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EXHIBIT 10.02
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT, dated as _______,1997, is entered by and
among AEROMAX, INC., a Delaware corporation (the "Company"), and JETFLEET
MANAGEMENT CORP., a California corporation (the "Management Company").
WITNESSETH
WHEREAS, the Company will be engaged in the business of acquiring income
producing assets, consisting primarily of aircraft equipment on lease to third
party users;
WHEREAS, the Company desires to hire the Management Company to perform
management services for the Company.
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 I
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 JUDGEMENT OR
OTHER ACTS OR OMISSIONS NOT AMOUNTING TO WILFUL MISCONDUCT OR GROSS
NEGLIGENCE.
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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
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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 incurrred 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, 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. 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.
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 its outstanding capital
stock for payable in the form of freely tradeable securities of the Company. The
purchase price would be set at 90% of the product of (i) the earnings 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 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, 2000.
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ARTICLE 5
MISCELLANEOUS PROVISIONS
5.1 APPLICABLE LAW. This Agreement shall be 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 CONFLICTS. In the event a conflict exists or arises between this
Agreement and the Prospectus, the terms and provisions of the Prospectus shall
control.
COMPANY: MANAGEMENT COMPANY:
AEROCENTURY CORP. JETFLEET MANAGEMENT CORP.,
a Delaware corporation a California corporation
By: By:
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
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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.