇▇'▇ Investors Service, Inc., and (iv) investments in money market
mutual funds all of the assets of which are invested in cash or investments
described in the immediately preceding clauses (i), (ii) and (iii), (c) it
may acquire all of the outstanding capital stock or assets of JetFleet Holding
Corp., a California corporation ("JHC"),
under
substantially the terms and conditions set forth in that certain Amended and
Restated Management Agreement (the "Management
Agreement")
between
AeroCentury and JetFleet Management Corp. ("JMC"),
a
California corporation, entered into as of April 23, 1998, and (d) Investments
in Unrestricted Subsidiaries after the Closing Date other than Investments
constituting Restricted Payments to the extent permitted by §6.8 (“Unrestricted
Subsidiary Investments”)
so long
as all Unrestricted Subsidiary Investments (i) are for the maintenance, repair
and storage expenses (or expenses otherwise necessary to preserve and maintain
the aircraft owned by such Unrestricted Subsidiary) or to pay the reasonable
legal costs and expenses incurred in connection with the refinancing of the
aircraft of such Unrestricted Subsidiary, (ii) as a result of such Unrestricted
Subsidiary Investment the aggregate amount of Unrestricted Subsidiary
Investments in respect of such Unrestricted Subsidiary shall not exceed the
Unrestricted Subsidiary Investment Amount for such Unrestricted Subsidiary
and
(iii) immediately prior to and immediately following such Unrestricted
Subsidiary Investment no Default or Event of Default exists or would exist;
provided, however, that notwithstanding the foregoing AeroCentury may make
Unrestricted Subsidiary Investments in respect of taxes, franchise fees and
miscellaneous administrative expenses of the Unrestricted Subsidiaries so long
as the aggregate amount thereof does not exceed $5,000 in any Fiscal
Year.
6.7. Transfer
of Assets; Nature of Business.
Sell,
transfer, pledge, assign or otherwise dispose of any of its assets unless such
sale or disposition shall be in the ordinary course of its business for value
received; or discontinue, liquidate or change in any material respect any
substantial part of its operations or business. Sales of individual or small
groups of leases and related equipment from time to time and sales of groups
of
leases in securitization transactions and transfers of assets in connection
with
non-recourse financing transactions shall be deemed to be in the ordinary course
of the business of AeroCentury. Notwithstanding the foregoing and provided
that
no Potential Default or Event of Default shall have occurred and be continuing
either immediately prior to or upon the consummation of any transaction,
AeroCentury may sell, transfer or dispose of assets constituting up to ten
percent (10%) of its total assets during any period of twelve
months.
6.8. Restricted
Payments.
Declare
or pay any cash dividends or redeem or retire any shares of the outstanding
capital stock of AeroCentury, provided however, if no Event of Default or
Potential Default exists either immediately prior to or would exist immediately
following, cash dividends, redemptions and/or retirements may be made in an
aggregate amount not in excess of 50% of Net Income earned in the immediately
preceding Fiscal Year as disclosed in the financial statements delivered
pursuant to §5.1(a) hereof.
6.9. Accounting
Change.
Make or
permit any change in financial accounting policies or financial reporting
practices, except as required by Generally Accepted Accounting Principles or
regulations of the Securities and Exchange Commission, if
applicable.
6.10. Transactions
with Affiliates.
Enter
into any transaction (including, without limitation, the purchase, sale or
exchange of property, the rendering of any services or the payment of management
fees) with any Affiliate, except transactions in the ordinary course of, and
pursuant to the reasonable requirements of its business, including the payment
of standard and customary brokerage fees, provided such transactions are in
good
faith and upon commercially reasonable terms. Sales of individual or small
groups of leases and related equipment from time to time and sales of groups
of
leases in securitization transactions and/or other sales of assets to an
Unrestricted Subsidiary shall be deemed to be in the ordinary course of the
business of AeroCentury. Management fees paid to JMC in accordance with the
Management Agreement as in effect on April 23, 1998 shall be permitted
hereunder.
6.11. Limitations
on Restrictive Agreements.
AeroCentury
will not enter into, or permit to exist, any agreement with any Person which
prohibits or limits the ability of AeroCentury and/or any of its Subsidiaries
to
(a) pay dividends or make other distributions or prepay any Debt (except for
Permitted Debt) owed to AeroCentury and/or its Subsidiaries, (b) make loans
or
advances to AeroCentury and/or its Subsidiaries, (c) transfer any of its
Properties to AeroCentury and/or its Subsidiaries or (d) create, incur, assume
or suffer to exist any Lien upon any of AeroCentury’s and/or its Subsidiaries’
Property whether now owned or hereafter acquired other than a Permitted Lien;
provided that the foregoing shall not apply to restrictions in effect on the
Closing Date contained in agreements governing Debt outstanding on the Closing
Date.
6.12. Restriction
on Amendment of this Agreement.
Enter
into or otherwise become subject to or suffer to exist any agreement which
would
require it to obtain the consent of any other person as a condition to the
ability of the Banks and AeroCentury to amend or otherwise modify this
Agreement.
7.
Financial Covenants
AeroCentury
covenants and agrees that from and after the date hereof and so long as the
Revolving Loan Commitments are in effect or any Obligation remains unpaid or
outstanding, it will maintain the following financial covenants:
7.1. Minimum
Tangible Net Worth.
Tangible
Net Worth will not at any time be less than the sum of (i) $16,000,000, (ii)
50%
of Net Income for each Fiscal Quarter ending on March 31, 2007 and thereafter,
without deduction for net losses, (iii) 50% of the net proceeds from any sale
of
equity securities after the date of this Agreement, (iv) 50% of the fair value
of any equity securities issued after the date of this Agreement in connection
with any acquisition permitted hereunder or by waiver hereto and (v) 100% of
any
Subordinated Debt.
7.2. EBITDA
to Interest Ratio.
The
ratio of EBITDA to Interest as at the end of any Fiscal Quarter and for the
period of such Fiscal Quarter will not be less than 2.15:1.0; provided, however,
that if AeroCentury raises unsecured Subordinated Debt of at least $10,000,000
during any Fiscal Quarter, the ratio of EBITDA to Interest as at the end of
such
Fiscal Quarter and as at the end of any Fiscal Quarter thereafter, and for
the
period of such Fiscal Quarters so long as unsecured Subordinated Debt in the
principal amount of at least $10,000,000 remains outstanding, will not be less
than 1.6:1.0.
7.3. Recourse
Funded Debt to Tangible Net Worth.
The
ratio
of Recourse Funded Debt to Tangible Net Worth will not at each Fiscal Quarter
end exceed 4.00:1.0.
7.4. Absence
of Net Loss.
AeroCentury will not suffer a consolidated net loss, as measured on a
consecutive, four-quarter basis.
7.5. Borrowing
Base.
The
aggregate principal amount of Loans outstanding shall not at any time exceed
the
Borrowing Base or the Aggregate Revolving Loan Commitment, whichever is less;
provided, however, that this covenant shall not be deemed breached if, at the
time such aggregate amount exceeds said level, within three Business Days after
the earlier of the date AeroCentury first has knowledge of such excess or the
date of the next Borrowing Base Certificate disclosing the existence of such
excess, a prepayment of Loans shall be made in an amount sufficient to assure
continued compliance with this covenant in the future.
7.6. Effect
of FASB Staff Position AUG AIR-1, Accounting for Planned Major Maintenance
Activities.
All
calculations made in Sections 7.1, 7.2, 7.3, 7.4 and 7.5 and referenced
definitions used herein shall be adjusted to (i) deduct the amount of
non-refundable maintenance reserves received by the Company and recorded as
income and (ii) add back the payments made from non-refundable maintenance
reserves and recorded as expense, both such deductions adjusted, as applicable,
by the tax rate applicable to the subject reporting period.
8.
Default
8.1. Events
of Default.
AeroCentury shall be in default if any one or more of the following events
(each
an "Event
of Default")
occurs:
(a) Payments.
AeroCentury fails to pay (1) any principal of or interest on the Notes when
due and payable (whether at maturity, by notice of intention to prepay, or
otherwise), or (2) any other amount payable under any Loan Document when it
is due and payable, and such failure shall continue in either case for a period
of five Business Days or more.
(b) Covenants.
AeroCentury fails to observe or perform (1) any term, condition or covenant
set forth in §§5.1(a), 5.1(b), 5.1(c), 5.1(g), 5.1(h) or 5.1(j), §5.2 (first
clause only), all sections of Articles 6 and 7 or §8.1(a) of this Agreement, as
and when required, or (2) any term, condition or covenant contained in this
Agreement or any other Loan Document other than as set forth in (1) above,
as
and when required and such failure shall continue for a period of 10 Business
Days or more.
(c) Representations,
Warranties.
Any
representation or warranty made or deemed to be made by AeroCentury herein
or in
any Loan Document or in any exhibit, schedule, report or certificate delivered
pursuant hereto or thereto shall prove to have been false, misleading or
incorrect in any material respect when made or deemed to have been
made.
(d) Bankruptcy.
AeroCentury is dissolved or liquidated, makes an assignment for the benefit
of
creditors, files a petition in bankruptcy, is adjudicated insolvent or bankrupt,
petitions or applies to any tribunal for any receiver or trustee, commences
any
proceeding relating to itself under any bankruptcy, reorganization, readjustment
of debt, dissolution or liquidation law or statute of any jurisdiction, has
commenced against it any such proceeding which remains undismissed for a period
of sixty (60) days, or indicates its consent to, approval of or acquiescence
in
any such proceeding, or any receiver of or trustee for AeroCentury or any
substantial part of the property of AeroCentury is appointed, or if any such
receivership or trusteeship continues undischarged for a period of sixty (60)
days.
(e) Certain
Other Defaults.
(1) AeroCentury shall fail to pay when due any Recourse Funded Debt which
singularly exceeds $250,000, or in the aggregate exceeds $250,000, and such
failure shall continue beyond any applicable cure period, or
(2) AeroCentury shall suffer to exist any default or event of default in
the performance or observance, subject to any applicable grace period, of any
agreement, term, condition or covenant with respect to any agreement or document
relating to Recourse Funded Debt if the effect of such default is to permit,
with the giving of notice or passage of time or both, the holders thereof,
or
any trustee or agent for said holders, to terminate or suspend any commitment
(which is equal to or in excess of $250,000 in any individual case or $250,000
in the aggregate) to lend money or to cause or declare any portion of any
borrowings thereunder to become due and payable prior to the date on which
it
would otherwise be due and payable, or (3) any default shall exist under
any Swap Agreement; provided that during any applicable cure period the Banks'
obligations hereunder to make further Loans shall be suspended.
(f) Judgments.
Any
judgments against AeroCentury or against its assets or property for amounts
in
excess of $1,000,000 in the aggregate remain unpaid, unstayed on appeal,
undischarged, unbonded and undismissed for a period of thirty (30)
days.
(g) Attachments.
Any
assets of AeroCentury shall be subject to attachments, levies, or garnishments
for amounts in excess of $1,000,000 in the aggregate which have not been
dissolved or satisfied within thirty (30) days after service of notice thereof
to AeroCentury.
(h) Change
in Management.
▇▇▇▇ ▇.
▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ shall cease to be executive officers of AeroCentury
or JMC shall cease to be the management company for AeroCentury as contemplated
by the Management Agreement dated as of April 23, 1998.
(i) Security
Interests.
Any
security interest created pursuant to any Loan Document shall cease to be in
full force and effect, or shall cease in any material respect to give the Bank,
the Liens, rights, powers and privileges purported to be created thereby
(including, without limitation, a perfected security interest in, and Lien
on,
all of the Collateral), superior to and prior to the rights of all third
Persons, and subject to no other Liens (except as permitted by
§6.3).
(j) Material
Adverse Change.
Any
Material Adverse Change shall have occurred.
THEN
and in
every such event other than that specified in §8.1(d), National City as Agent
may, or at the written request of the Required Banks shall, immediately
terminate the Revolving Loan Commitments and declare the Notes and all other
Obligations, including without limitation accrued interest but excluding any
obligation under any Swap Agreement then in existence, to be, and they shall
thereupon forthwith become due and payable without presentment, demand, or
notice of any kind, all of which are hereby expressly waived by AeroCentury.
Upon the occurrence of any event specified in §8.1(d), the Revolving Loan
Commitments shall automatically terminate and the Notes and all other
Obligations, including without limitation accrued interest but excluding any
obligation under any Swap Agreement then in existence, shall immediately be
due
and payable without presentment, demand, protest or other notice of any kind,
all of which are hereby expressly waived by AeroCentury. Any date on which
the
Notes and such other obligations are declared due and payable pursuant to this
§8.1 shall be the Revolver Termination Date for purposes of this Agreement.
From
and after the date an Event of Default shall have occurred and for so long
as an
Event of Default shall be continuing, the Loans shall bear interest at the
Default Rate whether or not a Revolver Termination Date shall have
occurred.
9.
Agent
9.1. Appointment
and Authorization.
Each
Bank hereby irrevocably appoints and authorizes National City, as Agent, to
take
such action on its behalf and to exercise such powers under this Agreement
and
the Loan Documents as are specifically delegated to it as Agent by the terms
hereof or thereof, together with such other powers as are reasonably incidental
thereto. The relationship between National City and each Bank has no fiduciary
aspects, and National City's duties as Agent hereunder are acknowledged to
be
only ministerial and not involving the exercise of discretion on its part.
Nothing in this Agreement or any Loan Document shall be construed to impose
on
National City any duties or responsibilities other than those for which express
provision is made herein or therein. In performing its duties and functions
hereunder, National City does not assume and shall not be deemed to have
assumed, and hereby expressly disclaims, any obligation with or for AeroCentury.
As to matters not expressly provided for in this Agreement or any Loan Document,
National City shall not be required to exercise any discretion or to take any
action or communicate any notice, but shall be fully protected in so acting
or
refraining from acting upon the instructions of the Required Banks and their
respective successors and assigns; provided, however, that in no event shall
National City be required to take any action which exposes it to personal
liability or which is contrary to this Agreement, any Loan Document or
applicable law, and National City shall be fully justified in failing or
refusing to take any action hereunder unless it shall first be specifically
indemnified to its satisfaction by the Banks against any and all liability
and
expense which may be incurred by it by reason of taking or omitting to take
any
such action. If an indemnity furnished to National City for any purpose shall,
in its reasonable opinion, be insufficient or become impaired, National City
may
call for additional indemnity from the Banks and not commence or cease to do
the
acts for which such indemnity is requested until such additional indemnity
is
furnished.
9.2. Duties
and Obligations.
In
performing its functions and duties hereunder on behalf of the Banks, National
City shall exercise the same care and skill as it would exercise in dealing
with
loans for its own account. Neither National City nor any of its directors,
officers, employees or other agents shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement
or
any Loan Document except for its or their own gross negligence or willful
misconduct. Without limiting the generality of the foregoing, National City
(a) may consult with legal counsel and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good
faith and in accordance with the advice of such experts; (b) makes no
representation or warranty to any Bank as to, and shall not be responsible
to
any Bank for, any recital, statement, representation or warranty made in or
in
connection with this Agreement, any Loan Document or in any written or oral
statement (including a financial or other such statement), instrument or other
document delivered in connection herewith or therewith or furnished to any
Bank
by or on behalf of AeroCentury; (c) shall have no duty to ascertain or
inquire into AeroCentury's performance or observance of any of the covenants
or
conditions contained herein or to inspect any of the property (including the
books and records) of AeroCentury or inquire into the use of the proceeds of
the
Revolving Credit Loans or (unless the officers of National City active in their
capacity as officers of National City on AeroCentury's account have actual
knowledge thereof or have been notified in writing thereof) to inquire into
the
existence or possible existence of any Event of Default or Potential Default;
(d) shall not be responsible to any Bank for the due execution, legality,
validity, enforceability, effectiveness, genuineness, sufficiency,
collectability or value of this Agreement or any other Loan Document or any
instrument or document executed or issued pursuant hereto or in connection
herewith, except to the extent that such may be dependent on the due
authorization and execution by National City itself; (e) except as
expressly provided herein in respect of information and data furnished to
National City for distribution to the Banks, shall have no duty or
responsibility, either initially or on a continuing basis, to provide to any
Bank any credit or other information with respect to AeroCentury, whether coming
into its possession before the making of the Loans or at any time or times
thereafter, and (f) shall incur no liability under or in respect of this
Agreement or any other Loan Document for, and shall be entitled to rely and
act
upon, any notice, consent, certificate or other instrument or writing (which
may
be by facsimile (telecopier), telegram, cable, or other electronic means)
believed by it to be genuine and correct and to have been signed or sent by
the
proper party or parties.
9.3. National
City Bank as a Bank.
With
respect to its Revolving Loan Commitment and the Loans made and to be made
by
it, National City shall have the same rights and powers under this Agreement
and
all other Loan Documents as the other Banks and may exercise the same as if
it
were not the Agent. The terms "Bank" and "Banks" as used herein shall, unless
otherwise expressly indicated, include National City in its individual capacity.
National City and any successor Agent which is a commercial bank, and their
respective affiliates, may accept deposits from, lend money to, act as trustee
under indentures of and generally engage in any kind of business with,
AeroCentury and its affiliates from time to time, all as if such entity were
not
the Agent hereunder and without any duty to account therefor to any
Bank.
9.4. Independent
Credit Decisions.
Each
Bank acknowledges to National City that it has, independently and without
reliance upon National City or any other Bank, and based upon such documents
and
information as it has deemed appropriate, made its own independent credit
analysis and decision to enter into this Agreement. Each Bank also acknowledges
that it will, independently or through other advisers and representatives but
without reliance upon National City or any other Bank, and based upon such
documents and information as it shall deem appropriate at the time, continue
to
make its own credit decisions in taking or refraining from taking any action
under this Agreement or any Loan Document.
9.5. Indemnification.
The
Banks agree to indemnify National City (to the extent not previously reimbursed
by AeroCentury), ratably in proportion to each Bank's Commitment Percentage,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of
any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against National City in its capacity as Agent in any way relating to or arising
out of this Agreement or any Loan Document or any action taken or omitted to
be
taken by National City in its capacity as Agent hereunder or under any Loan
Document; provided that none of the Banks shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from National City's gross
negligence or willful misconduct. Without limiting the generality of the
foregoing, each Bank agrees to reimburse National City, promptly on demand,
for
such Bank's ratable share (based upon the aforesaid apportionment) of any
out-of-pocket expenses (including counsel fees and disbursements) incurred
by
National City in connection with the preparation, execution, administration
or
enforcement of, or the preservation of any rights under, this Agreement and
the
Loan Documents to the extent that National City is not reimbursed for such
expenses by AeroCentury.
9.6. Successor
Agent.
National
City may resign at any time by giving written notice of such resignation to
the
Banks and AeroCentury, such resignation to be effective only upon the
appointment of a successor Agent as hereinafter provided. Upon any such notice
of resignation, the Banks shall jointly appoint a successor Agent upon written
notice to AeroCentury and National City. If no successor Agent shall have been
jointly appointed by such Banks and shall have accepted such appointment within
thirty (30) days after National City shall have given notice of resignation,
National City may, upon notice to AeroCentury and the Banks, appoint a successor
Agent. Upon its acceptance of any appointment as Agent hereunder, the successor
Agent shall succeed to and become vested with all the rights, powers, privileges
and duties of National City, and National City shall be discharged from its
duties and obligations as Agent under this Agreement and the Loan Documents.
After National City's resignation hereunder, the provisions hereof shall inure
to its benefit as to any actions taken or omitted to be taken by it while it
was
the Agent under this Agreement and the Loan Documents.
10.
Miscellaneous
10.1. Waiver.
No
failure or delay on the part of National City or any Bank or any holder of
any
Note in exercising any right, power or remedy under any Loan Document shall
operate as a waiver thereof; nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof
or
the exercise of any other right, power or remedy under any Loan Document. The
remedies provided under the Loan Documents are cumulative and not exclusive
of
any remedies provided by law.
10.2. Amendments.
No
amendment, modification, termination or waiver of any Loan Document or any
provision thereof nor any consent to any departure by AeroCentury therefrom
shall be effective unless the same shall have been approved in writing by the
Required Banks, be in writing and be signed by National City and AeroCentury,
and then any such waiver or consent shall be effective only in the instance
and
for the specific purpose for which given. No notice to or demand on AeroCentury
shall entitle AeroCentury to any other or further notice or demand in similar
or
other circumstances. Notwithstanding any other provision contained in any Loan
Document, no amendment, modification, termination or waiver shall affect the
payment of principal (including without limitation the date when due), reduce
any interest rate margin or any fee provided herein, increase any Revolving
Loan
Commitment, extend the Revolver Termination Date, modify the definitions of
"Borrowing Base", "Eligible Collateral", "Eligible Lease" or "Required Banks"
or
any voting rights of the Banks without the written consent of all the Banks.
The
rights and responsibilities of National City as the Agent hereunder cannot
be
changed without its prior written consent.
10.3. Governing
Law.
The Loan
Documents and all rights and obligations of the parties thereunder shall be
governed by and be construed and enforced in accordance with the laws of the
Commonwealth of Pennsylvania without regard to Pennsylvania or federal
principles of conflict of laws.
10.4. Participations
and Assignments.
AeroCentury hereby acknowledges and agrees that any Bank may at any time:
(a) grant participations in all or any portion of its Note or of its right,
title and interest therein or in or to this Agreement (collectively,
"Participations")
to any
other lending office or to any other bank, lending institution or other entity
which has the requisite sophistication to evaluate the merits and risks of
investments in Participations ("Participants");
provided, however, that: (i) all amounts payable by AeroCentury shall be
determined as if such Bank had not granted such Participation; and (ii) any
agreement pursuant to which a Bank may grant a Participation; (x) shall
provide that such Bank shall retain the sole right and responsibility to enforce
the obligations of AeroCentury including, without limitation, the right to
approve any amendment, modification or waiver of any provisions of this
Agreement; (y) such participation agreement may provide that such Bank will
not agree to any modification, amendment or waiver of this Agreement without
the
consent of the Participant if such modification, amendment or waiver would
reduce the principal of or rate of interest on any Loan or postpone the date
fixed for any payment of principal of or interest on any Loan; and
(z) shall not relieve such Bank from its obligations, which shall remain
absolute, to make Loans hereunder; and (b) each Bank may assign all or part
of its Note and its Revolving Credit Commitment (but only with the consent
of
AeroCentury and National City, as the Agent, which consent shall not be
unreasonably withheld), provided that each such assignment shall be in an amount
of at least $5,000,000 (unless, after giving effect to such assignment and
all
other such assignments by such assigning Bank occurring simultaneously or
substantially simultaneously therewith, such assigning Bank shall hold no
Revolving Credit Commitment or any portion of its Note hereunder); and
(ii) each such assignment by a Bank of its Note or a portion thereof, or
Revolving Credit Commitment or a portion thereof shall be made in such manner
so
that the same portion of its Loans, Note and Revolving Credit Commitment is
assigned to the respective assignee. Upon execution and delivery by the assignee
to AeroCentury and National City, as the Agent, of an instrument in writing
pursuant to which such assignee agrees to become a "Bank" hereunder (if not
already a Bank) having the Commitment(s) and Note interest specified in such
instrument, and upon consent thereto by AeroCentury and National City, as the
Agent, to the extent required above, the assignee shall have, to the extent
of
such assignment (unless otherwise provided in such assignment with the consent
of AeroCentury and National City, as the Agent), the obligations, rights and
benefits of a Bank hereunder holding the Revolving Credit Commitment(s) and
Loans (or portions thereof) assigned to it (in addition to the Revolving Credit
Commitment(s) and Note interest, if any, theretofore held by such assignee)
and
the assigning Bank shall, to the extent of such assignment, be released from
the
Commitment(s) (or portion(s) thereof) so assigned. Upon each such assignment
the
assigning Bank shall pay National City as the Agent an assignment fee of
$3,500.
10.5. Captions.
Captions
in the Loan Documents are included for convenience of reference only and shall
not constitute a part of any Loan Document for any other purpose.
10.6. Notices.
All
notices, requests, demands, directions, declarations and other communications
between the Banks and AeroCentury provided for in any Loan Document shall,
except as otherwise expressly provided, be mailed by registered or certified
mail, return receipt requested, or telegraphed, or faxed, or delivered in hand
to the applicable party at its address indicated opposite its name on the
signature pages hereto. The foregoing shall be effective and deemed received
five (5) days after being deposited in the mails, postage prepaid, addressed
as
aforesaid and shall whenever sent by telegram, telegraph or fax or overnight
courier service or delivered in hand be effective when received. Any party
may
change its address by a communication in accordance herewith.
10.7. Sharing
of Collections, Proceeds and Set-Offs; Application of
Payments.
(a) If
any
Bank, by exercising any right of set-off, counterclaim or foreclosure against
trade collateral or otherwise, receives payment of principal or interest or
other amount due on any Note which is greater than the percentage share of
such
Bank (determined as set forth below), the Bank receiving such proportionately
greater payment shall purchase such participation in the Loans held by the
other
Banks, and such other adjustments shall be made as may be required, so that
all
such payments shall be shared by the Banks on the basis of their percentage
shares; provided that if all or any portion of such proportionately greater
payment of such indebtedness is thereafter recovered from, or must otherwise
be
restored by, such purchasing Bank, the purchase shall be rescinded and the
purchase price restored to the extent of such recovery, but without interest
being paid by such purchasing Bank. The percentage share of each Bank shall
be
based on the portion of the outstanding Loans of such Bank (prior to receiving
any payment for which an adjustment must be made under this Section) in relation
to the aggregate outstanding Loans of all the Banks. AeroCentury agrees, to
the
fullest extent it may effectively do so under applicable law, that any holder
of
a participation in a Loan or reimbursement obligation, whether or not acquired
pursuant to the foregoing arrangements, may exercise rights of set-off or
counterclaim and other rights with respect to such participation as fully as
if
such holder of a participation were a direct creditor of AeroCentury in the
amount of such participation. If under any applicable bankruptcy, insolvency
or
other similar law, any Bank receives a secured claim in lieu of a set-off to
which this Section would apply, such Bank shall, to the extent practicable,
exercise its rights in respect of such secured claim in a manner consistent
with
the rights of the Banks entitled under this Section to share in the benefits
of
any recovery on such secured claim.
(b) If
an
Event of Default or Potential Default shall have occurred and be continuing
the
Agent and each Bank and AeroCentury agree that all payments on account of the
Loans shall be applied by the Agent and the Banks as follows:
First,
to the
Agent for any Agent fees then due and payable under this Agreement until such
fees are paid in full;
Second,
to the
Agent for any fees, costs or expenses (including expenses described in § 10.8)
incurred by the Agent under any of the Loan Documents or this Agreement, then
due and payable and not reimbursed by AeroCentury or the Banks until such fees,
costs and expenses are paid in full;
Third,
to the
Banks for their percentage shares of the Commitment Fee then due and payable
under this Agreement until such fee is paid in full;
Fourth,
to the
Banks for their respective shares of all costs, expenses and fees then due
and
payable from AeroCentury until such costs, expenses and fees are paid in
full;
Fifth,
to the
Banks for their percentage shares of all interest then due and payable from
AeroCentury until such interest is paid in full, which percentage shares shall
be calculated by determining each Bank's percentage share of the amounts
allocated in (a) above determined as set forth in said clause (a);
and
Sixth,
to the
Banks for their percentage shares of the aggregate principal amount of the
Loans
then due and payable from AeroCentury and any Obligations of AeroCentury under
or in connection with any Swap Agreements, which percentage shares shall be
calculated by determining each Bank's percentage share of the aggregate of
all
Loans and Swap Agreement Obligations outstanding at the time of the calculation
based on the aggregate amount of Loans and Swap Agreement Obligations held
by
each Bank in proportion to all Loans and Swap Agreement Obligations
outstanding.
10.8. Expenses;
Indemnification.
AeroCentury will from time to time reimburse National City as the Agent promptly
following demand for all reasonable out-of-pocket expenses (including the
reasonable fees and expenses of legal counsel) in connection with (i) the
preparation of the Loan Documents (not to exceed $25,000), (ii) the making
of any Loans, (iii) the administration or revision of the Loan Documents,
and (iv) the enforcement of the Loan Documents; and reimburse the Banks for
all reasonable out-of-pocket expenses (including reasonable fees and expenses
of
legal counsel) in connection with the enforcement of the Loan Documents. In
addition to the payment of the foregoing expenses, AeroCentury hereby agrees
to
indemnify, protect and hold the Agent, each Bank and any holder of each Note
and
the officers, directors, employees, agents, affiliates and attorneys of the
Agent, each Bank and such holder (collectively, the "Indemnitees")
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses and disbursements of
any
kind or nature, including reasonable fees and expenses of legal counsel, which
may be imposed on, incurred by, or asserted against such Indemnitee by
AeroCentury or other third parties and arise out of or relate to this Agreement
or the other Loan Documents or any other matter whatsoever related to the
transactions contemplated by or referred to in this Agreement or the other
Loan
Documents; provided, however, that AeroCentury shall have no obligation to
an
Indemnitee hereunder to the extent that the liability incurred by such
Indemnitee has been determined by a court of competent jurisdiction to be the
result of gross negligence or willful misconduct of such
Indemnitee.
10.9. Survival
of Warranties and Certain Agreements.
All
agreements, representations and warranties made or deemed made herein shall
survive the execution and delivery of this Agreement, the making of the Loans
hereunder and the execution and delivery of the Note. Notwithstanding anything
in this Agreement or implied by law to the contrary, the agreements of
AeroCentury in §§2.1(f), 2.5(b), 2.9 and 10.8 and the agreements of the Banks
set forth in §§9.1, 9.5 and 10.8 shall survive the payment of the Loans and the
termination of this Agreement. This Agreement shall remain in full force and
effect until the repayment in full of all amounts owed by AeroCentury under
the
Notes or any other Loan Document.
10.10. Severability.
The
invalidity, illegality or unenforceability in any jurisdiction of any provision
in or obligation under this Agreement, the Notes or other Loan Documents shall
not affect or impair the validity, legality or enforceability of the remaining
provisions or obligations under this Agreement, the Notes or other Loan
Documents or of such provision or obligation in any other
jurisdiction.
10.11. Banks'
Obligations Several; Independent Nature of Banks'
Rights.
The
obligation of each Bank hereunder is several and not joint and no Bank shall
be
the agent of any other (except to the extent the Agent is authorized to act
as
such hereunder). No Bank shall be responsible for the obligation or commitment
of any other Bank hereunder. In the event that any Bank at any time should
fail
to make a Loan as herein provided, the other Banks, or any of them as may then
be agreed upon, at their sole option, may make the Loan that was to have been
made by the Bank so failing to make such Loan. Nothing contained in any Loan
Document and no action taken by Agent or any Bank pursuant hereto or thereto
shall be deemed to constitute the Banks to be a partnership, an association,
a
joint venture or any other kind of entity. The amounts payable at any time
hereunder to each Bank shall be a separate and independent debt, and, subject
to
the terms of this Agreement, each Bank shall be entitled to protect and enforce
its rights arising out of this Agreement and it shall not be necessary for
any
other Bank to be joined as an additional party in any proceeding for such
purpose.
10.12. No
Fiduciary Relationship.
No
provision in this Agreement or in any of the other Loan Documents and no course
of dealing between the parties shall be deemed to create any fiduciary duty
of
any Bank to AeroCentury.
10.13. CONSENT
TO JURISDICTION AND SERVICE OF PROCESS.
AEROCENTURY, THE AGENT AND EACH BANK EACH HEREBY CONSENTS TO THE JURISDICTION
OF
ANY STATE OR FEDERAL COURT LOCATED WITHIN THE EASTERN DISTRICT OF PENNSYLVANIA
AND IRREVOCABLY AGREES THAT, ANY ACTIONS OR PROCEEDINGS ARISING OUT OF OR
RELATING TO THE NOTE, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY BE
LITIGATED IN SUCH COURTS. EACH PARTY TO THIS AGREEMENT ACCEPTS FOR ITSELF AND
IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENT, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS AGREEMENT, ANY NOTE, OR SUCH OTHER LOAN
DOCUMENT.
10.14. WAIVER
OF JURY TRIAL.
AEROCENTURY, THE AGENT AND EACH BANK EACH HEREBY WAIVES ITS RESPECTIVE RIGHTS
TO
A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING
TO
THE SUBJECT MATTER OF THIS AGREEMENT AND THE LENDERIBORROWER RELATIONSHIP
ESTABLISHED HEREBY THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING
OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT
CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS. AEROCENTURY, THE AGENT AND EACH BANK EACH ACKNOWLEDGES THAT
THIS WAIVER IS A MATERIAL INDUCEMENT TO THE TRANSACTION, THAT EACH HAS ALREADY
RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE
TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. AEROCENTURY, THE AGENT
AND EACH BANK EACH FURTHER WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES
ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER
IS
IRREVOCABLE, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS, MODIFICATIONS, REPLACEMENTS OR RESTATEMENTS TO THIS AGREEMENT,
THE
LOAN DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS.
IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO
A TRIAL BY THE COURT.
10.15. Counterparts;
Effectiveness.
This
Agreement and any amendment hereto or waiver hereof may be signed in any number
of counterparts, each of which shall be an original, with the same effect as
if
the signatures thereto and hereto were upon the same instrument. This Agreement
and any amendments hereto or waivers hereof shall become effective when the
Agent shall have received signed counterparts or notice by fax of the signature
page that the counterpart has been signed and is being delivered to it or
facsimile that such counterparts have been signed by all the parties hereto
or
thereto.
10.16. Use
of Defined Terms.
All
words used herein in the singular or plural shall be deemed to have been used
in
the plural or singular where the context or construction so requires. Any
defined term used in the singular preceded by "any" shall be taken to indicate
any number of the members of the relevant class.
10.17. Offsets.
Nothing
in this Agreement shall be deemed a waiver or prohibition of any Bank's right
of
banker's lien or offset.
10.18. Entire
Agreement.
This
Agreement, the Notes issued hereunder and the other Loan Documents constitute
the entire understanding of the parties hereto as of the date hereof with
respect to the subject matter hereof and thereof and supersede any prior
agreements, written or oral, with respect hereto or thereto.
10.19. Swap
Agreements.
Notwithstanding anything to the contrary contained in this Agreement,
AeroCentury and any Bank may enter into a swap agreement or swap agreements
at
any time and from time to time or amend or otherwise modify any such agreement
and such entry, amendment, modification and/or the existence of any such
agreement shall not constitute a breach of any provision of this Agreement
or
any other Loan Document, or be in any manner restricted by this Agreement or
any
other Loan Document.
10.20. Amended
and Restated Credit Agreement.
This
Agreement shall be deemed to, and does hereby, amend and restate in its entirety
the Amended and Restated Credit Agreement. Simultaneous with the execution
and
delivery of this Agreement, the commitment of each Bank party to the Amended
and
Restated Credit Agreement is hereby modified to be as set forth in Exhibit
A to
this Agreement.
10.21. Re-Funding
of Loans, Etc.
Promptly
following the effectiveness of this Agreement, National City, as the Agent
under
this Agreement, shall coordinate with each of the Banks (a) to provide for
funding by National City Bank, in its individual capacity, and each of the
other
Banks of Loans to AeroCentury under this Agreement equal to the proportionate
share of each Bank of the aggregate principal amount of Loans then outstanding
to AeroCentury based on the Revolving Loan Commitment Percentage of each Bank
and (b) to provide for application of the proceeds of such Loans to
repayment to each such Bank as shall be necessary to cause the Loans by each
such Bank not to exceed its proportionate share based on its Revolving Loan
Commitment Percentage applied to the aggregate principal amount of outstanding
Loans by the Banks to AeroCentury on such date.
10.22. USA
Patriot Act.
Each
Bank that is subject to the requirements of the USA Patriot Act (Title III
of
Pub. L. 107-56 (signed into law October 26, 2001)) (the "Patriot
Act")
hereby
notifies AeroCentury that pursuant to the requirements of the Patriot Act,
it is
required to obtain, verify and record information that identifies AeroCentury,
which information includes the name and address of AeroCentury and other
information that will allow such Bank to identify AeroCentury in accordance
with
the Patriot Act.
IN
WITNESS WHEREOF, the parties hereto have each caused this Agreement to be duly
executed by their duly authorized representatives as of the date first above
written.
|
By
Name: ▇▇▇▇
▇. ▇▇▇▇▇▇▇
Title: Senior
Vice President-Finance
|
|
|
Notices
To:
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
FAX
No. (▇▇▇) ▇▇▇-▇▇▇▇
Att: ▇▇▇▇
▇. ▇▇▇▇▇▇▇
Senior
Vice President-Finance
|
|
|
NATIONAL
CITY BANK
By
Name:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title:
Senior Vice President
|
|
|
Notices
To:
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇
Senior
Vice President
National
City Bank
Specialized
Banking Group,
Philadelphia
Region
One
South Broad Street,
13th
Floor, Loc. 01-5997
▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
FAX
No. (▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
CALIFORNIA
BANK & TRUST
By
Name:
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
Vice President
|
|
|
Notices
To:
Mr.
J. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Vice
President
California
Bank & Trust
San
Francisco Regional Corporate Banking
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX:
(▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
FIRST
BANK
By
Name:
▇▇▇ ▇. ▇▇▇▇▇▇
Title:
Vice President
|
|
|
Notices
To:
▇▇.
▇▇▇ ▇. ▇▇▇▇▇▇
Vice
President
First
Bank
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX
No. (▇▇▇) ▇▇▇-▇▇▇▇
|
|
|
BRIDGE
BANK, NATIONAL ASSOCIATION
By
Name:
▇▇▇▇ ▇▇▇▇▇▇▇
Title:
Executive Vice President
|
|
|
Notices
to:
Ms.
▇▇▇▇ ▇▇▇▇▇▇▇
Executive
Vice President
Bridge
Bank, National Association
▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, #▇▇▇
▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX
No. (▇▇▇) ▇▇▇-▇▇▇▇
|
Reference
Table of Definitions
[omitted]
EXHIBIT
A
BANKS’
COMMITMENTS AND PERCENTAGES
Bank Commitment Percentage
National
City Bank
$35,000,000 43.75%
Specialized
Banking Group,
Philadelphia
Region
One
South
Broad Street,
13th
Floor, Loc. 01-5997
▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
FAX
No.
(▇▇▇) ▇▇▇-▇▇▇▇
California
Bank & Trust $20,000,000 25.00%
San
Francisco Regional Corporate Banking
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX:
(▇▇▇) ▇▇▇-▇▇▇▇
First
Bank
$15,000,000 18.75%
▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX
No.
(▇▇▇) ▇▇▇-▇▇▇▇
Bridge
Bank, National Association
$10,000,000
12.50%
▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, #▇▇▇
▇▇▇
▇▇▇▇,
▇▇ ▇▇▇▇▇
FAX
No.
(▇▇▇) ▇▇▇-▇▇▇▇
TOTAL $80,000,000 100%
EXHIBIT
B
NOTE
$_,000,000Philadelphia,
PA
______________,
____
For
Value
Received, AeroCentury
Corp.,
a
Delaware corporation, hereby promises to pay to the order of _________________
BANK
(the
"Bank"),
in
lawful currency of the United States of America in immediately available funds
at principal office of National City Bank in Cleveland, Ohio, on the Revolver
Termination Date or on such earlier date or dates as provided in the Credit
Agreement described below, the principal sum of ___________________ DOLLARS
($_,000,000)
or, if
less, the then unpaid principal amount of all Loans made by the Bank pursuant
to
the Credit Agreement.
AeroCentury
Corp. promises also to pay interest on the unpaid principal amount hereof in
like money at such office from the date hereof until paid in full at the rates
and at the times provided in the Credit Agreement.
This
Note
amends and restates (but does not satisfy, extinguish or release the absolute
and unconditional obligation to repay the entire indebtedness evidenced by)
the
Note, dated ___________ ___, ______, executed by the Bank in favor of
AeroCentury Corp., in the original principal amount of ___________________
Dollars ($_,000,000).
This
Note
is one of the Notes referred to in, is entitled to the benefits of and is
secured by security interests referred to in the Second Amended and Restated
Credit Agreement, dated April 17, 2007, by and between AeroCentury Corp. and
the
banking institutions named therein, with National City Bank as Agent (as such
may be amended, modified, supplemented, restated or replaced from time to time,
the "Credit
Agreement").
This
Note is subject to voluntary prepayment and mandatory repayment prior to the
Revolver Termination Date, in whole or in part, as provided in the Credit
Agreement.
In
case
an Event of Default shall occur and be continuing, the maturity date of the
principal of and the accrued interest on this Note may be accelerated and be
declared to be due and payable in the manner and with the effect provided in
the
Credit Agreement.
AeroCentury
hereby waives presentment, demand, protest or notice of any kind in connection
with this Note.
Notwithstanding
the face amount of this Note, the undersigned's liability hereunder shall be
limited, at all times, to the actual aggregate outstanding indebtedness to
the
Bank relating to such Bank's Loans, including all principal and interest,
together with all fees and expenses as provided in the Credit Agreement, as
established by the Bank's books and records which shall be conclusive absent
manifest error.
Capitalized
terms used but not defined herein shall have the respective meanings assigned
to
them in the Credit Agreement.
THIS
NOTE
SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE
COMMONWEALTH OF PENNSYLVANIA WITHOUT REGARD TO PENNSYLVANIA OR FEDERAL
PRINCIPLES OR CONFLICT OF LAWS.
|
By
Name:
Title:
|
EXHIBIT
C
BORROWING
BASE CERTIFICATE
Date
of
Certificate:
Date
of
Information:
To:
National
City Bank, as Agent
Gentlemen:
This
Borrowing Base Certificate is delivered to you pursuant to the terms of §5.1 of
the Second Amended and Restated Credit Agreement, dated April 17, 2007, as
currently in effect. Capitalized terms used without definition below have the
same meanings as they have in the Credit Agreement.
We
hereby
certify that:
No
Potential Default or Event of Default has occurred and is continuing as of
the
date of this Borrowing Base Certificate.
There
has
been no Material Adverse Change since [insert the date of the most recent
financial statements delivered to the Bank pursuant to the terms of §5.1 of the
Credit Agreement], except as disclosed on the attached schedules.
The
information set forth on the attached schedules is true, current and complete
as
of the date of this Borrowing Base Certificate.
|
AeroCentury
Corp.
By
Name:
Title:
|
AeroCentury
Corp.
Computation
of Borrowing Base Availability
__________________,
________
Collateral
Loan Value
Total
Borrowing Base $
Maximum
Loans
Revolving
Loan Commitment $
80,000,000
Credit
Usage
Aggregate
Loan Balance (principal) at date
of
certificate $
Loan
Availability
Collateral
Loan Value minus Credit Usage $
Maximum
Loans minus Credit Usage $
Loan
Availability (lesser of two preceding lines) $
Amount
of
Loan Requested (not to exceed preceding line) $
EXHIBIT
D
COVENANT
COMPLIANCE CERTIFICATE
The
undersigned, the [chief executive or chief financial] Officer of AeroCentury
Corp. ("AeroCentury"), does hereby certify to National City Bank, Agent (the
"Bank"), as required by that certain Second Amended and Restated Credit
Agreement, dated April 17, 2007, by and between AeroCentury and the Bank, as
amended (the "Agreement") (terms not otherwise defined herein shall have the
meanings given to such terms in the Agreement), that as such officer he is
authorized to execute this Compliance Certificate (this "Certificate") on behalf
of AeroCentury and does further certify that:
AeroCentury
has complied and is in compliance with all covenants, agreements and conditions
in the Agreement and each of the other Loan Documents on the date
hereof.
Each
representation and warranty contained in the Agreement and each of the other
Loan Documents is true and correct on the date hereof.
No
Potential Default or Event of Default has occurred and is continuing as of
the
date of this Compliance Certificate.
There
has
been no Material Adverse Change since [insert the date of the most recent
financial statements delivered to the Bank pursuant to the terms of §5.1 of the
Credit Agreement], except as disclosed on the attached schedules.
The
covenant compliance calculations set forth in Attachment 1 hereto are true
and
correct on the dates specified.
IN
WITNESS WHEREOF, the undersigned has executed this Certificate in his capacity
as an officer of AeroCentury on this _____ day of _________,
______.
|
AEROCENTURY
CORP.
By
Name:
Title:
|
Attachment
1 to the
Covenant
Compliance Certificate
AEROCENTURY
CORP.
COVENANT
COMPLIANCE CALCULATIONS
For
the period ending _______
|
§7.1
|
MINIMUM
TANGIBLE NET WORTH
|
|||
|
REQUIREMENT:
-
Minimum Tangible Net Worth will not at any time be less than the
sum of
(i) $16,000,000 (ii) 50% of Net Income for each Fiscal Quarter ending
on
or after March
31, 2007,
without deduction for net losses, (iii) 50% of the net proceeds from
any
sale of equity securities after the date of this Agreement, (iv)
50% of
the fair value of any equity securities issued after the date of
this
Agreement in connection with any acquisition permitted hereunder
or by
waiver hereto and (v) 100% of any Subordinated Debt.
|
||||
|
Tangible
Net Worth on [date]
|
||||
|
Capital
Stock
|
||||
|
Paid-In
Capital
|
|
|||
|
Retained
Earnings, as adjusted on 1/1/07 pursuant to Section 7.6, as of
[date]
|
|
|||
|
less:
Non-refundable maintenance reserves recorded as income pursuant to
FSP AUG
AIR-1 since January 1, 2007, net of tax effect
|
(
)
|
|||
|
plus:
Non-refundable maintenance reserves recorded as expense pursuant
to FSP
AUG AIR-1 since January 1, 2007, net of tax effect
|
||||
|
Retained
Earnings, adjusted for
FSP
AUG AIR-1
|
||||
|
plus:
Unsecured Subordinated Debt due after the Revolver Termination
Date
|
|
|||
|
Subtotal
|
|
|||
|
less:
Net Worth of Unrestricted Subsidiaries
|
(
)
|
|||
|
less:
Intangibles
|
(
)
|
|||
|
Tangible
Net Worth
|
||||
|
Required
Tangible Net Worth
|
||||
|
(i)
$16,000,000
|
16,000,000
|
|||
|
(ii)
50% of Net Income, adjusted for effect of non-refundable maintenance
reserves recorded as income and expense pursuant to FSP AUG AIR-1,
net of
tax effect
|
||||
|
(iii)
50% of net proceeds from any sale of equity securities
|
|
|||
|
(iv)
50% of the fair value of any equity securities issued after the date
of
this Agreement in connection with any permitted
acquisition.
|
|
|||
|
(v)
100% of any subordinated debt
|
||||
|
Required
Tangible Net Worth
|
||||
|
EXCESS
(DEFICIENCY) OF ACTUAL TANGIBLE NET WORTH COMPARED WITH REQUIRED
TANGIBLE
NET WORTH
|
||||
|
§7.2
|
EBITDA
TO INTEREST RATIO
|
|||
|
REQUIREMENT:
-
The ratio of EBITDA to Interest as at the end of any Fiscal Quarter
and
for the period of such Fiscal Quarter will not be less than 2.15:1.0;
provided, however, that if AeroCentury raises unsecured Subordinated
Debt
of at least $10,000,000 during any Fiscal Quarter, the ratio of EBITDA
to
Interest as at the end of such Fiscal Quarter and as at the end of
any
Fiscal Quarter thereafter, and for the period of such Fiscal Quarters
so
long as unsecured Subordinated Debt in the principal amount of at
least
$10,000,000 remains outstanding, will not be less than
1.60:1.0.
|
||||
|
EBITDA
-
|
||||
|
Net
Income for the
|
||||
|
Fiscal
Quarter ended ___________
|
||||
|
Interest
deducted with respect to
the
Fiscal Quarter ended ___________
|
||||
|
Taxes
deducted with respect to
the
Fiscal Quarter ended ___________
|
||||
|
Depreciation
deducted with respect to
the
Fiscal Quarter ended ___________
|
||||
|
Amortization
deducted with respect to
Fiscal
Quarter ended ___________
|
||||
|
Non-refundable
maintenance reserves recorded as income pursuant to FSP AUG AIR-1,
with
respect to the Fiscal Quarter ended ___________
|
(
)
|
|||
|
Non-refundable
maintenance reserves recorded as expense pursuant to FSP AUG AIR-1,
with
respect to the Fiscal Quarter ended ____________
|
||||
|
EBITDA
for the Fiscal Quarter
ended
___________
|
||||
|
Interest
-
|
||||
|
Interest
for the Fiscal Quarter
ended
___________
|
||||
|
RATIO
OF EBITDA TO INTEREST
|
||||
|
§7.3
|
RECOURSE
FUNDED DEBT TO TANGIBLE NET WORTH
|
||
|
REQUIREMENT:
-
The ratio of Recourse Funded Debt (including Recourse Funded Debt
represented by the Notes) to Tangible Net Worth will not at any time
exceed 4.00:1.0.
|
|||
|
Recourse
Funded Debt on [date]:
|
|||
|
Tangible
Net Worth on [date]
|
|||
|
RATIO
OF RECOURSE FUNDED DEBT TO
TANGIBLE
NET WORTH
|
|||
|
§7.4
|
ABSENCE
OF NET LOSS
|
||
|
REQUIREMENT:
-
AeroCentury
will not suffer a consolidated net loss, as measured on a consecutive,
four-quarter basis.
|
|||
|
Net
Income for the consecutive four quarters ended ________
|
|||
|
less:
Non-refundable maintenance reserves recorded as income pursuant to
FSP AUG
AIR-1, net of tax effect
|
(
)
|
||
|
plus:
Non-refundable maintenance reserves recorded as expense pursuant
to FSP
AUG AIR-1, net of tax effect
|
|||
|
NET
INCOME FOR THE CONSECUTIVE FOUR QUARTERS ENDED __________, ADJUSTED
FOR
EFFECTS OF FSP
AUG
AIR-1
|
|||
|
1-PH/2368172.8
|
EXHIBIT
E
DEPRECIATION
POLICIES
AeroCentury
Corp's interest in aircraft and aircraft engines are recorded at cost, which
includes acquisition costs and loan fees. Depreciation is completed using the
straight-line method over the aircraft's estimated economic life (generally
assumed to be twelve years), to an estimated residual value.
SCHEDULE
1
DISCLOSURE
SCHEDULE
SCHEDULE
2
APPLICABLE
MARGINS, COMMITMENT FEE
Advances
under the Revolving Credit shall carry an interest rate based on the Borrower’s
ratio of Total Funded Recourse Indebtedness to Tangible Net Worth (“Total Funded
Recourse Debt to TNW”), as outlined below:
Ratio
of Funded
Debt
to Tangible Alternate
Base LIBO Commitment
Net
Worth Rate
Margin Rate
Margin
Fee
>
3.00
▇▇▇
▇▇ ▇▇▇
▇▇
▇▇
bp
≥
2.00
but ≤ 3.00
▇▇▇
▇▇ ▇▇▇
▇▇
▇▇
bp
<
2.00
▇▇
▇▇ ▇▇▇
▇▇
▇▇
bp
The
Commitment Fee is computed based upon the applicable Commitment Fee rate on
the
average daily unused portion of the Revolving Credit Loan that is due and
payable quarterly in arrears.