AMENDED AND RESTATED MANAGEMENT AGREEMENT
THIS AMENDED AND RESTATED MANAGEMENT AGREEMENT, dated as April 23,
1998, is entered by and among AEROCENTURY CORP., a Delaware corporation (the
"Company"), and JETFLEET MANAGEMENT CORP., a California corporation (the
"Management Company").
WITNESSETH
WHEREAS, pursuant to a Management Agreement, dated December 31, 1997
(the "Management Agreement") the Company hired the Management Company to perform
management services for the Company.
WHEREAS, the parties hereto desire to amend and restate such Management
Agreement.
NOW THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows.
ARTICLE 1
DELEGATION TO THE MANAGEMENT COMPANY
1.1 Powers, Rights and Obligations of the Management Company. The
Management Company shall conduct all aspects of the business affairs of the
Company including, without limitation, management of; (i) the identification and
selection of income producing assets ("Assets") for acquisition by the Company
with the proceeds of the Offering; (ii) administration of the leases for such
Assets; (iii) management of remarketing and resale of the Assets; and (iv)
general administrative and day-to-day operations of the Company. The Management
shall devote such time as may be necessary for the proper performance of its
duties and shall use its best efforts to carry out the purposes of the Company
and shall manage the affairs of the Company to the best of its abilities. The
Company agrees and acknowledges that the Management Company may, in the future,
act as management company for other investment entities sponsored by the
Management Company, which entities may engage in the same line of business as
the Company.
1.2 Indemnification. The Company shall indemnify and hold the
Management Company, its directions, officers, shareholders, employees and agents
harmless from and against any and all liability, demands, claims, actions,
losses, interest, cost of defense, and expenses (including reasonable attorney's
fees) which arise out of or in connection with the acceptance or appointment as
management company and the performance of its duties hereunder except such acts
or omissions as may result from the willful misconduct or gross negligence of
the Management Company. Promptly after receipt by the Management Company of
notice of any demand or claim or the commencement of any action, suit or
proceeding relating to this Management Agreement, the Management Company shall
notify the Company in writing. IT IS EXPRESSLY THE INTENT OF THE COMPANY TO
INDEMNIFY THE MANAGEMENT COMPANY, AND ITS DIRECTORS, OFFICERS, SHAREHOLDERS AND
EMPLOYEES AND AGENTS FROM ERRORS IN JUDGMENT OR OTHER ACTS OR OMISSIONS NOT
AMOUNTING TO WILFUL MISCONDUCT OR GROSS NEGLIGENCE.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE MANAGEMENT
COMPANY
2.1 The Management Company hereby makes the following representations
and warranties on which the Company has relied in making the delegation set
forth in Section 1.1:
(a) Organization. The Management Company is a California
corporation duly organized, validly existing and in a good standing under the
laws of the States of California and is duly qualified as a foreign corporation
in each jurisdiction in which the nature of its business makes such
qualification necessary.
(b) Authorization. The Management Company has all requisite
power and authority to execute, deliver and perform this Agreement, and the
execution, delivery and performance of this Agreement have been duly authorized
by all necessary action on the part of the Management Company.
(c) Binding Obligation. The Agreement constitutes a legal,
valid and binding obligation of the Management Company, enforceable against the
Management Company in accordance with its terms.
(d) No Violations. The execution, delivery and performance by
the Management Company of this Agreement does not (i) violate any provision of
the corporate charter or by-laws of the Management Company, (ii) violate any
statue or regulation or any order, writ, judgment or decree of any court,
arbitrator or governmental authority applicable to the Management Company or any
of its assets, or (iii) violate or constitute, with or without notice or lapse
of time, a default under, or result in the creation or imposition of any lien on
the assets of the Management Company pursuant to the provisions of, any
mortgage, indenture, contract, agreement or other undertaking to which the
Management Company is a party.
ARTICLE 3
AGENTS; CHANGES IN THE MANAGEMENT COMPANY; COMPENSATION
3.1 Agents.
(a) The Management Company may delegate any or all of the
powers, rights and obligations under this Agreement and may appoint, employ,
contract or otherwise deal with any person or entity (each, an "Agent") in
respect of the conduct of the business and affairs of the Company. Without
limitation, the Management Company may assign to any such Agent the right to
receive any fee or reimbursement of expenses as the Management Company would be
entitled to receive under this Agreement.
(b) The Management Company shall supervise the activities of
its Agents, and notwithstanding the designation of or delegation to any Agent,
the Management Company shall remain obligated to the Company for the proper
performance of the obligations of its obligations as Management Company;
provided, however, that the Management Company may enter into any agreement for
indemnification pursuant to which an Agent may indemnify and hold harmless the
Management Company from any liability to the Company arising by reason of the
act or omission of such Agent.
3.2 Effect of Termination. In the event of the bankruptcy or
dissolution of Management Company, such Management Company shall cease to
participate in the conduct of the business affairs of the Company.
3.3 Successor by Merger or Acquisition of Business. Any entity
resulting from any merger or consolidation to which the Management Company shall
be a party or succeeding to the business of the Management Company will be the
successor to the Management Company hereunder without the execution or filing of
any paper or any further act on the part of any the parties hereto. The
Management Company shall provide prompt written notice of any such event to the
Company.
3.4 Compensation. As full and exclusive compensation for all duties
assumed and services provided hereunder, the Management Company shall entitled
to receive a management fee payable monthly on the last day of each calendar
month equal to 0.25% of the Asset Value of the Company as of the last day of
such calendar month. In addition, the Management Company shall receive
reimbursement of expenses paid to third parties incurred by the Management
Company in connection with the administration and management of the Company. For
purposes of this Agreement, Asset Value shall mean the original costs of the
assets recorded on the books of the Company less depreciation not offset by
liabilities, calculated in accordance with generally accepted accounting
principles.
3.5 Term of Management Agreement. This Agreement shall have a term of
twenty years subject to termination rights under Section 3.6 below.
3.6 Termination.
(a) This Agreement may be terminated by a party upon six
months prior notice upon the material breach by the other party of any its
respective material agreements and obligations under this Agreement which
remains uncured for a period of after 90 days after written notice of such
breach. In the event the Company breaches this Agreement, then as liquidated
damages for such breach, and not as a penalty therefor, the Company shall pay
liquidated damages in the amount set forth on Schedule 1 hereto. The Company and
the Management Company hereby acknowledge that the damages suffered as a result
of the breach by the Company of this Agreement are difficult to ascertain, but
that such liquidated damage amounts are reasonable in light of the actual
anticipated damages.
(b) A sale or disposition by the Company of substantially all
or a significant portion of the assets of the Company in a single transaction or
series of transactions not recommended by the Management Company shall be deemed
to be a termination by the Company in breach of this Agreement. For purposes of
this subsection, a sale of a "significant portion" of the assets of the Company
shall mean a sale, disposition or transfer of 25% or more of the assets (based
on fair market value).
ARTICLE 4
OPTION TO PURCHASE MANAGEMENT COMPANY
4.1 Option to Acquire Management Company. In consideration of the
Company entering into this Agreement, the Management Company hereby grants to
the Company, the exclusive right to acquire all of the outstanding capital stock
of the Management Company. The purchase price would be set at 90% of the product
of (i) the Earnings (as defined below) of the Management Company as of the most
recent 12-month period prior to the acquisition, multiplied by (ii) the average
price to earnings ratio of the Company over the same 12 month period, each as
determined according to generally accepted accounting principles; provided,
however, that if the purchase price is less than $12 million, Management Company
would have the right to decline the acquisition. The purchase price would be
payable in the form of freely tradeable securities of the Company and the
closing of the purchase shall be conditioned upon the approval of the respective
boards of directors and shareholders of both the Company and the Management
Company, as required by law, and shall expire on December 31, 2003. For purposes
of this Section 4.1, the term "Earnings" shall mean Earnings before cumulative
equity in earnings/losses of subsidiaries.
ARTICLE 5
MISCELLANEOUS PROVISIONS
5.1 Applicable Law. This Agreement shall by governed by and construed
and enforced in accordance with the laws of the State of California without
regard to principles of conflicts of law.
5.2 Counterparts. This Agreement may be executed in several
counterparts, all of which together shall constitute one agreement binding on
all parties hereto, notwithstanding that all the parties have not signed the
same counterpart.
5.3 Separability of Provisions. If any provision of this Agreement is
determined by a court of competent jurisdiction to be unenforceable, such
provision shall be automatically reformed and construed so as to be valid and
enforceable to the maximum extent permitted by law while most nearly preserving
its original intent. The invalidity of all or any part of this Agreement shall
not render invalid the remainder of this Agreement.
5.4 Captions. Article and Section titles and any table of contents are
for convenience of reference only and shall not control or alter the meaning of
this Agreement as set forth in this text.
5.5 No Benefit to Third Parties. The provisions of this Agreement shall
not be construed for the benefit of or enforceable by a person not a party
hereto.
5.6 Successors and Assigns. The covenants and agreements contained
herein shall be binding upon, and inure to the benefit of, the successors and
permitted assigns of the respective parties hereto.
5.7 Amendments. This Agreement may only be amended in writing executed
by the parties hereto.
5.8 Prior Management Agreement Superseded. This Amended and Restated
Management Agreement supersedes and replaces that certain Management Agreement
between the parties hereto, dated December 31, 1997.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
COMPANY: MANAGEMENT COMPANY:
AEROCENTURY CORP. JETFLEET MANAGEMENT CORP.,
a Delaware corporation a California corporation
By:_____________________________ By:_____________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
SCHEDULE A
Liquidated Damages For Termination
From September 1, 1997 to October 31, 2007: $12,000,000*.
From September 1, 2007 to October 31, 2017: $12,000,000* less
$1,000,000 for each year or portion
thereof remaining in the term of this Agreement.
* This $12,000,000 amount shall be adjusted to reflect changes in the Consumer
Price Index (as published by the United States Department of Labor) from the
date of this Agreement to the termination date. If the Consumer Price Index is
or becomes unavailable, then a comparable index will be mutually agreed upon by
the Company and the Management Company.