AEROCENTURY CORP. SECURITIES PURCHASE AGREEMENT $28,000,000 16% Senior Subordinated Notes due December 30, 2011 171,473 Warrants to Purchase Common Stock April 17, 2007
THIS
INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE
IN
THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND
INTERCREDITOR AGREEMENT (THE “SUBORDINATION AGREEMENT”) DATED AS OF APRIL 17,
2007 AMONG SATELLITE FUND II, L.P., SATELLITE FUND IV, L.P., SATELLITE FUND
V,
LLC AND THE APOGEE GROUP, LLC AND NATIONAL CITY BANK (TOGETHER WITH ITS
SUCCESSORS AND ASSIGNS, THE “SENIOR AGENT”), TO THE INDEBTEDNESS (INCLUDING
INTEREST) OWED BY AEROCENTURY CORP. (THE “COMPANY”) PURSUANT TO THAT CERTAIN
SECOND AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF APRIL 17, 2007 AMONG
THE COMPANY, THE SENIOR AGENT AND THE LENDERS FROM TIME TO TIME PARTY THERETO,
AND THE OTHER LOAN DOCUMENTS (AS DEFINED IN THE CREDIT AGREEMENT) AS
SUCH CREDIT
AGREEMENT AND OTHER LOAN DOCUMENTS MAY BE AMENDED, RESTATED, SUPPLEMENTED OR
OTHERWISE MODIFIED FROM TIME TO TIME AND TO INDEBTEDNESS REFINANCING THE
INDEBTEDNESS THEREUNDER AS CONTEMPLATED BY THE SUBORDINATION AGREEMENT; AND
EACH
HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO
BE
BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.
SECURITIES
PURCHASE AGREEMENT
$28,000,000
16% Senior Subordinated Notes due December 30, 2011
171,473
Warrants to Purchase Common Stock
April
17,
2007
TABLE
OF CONTENTS
Page
i
Schedules
and Exhibits
|
Schedule
I
|
--
|
Information
as to Purchasers
|
|
Schedule
1.1
|
--
|
Core
Lease Provisions
|
|
Schedule
6.5
|
--
|
Litigation
|
|
Schedule
6.7
|
--
|
Tax
Returns and Payment
|
|
Schedule
6.8
|
--
|
Subsidiaries;
Joint Ventures
|
|
Schedule
6.10
|
--
|
Other
Debt, Guarantees and Capitalized Leases
|
|
Schedule
6.14
|
--
|
Patents,
Trademarks, Copyrights, Licenses, Etc.
|
|
Schedule
6.15
|
--
|
Environmental
and Safety and Health Matters
|
|
Schedule
6.19
|
--
|
Capital
Stock of Issuer
|
|
Schedule
6.24
|
--
|
Aircraft
and Aircraft Lease Terms
|
|
Schedule
12.1
|
--
|
Existing
Debt
|
|
Schedule
12.2
|
--
|
Closing
Date Liens
|
|
Schedule
13.5
|
--
|
Maximum
LTV Ratios and Balances
|
|
Exhibit
2(a)
|
Form
of Warrant
|
|
|
Exhibit
2(b)
|
--
|
Form
of Note
|
|
Exhibit
4
|
--
|
Instructions
for Wire Transfer of Funds at Closing
|
|
Exhibit
5.4
|
--
|
Form
of Subordination Agreement
|
|
Exhibit
5.5
|
--
|
Form
of Management Subordination Agreement
|
|
Exhibit
7(c)
|
--
|
Covenant
Compliance Certificate
|
0000
Xxxxxx Xxxxxx
Xxxxx
000
Xxxxxxxxxx,
XX 00000
April
17,
2007
To
Each
of the Purchasers Named
on
Schedule
I
Attached
Hereto
Ladies
and Gentlemen:
AEROCENTURY
CORP.,
a
Delaware corporation (together with its successors permitted hereunder, the
“Issuer”),
agrees with each Purchaser named on Schedule I attached hereto (each a
“Purchaser”
and
collectively the “Purchasers”)
as
follows.
| 1. |
DEFINITIONS.
|
1.1. Definitions
of Capitalized Terms.
The
terms
defined in this Section 1.1,
whenever used in this Agreement, shall, unless the context otherwise requires,
have the following respective meanings:
“Affiliate”
shall
mean any Person (a) which directly or indirectly through one or more
intermediaries controls, is controlled by or is under common control with any
one or more of the Issuer or any Subsidiaries, (b) which directly or indirectly
through one or more intermediaries beneficially owns or holds or has the power
to direct the voting power of ten percent (10%) or more of any class of Capital
Stock of the Issuer or any Subsidiary, (c) which has ten percent (10%) or more
of any class of its Capital Stock beneficially owned or held, directly or
indirectly, by the Issuer or any Subsidiary or (d) who is a director, officer,
manager or employee of the Issuer or any Subsidiary; provided, however, that
no
holder of Securities shall be deemed an Affiliate of an Issuer or Subsidiary
hereunder. For purposes of this definition, “control” shall mean the power to
direct the management and policies of a Person, directly or indirectly, whether
through the ownership of voting securities, by contract or
otherwise.
“Agreement”
shall
mean this Securities Purchase Agreement, as amended, modified or waived from
time to time in accordance with Section 17.
“Aircraft
Acquisition Fees”
shall
mean fees charged by JMC in connection with the acquisition of aircraft by
the
Issuer consistent with past practices as described to the
Purchasers.
“Aircraft
Portfolio”
shall
mean, at any time, each aircraft owned by the Issuer and that is leased by
the
Issuer pursuant to a lease agreement so long as such lease agreement contains
terms and conditions substantially similar in all material respects those as
set
forth on Schedule
1.1
attached
hereto.
“Aircraft
Regulatory Authority”
shall
mean, as applicable, the FAA or any similar regulatory authority of any
jurisdiction in which any aircraft in the Aircraft Portfolio is registered
or
operated.
“Applicable
Premium”
shall
have the meaning specified in Section 9.2.
“Available
Amount”
shall
mean, at any time with respect to any Sale Notice, (i) $18,000,000, minus
(ii) the
aggregate principal amount of Notes purchased and sold pursuant to a Sale Notice
in accordance with the terms of this Agreement at any prior Subsequent Closing,
minus
(iii)
the
aggregate principal amount of Notes which are the subject of a prior Sale Notice
that have not yet been purchased and sold hereunder prior to such
time.
“Average
Principal Balance”
-
means, with respect to any period, the sum of the aggregate outstanding balance
of all Notes on each day of such period divided
by
the
number of days in such period.
“Bankruptcy
Code”
means
the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §101, et
seq.),
as
amended and in effect from time to time and the regulations issued from time
to
time thereunder.
“Business
Day”
shall
mean any day other than a Saturday, Sunday or other day which shall be in
Burlingame, California, or New York, New York, a legal holiday or a
day on
which banking institutions therein are authorized by law to close.
“Capital
Stock”
shall
mean, with respect to any corporation, limited liability company, partnership
or
other entity, any capital stock, membership interests, partnership interests
or
other equity interests of or in such corporation, limited liability company,
partnership or other entity and any warrants, rights or options to purchase
or
acquire any such capital stock, membership interests, partnership interests
or
other equity interests.
“Capitalized
Lease”
shall
mean any lease of Property, whether real and/or personal, by a Person as lessee
which in accordance with GAAP is required to be capitalized on the balance
sheet
of such Person.
“Capitalized
Lease Obligations”
of
any
Person shall mean, as of the date of any determination thereof, the amount
at
which the aggregate rental obligations due and to become due under all
Capitalized Leases under which such Person is a lessee would be reflected as
a
liability on a balance sheet of such Person in accordance with
GAAP.
“CERCLA”
shall
mean the Comprehensive Environmental Response, Compensation and Liability Act
of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986,
42
U.S.C. §9601 et seq., and as the same may from time to time be further
amended.
“Change
of Control”
shall
have the meaning specified in Section 9.3(b).
“Closing”
shall
mean the Initial Closing or a Subsequent Closing, as applicable.
“Closing
Date”
shall
mean, the Initial Closing Date or a Subsequent Closing Date, as
applicable.
“Code”
shall
mean the Internal Revenue Code of 1986, as amended, and any successor statute
of
similar import, together with the regulations thereunder, in each case as in
effect from time to time. References to sections of the Code shall be construed
to also refer to any successor sections.
“Commission”
shall
mean the United States Securities and Exchange Commission or any other federal
agency of the United States from time to time administering the Securities
Act
and/or the Exchange Act.
“Commitment
Percentage”
shall
mean, with respect to any Purchaser, the amount of such Purchaser’s commitment
percentage as set forth on Schedule
I
with
respect to such Purchaser.
“Common
Stock”
shall
mean the common stock of the Issuer.
“Debt”
shall
mean, as of any date of determination with respect to any Person, without
duplication, (a) all indebtedness, liabilities and obligations of such Person
for borrowed money or which have been incurred in connection with the purchase
or other acquisition of Property (excluding trade accounts payable and accrued
expenses arising in the ordinary course), (b) all indebtedness, liabilities
and
obligations secured by any Lien on, or payable out of the proceeds of or
production from, any Property owned by such Person, whether or not such Person
has assumed or become liable for the payment of such obligations, (c) all
indebtedness, liabilities and obligations of third parties, including joint
ventures and partnerships of which such Person is a venturer or general partner,
to the extent recourse to which may be had against such Person, (d) all
indebtedness, liabilities, and obligations created or arising under any
conditional sale or other title retention agreement with respect to Property
acquired by such Person, notwithstanding the fact that the rights and remedies
of the seller, lender or lessor under such agreement in the event of default
are
limited to repossession or sale of such Property, (e) Capitalized Lease
Obligations of such Person, (f) the aggregate undrawn face amount of all letters
of credit issued for the account of and/or upon the application of such Person
together with all unreimbursed drawings with respect thereto, (g) all
indebtedness, liabilities and obligations of such Person to pay the deferred
purchase price of property or services, (h) the Swap Termination Value under
any
Swap Contract to which such Person is a party to the extent such Swap
Termination Value is owed or would be owed by such Person, (i) the present
value
of any outstanding Operating Lease Payments discounted at 10% and (j)
indebtedness, liabilities and obligations of such Person under Guarantees,
including, without limitation, any obligations of the Issuer to Guarantee the
residual value of any aircraft.
“Default”
shall
mean any condition or event which constitutes or, after notice or lapse of
time
or both, would constitute an Event of Default.
“Defaulted
Lease”
shall
mean any aircraft lease the lease payments (or any other monetary payments)
of
which are past due (based on the contractual terms in existence at the later
of
the Initial Closing Date and the commencement of such lease) provided however
if
the Issuer has a security deposit in respect of such aircraft lease in excess
of
the amounts past due such aircraft lease shall not be a Defaulted Lease until
such time as any past due amount is overdue for more than 45 days.
“Disclosure
Schedules”
shall
have the meaning specified in the introductory paragraph to Section 6.
“Discounted
Aircraft Portfolio Value”
shall
mean, with respect to the Aircraft Portfolio and any determination date, the
amount obtained by discounting all Remaining Scheduled Aircraft Portfolio
Payments with respect to each aircraft in the Aircraft Portfolio from their
respective scheduled due dates to such determination date, in accordance with
accepted financial practice and at a discount factor (applied on the same
periodic basis as that on which interest on the Notes is payable) equal to
the
Lease Discount Rate; provided that (a) with respect to any aircraft not then
subject to lease or subject to a Defaulted Lease, the value thereof will be
the
most recent (which shall not be older than twelve months) desktop appraisal
provided by Ascend, a division of Airclaims, as adjusted for any write downs
to
book value taken by the Issuer since the date of such appraisal and (b) with
respect to any aircraft or engine that is the subject of an insurance claim,
such aircraft or engine shall no longer be part of the Aircraft Portfolio
commencing on the earlier of the date the lease in respect of such aircraft
terminates or the date the Issuer receives the stipulated loss value in respect
thereof.
“EBITDA”
shall
mean, for any period, the sum of Net Income for such period plus the amount
deducted from such Net Income as expenses for Interest, taxes, depreciation
and
amortization.
“Environmental
Claim” shall
mean any administrative, regulatory or judicial action, judgment, order, consent
decree, suit, demand, demand letter, claim, Lien, notice of non-compliance
or
violation, investigation or other proceeding arising (a) pursuant to any
Environmental Law or governmental or regulatory approval issued under any such
Environmental Law, (b) from the presence, use, generation, storage, treatment,
Release, threatened Release, disposal, remediation or other existence of any
Hazardous Substance, (c) from any removal, remedial, corrective or other
response action pursuant to an Environmental Law or the order of any
governmental or regulatory authority or agency, (d) from any third party seeking
damages, contribution, indemnification, cost recovery, compensation, injunctive
or other relief in connection with a Hazardous Substance or arising from alleged
injury or threat of injury to health, safety, natural resources or the
environment or (e) from any Lien against any Property owned, leased or operated
by the Issuer or any Subsidiary in favor of any governmental or regulatory
authority or agency in connection with a Release, threatened Release or disposal
of a Hazardous Substance.
“Environmental
Law”
shall
mean any Federal, state, local, foreign or other statute, law, rule, regulation,
order, consent decree, judgment, permit, license, code, covenant, deed
restriction, common law, treaty, convention, ordinance or other requirement
relating to public health, safety or the environment, including, without
limitation, those relating to Releases, discharges or emissions to air, water,
land or groundwater, to the withdrawal or use of groundwater, to the use and
handling of polychlorinated biphenyls or asbestos, to the disposal, treatment,
storage or management of hazardous or solid waste, Hazardous Substances or
crude
oil, or any fraction thereof, to exposure to toxic or hazardous materials,
to
the handling, transportation, discharge or release of gaseous or liquid
Hazardous Substances and any rule, regulation, order, notice or demand issued
pursuant to such law, statute or ordinance, in each case applicable to any
of
the Property owned, leased or operated by the Issuer or any Subsidiary or the
operation, construction or modification of any such Property, including, without
limitation, the following: CERCLA, the Solid Waste Disposal Act, as amended
by
the Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid
Waste Amendments of 1984, the Hazardous Materials Transportation Act, as
amended, the Federal Water Pollution Control Act, as amended by the Clean Water
Act of 1976, the Safe Drinking Water Control Act, the Clean Air Act of 1966,
as
amended, the Toxic Substances Control Act of 1976, the Occupational Safety
and
Health Act of 1970, as amended, the Emergency Planning and Community
Right-to-Know Act of 1986, the National Environmental Policy Act of 1975, the
Oil Pollution Act of 1990 and any similar or implementing state or local law,
and any state or local statute and any further amendments to these laws
providing for financial responsibility for cleanup or other actions with respect
to the Release or threatened Release of Hazardous Substances or crude oil,
or
any fraction thereof and all rules and regulations promulgated
thereunder.
“ERISA”
shall
mean the Employee Retirement Income Security Act of 1974, as amended, and any
successor statute of similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to sections of ERISA
shall be construed to also refer to any successor sections.
“ERISA
Affiliate”
shall
mean any corporation, trade or business that is, along with the Issuer or any
Subsidiary, a member of a controlled group of corporations or a controlled
group
of trades or businesses, as described in Sections 414(b) and 414(c),
respectively, of the Code or Section 4001 of ERISA.
“Event
of Default”
shall
have the meaning specified in Section 14.1.
“Exchange
Act”
shall
mean the Securities Exchange Act of 1934, as amended, or any successor federal
statute, and the rules and regulations of the Commission promulgated thereunder,
all as the same shall be in effect from time to time.
“FAA”
shall
mean the Federal Aviation Authority of the United States Department of
Transportation or any successor thereof.
“Final
Closing Date”
shall
mean the Subsequent Closing Date on or before June 30, 2008 on which the Issuer
shall have issued, and the Purchasers shall have purchased, $28,000,000 in
aggregate principal amount of Notes.
“Final
Maturity Date”
shall
mean December 30, 2011.
“Fiscal
Quarter”
shall
mean a fiscal quarter of the Issuer, 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 the Issuer, which shall end on the last day of
December.
“GAAP”
shall
mean, at any time, generally accepted accounting principles at such time in
the
United States.
“Guarantee” by
any
Person shall mean any obligation (other than endorsements of negotiable
instruments for deposit or collection in the ordinary course of business),
contingent or otherwise, of such Person guaranteeing, or in effect guaranteeing,
any Debt, liability, dividend or other obligation of any other Person (the
“primary obligor”) in any manner, whether directly or indirectly, including,
without limitation, all obligations incurred through an agreement, contingent
or
otherwise, by such Person: (a) to purchase such Debt or obligation or any
Property constituting security therefor, (b) to advance or supply funds (i)
for
the purchase or payment of such Debt or obligation, (ii) to maintain working
capital or other balance sheet condition or otherwise to advance or make
available funds for the purchase or payment of such Debt or obligation, (iii)
to
lease property or to purchase securities or other property or services primarily
for the purpose of assuring the owner of such Debt or obligation of the ability
of the primary obligor to make payment of the Debt or obligation or (iv)
otherwise to assure the owner of the Debt or obligation of the primary obligor
against loss in respect thereof. For the purposes of all computations made
under
this Agreement, a Guarantee in respect of any Debt for borrowed money shall
be
deemed to be Debt equal to the then outstanding principal amount of such Debt
for borrowed money which has been guaranteed or such lesser amount to which
the
maximum exposure of the guarantor shall have been specifically limited, and
a
Guarantee in respect of any other obligation or liability or any dividend shall
be deemed to be Debt equal to the maximum aggregate amount of such obligation,
liability or dividend or such lesser amount to which the maximum exposure of
the
guarantor shall have been specifically limited. Guarantee when used as a verb
shall have a correlative meaning.
“Guarantee
Agreement”
shall
have the meaning specified in Section 11.10.
“Hazardous
Substance”
shall
mean any hazardous or toxic material, substance or waste, any pollutant or
any
contaminant, in each case, as regulated under any Environmental Law, including,
without limitation, any such material, substance or waste which is: (a) defined
as a hazardous substance under Section 311 of the Federal Water Pollution
Control Act (33 U.S.C. §§1317), as amended; (b) regulated as a hazardous waste
under Section 1004 or Section 3001 of the Federal Solid Waste Disposal Act,
as
amended by the Resource Conservation and Recovery Act (42 U.S.C. §§6901 et
seq.), as amended; (c) defined as a hazardous substance under Section 101 of
the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
§§9601 et seq.), as amended; or (d) defined or regulated as a hazardous
substance or hazardous waste under any rules or regulations promulgated under
any of the foregoing statutes.
“Initial
Closing”
shall
have the meaning specified in Section 4.1.
“Initial
Closing Date”
shall
have the meaning specified in Section 4.1.
“Initial
Notes”
shall
mean Notes to be issued on the Initial Closing Date in the aggregate principal
amount of $10,000,000.
“Insolvency
Proceeding”
means
(a) any case, action or proceeding before any court or other governmental
authority relating to bankruptcy, reorganization, insolvency, liquidation,
receivership, dissolution, winding-up or relief of debtors, or (b) any general
assignment for the benefit of creditors, composition, marshaling of assets
for
creditors, or other, similar arrangement in respect of its creditors generally
or any substantial portion of its creditors; in each case in (a) and (b) above,
undertaken under U.S. federal, state or foreign law, including the Bankruptcy
Code.
“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 interest expense of the Issuer with respect to a Fiscal Quarter as
calculated in accordance with GAAP.
“Investment”
shall
mean any investment by the Issuer or any Subsidiary in any Person, whether
payment therefor is made in cash or Capital Stock of the Issuer or any
Subsidiary, and whether such investment is by acquisition of stock or Debt,
or
by loan, advance, transfer of Property, capital contribution, equity or profit
sharing interest or extension of credit.
“Issuer”
shall
have the meaning specified in the introductory paragraph hereto.
“Issuer
Administrative Expense”
shall
mean all expenses of the Issuer other than aircraft maintenance expenses, taxes,
the JMC Management Fee, Re-Sale Fees, Aircraft Acquisition Fees and interest
expense in respect of Debt permitted hereunder.
“JHC”
shall
have the meanings specified in Section 12.8.
“JMC”
shall
mean JetFleet Management Corp., a California corporation.
“JMC
Management Agreement”
shall
have the meanings specified in Section 12.8.
“JMC
Management Fee”
shall
mean the management fee payable to JMC pursuant to Section 3.4 of the Management
Agreement.
“Lease
Discount Rate “
shall
mean, at any time, the lesser of (a) the blended cost of capital assuming that
the aggregate commitment under the Senior Bank Agreement (or any Permitted
Refinancing thereof) has been fully advanced (giving effect to the borrowing
base provided for therein) and the Issuer has issued Notes equal to the Maximum
Outstanding Balance permitted at such time and (b) the blended cost of capital,
calculated as the weighted average of the rates in effect under the Senior
Bank
Agreement (or any Permitted Refinancing thereof) and on the Notes.
“Lien”
shall
mean any interest in Property securing an obligation owed to, or a claim by,
a
Person other than the owner of the Property, whether such interest is based
on
common law, statute or contract, including, without limitation, any security
interest, mortgage, deed of trust, pledge, hypothecation, judgment lien or
other
lien or encumbrance of any kind or nature whatsoever, any conditional sale
or
trust receipt, any lease, consignment or bailment for security purposes and
any
Capitalized Lease. The term “Lien” shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting
Property.
“Maintenance
Reserve”
shall
mean, at any time for any aircraft, the amount equal to 3% of the aggregate
rents payable under the aircraft lease with respect to such aircraft at such
time.
“Make-Whole
Amount”
shall
have the meaning specified in Section 9.3(d).
“Management”
shall
mean Xxxx X. Xxxxxxx or Xxxx X. Xxxxxxx.
“Management
Fee”
shall
mean, any management fee, consulting fee, investment banking fee, re-sale fee,
similar fee or any payment under the JMC Management Agreement, including without
limitation, the JMC Management Fee.
“Management
Subordination Agreement”
shall
have the meaning specified in Section 5.5.
“Mandatory
Payment Date”
shall
have the meaning specified in Section 9.1(a).
“Material
Adverse Effect”
shall
mean a material adverse effect on (i) the financial condition, business,
properties, or prospects of the Issuer, (ii) the ability of Issuer to perform
its existing obligations under this Agreement and the Notes, or (iii) the
legality, validity or enforceability of this Agreement or the Notes or the
rights and remedies of the holders of Notes.
“Maximum
Debt to Value Ratio”
shall
mean, as the last day of any calendar month, the ratio of the aggregate amount
of Debt of the Issuer outstanding at such time to the Discounted Aircraft
Portfolio Value at such time.
“Maximum
Outstanding Balance”
shall
mean, with respect to any calendar month, the amount set forth on Schedule
13.5
hereto
opposite such month under the column “Maximum Outstanding Balance.”
“Multi-Employer
Plan” shall
mean a “multi-employer plan” as defined in Section 4001(a)(3) of ERISA which is
maintained for employees of the Issuer, any Subsidiary or any ERISA Affiliate
or
to which the Issuer, any Subsidiary or any ERISA Affiliate has contributed
in
the past or currently contributes.
“Net
Income”
shall
mean, for any period, the net income of the Issuer after income taxes as shown
on the income statement of the Issuer delivered in accordance with clause (a)
of
(b) of Section 7
for such
period.
“Net
Worth”
shall
mean, at any time with respect to the Issuer, the sum of, (a) Capital Stock
plus
(b) paid-in-capital, plus (c) retained earnings, plus (d) the portion of
unsecured subordinated debt which is due and payable after the Revolver
Termination Date (as defined in the Senior Bank Agreement), minus (e) 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 the Issuer or any Subsidiary by reason of any guaranty or other
obligation on the part of the Issuer or any Subsidiary (other than Debt
permitted by Section 12.1(d)(ii)).
“Notes”
shall
have the meaning specified in Section 2(b).
“Occupational
Safety and Health Laws”
shall
mean the Occupational Safety and Health Act of 1970, as amended, and any other
Federal, state or local statute, law, ordinance, code, rule, regulation, order
or decree regulating, relating to or imposing liability or standards of conduct
concerning employee health and/or safety, as now or at any time hereafter in
effect.
“Officer’s
Certificate”
shall
mean, with respect to any Person, a certificate signed on behalf of such Person
by the president or one of the vice presidents of such Person except that with
respect to any Officer’s Certificate due pursuant to Section 7(c),
such
certificate shall be signed by the chief financial officer or treasurer of
the
Issuer and shall be substantially in the form attached hereto as Exhibit
7(c).
“Operating
Lease”
shall
mean any lease of Property, whether real and/or personal, by a Person as lessee
which is not a Capitalized Lease.
“Operative
Documents”
shall
mean this Agreement, the Securities, the Guarantee Agreements, the Subordination
Agreement, the Management Subordination Agreement and each of the other
agreements, documents and instruments executed in connection herewith and
therewith, each as it may from time to time be amended, modified or
supplemented.
“Patriot
Act” means
the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001 of the United
States of America.
“PBGC”
shall
mean the Pension Benefit Guaranty Corporation and any entity succeeding to
any
or all of its functions under ERISA.
“Pension
Plan”
shall
mean a “pension plan,” as such term is defined in Section 3(2) of ERISA, which
is established or maintained by the Issuer, any Subsidiary or any ERISA
Affiliate, other than a Multi-Employer Plan.
“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 the Issuer
or any Subsidiary by appropriate proceedings and for which adequate reserves
have been established by the Issuer or such Subsidiary as reflected in the
Issuer’s consolidated 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 the Issuer or any Subsidiary by appropriate
proceedings and for which adequate reserves have been established by the Issuer
as reflected in Issuer’s consolidated financial statements; (c) easements,
rights-of-way, restrictions and other similar encumbrances on the real property
or fixtures of the Issuer or any Subsidiary 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 the Issuer or such Subsidiary; (d) Liens (other than Liens
imposed on any property of the Issuer pursuant to XXXXX xx §000 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 securing the Debt under the Senior Bank Agreement (and any
Permitted Refinancing thereof) and any other Liens, if any, existing on the
Initial Closing Date hereof and listed in Schedule
12.2
hereto
and (f) Liens of the Issuer securing Debt of the Issuer permitted by Section
12.1(d)(ii) so long as such Lien attaches only to the Capital Stock of the
applicable Unrestricted Subsidiary.
“Permitted
Refinancing”
shall
mean any refinancing or replacement of the Senior Bank Documents permitted
pursuant to Section 3 of the Subordination Agreement.
“Person”
shall
mean an individual, a corporation, a limited liability company, an association,
a joint-stock company, a business trust or other similar organization, a
partnership, a joint venture, a trust, an unincorporated organization or a
government or any agency, instrumentality or political subdivision
thereof.
“Property”
shall
mean any interest in any kind of property or asset, whether real, personal
or
mixed, or tangible or intangible. Properties shall mean the plural of Property.
For purposes of this Agreement, the Issuer and each Subsidiary shall be deemed
to be the owner of any Property which it has acquired or holds subject to a
conditional sale agreement, financing lease or other arrangement pursuant to
which title to the Property has been retained by or vested in some other Person
for security purposes.
“Purchase
Price”
shall
mean (a) with respect to the Initial Notes, an aggregate amount equal to 99%
of
the aggregate face amount of such Notes less $500,000 and (b) with respect
to
any Notes issued at any Subsequent Closing, 99% of the face amount
thereof.
“Purchasers”
shall
have the meaning specified in the introductory paragraph to this
Agreement.
“Qualifying
Equity Event”
shall
have the meaning specified in Section 9.2.
“Recourse
Funded Debt”
shall
mean (i) all indebtedness, liabilities, and obligations, now existing or
hereafter arising, for money borrowed by the Issuer on a recourse basis whether
or not evidenced by any note, indenture, or agreement (including, without
limitation, the Notes, 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 the
Issuer 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.
“Release”
shall
mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping or disposing into the environment,
including, without limitation, the abandonment or discarding of barrels, drums,
containers, tanks and/or other receptacles containing any Hazardous
Substance.
“Remaining
Scheduled Aircraft Portfolio Payments”
shall
mean, at any date of determination with respect to each aircraft in the Aircraft
Portfolio that is in effect on such date of determination and not subject to
a
Defaulted Lease (an “Existing
Lease”),
the
expected lease rental payments and residual payments due in respect of such
aircraft reduced by the expected Management Fees and Maintenance Reserves in
respect of such aircraft and assuming for such calculation (without
duplication):
(a) that
the
lease rental payments under each Existing Lease will be paid in accordance
with
the terms of such aircraft lease;
(b) that
each
aircraft that (i) is subject to an Existing Lease and (ii) which Existing Lease
terminates prior to the 12th anniversary of the date on which the Issuer (or
an
Affiliate) acquired such aircraft, will be re-leased at the expiration of its
current term for a series of successor lease terms, each (A) for a period equal
to the lesser of (I) 4 years or (II) 11.5 years less the number of months since
the acquisition of such aircraft by the Issuer (or an Affiliate), (B) commencing
3 months after the expiration of the immediately preceding lease term and (C)
at
a lease rate 10% less than the lease rate under the immediately preceding
lease;
(c) that
each
aircraft that (i) is subject of an Existing Lease and (ii) which Existing Lease
will terminate after the 12th anniversary of the date on which the Issuer (or
an
Affiliate) acquired such aircraft, will be leased to the end of its current
lease term and that the Residual Value will be realized 6 months following
the
termination of such lease term;
(d) that
each
aircraft that (i) is subject to an Existing Lease and (ii) which Existing Lease
will terminate prior to the 12th anniversary of the date the Issuer (or an
Affiliate) acquired such aircraft will be leased in accordance with clause
(b)
above and that the Residual Value of each such aircraft will be realized 6
months following the termination of the lease term that ends 11.5 years from
the
date of acquisition.
“Reportable
Event”
shall
have the meaning given to such term in ERISA.
“Required
Holders”
shall
mean, at any date, the holder or holders of 51% or more in principal amount
of
Notes at such time outstanding (excluding all Notes at the time owned by the
Issuer or any Affiliate of the Issuer).
“Re-Sale
Fees”
shall
mean fees charged by JMC in connection with the sale of aircraft by the Issuer
consistent with past practices as described to the Purchasers.
“Residual
Value”
shall
mean, at any time (i) with respect to any aircraft owned by the Issuer on the
Initial Closing Date, 90% of the appraised fair market residual value as of
the
date of acquisition (unless at such time a desktop appraisal for such aircraft
is available, in which case the fair market residual value shall be determined
from the most recent desktop appraisal then available) adjusted on a linear
basis for the difference between the then expected disposition date and the
current expected disposition date or, (ii) with respect to any aircraft acquired
by the Issuer after the Initial Closing Date, an amount equal to the lesser
of
(a) 36% of the acquisition price of such aircraft (exclusive of any Aircraft
Acquisition Fees) and (b) 90% of the appraised fair market residual value of
such aircraft as of the date of acquisition (unless at such time a desktop
appraisal for such aircraft is available, in which case the fair market residual
value shall be determined from the most recent desktop appraisal then
available), adjusted on a linear basis for the difference between the then
expected disposition date and the current expected disposition.
“Responsible
Officer”
of
any
Person shall mean the chief executive officer, president, chief financial
officer or any vice president of such Person and any other officer or similar
official thereof responsible for the administration of the obligations of such
Person in respect of this Agreement.
“Restricted
Payment”
in
respect of any corporation, limited liability company, partnership or other
entity shall mean (a) any dividend or other distribution (whether in cash,
securities, promissory notes or other property) on or in respect of any of
the
Capital Stock of or in such corporation, limited liability company, partnership
or other entity, (b) any payment (whether in cash, securities, promissory notes
or other property), including any sinking fund or similar deposit, for or in
respect of the purchase, redemption, retirement, acquisition, cancellation
or
termination of any Capital Stock of or in such corporation, limited liability
company, partnership or other entity or of any warrants, rights or other options
to purchase any such Capital Stock and (c) any Investment in any Unrestricted
Subsidiary or any payment, directly or indirectly, by the Issuer to or on behalf
of an Unrestricted Subsidiary, in each case, in connection with the obligation
of such Unrestricted Subsidiary to pay Management Fees.
“Restricted
Payment Amount”
shall
mean, with respect to any Restricted Payment in any Fiscal Year, 50% of Net
Income earned in the immediately preceding Fiscal Year as disclosed in the
financial statements delivered pursuant to 7(b)
hereof.
“Sale
Notice”
shall
mean an irrevocable written notice of a Responsible Officer of the Issuer
delivered to each Purchaser which notice shall
(i) specify
the aggregate principal amount of Notes covered thereby, which shall not be
less
than the lesser of (x) $6,000,000 or (y) the entire amount of the Available
Amount, if the Available Amount shall be less than $6,000,000 at the time such
Sale Notice is made, and shall not be greater than the Available
Amount,
(ii) specify
the proposed date (the “Subsequent
Closing Date”)
for
the closing of the purchase and sale of such Notes, which, which shall be a
Business Day not less than ten days and not more than 20 days after the delivery
of such Sale Notice and in any event prior to June 30, 2008,
(vi) specify
the number of the account and the name and address of the depository institution
to which the aggregate Purchase Price of such Notes is to be transferred on
the
Subsequent Closing Date for such purchase and sale, and
(vii) certify
that, exclusive of those exceptions noted on an exhibit attached thereto, the
representations and warranties contained in Section 6
are true
on and as of the date of such Sale Notice and that there exists on the date
of
such Sale Notice no Event of Default or Default.
Each
Sale
Notice shall be in writing and shall be deemed made when received by the
Purchasers.
“Securities”
shall
mean the Notes and the Warrants each of which is a “Security”.
“Securities
Act”
shall
mean the Securities Act of 1933, as amended, or any successor federal statute,
and the rules and regulations of the Commission promulgated thereunder, all
as
the same shall be in effect from time to time.
“Senior
Agent”
shall
mean National City Bank, a national banking association, as agent on behalf
of
the lenders party to the Senior Bank Agreement (or any successor to National
City Bank in such capacity).
“Senior
Bank Agreement”
shall
mean the Second Amended and Restated Credit Agreement, dated as of April 17,
2007 among the Issuer, the Senior Banks, and the Senior Agent, as from time
to
time in effect.
“Senior
Bank Documents”
shall
mean the Senior Bank Agreement or any agreement evidencing a Permitted
Refinancing thereof and the other agreements, documents and instruments related
thereto.
“Senior
Banks”
shall
mean National City Bank, a national banking association, and the other lenders
from time to time under the Senior Bank Agreement or financial institutions
a
party to any agreement evidencing a Permitted Refinancing thereof.
“Subordinated
Debt”
shall
mean, as of the date of any determination thereof, the aggregate advanced
principal amount of all Debt of the Issuer outstanding as of such date which
is
subordinated to the Debt in respect of the Senior Bank Agreement as permitted
thereunder, including the Notes.
“Subordination
Agreement”
shall
have the meaning specified in Section 5.4.
“Subsequent
Closing”
shall
have the meaning specified in Section 4.2(b).
“Subsequent
Closing Date”
shall
have the meaning specified in the definition of Sale Notice in this Section
1.1.
“Subsidiary”
of
any
Person at any date shall mean (a) any other Person a majority (by number of
votes) of the Voting Stock of which is owned by such first-mentioned Person
and/or by one or more other Subsidiaries of such first-mentioned Person and
(b)
any other Person with respect to which such first-mentioned Person and/or any
one or more other Subsidiaries of such first-mentioned Person (i) is entitled
to
more than 50% of such Person’s profits or losses or more than 50% of such
Person’s assets on liquidation or (ii) holds an equity interest in such Person
of more than 50%. As used herein, unless the context clearly requires otherwise,
the term “Subsidiary” refers to a Subsidiary of the Issuer and excludes any
Unrestricted Subsidiary (except in the case of Section 6).
“Swap
Contract”
shall
mean (a) any and all rate swap transactions, basis swaps, credit derivative
transactions, forward rate transactions, commodity swaps, commodity options,
forward commodity contracts, equity or equity index swaps or options, bond
or
bond price or bond index swaps or options or forward bond or forward bond price
or forward bond index transactions, interest rate options, forward foreign
exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions,
currency options, spot contracts or any other similar transactions or any
combination of any of the foregoing (including any options to enter into any
of
the foregoing), whether or not any such transaction is governed by or subject
to
any master agreement, and (b) any and all transactions of any kind, and the
related confirmations, which are subject to the terms and conditions of, or
governed by, any form of master agreement published by the International Swaps
and Derivatives Association, Inc., any International Foreign Exchange Master
Agreement, or any other master agreement (any such master agreement, together
with any related schedules, a “Master Agreement”), including any such
obligations or liabilities under any Master Agreement.
“Swap
Termination Value”
shall
mean, in respect of any Swap Contract, after taking into account the effect
of
any legally enforceable netting agreement relating to such Swap Contract, (a)
for any date on or after the date such Swap Contract has been closed out and
a
termination value determined in accordance therewith, such termination value
and
(b) for any date prior to the date referenced in clause (a), the amount
determined as the xxxx-to-market value for such Swap Contract, as determined
based upon one or more mid-market or other readily available quotations provided
by any recognized dealer in such Swap Contract.
“Tangible
Net Worth”
shall
mean Net Worth, minus Intangible Assets.
“Unrestricted
Subsidiaries”
shall
mean Subsidiaries of the Issuer which are special purpose entities or bankruptcy
remote entities from the Issuer that have debt on their respective balance
sheets which when consolidated with the Issuer is deemed to be Non-Recourse
Debt
to the Issuer.
“Unrestricted
Subsidiary Investment”
shall
have the meaning specified in Section 12.8.
“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.
“Unused
Commitment Fee”
shall
have the meaning specified in Section 4.4
“Voting
Stock”,
when
used with reference to any Person, shall mean shares (however designated) of
such Person having ordinary voting power for the election of a majority of
the
members of the board of directors (or other governing body) of such Person,
other than shares having such power only by reason of the happening of a
contingency.
“Warrants”
shall
have the meaning specified in Section 2(a).
“Welfare
Plan”
shall
mean a “welfare plan” as such term is defined in Section 3(1) of ERISA, which is
established or maintained by the Issuer, any Subsidiary or any ERISA Affiliate,
other than a Multi-Employer Plan.
“Wholly-Owned
Subsidiary”
shall
mean as to any Person at any time, another Person all of the Capital Stock
of
which (except directors’ qualifying shares) is at such time directly or
indirectly owned by such Person and/or another Wholly-Owned Subsidiary of such
Person. Unless the context otherwise requires, each reference to a Wholly-Owned
Subsidiary herein shall be a reference to a Wholly-Owned Subsidiary of the
Issuer.
1.2. Other
Definitions.
The
terms
defined in this Section 1.2,
whenever used in this Agreement, shall, unless the context otherwise requires,
have the respective meanings hereinafter specified.
“this
Agreement”
(and
similar references to any of the other Operative Documents) shall mean, and
the
words “herein”
(and
“therein”),
“hereof”
(and
“thereof”),
“hereunder”
(and
“thereunder”)
and
words of similar import shall refer to, such instruments as they may from time
to time be amended, modified or supplemented.
a
“class”
of
Securities shall refer to the Notes or the Warrants, as the case may be, each
of
which is a separate class.
“corporation”
shall
include an association, joint stock company, limited liability company, business
trust or other similar organization.
“premium”
when
used in conjunction with references to principal of and interest on the Notes,
shall mean any amount due upon any payment or prepayment of any of the Notes,
other than principal and interest and shall include the Applicable
Premium.
“shares”
of
any
Person shall include any and all shares of Capital Stock of such Person of
any
class or other shares, interests, participations or other equivalents (however
designated) in the capital of such Person.
1.3. Accounting
Terms and Principles; Laws.
(a) All
accounting terms used herein which are not expressly defined in this Agreement
shall be construed in accordance with GAAP; all computations made pursuant
to
this Agreement shall be made in accordance with GAAP and all financial
statements shall be prepared in accordance with GAAP. If any changes in GAAP
are
hereafter required or permitted and are adopted by the Issuer, and such changes
in GAAP result in a change in the method of calculation or the interpretation
of
any of the financial covenants, standards or terms found in any provision of
this Agreement, conforming adjustments shall be made to such affected terms
and
provisions to reflect such changes in GAAP so as to cause the criteria for
evaluating the Issuer’s financial condition to be the same after such changes in
GAAP as they would have been had such changes in GAAP not been
effected.
(b) All
references herein to laws, statutes, rules, regulations and/or to other
governmental restrictions, standards and/or requirements shall, unless the
context clearly requires otherwise, be deemed to refer to those promulgated,
issued and/or enforced by any domestic or foreign federal, state or local
government, governmental agency, authority, court, instrumentality or regulatory
body, including, without limitation, those of the United States of America
or
any state thereof or the District of Columbia.
| 2. |
AUTHORIZATION
OF SECURITIES; GUARANTIES.
|
The
Issuer has authorized the issue and sale of
(a) its
warrants (herein, together with any warrants issued in exchange therefor or
replacement thereof, called the “Warrants”)
evidencing
rights to purchase, in the aggregate 171,473 shares of Common Stock representing
10% of the total common equity of the Issuer; the Warrants are to be
substantially in the form of Exhibit 2(a)
attached
hereto;
and
(b) its
16%
Senior Subordinated Notes due December 30, 2011 (herein, together with any
notes
issued in exchange therefor or replacement thereof, called the “Notes”)
in the
aggregate principal amount of up to $28,000,000; the Notes are to be
substantially in the form of Exhibit
2(b)
attached
hereto.
The
Notes
are to be guaranteed (as to principal, premium, interest and other amounts)
in
accordance with Section 11.10.
| 3. |
SALE
AND PURCHASE OF
SECURITIES.
|
The
Issuer will issue and sell to each of the Purchasers and, subject to the terms
and conditions hereof and in reliance upon the representations and warranties
of
the Issuer contained herein and in the other Operative Documents, each Purchaser
will purchase from the Issuer, at the applicable Purchase Price and at the
Closings provided in Section 4,
the
principal amount of Notes equal to such Purchaser’s Commitment Percentage of the
aggregate principal amount of Notes being issued at such Closing. In connection
with such purchase and sale, and as an inducement for each of the Purchasers
to
purchase Notes, the Issuer will, subject to the terms and conditions contained
herein and in the Warrants, issue to each of the Purchasers on the Initial
Closing Date a Warrant to purchase the aggregate number of shares of Common
Stock set forth below such Purchaser’s name on Schedule
I
hereto.
The
Purchasers’ obligations hereunder are several and not joint obligations and no
Purchaser shall have any liability to any Person for the performance or
non-performance of any obligation by any other Purchaser hereunder.
| 4. |
CLOSING.
|
4.1. Initial
Closing.
The
closing of the sale and purchase of the Initial Notes and the Warrants hereunder
(the “Initial
Closing”)
shall
take place at the office of Xxxxxxx XxXxxxxxx LLP, Xxx Xxxxx Xxxxxx, Xxxxxxxx,
XX 00000, on April 17, 2007 (the “Initial
Closing Date”)
not
later than 1:00 P.M. New York time (the Purchasers’ reinvestment deadline). At
the Closing the Issuer will deliver to each Purchaser:
(a) the
Initial Notes to be purchased by such Purchaser in the denominations indicated
on Schedule
I,
dated
the Initial Closing Date, bearing interest from the Initial Closing Date and
payable to the holder indicated on Schedule
I
against
payment of the Purchase Price therefor to (or for the benefit of) the Issuer
in
immediately available funds in accordance with the wire instructions set forth
on Exhibit
4
hereto;
and
(b) the
Warrants to purchase the number of shares of Common Stock as set forth below
such Purchaser’s name on Schedule
I),
and
registered in the name of the holder indicated on Schedule
I.
4.2. Notice
of Subsequent Closing; Subsequent Closing.
(a) Sale
Notice.
Subsequent to the date hereof, the Issuer may deliver to the Purchasers one
or
more Sale Notices specifying the sale of up to the Available Amount of Notes,
which sales must occur on or before June 30, 2008, and, subject to the terms
and
conditions hereof (including, without limitation Section 5)
and in
reliance upon the representations and warranties of the Issuer contained herein
and in the other Operative Documents, each Purchaser will purchase from the
Issuer, at the applicable Purchase Price and at the Subsequent Closing provided
in such Sale Notice, the principal amount of Notes equal to such Purchaser’s
Commitment Percentage of the aggregate principal amount of Notes being issued
at
such Subsequent Closing.
(b) Subsequent
Closing.
The
sale and purchase of the Notes to be purchased by each of the Purchasers on
a
Subsequent Closing Date shall occur at the offices of Xxxxxxx
XxXxxxxxx LLP, Xxx Xxxxx Xxxxxx, Xxxxxxxx, XX 00000, at 1:00 p.m.,
local time, at a closing (the “Subsequent
Closing”)
on the
Subsequent Closing Date or on such later Business Day as may be agreed upon
by
the Issuer and the Purchasers. At the Subsequent Closing, the Issuer will
deliver to each Purchaser the Notes to be purchased by such Purchaser in the
form of a single Note (or such greater number of Notes in denominations of
at
least $100,000 as such Purchaser may request), dated such Subsequent Closing
Date and registered in such Purchaser’s name (or in the name of its nominee),
against delivery by such Purchaser to the Issuer or its order of immediately
available funds in the amount of the Purchase Price therefor by wire transfer
of
immediately available funds for the account of the Issuer as set forth in the
Sale Notice.
4.3. Failure
of the Issuer to Deliver.
If
at the
Initial Closing the Issuer shall fail to tender the Securities or at any
Subsequent Closing the Issuer shall fail to tender the Notes to be delivered
to
any Purchaser as provided herein, or if at any Closing any of the conditions
specified in Section 5
shall
not have been fulfilled to each Purchaser’s satisfaction, each Purchaser shall,
at its election, be relieved of all further obligations under this Agreement,
without thereby waiving any other rights such Purchaser may have by reason
of
such failure or such non-fulfillment.
4.4. Unused
Commitment Fee.
On
the
last day of each month, commencing on May 31, 2007 and ending on the earlier
of
June 30, 2008 or the Final Closing Date, the Issuer shall pay to the Purchasers
ratably in accordance with their respective Commitment Percentages in
immediately available funds a fee (herein called an “Unused
Commitment Fee”)
on the
amount, if any, by which (i) the Average Principal Balance during such month
(or, in the case of the payment due on May 31, 2007, the period commencing
on
the Initial Closing Date and ending on such date, and, in the case of the
payment due with respect to the Final Closing Date, the period commencing on
the
first day of the then current month and ending on such date) is less than (ii)
$28,000,000, at the rate of 0.50% per annum, calculated on the basis of a year
of 360 days for the actual number of days elapsed. The Unused Commitment Fee
shall be paid to each Purchaser in accordance with the payment instructions
provided for on Schedule
I.
| 5. |
CONDITIONS
TO CLOSING.
|
The
obligation of the Issuer to deliver the Notes to each relevant Purchaser on
the
applicable Closing Date is subject to the Issuer receiving the Purchase Price
therefor. Each Purchaser’s obligation to purchase and pay for the Notes to be
sold to such Purchaser on a Closing Date is subject to the fulfillment to such
Purchaser’s satisfaction, prior to or on such Closing Date, of the following
conditions:
5.1. Representations
and Warranties Correct.
The
representations and warranties of the Issuer in this Agreement shall be correct
(a) when made as of the date hereof and (b) with respect to each Subsequent
Closing, on the date of such Subsequent Closing, in each case, after giving
effect to the transactions contemplated by this Agreement at each of the
Closings.
5.2. Performance:
No Default
The
Issuer shall have performed and complied with all agreements and conditions
contained in this Agreement required to be performed or complied with by it
prior to or on such Closing Date and, after giving effect to the issue and
sale
of the Notes (and the application of the proceeds thereof as contemplated by
Section 6.21)
on such
Closing Date, no Default or Event of Default shall have occurred and be
continuing. No condition shall exist since December 31, 2006 which has resulted
in a material adverse effect on the financial condition or business of the
Issuer, or could reasonably be expected to result in, a Material Adverse
Effect.
5.3. Sale
of Securities to Purchasers.
At
such
Closing, the Issuer shall sell and issue to each Purchaser the Securities to
be
purchased at such Closing by such Purchaser pursuant to this Agreement and
shall
receive payment in full of the purchase price thereof.
5.4. Subordination
Agreement.
Prior
to
or simultaneously with the Initial Closing, each of the Purchasers and the
Senior Agent (on behalf of itself and the Senior Banks) shall have entered
into
a subordination agreement substantially in the form of Exhibit
5.4
attached
hereto (the “Subordination
Agreement”),
and
such agreement shall be in full force and effect.
5.5. Management
Subordination Agreement.
Prior
to
or simultaneously with the Initial Closing, each of the Purchasers and JMC
shall
have entered into a subordination agreement substantially in the form of
Exhibit
5.5
attached
hereto (the “Management
Subordination Agreement”),
and
such agreement shall be in full force and effect.
5.6. Compliance
Certificate.
(a) Officer’s
Certificate.
The
Issuer shall have delivered to each Purchaser an Officer’s Certificate, dated
the applicable Closing Date, certifying that the conditions specified in
Sections 5.1
and
5.2
have
been fulfilled.
(b) Secretary’s
Certificate.
The
Issuer shall have delivered to each Purchaser a certificate of its Secretary
or
Assistant Secretary, dated the applicable Closing Date, certifying as to the
resolutions attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Securities and this
Agreement.
5.7. Opinion
of Counsel for the Issuer.
At
the
Initial Closing, each Purchaser shall have received an opinion, dated the date
of such Closing, from Xxxxxxxx & Xxxxxxxx, LLP, special counsel for the
Issuer, in form and substance satisfactory to the Purchasers.
5.8. Payment
of Transaction Costs.
The
Issuer shall have paid all reasonable fees, expenses and disbursements incurred
by the Purchasers at or prior to the time of such Closing in connection with
the
transactions contemplated by the Agreement, including, without limitation,
the
reasonable fees, expenses and disbursements of Xxxxxxx XxXxxxxxx LLP and World
Star Aviation Services, Inc. and travel and other expenses incurred by the
Purchasers in connection with the transactions contemplated hereby.
5.9. Purchase
Permitted By Applicable Law, Etc.
On
each
Closing Date, each Purchaser’s purchase of Notes to be purchased on such Closing
Date shall (a) not violate any applicable law or regulation (including,
without limitation, Regulation T, U or X of the Board of Governors of the
Federal Reserve System) and (b) not subject such Purchaser to any tax,
penalty or liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date hereof.
5.10. Proceedings
and Documents.
All
proceedings in connection with the transactions contemplated by the Operative
Documents and all agreements, documents and instruments incident to such
transactions shall be reasonably satisfactory in substance and form to the
Purchasers and their special counsel, and the Purchasers and their special
counsel shall have received all such counterpart originals or copies thereof
as
the Purchasers or their special counsel may reasonably request in connection
therewith.
| 6. |
REPRESENTATIONS
AND WARRANTIES.
|
As
of the
date hereof and as of each Closing Date (except where the representation or
warranty is expressly made as of another date, in which case such representation
or warranty is made only as of such other date), the Issuer hereby represents
and warrants to each of the Purchasers, subject to such exceptions as are
specifically disclosed in writing in the disclosure schedules attached hereto
(the “Disclosure
Schedules”),
as
follows:
6.1. Existence
and Power.
The
Issuer: (a) is duly organized, validly existing and in good standing under
the
laws of the jurisdiction of its organization; (b) has all requisite corporate
power required to carry on its business as now conducted; (c) has all requisite
governmental and regulatory licenses, authorizations, consents and approvals
required to carry on its business as now conducted and (d) is qualified to
transact business as a foreign corporation or other form of foreign entity
in,
and is in good standing under the laws of, all jurisdictions in which it is
required by applicable law to maintain such qualification and good standing
except for those states in which the failure to qualify or maintain good
standing could not reasonably be expected to have a Material Adverse
Effect.
6.2. Authorization.
The
execution, delivery and performance by the Issuer of this Agreement and the
other Operative Documents are within the corporate powers of the Issuer and
have
been duly authorized by all necessary corporate action.
6.3. Binding
Effect.
This
Agreement, the Securities and the other Operative Documents have been duly
executed and delivered by the Issuer and constitute the legal, valid and binding
obligations of the Issuer enforceable in accordance with their respective terms,
except as such enforceability may be limited by (a) bankruptcy, insolvency
or
other similar laws affecting the enforcement of creditors’ rights generally and
(b) general principles of equity (regardless of whether such enforceability
is
considered in a proceeding in equity or at law).
6.4. Financial
Statements.
The
Issuer has furnished each Purchaser with the following financial statements:
(a)
consolidated and consolidating financial statements of the Issuer and its
Subsidiaries as of and for the Fiscal Years ended December 31, 2006 and December
31, 2005 consisting of a balance sheet, statement of income, a statement of
shareholders’ equity, statement of cash flows, and accompanying notes to
financial statements, all such financial statements present fairly, in all
material respects, the consolidated financial position, and results of
operations of the Issuer as of the dates and for the periods referred to, in
conformity with GAAP. 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.
6.5. Litigation.
Except
as
disclosed on Schedule
6.5
hereto,
there is no action or proceeding pending or, to the knowledge of the Issuer,
threatened against or affecting the Issuer or any Subsidiary before any court,
arbitrator or any governmental, regulatory or administrative body, agency,
instrumentality, authority or official which, if determined adversely against
the Issuer or any Subsidiary, could reasonably be expected to have a Material
Adverse Effect. Neither the Issuer nor any Subsidiary is in default with respect
to any order, writ, injunction, decision or decree of any court, arbitrator
or
any governmental, regulatory or administrative body, agency, instrumentality,
authority or official, a default under which could reasonably be expected to
have a Material Adverse Effect. There are no outstanding judgments against
the
Issuer or any Subsidiary.
6.6. Pension
and Welfare Plans.
(a) Each
Pension Plan and Welfare Plan complies in all material respects with ERISA
and
all other applicable statutes and governmental and regulatory rules and
regulations; no Reportable Event has occurred and is continuing with respect
to
any Pension Plan; neither the Issuer nor any ERISA Affiliate has withdrawn
from
any Multi-Employer Plan in a “complete withdrawal” or a “partial withdrawal” as
defined in Sections 4203 or 4205 of ERISA, respectively; neither the Issuer
nor
any ERISA Affiliate has entered into an agreement pursuant to Section 4204
of
ERISA; neither the Issuer nor any ERISA Affiliate has in the past contributed
to
or currently contributes to a Multi-Employer Plan; neither the Issuer nor any
ERISA Affiliate has any withdrawal liability with respect to a Multi-Employer
Plan; no steps have been instituted by the Issuer or any ERISA Affiliate to
terminate any Pension Plan; no condition exists or event or transaction has
occurred in connection with any Pension Plan, Multi-Employer Plan or Welfare
Plan which could result in the incurrence by the Issuer or any ERISA Affiliate
of any material liability, fine or penalty; and neither the Issuer nor any
ERISA
Affiliate is a “contributing sponsor” as defined in Section 4001(a)(13) of ERISA
of a “single employer plan” as defined in Section 4001(a)(15) of ERISA which has
two or more contributing sponsors at least two of whom are not under common
control. Except as disclosed on the consolidated financial statements of the
Issuer and its Subsidiaries delivered by the Issuer to each Purchaser, neither
the Issuer nor any ERISA Affiliate has any unfunded liability with respect
to
any Welfare Plan.
(b) The
consummation of the transactions contemplated hereunder will not involve any
transaction that is subject to the prohibitions of section 406 of ERISA or
in
connection with which a tax could be imposed pursuant to section
4975(c)(1)(A)-(D) of the Code.
6.7. Tax
Returns and Payment.
The
Issuer and each Subsidiary has filed all Federal, state, local and other income
and other material tax returns which are required to be filed and has paid
all
taxes which have become due and payable pursuant to such returns and all other
taxes, assessments, fees and other governmental charges upon the Issuer or
such
Subsidiary, as the case may be, and upon its Properties, income and franchises
which have become due and payable by the Issuer or such Subsidiary, as the
case
may be, except those wherein the amount, applicability or validity are (a)
being
contested by the Issuer or such Subsidiary, as the case may be, by appropriate
proceedings being diligently conducted in good faith and in respect of which
adequate reserves in accordance with GAAP have been established or (b)
immaterial to the conduct of the Issuer’s business. Except as disclosed on
Schedule
6.7
attached
hereto, there is no asserted or assessed (or to the Issuer’s knowledge,
proposed) tax deficiency against the Issuer or any Subsidiary which, if
determined adversely against the Issuer or any Subsidiary, could reasonably
be
expected to have a Material Adverse Effect.
6.8. Subsidiaries;
Joint Ventures.
The
Issuer has no Subsidiaries except for special purpose entities formed in
connection with financings which are permitted by Section 12.1.
Set
forth in Schedule
6.8
hereto
is a complete and correct list, as of the date of this Agreement, of all special
purpose entities owned by the Issuer and all Investments held by the Issuer
in
any joint venture or other Person
6.9. Compliance
With Other Instruments; None Burdensome.
Neither
the Issuer nor any Subsidiary is a party to any contract, agreement, document
or
instrument or subject to any charter or other corporate, limited liability
company or other restriction which could reasonably be expected to have a
Material Adverse Effect and which is not disclosed in the financial statements
heretofore submitted to each Purchaser; none of the execution and delivery
by
the Issuer of the Operative Documents, the consummation of the transactions
therein contemplated or the compliance with the provisions thereof will violate
any law, rule, regulation, order, writ, judgment, injunction, decree or award
binding on the Issuer, or any of the provisions of the certificate of
incorporation, operating agreement or bylaws of any of the Issuer or any of
the
provisions of any indenture, agreement, document, instrument or undertaking
to
which the Issuer is a party or subject, or by which the Issuer or any Property
of the Issuer is bound, or conflict with or constitute a default thereunder
or
result in the creation or imposition of any Lien pursuant to the terms of any
such indenture, agreement, document, instrument or undertaking (other than
in
favor of the Senior Agent pursuant to the Senior Bank Documents). No order,
consent, approval, license, authorization or validation of, or filing, recording
or registration with, or exemption by, any governmental, regulatory,
administrative or public body or authority, or any subdivision thereof, or
any
other Person is required to authorize, or is required in connection with, the
execution, delivery or performance by the Issuer of, or the legality, validity,
binding effect or enforceability of, any of the Operative
Documents.
6.10. Other
Debt, Guarantees and Capitalized Leases.
Except
as
disclosed on Schedule
6.10
attached
hereto, neither the Issuer nor any Subsidiary is a borrower, guarantor or
obligor with respect to, or a lessee under, any Debt (including, without
limitation, any Swap Contracts, Capitalized Leases and/or Guarantees
constituting Debt) other than unasserted claims by lessees against maintenance
reserve balances held by the Issuer in respect of aircraft owned by the Issuer.
6.11. Title
to Property.
The
Issuer and each Subsidiary 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 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.
6.12. Regulation
U.
The
Issuer is not engaged principally, or as one of its important activities, in
the
business of extending credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U of The Board of Governors of the
Federal Reserve System, as amended) and no part of the proceeds of any Security
will be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately (a) to purchase or carry margin stock or to extend
credit to others for the purpose of purchasing or carrying margin stock, or
to
refund or repay indebtedness originally incurred for such purpose or (b) for
any
purpose which entails a violation of, or which is inconsistent with, the
provisions of any of the Regulations of The Board of Governors of the Federal
Reserve System, including, without limitation, Regulations U, T or X thereof,
as
amended.
6.13. Public
Utility Holding Company Act; Investment Company Act of 1940.
The
Issuer 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, the Issuer 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.
6.14. Patents,
Trademarks, Copyrights, Licenses, Etc.
Except
as
disclosed on Schedule
6.14
attached
hereto, neither the Issuer nor any Subsidiary has any patents, patent
applications, patent rights, trademarks, trademark applications, trademark
rights, copyrights, licenses or other intellectual property which are material
to the business of the Issuer or any Subsidiary. The Issuer and each Subsidiary
possesses all patents, patent rights, trademarks, trademark rights, trade names,
trade name rights, copyrights, licenses and other intellectual property
necessary to conduct its business as presently conducted without conflict with
any patent, patent right, trademark, trademark right, trade name, copyright,
license or other intellectual property of any other Person, except where the
failure to possess the same could not reasonably be expected to have a Material
Adverse Effect.
6.15. Environmental
and Safety and Health Matters.
Except
as
disclosed on Schedule
6.15
attached
hereto: (a) the operations of the Issuer and each Subsidiary comply with all
applicable Environmental Laws and all applicable Occupational Safety and Health
Laws, the violation or noncompliance with which could reasonably be expected
to
have a Material Adverse Effect; (b) none of the operations of the Issuer or
any
Subsidiary are subject to any Environmental Claim or any judicial, governmental,
regulatory or administrative proceeding alleging the violation of any
Occupational Safety and Health Law, which, if determined adversely against
the
Issuer or any Subsidiary, could reasonably be expected to have a Material
Adverse Effect; (c) none of the operations of the Issuer or any Subsidiary
is
the subject of any Federal or state investigation evaluating whether any
remedial action is needed to respond to any Release of Hazardous Substances
or
any unsafe or unhealthful condition at any premises owned, leased or operated
by
the Issuer or such Subsidiary, which, if determined adversely to the Issuer
or
any Subsidiary, could reasonably be expected to have a Material Adverse Effect;
(d) neither the Issuer nor any Subsidiary has filed any notice under any
Environmental Law or Occupational Safety and Health Law indicating or reporting
(i) any past or present spillage, leakage or Release into the environment of,
or
treatment, storage or disposal of, any Hazardous Substance or (ii) any unsafe
or
unhealthful condition at any premises owned, leased or operated by the Issuer
or
such Subsidiary; and (e) neither the Issuer nor any Subsidiary has any material
contingent liability in connection with (i) any spillage, disposal or Release
into the environment of, or otherwise with respect to, any Hazardous Substances
or (ii) any unsafe or unhealthful condition at any premises owned, leased or
operated by the Issuer or such Subsidiary.
6.16. No
Default; Compliance with Law.
No
Default or Event of Default under this Agreement has occurred and is continuing.
There is no existing default or event of default under or with respect to any
indenture, contract, agreement, lease or other instrument to which the Issuer
or
any Subsidiary is a party or by which any Property of the Issuer or any
Subsidiary is bound or affected, a default under which could reasonably be
expected to have a Material Adverse Effect. The Issuer and each Subsidiary
has
and is in full compliance with and in good standing with respect to all
governmental and/or regulatory permits, licenses, certificates, consents and
franchises necessary to continue to conduct its business as previously conducted
by it and to own or lease and operate its Properties as now owned or leased
by
it, the failure to have or noncompliance with which could reasonably be expected
to have a Material Adverse Effect, and, to the best of the Issuer’s knowledge,
none of said permits, certificates, consents or franchises contain any term,
provision, condition or limitation more burdensome than such as are generally
applicable to Persons engaged in the same or similar business as the Issuer
or
such Subsidiary, as the case may be. Neither the Issuer nor any Subsidiary
is in
violation of any applicable statute, law, rule, regulation or ordinance of
the
United States of America, of any state, city, town, municipality, county or
of
any other jurisdiction, or of any agency thereof, a violation of which could
reasonably be expected to have a Material Adverse Effect.
6.17. Disclosure.
The
representations and statements made by the Issuer or on its behalf in connection
with this Agreement and the issuance of the Securities, including
representations and statements in each of the Operative 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 the Issuer or on its behalf to the Purchasers
in connection with this Agreement or any Operative 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.
6.18. Solvency.
After
giving effect to the transactions contemplated by this Agreement, (a) the fair
salable value of the assets of the Issuer is and will be greater than the total
amount of the liabilities of the Issuer (including contingent, subordinated,
unmatured and unliquidated liabilities, whether or not includable on its balance
sheet in accordance with GAAP), (b) the present fair salable value of the assets
of the Issuer is and will be greater than the amount that will be required
to
pay the probable liabilities of the Issuer as they become absolute and matured,
(c) the Issuer will be able to realize upon its assets, or will have sufficient
cash flow, to enable the Issuer to pay its debts, other liabilities, contingent
obligations and other commitments as they mature in the ordinary course of
business, (d) the Issuer does not have an unreasonably small amount of capital
with which to engage in its anticipated businesses, (e) the fair salable value
of the assets of each Subsidiary is and will be greater than the total amount
of
the liabilities of such Subsidiary (including contingent, subordinated,
unmatured and unliquidated liabilities, whether or not includable on its balance
sheet in accordance with GAAP), (f) the present fair salable value of the assets
of each Subsidiary is and will be greater than the amount that will be required
to pay the probable liabilities of such Subsidiary as they become absolute
and
matured, (g) each Subsidiary will be able to realize upon its assets, or will
have sufficient cash flow, to enable such Subsidiary to pay its debts, other
liabilities, contingent obligations and other commitments as they mature in
the
ordinary course of business and (h) none of the Subsidiaries has an unreasonably
small amount of capital with which to engage in its anticipated businesses.
For
purposes of the foregoing, the “fair salable value” of any asset or investment
has been and shall be determined on the basis of the amount which may be
realized within a reasonable time, either through collection or sale of such
asset or investment at its regular market value, conceiving the latter as the
amount which could be obtained therefor within such period by a capable and
diligent businessman from an interested buyer who is willing to purchase under
ordinary selling conditions.
6.19. Capital
Stock of Issuer.
(a) Schedule
6.19
hereto
correctly specifies, as of the Initial Closing Date, the authorized Capital
Stock of the Issuer.
(b) Schedule
6.19
hereto
correctly specifies the authorized Capital Stock or other equity interests
of
each Subsidiary (“Subsidiary
Stock”).
Immediately following the Initial Closing, and as of the Initial Closing Date,
all of the issued and outstanding shares of Subsidiary Stock will be owned
as
set forth on Schedule
6.19,
of
record and beneficially and free of any Lien, proxy, voting agreement, voting
trust or similar agreement or restriction (other than Permitted
Liens)
(c)
All of
the outstanding equity capital of the Issuer, including without limitation
all
the Warrants, have been (or will have been) offered, issued and sold by the
Issuer in accordance with all applicable laws.
(d) Except
as
set forth on Schedule
6.19
attached
hereto: (i) there are no outstanding rights, options, warrants or agreements
for
the purchase from, or sale or issuance by, the Issuer of any of its Capital
Stock or securities convertible into or exercisable or exchangeable for such
Capital Stock; (ii) there are no agreements on the part of the Issuer to issue,
sell or distribute any of its securities or assets; (iii) the Issuer has no
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
any of its securities or Capital Stock or any interest therein or to pay any
dividend or make any distribution in respect thereof; and (iv) no Person is
entitled to (A) any preemptive or similar right with respect to the issuance
of
any securities of the Issuer, including upon the issuance of the Warrants or
(B)
any rights with respect to the registration of any securities of the Issuer
under the Securities Act.
(e) The
Issuer has authorized and unissued and reserved for issuance, a sufficient
number of shares of Common Stock (such number being set forth on Schedule
6.19
to
permit, after giving effect to the transaction hereunder, the exercise of all
of
the shares of Common Stock issuable pursuant to the Warrants and all other
options, warrants and rights exercisable or convertible into Common Stock.
The
171,473 shares of Common Stock issuable upon exercise of the Warrants issued
pursuant hereto constitute at least 10% of the total Common Stock immediately
following the Initial Closing determined on a fully-diluted basis.
6.20. Offer
of Securities.
Neither
the Issuer nor any Person acting on their behalf (a) has directly or indirectly
offered the Securities or any part thereof or any similar securities for issue
or sale to, or solicited any offer to buy any of the same from, anyone other
than the Purchasers, (b) has taken or will take any action which would bring
the
issuance and sale of the Securities within the provisions of section 5 of the
Securities Act or the registration or qualification provisions of any applicable
blue sky or other securities laws, or (c) has dealt with any broker, finder,
commission agent or other similar Person in connection with the sale of the
Securities and the other transactions contemplated by the Operative
Documents.
6.21. Use
of Proceeds.
The
proceeds of the sale of the Securities will be used for (a) the purchase or
financing of aircraft and related equipment by the Issuer to be leased to
unaffiliated Persons and (b) for general working capital purposes of the
Issuer.
6.22. Certain
Laws
(a) The
Issuer: (i) is not a person whose property or interest in property is blocked
or
subject to blocking pursuant to Section 1 of Executive Order 13224 of September
23, 2001, Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism (31 CFR Part 595 et seq.);
(ii)
does not engage in any dealings or transactions prohibited by Section 2 of
such
executive order, or is otherwise associated with any such person in any manner
that violates Section 2; or (iii) is not a Person on the list of Specially
Designated Nationals and Blocked Persons or subject to the limitations or
prohibitions under any other U.S. Department of Treasury’s Office of Foreign
Assets Control regulation or executive order.
(b) The
Issuer is in compliance, in all material respects, with the Patriot Act. No
part
of the proceeds of the Securities will be used, directly or indirectly, for
any
payments to any governmental official or employee, political party, official
of
a political party, candidate for political office, or anyone else acting in
an
official capacity, in order to obtain, retain or direct business or obtain
any
improper advantage, in violation of the United States Foreign Corrupt Practices
Act of 1977, as amended.
6.23. Aircraft
Regulatory Authority.
The
Issuer holds all permits, certificates and authorizations for the operation
of
its business as are necessary and required by each applicable Aircraft
Regulatory Authority.
6.24. Aircraft
Leases.
Schedule
6.24
attached
hereto is a listing of each aircraft owned by the Issuer and a description
of
the relevant material lease terms in which, to the Issuer’s knowledge, there are
not material inaccuracies.
| 7. |
FINANCIAL
STATEMENTS AND
INFORMATION.
|
The
Issuer will furnish to each Purchaser, so long as such Purchaser shall be
obligated to purchase Notes hereunder or shall hold any of the Notes, and to
each other holder from time to time of the Notes; provided, however, that the
Issuer’s filing of such financial statements and any other information required
by this Section 7
with the
Securities and Exchange Commission over the XXXXX system within the time period
required therefore shall be deemed to satisfy the following
covenants:
(a) as
soon
as available and in any event within sixty (60) days after the end of each
Fiscal Quarter, the unaudited consolidated and consolidating balance sheets
of
the Issuer as at the end of such period and the related unaudited consolidated
and consolidating statements of income and cash flows for such period and for
the portion of the Fiscal Year then ended, in each case setting forth in
comparative form the corresponding figures for the same period and the portion
of the preceding Fiscal Year;
(b) 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 the Issuer as of
the
end of such Fiscal Year and related consolidated and consolidating statements
of
income, shareholders equity and cash flows for such Fiscal Year in each case
setting forth in comparative form the corresponding figures for the preceding
Fiscal Year, which financial statements shall be in reasonable detail with
appropriate notes and be prepared in accordance with GAAP and shall be certified
(without any qualification or exception) by BDO Xxxxxxx, LLP or other
independent public accountants acceptable to the Required Holders; such
financial statements shall be accompanied by (i) 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 consolidated financial position, and the results of operations and the
cash
flows of the Issuer for the period then ended in conformity with GAAP, 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;
(c) together
with each delivery of financial statements pursuant to Sections 7(a)
and
7(b),
an
Officer’s Certificate;
(d) promptly
upon the receipt thereof (but in any event not later than five Business Days),
any reports (including, without limitation, any management letters) submitted
to
the Issuer or any Subsidiary (other than reports previously delivered pursuant
to Section 7(b)
above)
by independent accountants in connection with any annual, interim or special
audit made by them of the books of the Issuer or any Subsidiary;
(e) as
promptly as practicable (but in any event not later than five days) after the
same are available, copies of (i) all material press releases issued by the
Issuer or any Subsidiary, and all notices, proxy statements, financial
statements, reports and documents as the Issuer shall send or make available
generally to its holders or as any Subsidiary shall send or make available
generally to its holders other than the Issuer and (ii) all periodic and special
reports, documents and registration statements (other than on Forms 3,4, 5,
13-D
and 13-G) which the Issuer or any Subsidiary furnishes or files, or any officer
or director or stockholder of the Issuer or any of its Subsidiaries furnishes
or
files with respect to the Issuer or any of its Subsidiaries, with the Commission
(or any analogous foreign governmental authority) or any national securities
exchange;
(f) written
notice within three (3) Business Days after any Responsible Officer of the
Issuer has actual knowledge thereof, describing the same and, if applicable,
the
steps being taken by the Person(s) affected with respect thereto;
(i) the
occurrence of any Default or Event of Default;
(ii) the
occurrence of any default or event of default by the Issuer or any Subsidiary
under any material note, indenture, loan agreement, mortgage, deed of trust,
security agreement, lease or other similar agreement, document or instrument
to
which the Issuer or any Subsidiary, as the case may be, is a party or by which
it is bound or to which it is subject;
(iii) the
institution of any litigation, arbitration proceeding or governmental or
regulatory proceeding affecting the Issuer or any Subsidiary, whether or not
considered to be covered by insurance, in which the prayer or claim for relief
seeks recovery of an amount in excess of $200,000.00 (or, if no dollar amount
is
specified in the prayer or claim for relief, in which there is a reasonable
likelihood of recovery of an amount in excess of $200,000.00) or any form of
equitable relief which, if granted, could reasonably be expected to have a
Material Adverse Effect;
(iv) the
entry
of any judgment or decree against the Issuer or any Subsidiary;
(v) the
occurrence of a Reportable Event with respect to any Pension Plan for which
a
thirty (30) day notice is required under applicable PBGC regulations; the filing
of a notice of intent to terminate a Pension Plan by the Issuer, any ERISA
Affiliate or any Subsidiary; the institution of proceedings to terminate a
Pension Plan by the PBGC or any other Person; the withdrawal in a “complete
withdrawal” or a “partial withdrawal” as defined in Sections 4203 and 4205,
respectively, of ERISA by the Issuer, any ERISA Affiliate or any Subsidiary
from
any Multi-Employer Plan; or the incurrence of any material increase in the
contingent liability of the Issuer or any Subsidiary with respect to any
“employee welfare benefit plan” as defined in Section 3(1) of ERISA which covers
retired employees and their beneficiaries; and
(vi) the
occurrence of any event which could reasonably be expected to have a Material
Adverse Effect;
(g) contemporaneously
with its delivery or receipt, a copy of such other material information relating
to the Issuer or any of the Subsidiaries as shall be furnished to or received
from the Senior Agent and/or the Senior Banks pursuant to the Senior Bank
Agreement (including any Permitted Refinancing thereof) or furnished to or
received from any other bank, financial institution or other Person to which
the
Issuer or any of the Subsidiaries is indebted for borrowed money or for any
letters of credit (or similar instruments) (other than information relating
solely to collateral therefor);
(h) contemporaneously
with its delivery, the annual “desktop” appraisal of all aircraft owned by the
Issuer;
(i) no
later
than
thirty
(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
the Required Holders of Notes) applicable to all leases included in the Aircraft
Portfolio;
(j) at
the
time that payment is made to the holders of Notes in accordance with Section
9.1(a),
a
calculation of the Discounted Aircraft Portfolio Value and the Maximum Debt
to
Value Ratio;
(k) by
December 31 of each year, budgets and forecasts for the ensuing fiscal year;
and
(l) such
other information as from time to time may reasonably be requested.
| 8. |
INSPECTION.
|
The
Issuer shall permit a representative of each holder of Notes, at the expense
of
the Issuer to visit and inspect (with those representatives of holders desiring
to inspect visiting together as a group) any of the offices or properties of
the
Issuer or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and
to
discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision the Issuer
authorizes said accountants to discuss the affairs, finances and accounts of
the
Issuer and its Subsidiaries), all at such times and as often as may be
requested; provided however so long as no Default or Event of Default shall
have
occurred and be continuing (i) there shall be no more than two (2) such
inspections during any Fiscal Year, (ii) all such visits and inspections shall
be at such reasonable times and as often as may be reasonably requested in
writing and (iii) the aggregate amount that the Issuer shall be required to
reimburse the holders of Notes in respect of such inspections and visits shall
not exceed $10,000 in any Fiscal Year.
| 9. |
PREPAYMENT
OF NOTES.
|
9.1. Mandatory
Principal Payments.
(a) On
the
last day of each month (each a “Mandatory
Payment Date”)
the
Issuer will prepay a principal amount equal to the Required Amortization Amount
of the Notes at par and without payment of the Make-Whole Amount or any
Applicable Premium. For purposes hereof the “Required
Amortization Amount”
for any
Mandatory Payment Date shall be equal to the amount necessary to cause both
the
Maximum Debt to Value Ratio and the Maximum Outstanding Balance of the Notes
for
the month then ended to not exceed the amounts therefor set forth opposite
such
month on Schedule
13.5
hereto.
(b) If
on or
before June 30, 2008, the Issuer shall not have sold pursuant to this Agreement
Notes in an aggregate principal amount of $28,000,000 then on such date the
entire then outstanding principal amount of the Notes shall become due and
payable together with interest accrued to such date and the Applicable Premium
on such principal amount; provided however, that the failure of any Purchaser
to
acquire Notes hereunder due to any matter arising under Section 5.9
shall
not give rise to a prepayment obligation under this Section 9.1(b).
(c) As
provided therein, the entire unpaid principal balance of the Notes, together
with all accrued interest to such date, shall be due and payable on the Final
Maturity Date.
9.2. Optional
Prepayment of Notes With Premium.
(a) With
Premium.
At any
time or from time to time after April 17, 2009, the Issuer may, at its option,
upon notice as set forth in Section 9.5,
prepay
all or any part of the Notes (in an integral multiple of $500,000 and a minimum
of $5,000,000 or such lesser principal amount thereof as shall then be
outstanding); provided that (a) the funds used to make such prepayment are
funded by a Qualifying Equity Event and (b) the Issuer concurrently pays an
amount equal to a percentage of the principal amount to be prepaid pursuant
to
this Section 9.2
(the
“Applicable
Premium”),
such
percentage to be that set forth in the table below opposite the period in which
the date fixed for such prepayment occurs:
|
Period
|
Applicable
Premium
|
|
April
18, 2009 through April 17, 2010
|
10%
|
|
April
18, 2010 through April 17, 2011
|
5%
|
|
April
18, 2011 and thereafter
|
0%
|
For
purposes of this Section 9.2,
the
term “Qualifying
Equity Event”
shall
mean an equity offering of securities for the account of the Issuer so long
as
the aggregate amount received by the Issuer in such offering is at least
$5,000,000.
(b) Without
Premium.
At any
time or from time to time after April 17, 2009, the Issuer may, at its option,
upon notice as set forth in Section 9.5,
prepay
all or any part of the Notes (in an integral multiple of $500,000 and a minimum
of $3,000,000 or such lesser principal amount thereof as shall then be
outstanding), provided that the funds used to make such prepayment are funded
solely from operating cash flow of the Issuer as certified to the holders of
Notes in an Officer’s Certificate of the Issuer.
9.3. Prepayment
upon a Change of Control.
(a) If
any
Change of Control is to occur, then not less than 30 days (or such later date
as
the Issuer first obtains knowledge thereof) nor more than 60 days prior to
the
occurrence of such Change of Control, the Issuer will notify in writing each
holder of Notes of such pending Change of Control and the date upon which it
is
scheduled to occur. The Issuer will prepay all of the Notes held by each holder
then outstanding, together with all accrued interest to such date and an amount
equal to the Make-Whole Amount for the date of such prepayment. Each such
prepayment shall occur on the date upon which the Change of Control occurs,
unless the Issuer and such holder of Notes agrees to a different date, and
no
prepayment requested pursuant to this Section 9.3
shall be
due unless the Change of Control shall occur.
(b) For
purposes of this Section 9.3,
the
term “Change
of Control”
shall
mean
(i) Management
and JHC shall fail to, directly or indirectly, beneficially own and control
at
least 80% of the Common Stock owned by such Persons on the Initial Closing
Date
(provided that any transfer of the Common Stock by JHC to employees of JHC
and
its Subsidiaries as a bonus or otherwise in consideration of their employment
will be considered to be held by JHC for the purposes of this clause (i));
(ii) Management
shall fail to, directly or indirectly, (A) beneficially own and control 51%
of
the equity interests of JHC (determined on a fully diluted basis) other than
as
a result of the acquisition of such equity interests by the Issuer pursuant
to
the JMC Management Agreement or (B) have the right to appoint a majority of
the
board of directors of JHC;
(iii) any
Person (other than members of Management), together with “affiliates” and
“associates” of such Person, within the meaning of Rule 12b-2 of the Commission
under the Exchange Act, shall acquire beneficial ownership (including beneficial
ownership resulting from the formation of a “group” within the meaning of Rule
13d-5 of the Exchange Act) of 33% or more of the outstanding shares of Common
Stock or of any other class of Voting Stock of the Issuer;
(iv) any
directors nominated by the board of directors of the Company shall fail to
be
elected by the shareholders of the Company; or
(v) if
at any
time (A) one or more of members of Management shall cease to be executive
officers of the Issuer unless such member of Management is replaced within
sixty
(60) days with an individual acceptable to the Required Holders or (B) JMC
shall
cease to be the management company for the Issuer as contemplated by the JMC
Management Agreement.
(c) For
purposes of this Section 9.3,
beneficial ownership shall be determined in the manner set forth in Rule 13d-3
of the Commission under the Exchange Act.
(d) For
purposes of this Section 9.3,
the
term “Make-Whole
Amount”
means,
with respect to any Note, an amount equal to the excess, if any, of the
Discounted Value of the Remaining Scheduled Payments with respect to the Called
Principal of such Note over the amount of such Called Principal, provided that
the Make-Whole Amount may in no event be less than zero. For the purposes of
determining the Make-Whole Amount, the following terms have the following
meanings:
“Called
Principal”
means,
with respect to any Note, the principal of such Note that is to be prepaid
pursuant to Section 9.3.
“Discounted
Value”
means,
with respect to the Called Principal of any Note, the amount obtained by
discounting all Remaining Scheduled Payments with respect to such Called
Principal from their respective scheduled due dates to the Settlement Date
with
respect to such Called Principal, in accordance with accepted financial practice
and at a discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with respect
to such Called Principal.
“Reinvestment
Yield”
means,
with respect to the Called Principal of any Note, 1.0% over the yield to
maturity implied by (i) the yields reported as of 10:00 a.m. (New York City
time) on the fifth Business Day preceding the Settlement Date with respect
to
such Called Principal, on the display designated as “Page PX1” (or such other
display as may replace Page PX1) on Bloomberg Financial Markets for the most
recently issued actively traded on the run U.S. Treasury securities having
a
maturity equal to the Remaining Life of such Called Principal as of such
Settlement Date, or (ii) if
such yields are not reported as of such time or the yields reported as of such
time are not ascertainable (including by way of interpolation), the Treasury
Constant Maturity Series Yields reported, for the latest day for which such
yields have been so reported as of the second Business Day preceding the
Settlement Date with respect to such Called Principal, in Federal Reserve
Statistical Release H.15 (or any comparable successor publication) for U.S.
Treasury securities having a constant maturity equal to the Remaining Life
of
such Called Principal as of such Settlement Date.
In
the
case of each determination under clause (i) or clause (ii), as the
case may be, of the preceding paragraph, such implied yield will be determined,
if necessary, by (a) converting U.S. Treasury xxxx quotations to bond
equivalent yields in accordance with accepted financial practice and
(b) interpolating linearly between (1) the applicable U.S. Treasury
security with the maturity closest to and greater than such Remaining Life
and
(2) the applicable U.S. Treasury security with the maturity closest to and
less than such Remaining Life. The Reinvestment Yield shall be rounded to the
number of decimal places as appears in the interest rate of the applicable
Note.
“Remaining
Life”
means,
with respect to any Called Principal, the number of years (calculated to the
nearest one-twelfth year) that will elapse between the Settlement Date with
respect to such Called Principal and the Final Maturity Date of such
Note.
“Remaining
Scheduled Payments”
means,
with respect to the Called Principal of any Note, all payments of such Called
Principal and interest thereon that would be due after the Settlement Date
with
respect to such Called Principal, subject to Section 9.1
hereof,
if no payment of such Called Principal were made prior to the Final Maturity
Date, provided that if such Settlement Date is not a date on which interest
payments are due to be made under the terms of the Notes, then the amount of
the
next succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on such
Settlement Date pursuant to Section 9.3.
“Settlement
Date”
means,
with respect to the Called Principal of any Note, the date on which such Called
Principal is to be prepaid pursuant to Section 9.3.
9.4. Allocation
of Partial Prepayments of Notes.
In
the
case of each partial prepayment of the Notes under this Section 9,
the
principal amount of the Notes to be prepaid shall be allocated among all of
the
Notes at the time outstanding (excluding any Notes at the time owned by the
Issuer or any Affiliate of the Issuer) in proportion, as nearly as practicable,
to the respective unpaid principal amounts thereof, with adjustments, to the
extent practicable, to compensate for any prior prepayments not made exactly
in
such proportion.
9.5. Notice
of Certain Prepayments of Notes.
In
the
case of each prepayment under Section 9.2
and
9.3,
the
Issuer shall give written notice thereof to each holder of Notes not less than
5
nor more than 30 days prior to the date fixed for such prepayment. Each such
notice shall set forth: (a) the date fixed for prepayment; (b) the aggregate
principal amount of Notes to be prepaid on such date; and (c) the aggregate
principal amount of Notes held by such holder to be prepaid on such date and
the
amount of accrued interest and the Applicable Premium, if any, or Make-Whole
Amount, if any, to be paid to such holder on such date (together with the
calculation of such Applicable
Premium or Make-Whole Amount which calculation shall be satisfactory to each
holder of the Notes).
9.6. Maturity;
Accrued Interest; Surrender, etc. of Notes.
In
the
case of each prepayment of all or any part of any Note, the principal amount
to
be prepaid shall mature and become due and payable on the date fixed for such
prepayment, together with interest on such principal amount accrued to such
date
and the premium, if any, due thereon. Any Note prepaid in full shall be
surrendered to the Issuer at its principal place of business promptly following
prepayment and cancelled and shall not be reissued, and no Note shall be issued
in lieu of any prepaid principal amount of any Note.
9.7. Purchase
of Notes.
The
Issuer will not, and will not permit any of their Affiliates to, directly or
indirectly, purchase or otherwise acquire, or offer to purchase or otherwise
acquire, any outstanding Notes except by way of payment or prepayment in
accordance with the provisions of the Notes and this Agreement or in a
transaction pursuant to which each holder of Notes is given the opportunity
to
sell or otherwise transfer a proportionate amount of such holder’s Notes on the
same terms and conditions.
9.8. Payment
on Non-Business Days.
If
any
amount hereunder or under the Notes shall become due on a day which is not
a
Business Day, then such payment shall be made on the first Business Day
following the day on which such payment shall have so fallen due, without
including the additional days elapsed in the computation of the interest payable
on such succeeding Business Day.
| 10. |
BOARD
VISITATION RIGHTS.
|
So
long
as the Notes are outstanding the Required Holders shall have the right to
appoint one representative who shall: (a) receive written notice of all meetings
(both regular and special) of the boards of directors (or similar body) of
the
Issuer and the Subsidiaries (other than an Unrestricted Subsidiary) and each
committee of any such board (such notice to be delivered or mailed as specified
in Section 21
at the
same time as notice is given to the members of any such board and/or committee
but in no event later than seven days prior to the date of such meeting); (b)
be
entitled to attend (or, in the case of telephone meetings, monitor) all such
meetings; (c) receive all notices, information and reports which are furnished
by the Issuer or any such Subsidiary to the members of any such board and/or
committee (in their capacity as a member of such board or committee) at the
same
time and in the same manner as the same is furnished to such members; (d) be
entitled to participate in all discussions conducted at such meetings and (e)
receive as soon as available (but in any event prior to the next succeeding
board meeting) copies of the minutes of all such meetings. If any action is
proposed to be taken by any such board and/or committee by written consent
in
lieu of a meeting, the Issuer will give written notice thereof to such
representative, which notice shall describe in reasonable detail the nature
and
substance of such proposed action and shall be delivered at the same time as
notice is given to the members of any such board and/or committee but in no
event later than five days prior to the date such written consent becomes
effective. The Issuer will furnish such representative with a copy of each
such
written consent not later than five days after it has been signed by its last
signatory. Such representative shall not constitute a member of any such board
and/or committee and shall not be entitled to vote on any matters presented
at
meetings of any such board and/or committee or to consent to any matter as
to
which the consent of any such board and/or committee shall have been requested.
The board of directors (or similar body) of the Issuer shall meet not less
frequently than four times during each Fiscal Year (at least one of which must
be in person). Each designated representative electing not to attend any meeting
in person may in any event be permitted to participate in such meeting by
telephone as if such designated representative were present. Such representative
shall agree in writing to hold in confidence and trust and to act in a fiduciary
manner with respect to all information so provided; and, provided further,
that
the Issuer reserves the right to withhold any information and to exclude such
representative from any meeting or portion thereof in order to (i) preserve
or
avoid any adverse effect to the attorney-client privilege between the Issuer
and
its counsel, (ii) prevent the disclosure of trade secrets to such
representative, (iii) fulfill the Issuer’s obligations with respect to
confidential or proprietary information of third parties or (iv) review or
discuss any information that could reasonably be expected to involve a conflict
of interest between the holders of Notes and the Issuer.
| 11. |
AFFIRMATIVE
COVENANTS.
|
So
long
as any of the Notes shall remain outstanding, the Issuer will duly perform
and
observe each and all of the covenants and agreements applicable to it as
hereinafter set forth:
11.1. Payment
of Debt; Taxes.
The
Issuer will, and will cause each Subsidiary to, 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 the Issuer 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 a Default or Event of 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.
11.2. Maintenance
of Books and Records.
The
Issuer will, and will cause each Subsidiary to, maintain books and records
sufficient to permit the preparation of financial statements in accordance
with
GAAP and in which true, correct and complete entries in conformity with GAAP
shall be made of all dealings and transactions in relation to its
business.
11.3. Existence.
The
Issuer will, and will cause each Subsidiary to, do all things necessary to
(a)
preserve and keep in full force and effect at all times its corporate existence
and all permits, licenses, franchises and other rights material to its business
and (b) be duly qualified to do business and be in good standing in all
jurisdictions where the nature of its business or its ownership of Property
requires such qualification except for those jurisdictions in which the failure
to qualify or be in good standing could not reasonably be expected to have
a
Material Adverse Effect.
11.4. Maintenance
of Property.
The
Issuer will, and will cause each Subsidiary to, at all times, preserve and
maintain all of the Property used or useful in the conduct of its business
in
good condition, working order and repair, ordinary wear and tear
excepted.
11.5. Insurance.
The
Issuer will, and will cause each Subsidiary or each Person that leases Property
to, insure all of its Property of the character usually insured by Persons
engaged in the same or similar businesses similarly situated, against loss
or
damage of the kind customarily insured against by such Persons, and carry
liability insurance and other insurance of a kind and in an amount generally
carried by Persons engaged in the same or similar businesses similarly situated.
All such insurance may be subject to reasonable deductible amounts. The Issuer
will take all commercially reasonable steps to ensure that the Issuer and the
Senior Agent are identified by name as "additional insured" or “contract party”
and “loss payee” on any certificates of insurance issued in respect of aircraft
owned and acquired by the Issuers or any Subsidiary. The Issuers will also
take all commercially reasonable steps to ensure that references to AVN67B
are
updated to AVN67C where appropriate.
11.6. Compliance
with Laws, Regulations, Etc.
The
Issuer will, and will cause each Subsidiary to, (a) comply with any and all
laws, ordinances and
governmental and regulatory rules and regulations to which the Issuer or such
Subsidiary,
as the
case may be, is subject (including, without limitation, all Occupational Safety
and Health Laws and all Environmental Laws), the violation of which or failure
to comply with which could reasonably be expected to have a Material Adverse
Effect and (b) obtain any and all licenses, permits, franchises and other
governmental and regulatory authorizations necessary to the ownership of its
Properties or to the conduct of its business, the failure to obtain which
license, permit, franchise and/or other governmental or regulatory authorization
could reasonably be expected to have a Material Adverse Effect.
11.7. ERISA
Compliance.
If
the
Issuer, any Subsidiary or any ERISA Affiliate shall have any Pension Plan,
the
Issuer, such Subsidiary or such ERISA Affiliate, as the case may be, shall
comply in all material respects with all requirements of ERISA relating to
such
Pension Plan. Without limiting the generality of the foregoing, the Issuer
will
not, and will not cause or permit any Subsidiary or any ERISA Affiliate
to:
(a) permit
any Pension Plan maintained by the Issuer, any Subsidiary or any ERISA Affiliate
to engage in any nonexempt “prohibited transaction,” as such term is defined in
Section 4975 of the Code;
(b) permit
any Pension Plan maintained by the Issuer, any Subsidiary or any ERISA Affiliate
to incur any “accumulated funding deficiency”, as such term is defined in
Section 302 of ERISA, 29 U.S.C. § 1082, whether or not waived;
(c) terminate
any Pension Plan in a manner which could result in the imposition of a Lien
on
any Property of the Issuer, any Subsidiary or any ERISA Affiliate pursuant
to
Section 4068 of ERISA, 29 U.S.C. § 1368; or
(d) take
any
action which would constitute a complete or partial withdrawal from a
Multi-Employer Plan within the meaning of Sections 4203 or 4205 of Title IV
of
ERISA.
Notwithstanding
any provision contained in this Section 11.7
to the
contrary, an act by the Issuer or any Subsidiary shall not be deemed to
constitute a violation of this Section 11.7
unless
said action, individually or cumulatively with other acts of the Issuer and
the
Subsidiaries, has or could reasonably be expected to have a Material Adverse
Effect.
11.8. Line
of Business
The
Issuer will, and will cause each Subsidiary to, continue to engage in the same
business as conducted by it on the Initial Closing Date and businesses
reasonably related thereto.
11.9. Further
Assurances.
The
Issuer will execute and deliver to the holders of the Notes, at any time and
from time to time, any and all further agreements, documents and instruments
with reasonable promptness after the Required Holders’ of Notes request
therefor, and take any and all further actions which may be required under
applicable law, or which the Required Holders of Notes may from time to time
reasonably request with reasonable promptness after any such request, in order
to effectuate the transactions contemplated by this Agreement and the other
Operative Documents
11.10. Guarantee
Agreements.
In
the
event that any Subsidiary of the Issuer shall Guarantee any Debt of the Issuer,
including without limitation, the Debt outstanding under the Senior Bank
Agreement (or any Permitted Refinancing thereof), then and in each such case
the
Issuer will notify each holder of the Notes as promptly as practicable after
(but in any event within 30 days of) the date such Subsidiary enters into such
Guarantee and the Issuer shall cause such Subsidiary to execute and deliver
to
the holders of the Notes a Guarantee Agreement (the “Guarantee
Agreement”),
in
form and substance reasonably satisfactory to the Required Holders of Notes,
together with all documents and opinions which the Required Holders of Notes
may
reasonably request relating to the existence of such Subsidiary, the corporate
or other authority for and the validity of the Guarantee Agreement, and any
other matters reasonably determined by the Required Holders of Notes to be
relevant thereto, all in form and substance reasonably satisfactory to the
Required Holders of Notes.
11.11. Use
of Proceeds of Notes and Senior Bank Agreement.
The
Issuer shall use the proceeds of the Notes and of any Loans (as defined in
the
Senior Bank Agreement) for (a) the purchase or financing of aircraft and related
equipment to be leased to unaffiliated Persons and (b) for general working
capital purposes of the Issuer.
11.12. Aircraft
Leases.
The
Issuer shall update Schedule
6.24
promptly
upon the Issuer acquiring any new aircraft or entering into any aircraft lease
(including any renewal, extension or modification of any aircraft
lease).
| 12. |
NEGATIVE
COVENANTS.
|
So
long
as any of the Notes shall remain outstanding, the Issuer will duly perform
and
observe each and all of the covenants and agreements applicable to it as
hereinafter set forth:
12.1. Limitation
on Debt.
The
Issuer will not, and will not cause or permit any Subsidiary or Unrestricted
Subsidiary to, incur or be obligated on any Debt, either directly or indirectly,
by way of Guarantee, suretyship or otherwise, other than:
(a) Debt
of
the Issuer in respect of the Senior Bank Agreement;
(b) Debt
of
the Issuer existing as of the Initial Closing Date and listed on Schedule
12.1
attached
hereto;
(c) Debt
in
respect of the Notes;
(d) Debt
of
an Unrestricted Subsidiary (i) for which the Issuer or a Subsidiary is not
a
guarantor in whole or in part or otherwise liable or (ii) 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; and
(e) Debt
of
Unrestricted Subsidiaries permitted by Section 12.8(d) and (e).
12.2. Limitation
on Liens.
The
Issuer will not, and will not cause or permit any Subsidiary to, create, incur
or assume, or suffer to be incurred or to exist, any Lien on any of its
Property, whether now owned or hereafter acquired, or upon any income or profits
therefrom, except for Permitted Liens.
12.3. Consolidation,
Merger, Sale of Property, Etc.
The
Issuer will not, and will not cause or permit any Subsidiary to, directly or
indirectly merge or consolidate with or into any other Person or permit any
other Person to merge into or with or consolidate with it; provided, however,
that so long as no Default or Event of Default exists immediately before or
immediately after giving effect to such merger or such consolidation, any Person
may merge or consolidate with or into the Issuer provided that the Issuer shall
be the continuing or surviving corporation.
12.4. Sale
of Property, Etc.
Except
for sales or dispositions entered into in the ordinary course of business of
the
Issuer or a Subsidiary consistent with past practices for value received, or
transfer in respect of Permitted Liens the Issuer will not, and will not cause
or permit any Subsidiary to, (i) sell, assign, lease, transfer, abandon or
otherwise dispose of any of its Property (including, without limitation, any
shares of Capital Stock or other equity interests of a Subsidiary or
Unrestricted Subsidiary owned by the Issuer or another Subsidiary) or (ii)
discontinue, liquidate or change in any material respect any substantial part
of
its operations or business.
12.5. Transactions
with Affiliates.
The
Issuer will not, and will not cause or permit any Subsidiary or Unrestricted
Subsidiary to, enter into or be a party to any transaction or arrangement with
any Affiliate (including, without limitation, the purchase from, sale to, lease
from or exchange of Property with, or the rendering of any service by or for,
any Affiliate and the payment of Management Fees), except in the ordinary course
of business and pursuant to the reasonable requirements of the Issuer’s or such
Subsidiary’s or Unrestricted Subsidiary’s business and upon fair and reasonable
terms no less favorable to the Issuer or such Subsidiary or such Unrestricted
Subsidiary than would be obtained in a comparable arm’s-length transaction with
a Person not an Affiliate. Payment of the JMC Management Fees in accordance
with
the JMC Management Agreement as in effect on the date hereof and Re-Sale Fees
and Aircraft Acquisition Fees shall be permitted under this Section 12.5
but
shall be subject to Section 12.12.
12.6. Restricted
Payments.
The
Issuer will not, and will not cause or permit any Subsidiary to, declare or
incur any liability to make any Restricted Payment on or in respect of the
Capital Stock of or in the Issuer or the Capital Stock of or in any such
Subsidiary, as the case may be; provided, however, that (a) each Wholly-Owned
Subsidiary of the Issuer shall be permitted to declare and pay cash
distributions on its Capital Stock to the Issuer and (b) the Issuer may make
Restricted Payments in any Fiscal Year so long as (i) the aggregate amount
of
all Restricted Payments (including such Restricted Payment) in such Fiscal
Year
does not exceed the Restricted Payment Amount for such Fiscal Year and (ii)
immediately prior to and immediately following such Restricted Payment no
Default or Event of Default exists or would exist.
12.7. Pension
Plans.
The
Issuer will not, and will not cause or permit any Subsidiary to, (a) permit
any
condition to exist in connection with any Pension Plan which might constitute
grounds for the PBGC to institute proceedings to have such Pension Plan
terminated or a trustee appointed to administer such Pension Plan or (b) engage
in, or permit to exist or occur, any other condition, event or transaction
with
respect to any Pension Plan which could result in the incurrence by the Issuer,
any Subsidiary or any ERISA Affiliate of any material liability, fine or
penalty.
12.8. Acquisitions
and Investments.
The
Issuer will not, and will not permit any Subsidiary, to 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 the Issuer
may
(a) acquire and hold stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to it,
(b) 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 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 Xxxxx’x 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) 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 “JMC
Management Agreement”)
between
the Issuer and JMC entered into as of Xxxxx 00, 0000, (x) Investments in
Unrestricted Subsidiaries existing on the Initial Closing Date of the type
described in clause (c) of the definition of Restricted Payments but solely
to
the extent such Investments are permitted under Section 12.6 and (e) make
Investments in Unrestricted Subsidiaries after the Initial Closing other than
Investments permitted by the foregoing clause (d) (“Unrestricted
Subsidiary Investments”)
so long
as (i) all Unrestricted Subsidiary Investments 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 all Unrestricted Subsidiary
Investments in respect of such Unrestricted Subsidiary for the period commencing
on the Initial Closing Date through the date of such Unrestricted Subsidiary
Investment shall not exceed the Unrestricted Subsidiary Investment Amount for
such Unrestricted Subsidiary at such time 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 the Issuer 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. For the avoidance of doubt with respect to
clause (e) above, the aggregate amount of Unrestricted Subsidiary Investments
with respect to any Unrestricted Subsidiary is determined for each Unrestricted
Subsidiary Investment for the period commencing on the Initial Closing Date
through the date of such Unrestricted Subsidiary Investment and is compared
to
the net book value of the assets of such Unrestricted Subsidiary as of such
date
of determination.
12.9. Limitations
on Restrictive Agreements.
The
Issuer will not, and will not cause or permit any Subsidiary to, enter into,
or
permit to exist, any agreement with any Person which prohibits or limits the
ability of the Issuer or such Subsidiary, as the case may be, to (a) pay
dividends or make other distributions or prepay any Debt owed to the Issuer
and/or any Subsidiary, (b) make loans or advances to the Issuer and/or any
Subsidiary, (c) transfer any of its Properties to the Issuer and/or any
Subsidiary or (d) create, incur, assume or suffer to exist any Lien upon any
of
its 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 Initial Closing Date contained in this Agreement, the Senior Bank Documents
and agreements governing Debt outstanding on the Initial Closing Date and listed
on Schedule
12.1
attached
hereto and, if such Debt is renewed, extended or refinanced, restrictions in
the
agreements governing the renewed, extended or refinanced Debt (and successive
renewals, extensions and refinancings thereof) if such restrictions are no
more
restrictive in any material respect than those contained in the agreements
governing the Debt being renewed, extended or refinanced.
12.10. Accounting
Change.
The
Issuer will not make or permit any change in financial accounting policies
or
financial reporting practices, except as required by GAAP or regulations of
the
Commission, if applicable
12.11. Modification
of Senior Bank Agreement and Management Agreement.
The
Issuer will not, and will not permit any of the Subsidiaries to
amend,
supplement, modify or waive any term of (a) the Senior Bank Documents (or the
documents relating to any Permitted Refinancing thereof) unless such amendment,
supplement, modification or waiver thereof is permitted by Section 3 of the
Subordination Agreement
or (b)
the Management Agreement without the prior written consent of the Required
Holders.
12.12. Management
Fees, Management Company Expenses and Aircraft Acquisition
Fees.
The
Issuer will not, and will not permit any Subsidiary to pay any Management Fees,
Issuer Administrative Expenses or aircraft acquisition fees; provided however
that so long as both (a) payment of the Notes is not blocked pursuant to the
terms of the Subordination Agreement and (b) the Issuer is in compliance with
the financial covenants set forth in Section 13
the
Issuer may pay (i) the JMC Management Fee, (ii) Re-Sale Fees, (iii) Aircraft
Acquisition Fees and (iv) Issuer Administrative Expenses; provided however
that
notwithstanding the fact payment of such fees and expenses may not be permitted
by clause (a) or (b) above, the Issuer may pay (A) the JMC Management Fee,
Aircraft Acquisition Fees and Re-Sale Fees to the extent that the aggregate
amount of all such fees paid during any Fiscal Quarter does not exceed $750,000
and (B) Issuer Administrative Expenses to the extent that the aggregate amount
of such expenses does not exceed $500,000 for any two consecutive Fiscal
Quarters.
| 13. |
FINANCIAL
COVENANTS.
|
So
long
as any of the Notes shall remain outstanding, the Issuer will duly perform
and
observe each and all of the covenants and agreements applicable to it as
hereinafter set forth:
13.1. Minimum
Tangible Net Worth.
The
Issuer will not permit Tangible Net Worth at any time to be less than the sum
of
(i) $15,000,000, plus
(ii)
50%
of Net Income for each Fiscal Quarter ending on March 31, 2007 and thereafter,
without deduction for net losses, plus
(iii)
50% of the net proceeds from any sale of equity securities after the date of
this Agreement to the extent such net proceeds are not used to prepay the Notes
as permitted by Section 9.2,
plus
(iv) 50%
of the fair value of any equity securities issued by the Issuer after the
Initial Closing Date in connection with any acquisition permitted hereunder
or
by waiver hereto plus
(v) 100%
of any Subordinated Debt.
13.2. EBITDA
to Interest Ratio.
The
Issuer will not permit the ratio of EBITDA to Interest as at the end of any
Fiscal Quarter and for the period of such Fiscal Quarter to be less than
1.5:1.0.
13.3. Recourse
Funded Debt to Tangible Net Worth.
The
Issuer will not permit
the
ratio
of Recourse Funded Debt to Tangible Net Worth at each Fiscal Quarter end to
exceed 4.25:1.0.
13.4. Absence
of Net Loss.
The
Issuer will not suffer a consolidated net loss, as measured for the four
consecutive Fiscal Quarters then ended.
13.5. Debt
to Value Ratio.
The
Issuer will not permit the
ratio
of Maximum Debt to Value as at the last day of each calendar month end to exceed
the amount set forth opposite such month for “Maximum Debt to Value” on
Schedule
13.5
hereto.
13.6. Effect
of FASB Staff Position AUG AIR-1, Accounting for Planned Major Maintenance
Activities.
All
calculations made in Sections 13.1,
13.2,
13.3,
13.4
and
13.5
and
referenced definitions used herein shall be adjusted to (i) deduct the amount
of
non-refundable maintenance reserves received by the Issuer and recorded as
income and (ii) add back the payments made from non-refundable maintenance
reserves and recorded as expense, both such deductions adjusted by the tax
rate
applicable to the subject reporting period.
| 14. |
REMEDIES
|
14.1. Events
of Default Defined; Acceleration of Maturity.
If
any
one or more of the following events (“Events
of Default”)
shall
occur and is continuing (whatever the reason for such Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of
law
or pursuant to any judgment, decree or order of any court or any order, rule
or
regulation of any administrative or governmental body), that is to
say:
(a) if
default shall be made in the due and punctual payment of all or any part of
the
principal of, or Applicable Premium (if any) or Make-Whole Amount (if any)
on,
any Note when and as the same shall become due and payable, whether at the
stated maturity thereof, by notice of or demand for prepayment, or
otherwise;
(b) if
default shall be made in the due and punctual payment of any interest on any
Note when and as such interest shall become due and payable and such default
shall have continued for a period of three Business Days;
(c) if
default shall be made in the performance or observance of any covenant,
agreement or condition contained in Sections 7(a),
7(b),
7(c),
7(i),
7(j),
11.3,
11.5,
11.8,
12
(in its
entirety) and 13
(in its
entirety);
(d) if
default shall be made in the performance, satisfaction or observance of any
other of the covenants, agreements or conditions contained in this Agreement
or
any of the other Operative Documents and such default shall have continued
for a
period of 10 days after the earlier to occur of (i) a Responsible Officer of
the
Issuer obtaining actual knowledge of such default or (ii) the Issuer’s receipt
of written notice of such default from any holder of Notes;
(e) if
the
Issuer or any of the Subsidiaries (i) voluntarily ceases to conduct its business
in the ordinary course; (ii) commences any Insolvency Proceeding with respect
to
itself; or (iii) takes any action to effectuate or authorize any of the
foregoing; or;
(f) (i)
if
any involuntary Insolvency Proceeding is commenced or filed against the Issuer
or any Subsidiary, or any writ, judgment, warrant of attachment, execution
or
similar process, is issued or levied against a substantial part of the Issuer’s
or any of the Subsidiaries’ Properties, and any such proceeding or petition
shall not be dismissed, or such writ, judgment, warrant of attachment, execution
or similar process shall not be released, vacated or fully bonded within sixty
(60) days after commencement, filing or levy; (ii) the Issuer or any of the
Subsidiaries admits the material allegations of a petition against it in any
Insolvency Proceeding, or an order for relief (or similar order under non-U.S.
law) is ordered in any Insolvency Proceeding; or (iii) the Issuer or any of
the
Subsidiaries acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or the agent therefor), or
other similar Person for itself or a substantial portion of its Property or
business; or
(g) if
the
Issuer or any Subsidiary shall fail beyond any applicable grace period to (i)
make any payment due on any Debt (other than the Notes) having an aggregate
principal amount of more than $250,000, or (ii) perform, observe or discharge
any covenant, condition or obligation in any agreement, document or instrument
evidencing, securing or relating to such Debt, if the effect of any such failure
of the character described in this clause (g)
is to
cause, or permit any other Person to cause, Debt having an individual principal
amount in excess of $250,000 or having an aggregate principal amount of $250,000
or more to become due and payable, or if any such Debt or other obligation
shall
become due and payable by its terms and shall not be paid or
extended;
(h) if
a
final judgment or judgments for the payment of money (exclusive of judgment
amounts to the extent adequately covered by insurance where the insurer’s
liability in respect of such judgment has been acknowledged in writing) shall
be
rendered against the Issuer or any Subsidiary which judgments are not, within
30
days after entry thereof, discharged or stayed pending appeal or otherwise,
or
are not discharged within 30 days after the expiration of such
stay;
(i) if
any
representation or warranty made by or on behalf of the Issuer or any Subsidiary
in this Agreement or in any of the other Operative Documents or in any
agreement, document or instrument delivered under or pursuant to any provision
hereof or thereof shall prove to have been false or incorrect in any material
respect when made;
(j) the
occurrence of a Reportable Event with respect to any Pension Plan; the filing
of
a notice of intent to terminate a Pension Plan by the Issuer, any ERISA
Affiliate or any Subsidiary; the institution of proceedings to terminate a
Pension Plan by the PBGC or any other Person; the withdrawal in a “complete
withdrawal” or a “partial withdrawal” as defined in Sections 4203 and 4205,
respectively, of ERISA by the Issuer, any ERISA Affiliate or any Subsidiary
from
any Multi-Employer Plan; or the incurrence of any material increase in the
contingent liability of the Issuer or any Subsidiary with respect to any
“employee welfare benefit plan” as defined in Section 3(1) of ERISA which covers
retired employees and their beneficiaries;
(k) the
institution by the Issuer, any ERISA Affiliate or any Subsidiary of steps to
terminate any Pension Plan if, in order to effectuate such termination, the
Issuer, such ERISA Affiliate or such Subsidiary, as the case may be, would
be
required to make a contribution to such Pension Plan, or would incur a liability
or obligation to such Pension Plan, in excess of $50,000.00; or the institution
by the PBGC of steps to terminate any Pension Plan;
(l) if,
at
any time, this Agreement or any of the other Operative Documents shall for
any
reason (other than the scheduled termination thereof in accordance with its
terms) expire, fail to be in full force and effect or be disaffirmed,
repudiated, cancelled, terminated or declared to be unenforceable, null and
void; or
(m) loss
of
any license, certificate or authorization from any Aircraft Regulatory Authority
which has resulted in or could reasonably be expected to result in, a Material
Adverse Effect.
then,
in
the case of any Event of Default (other than one of the character described
in
subsections (e)
or
(f)
of this
Section 14.1)
and at
the option of the Required Holders, exercised by written notice to the Issuer,
the principal of all Notes shall forthwith become due and payable, together
with
interest accrued thereon, without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived, and the Issuer shall
forthwith upon any such acceleration pay to the holder or holders of all the
Notes then outstanding (i) the entire principal of and interest accrued on
the
Notes and (ii) in addition, to the extent permitted by applicable law, an amount
equal to the Applicable Premium (determined as of the date of such
acceleration), as liquidated damages and not as a penalty; provided that, in
the
case of an Event of Default of the character described in subsections
(a)
or
(b)
of this
Section 14.1
and
irrespective of whether all of the Notes have been declared due and payable
by
the Required Holders at the time outstanding, any holder of Notes who or which
has not consented to any waiver with respect to such Event of Default may,
at
the option of such holder, by written notice to the Issuer, declare all Notes
then held by such holder to be, and such Notes shall thereupon become, forthwith
due and payable, together with interest accrued thereon, without presentment,
demand, protest or other notice of any kind, all of which are hereby expressly
waived, and the Issuer shall forthwith upon any such acceleration to pay to
such
holder (i) the entire principal of and interest accrued on such Notes, and
(ii)
in addition, to the extent permitted by applicable law, an amount equal to
the
Applicable Premium (determined as of the date of such acceleration), as
liquidated damages and not as a penalty; provided, further, that, in the case
of
an Event of Default of the character described in subsections (e)
or
(f)
of this
Section 14.1,
the
principal all Notes shall forthwith become due and payable, together with
interest accrued thereon (including any interest accruing after the commencement
of any action or proceeding under the federal bankruptcy laws, as now or
hereafter constituted, or any other applicable domestic or foreign federal
or
state bankruptcy, insolvency or other similar law, and any other interest that
would have accrued but for the commencement of such proceeding, whether or
not
any such interest is allowed as an enforceable claim in such proceeding),
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived, and the Issuer shall forthwith upon any such
acceleration pay to the holder or holders of all the Notes then outstanding
(i)
the entire principal of and interest accrued on the Notes, and (ii) in addition,
to the extent permitted by applicable law, an amount equal to the Applicable
Premium (determined as of the date of such acceleration), as liquidated damages
and not as a penalty.
Notwithstanding
the foregoing provisions, at any time after the occurrence of any Event of
Default and of notice thereof, if any, by any holder or holders of Notes and
before any judgment, decree or order for payment of the money due has been
obtained by or on behalf of any holder or holders of the Notes, the Required
Holders by written notice to the Issuer, may rescind and annul such Event of
Default and/or notice of such Event of Default and the consequences thereof
with
respect to all of the Notes (including any Notes which were accelerated pursuant
to the first provision in the preceding paragraph by any holder or holders
on
account of an Event of Default of the character described in subsection
(a)
or
(b)
of this
Section 14.1)
if:
(i) the
Issuer has paid a sum sufficient to pay
(1) all
overdue interest on all Notes at the rate specified in the Notes;
(2) the
principal of (and premium, if any, on) any Notes which have become due otherwise
than by such Event of Default or notice thereof and interest thereon at the
rate
specified in such Notes; and
(3) interest
on such overdue principal (and premium, if any) and, to the extent that payment
of such interest is lawful, interest upon overdue interest, all at the rate
for
overdue amounts specified in the Notes; and
(ii) all
Defaults and Events of Default, other than the non-payment of the principal
of
Notes which have become due solely by such acceleration, have been cured or
waived as provided in Section 17.
No
such
rescission shall affect any subsequent default or impair any right consequent
thereon.
14.2. Suits
for Enforcement, etc.
In
case
any one or more of the Events of Default specified in Section 14.1
shall
have occurred, and irrespective of whether any Notes have become or have been
declared immediately due and payable under Section 14.1,
the
holder of any Note may proceed to protect and enforce its rights either by
suit
in equity or by action at law, or both.
14.3. No
Election of Remedies.
No
remedy
conferred in this Agreement or in any of the other Operative Documents upon
the
holder of any Note is intended to be exclusive of an other remedy, and each
and
every such remedy shall be cumulative and shall be in addition to every other
remedy given hereunder or thereunder or now or hereafter existing at law or
in
equity or by statute or otherwise.
14.4. Remedies
Not Waived.
No
course
of dealing between the Issuer and any of their respective Subsidiaries, on
the
one hand, and any holder of any Note, on the other hand, no delay by any such
holder in exercising any rights hereunder or under any of the other Operative
Documents shall operate as a waiver of any rights of any such
holder.
14.5. Application
of Payments.
In
case
any one or more of the Events of Default specified in Section 14.1
shall
have occurred, all amounts to be applied to the prepayment or payment of any
Notes, shall be applied, after the payment of all related costs and expenses
incurred by the holders of the Notes (including, without limitation,
compensation to any and all trustees, liquidators, receivers or similar
officials and
reasonable fees, expenses and disbursements of counsel) in such order of
priority as is determined by the Required Holders of the Notes.
| 15. |
REGISTRATION,
TRANSFER AND EXCHANGE OF
SECURITIES.
|
The
Securities issued hereunder shall be issued in registered form. The Issuer
shall
keep at its principal executive office (which is now located at the address
set
forth at the beginning of this Agreement), registers in which the Issuer shall
provide for the recordation or registration, as applicable, and transfer of
each
Security issued hereunder. The name and address of each holder of the Securities
shall be recorded in such records. The Issuer shall give to any institutional
holder of any Security promptly (but in any event within 10 days) following
request therefor, a complete and correct list of the names and addresses of
all
recorded holders of the Securities and the amount and kind of Securities held
by
each. Whenever any Security or Securities shall be surrendered for transfer,
the
Issuer, at its expense will execute and deliver in exchange therefor a new
Security or Securities (in such denominations and registered or recorded, as
applicable, in such name or names as may be requested by the holder of the
surrendered Security or Securities), in the same aggregate unpaid principal
amount (in the case of the Notes) or the number of shares of Common Stock (in
the case of the Warrants), as applicable, as that of the Security or Securities
so surrendered. The Issuer may treat the Person in whose name any Security
is
registered or recorded as the owner of such Security for all purposes. Notes
shall not be transferred in denominations of less than $5,000,000, provided
that
if necessary to enable the registration of transfer by a holder of its entire
holding of Notes, one Note may be in a denomination of less than $5,000,000.
The
Warrants may be transferred in accordance with the terms thereof. In connection
with the foregoing, the Issuer shall take such other actions reasonably
requested by a holder of a Security in order to effect such any applicable
transfer, registration or exchange. Notwithstanding anything herein to the
contrary, if the original Purchasers shall transfer Notes to any Person or
Persons (other than an affiliate of such original Purchaser) such that after
such transfer the original Purchasers own less that 51% of the aggregate
principal amount of the Notes then outstanding, such transfer shall require
the
Issuer’s written consent which consent not to be unreasonably
withheld.
| 16. |
REPLACEMENT
OF SECURITIES.
|
Upon
receipt by the Issuer of reasonably satisfactory evidence of the loss, theft,
destruction or mutilation of any Security and (in the case of loss, theft or
destruction) of reasonably satisfactory indemnity, and (in the case of
mutilation) upon surrender of such Security, the Issuer, at its expense, will
execute and deliver in lieu of such Security a new Security of like tenor and,
in the case of any new Note, dated so as not to result in any loss of interest.
A Purchaser’s unsecured agreement to indemnify and/or affidavit and that of any
other institutional holder shall constitute satisfactory indemnity and/or
satisfactory evidence of loss, theft or destruction for the purpose of this
Section 16.
| 17. |
AMENDMENT
AND WAIVER.
|
(a) Any
term
of this Agreement and, unless explicitly provided otherwise therein, of any
of
the other Operative Documents may, with the consent of the Issuer, be amended,
or compliance therewith may be waived, in writing only, by the Required Holders,
provided that (i) without the consent of the holders of all of the Notes at
the
time outstanding, no such amendment or waiver shall (A) change the amount of
the
principal of or any rate of interest on or premium payable with respect to
any
of the Notes or change the payment terms of any of the Notes, or, except as
provided in the Subordination Agreement, subordinate the obligation of the
Issuer to pay any amount due on the Notes to any other obligation, or (B) change
the percentage of holders of Notes required to approve any such amendment,
effectuate any such waiver or accelerate payment of the Notes; and (ii) no
such
amendment or waiver shall extend to or affect any obligation not expressly
amended or waived or impair any right consequent thereon. Executed or true
and
correct copies of any amendment, waiver or consent effected pursuant to this
Section 17
shall be
delivered by the Issuer to each holder of Notes forthwith (but in any event
not
later than five days) following the effective date thereof.
(b) The
Issuer will not, directly or indirectly, request or negotiate for, or offer
or
pay any remuneration or grant any security as an inducement for, any proposed
amendment or waiver of any of the provisions of this Agreement or any of the
other Operative Documents unless each holder of the Notes (irrespective of
the
kind and amount of Notes then owned by it) shall be informed thereof by the
Issuer and, if such holder is entitled to the benefit of any such provision
proposed to be amended or waived, shall be afforded the opportunity of
considering the same, shall be supplied by the Issuer with sufficient
information to enable it to make an informed decision with respect thereto
and
shall be offered and paid such remuneration and granted such security on the
same terms.
(c) In
determining whether the requisite holders of Notes have given any authorization,
consent or waiver under this Section 17,
any
Notes owned by the Issuer or any of its Affiliates shall be disregarded and
deemed not to be outstanding.
| 18. |
METHOD
OF PAYMENT OF SECURITIES.
|
Irrespective
of any provision hereof or of the other Operative Documents to the contrary,
so
long as any Purchaser (or its nominee) or any other institutional holder shall
hold any Security, the Issuer will make all payments thereon to such Purchaser
or such other institutional holder by the method and at the address for such
purpose specified in Schedule
I
attached
hereto or by such other method or at such other address as such Purchaser or
such institutional holder may designate in writing, without requiring any
presentation or surrender of such Security, except that if any Security shall
be
paid, prepaid and/or repurchased in full, such Security shall be surrendered
to
the Issuer, promptly following such payment, prepayment or repurchase and
cancelled and, in the case of a Note, if transferred all prior payments of
principal and interest will be noted thereon. All such payments shall be made
by
the Issuer, without any right of setoff or counterclaim in respect
thereof.
| 19. |
EXPENSES;
INDEMNITY.
|
Whether
or not the transactions contemplated by this Agreement or any of the other
Operative Documents shall be consummated, the Issuer will pay or cause to be
paid (or reimbursed, as the case may be) and will defend, indemnify and hold
each Purchaser (and each other holder of any of the Securities) and each of
such
Purchaser’s (and such other holder’s) directors, officers, employees, agents,
advisors and Affiliates (each, an “Indemnitee”)
harmless in respect of all costs, losses, expenses (including, without
limitation, the reasonable fees, costs, expenses and disbursements of counsel)
and damages (collectively, “Indemnified
Costs”)
incurred by or asserted against any Indemnitee in connection with the
negotiation, execution, delivery, performance and/or enforcement of this
Agreement or any of the other Operative Documents (including, without
limitation, so-called work-outs and/or restructurings and all amendments,
waivers and consents hereunder and thereunder, whether or not effected) and/or
the consummation of the transactions contemplated hereby and thereby or which
may otherwise be related in any way to this Agreement or any other Operative
Documents or such transactions or such Indemnitee’s relationship to the Issuer
or any of its Affiliates or any of their respective properties and assets,
including, without limitation, any and all Indemnified Costs related in any
way
to the requirements of any Environmental Laws (as the same may be amended,
modified or supplemented from time to time) or to any environmental
investigation, assessment, site monitoring, containment, clean up, remediation,
removal, restoration, reporting and sampling, whether or not consented to,
or
requested or approved by, Indemnitee, and whether or not such Indemnified Cost
is attributable to an event or condition originating from any properties or
assets of the Issuer or any of the Subsidiaries or any other properties
previously or hereafter owned, leased, occupied or operated by the Issuer or
any
of its Subsidiaries. Notwithstanding the foregoing, the Issuer shall not have
any obligation to an Indemnitee under this Section 19
with
respect to any Indemnified Cost which is finally determined by a court of
competent jurisdiction to have arisen directly as a result of the gross
negligence, willful misconduct or bad faith of such Indemnitee.
| 20. |
TAXES.
|
The
Issuer will pay all taxes and fees (including interest and penalties),
including, without limitation, all recording and filing fees, issuance and
documentary stamp and similar taxes, which may be payable in respect of the
execution and delivery of this Agreement and each of the other Operative
Documents.
| 21. |
COMMUNICATIONS.
|
All
communications provided for herein and, unless explicitly provided otherwise
therein, in any of the other Operative Documents shall be in writing and sent
(a) by telecopy if the sender on the same day sends a confirming copy of such
communication by messenger or a recognized overnight delivery service (charges
prepaid), (b) or by email, if available, (c) by a recognized overnight delivery
service (charges prepaid), or (d) by messenger. Any such communication must
be
sent (i) if to the Issuer at:
0000
Xxxxxx Xxxxxx
Xxxxx
000
Xxxxxxxxxx,
XX 00000
Attention:
Xxxx Xxxxxxx
Telecopy:
(000) 000-0000
or
at
such other address (or telecopy number) as may be furnished in writing by the
Issuer to each holder of any Security and (ii) if to a Purchaser, at its address
for such purpose set forth in Schedule
I
attached
hereto and if to any other holder of any Security, at the address of such holder
(with a copy to the Persons so designated) as it appears on the applicable
register maintained pursuant to Section 15,
or at
such other address as may be furnished in writing by a Purchaser or by any
other
holder to the Issuer. Communications under this Section 21
shall be
deemed given only when actually received.
| 22. |
SURVIVAL
OF AGREEMENTS,
REPRESENTATIONS AND WARRANTIES,
ETC.
|
All
agreements, representations and warranties contained herein and in the other
Operative Documents shall be deemed to have been relied upon by the Purchasers
and shall survive the execution and delivery of this Agreement and each of
the
other Operative Documents, the issue, sale and delivery of the Securities and
payment therefor and any disposition of the Securities by any Purchaser, whether
or not any investigation at any time is made by such Purchaser or on its behalf.
All indemnification provisions, including, without limitation, those contained
in Sections 19
and
20
shall
survive the date upon which none of the Securities shall be outstanding and
the
termination of this Agreement and each of the other Operative
Documents.
| 23. |
SUCCESSORS
AND ASSIGNS; RIGHTS OF OTHER
HOLDERS.
|
This
Agreement and, unless explicitly provided otherwise therein, each of the other
Operative Documents shall bind and inure to the benefit of and be enforceable
by
the Issuer and each Purchaser, successors to the Issuer and each Purchaser’s
successors and assigns, and, in addition, shall inure to the benefit of and
be
enforceable by each holder from time to time of any Security who, upon
acceptance thereof, shall, without further action, be entitled to enforce the
applicable provisions and enjoy the applicable benefits hereof and thereof.
The
Issuer may not assign any of their respective rights or obligations hereunder
or
under and of the other Operative Documents without the written consent of all
of
the holders of the Securities then outstanding.
| 24. |
PURCHASE
FOR INVESTMENT.
|
Each
Purchaser represents and warrants (i) that it has been furnished with all
information that it has requested for the purpose of evaluating such Purchaser’s
proposed acquisition of the Securities to be issued to such Purchaser pursuant
hereto and (ii) that such Purchaser will acquire such Securities for its own
account for investment and not for distribution in any manner that would violate
applicable securities laws, but without prejudice to such Purchaser’s rights to
dispose of such Securities or a portion thereof to a transferee or transferees,
in accordance with such laws if at some future time such Purchaser deems it
advisable to do so. The acquisition of such Securities by each Purchaser at
the
Closing shall constitute such Purchaser’s confirmation of the foregoing
representations and warranties. Each Purchaser understands that such Securities
are being sold to such Purchaser in a transaction which is exempt from the
registration requirements of the Securities Act, and that, in making the
representations and warranties contained in Section 6.20,
the
Issuer are relying, to the extent applicable, upon such Purchaser’s
representations and warranties contained herein.
| 25. |
GOVERNING
LAW; JURISDICTION; WAIVER OF JURY
TRIAL.
|
This
Agreement and, unless explicitly provided otherwise therein, each of the other
Operative Documents, including the validity hereof and thereof and the rights
and obligations of the parties hereunder and thereunder, and all amendments
and
supplements hereof and thereof and all waivers and consents hereunder and
thereunder, shall be construed in accordance with and governed by the domestic
substantive laws of the State of New York without giving effect to any choice
of
law or conflicts of law provision or rule that would cause the application
of
the domestic substantive laws of any other jurisdiction. The Issuer, to the
extent that it may lawfully do so, hereby consents to service of process, and
to
be sued, in the State of New York and consents to the jurisdiction of the courts
of the State of New York and the United States District Court for the Southern
District of New York, as well as to the jurisdiction of all courts to which
an
appeal may be taken from such courts, for the purpose of any suit, action or
other proceeding arising out of any of its obligations hereunder or thereunder
or with respect to the transactions contemplated hereby or thereby, and
expressly waives any and all objections it may have as to venue in any such
courts. The Issuer further agrees that a summons and complaint commencing an
action or proceeding in any of such courts shall be properly served and shall
confer personal jurisdiction if served personally or by certified mail to it
at
its address referred to in Section 21
or as
otherwise provided under the laws of the State of New York. Notwithstanding
the
foregoing, the Issuer agrees that nothing contained in this Section 25
shall
preclude the institution of any such suit, action or other proceeding in any
jurisdiction other than the State of New York. THE ISSUER IRREVOCABLY WAIVES
ALL
RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER PROCEEDING INSTITUTED
BY
OR AGAINST IT IN RESPECT OF ITS OBLIGATIONS HEREUNDER OR UNDER ANY OTHER
OPERATIVE DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.
| 26. |
CONFIDENTIAL
INFORMATION.
|
For
the
purposes of this Section 26,
“Confidential Information” means information delivered to any Purchaser by or on
behalf of the Issuer or any Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this Agreement that is proprietary
in
nature, provided
that
such term does not include information that (a) was publicly known or otherwise
known to such Purchaser prior to the time of such disclosure, (b) subsequently
becomes publicly known through no act or omission by such Purchaser or any
person acting on such Purchaser’s behalf, (c) otherwise becomes known to such
Purchaser other than through disclosure by the Issuer or any Subsidiary or
(d)
constitutes financial statements delivered to such Purchaser under Section
7
that are
otherwise publicly available. Each Purchaser will, and will cause any
representative appointed pursuant to Section 10
to,
maintain the confidentiality of such Confidential Information in accordance
with
procedures adopted by such Purchaser in good faith to protect confidential
information of third parties delivered to such Purchaser, provided
that
such Purchaser may deliver or disclose Confidential Information on a need to
know basis to (i) its directors, officers, trustees, partners, employees,
agents, attorneys, professional consultants, portfolio management services,
funding sources investors, pledges, rating agencies and affiliates, (ii) its
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with
the
terms of this Section 26,
(iii)
any other holder of any Note, (iv) any institutional investor to which it sells
or offers to sell such Note or any part thereof or any participation therein,
subject to a reasonable confidentiality arrangement regarding any non-public
confidential information thereby disclosed, (vi) any federal or state regulatory
authority having jurisdiction over such Purchaser, or (vii) any other Person
to
which such delivery or disclosure may be necessary or appropriate (w) to effect
compliance with any law, rule, regulation or order applicable to such Purchaser,
(x) in response to any subpoena or other legal process, (y) in connection with
any litigation to which such Purchaser is a party or (z) if an Event of Default
has occurred and is continuing, to the extent such Purchaser may reasonably
determine such delivery and disclosure to be necessary or appropriate in the
enforcement or for the protection of the rights and remedies under such
Purchaser’s Notes and this Agreement. In the event that a holder of a Note or
Warrant receives non-public information regarding the Issuer pursuant to the
provisions of this Agreement, including, without limitation Sections 8 or 11
hereunder, such holder acknowledges that federal and applicable state securities
laws may require it to abstain from public sales or purchases in the Issuer’s
securities, including the Notes and Warrants, until such time as such
information is disclosed to the public by the Issuer. Each holder of a Note,
by
its acceptance of a Note, will be deemed to have agreed to be bound by and
to be
entitled to the benefits of this Section 26
as
though it were a party to this Agreement.
| 27. |
MISCELLANEOUS.
|
The
headings in this Agreement and in each of the other Operative Documents are
for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof or thereof. This Agreement (together with the other Operative Documents)
embodies the entire agreement and understanding between each of the Purchasers
and the Issuer and supersedes all prior agreements and understandings relating
to the subject matter hereof. Each covenant contained herein and in each of
the
other Operative Documents shall be construed (absent an express provision to
the
contrary) as being independent of each other covenant contained herein and
therein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. If any provision in this Agreement or in any
of
the other Operative Documents refers to any action taken or to be taken by
any
Person, or which such Person is prohibited from taking, such provision shall
be
applicable, whether such action is taken directly or indirectly by such Person.
In case any provision in this Agreement or any of the other Operative Documents
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or
impaired thereby. This Agreement and, unless explicitly provided otherwise
therein, each of the other Operative Documents, may be executed in any
number of counterparts and by the parties hereto or thereto, as the case may
be,
on separate counterparts but all such counterparts shall together constitute
but
one and the same instrument.
[Remainder
of page intentionally left blank. Next page is a signature
page.]
If
you
are in agreement with the foregoing,
please
sign the form of agreement on the accompanying counterparts of this Agreement,
whereupon it shall become a binding agreement under seal between each Purchaser
and the Issuer. Please then return one of such counterparts to the
Issuer.
Very
truly yours,
By:
Name:
Title:
The
foregoing Agreement is hereby
agreed
to
as of the date thereof.
SATELLITE
FUND II, L.P.
By: Satellite
Advisors, L.L.C.
Its
General Partner
By:_________________________________
Name: Xxxxx
Xxxxxxx
Title: General
Counsel
SATELLITE
FUND IV, L.P.
By: Satellite
Advisors, L.L.C.
Its
General Partner
By:_________________________________
Name: Xxxxx
Xxxxxxx
Title: General
Counsel
THE
APOGEE GROUP, LLC
By: Satellite
Asset Management, L.P.
Its
Manager
By:_________________________________
Name: Xxxxx
Xxxxxxx
Title: General
Counsel
SATELLITE
FUND V, LLC
By: Satellite
Asset Management, L.P.
Its
Manager
By:_________________________________
Name: Xxxxx
Xxxxxxx
Title: General
Counsel
CTDOCS/1687364.5
SCHEDULE
I
INFORMATION
AS TO PURCHASERS
|
Purchaser
Name
|
SATELLITE
FUND II, L.P.
|
|
Name
in which to register Securities
|
SATELLITE
FUND II, L.P.
|
|
Commitment
Percentage for Purchases
|
55.60105%
|
|
Note
registration number; Initial Closing Date Note Face Amount; purchase
price
|
R-1;
$5,560,105; $5,226,498.70
|
|
Warrant
registration number; number of warrants
|
WR-1;
95,341 Warrants
|
|
Payment
on account of Note
Method
Account
information
|
Federal
Funds Wire Transfer
[omitted
from filing]
|
|
Accompanying
information
|
Name
of Issuer: AEROCENTURY
CORP.
Description
of Security: 16%
Senior Subordinated Notes due December
30, 2011
Description
of Securities: Warrants
to purchase Common Stock
If
applicable, due date and application (as among principal, premium
and
interest) of the payment being
made.
|
|
Purchaser
Name
|
SATELLITE
FUND II, L.P.
|
|
Address
/ Fax # for all notices
|
Satellite
Fund II, L.P.
c/o
Satellite Asset Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxx Xxxxxxx
Phone:
212-xxx-xxxx
Fax:
212-xxx-xxxx
Email:
xxx
And
Satellite
Fund II, L.P.
c/o
Satellite Asset Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx Xxxxxxxx
Phone:
212-xxx-xxxx
Email:
xxx
And
Satellite
Fund II, L.P.
c/o
Satellite Asset Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxx Xxxxxx
Phone:
212-xxx-xxxx
Email:
xxx
with
a copy (which shall not constitute notice) to:
Xxxxxxx
XxXxxxxxx LLP
Xxx
Xxxxx Xxxxxx
Xxxxxxxx,
XX 00000
Attention:
F. Xxxx Xxxxx, Esq.
Fax:
(000) 000-0000
|
|
Tax
identification number
|
00-0000000
|
|
Purchaser
Name
|
SATELLITE
FUND IV, L.P.
|
|
Name
in which to register Securities
|
SATELLITE
FUND IV, L.P.
|
|
Commitment
Percentage for Purchases
|
9.49989%
|
|
Note
registration number; Initial Closing Date Note Face Amount; purchase
price
|
R-2;
$949,989; $892,989.66
|
|
Warrant
registration number; number of warrants
|
WR-2;
16,290 Warrants
|
|
Payment
on account of Note
Method
Account
information
|
Federal
Funds Wire Transfer
[omitted
from filing]
|
|
Accompanying
information
|
Name
of Issuer: AEROCENTURY
CORP.
Description
of Security: 16%
Senior Subordinated Notes due December
30, 2011
Description
of Securities: Warrants
to purchase Common Stock
If
applicable, due date and application (as among principal, premium
and
interest) of the payment being
made.
|
|
Purchaser
Name
|
SATELLITE
FUND IV, L.P.
|
|
Address
/ Fax # for all notices
|
Satellite
Fund II, L.P.
c/o
Satellite Asset Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxx Xxxxxxx
Phone:
xxx-xxx-xxxx
Fax:
xxx-xxx-xxxx
Email:
xxxxxxxxxx
And
Satellite
Fund II, L.P.
c/o
Satellite Asset Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx Xxxxxxxx
Phone:
212-xxx-xxxx
Email:
xxxxxxxxxxxxxxx
And
Satellite
Fund II, L.P.
c/o
Satellite Asset Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxx Xxxxxx
Phone:
212-xxx-xxxx
Email:
xxxxxxxxxxxxxxxxxx
with
a copy (which shall not constitute notice) to:
Xxxxxxx
XxXxxxxxx LLP
Xxx
Xxxxx Xxxxxx
Xxxxxxxx,
XX 00000
Attention:
F. Xxxx Xxxxx, Esq.
Fax:
(xxx)-xxx-xxxx
|
|
Tax
identification number
|
00-0000000
|
|
Purchaser
Name
|
THE
APOGEE GROUP, LLC
|
|
Name
in which to register Securities
|
THE
APOGEE GROUP, LLC
|
|
Commitment
Percentage for Purchases
|
24.38515%
|
|
Note
registration number; Initial Closing Date Note Face Amount; purchase
price
|
R-3;
$2,438,515; $2,292,204.10
|
|
Warrant
registration number; number of warrants
|
WR-3;
41,814 Warrants
|
|
Payment
on account of Note
Method
Account
information
|
Federal
Funds Wire Transfer
[Omitted
from Filing]
|
|
Accompanying
information
|
Name
of Issuer: AEROCENTURY
CORP.
Description
of Security: 16%
Senior Subordinated Notes due December
30, 2011
Description
of Securities: Warrants
to purchase Common Stock
If
applicable, due date and application (as among principal, premium
and
interest) of the payment being
made.
|
|
Purchaser
Name
|
THE
APOGEE GROUP, LLC
|
|
Address
/ Fax # for all notices
|
The
Apogee Group, LLC
c/o
Satellite Asset Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxx Xxxxxxx
Phone:
212-xxx-xxxx
Fax:
212-xxx-xxxx
Email:
xxxxxxxxxxxxxxxxxx
And
The
Apogee Group, LLC
c/o
Satellite Asset Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx Xxxxxxxx
Phone:
212-xxx-xxxx
Email:
xxxxxxxxxxxxxxxxxxxxxxxx
And
The
Apogee Group, LLC
c/o
Satellite Asset Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxx Xxxxxx
Phone:
212-xxx-xxxx
Email:
xxxxxxxxxxxxxxxxxxxxxxxx
with
a copy (which shall not constitute notice) to:
Xxxxxxx
XxXxxxxxx LLP
Xxx
Xxxxx Xxxxxx
Xxxxxxxx,
XX 00000
Attention:
F. Xxxx Xxxxx, Esq.
Fax:
(000) 000-0000
|
|
Tax
identification number
|
00-0000000
|
|
Purchaser
Name
|
SATELLITE
FUND V, LLC
|
|
Name
in which to register Securities
|
SATELLITE
FUND V, LLC
|
|
Commitment
Percentage for Purchases
|
10.51391%
|
|
Note
registration number; Initial Closing Date Note Face Amount; purchase
price
|
R-4;
$1,051,391; $988,307.54
|
|
Warrant
registration number; number of warrants
|
WR-4;
18,028 Warrants
|
|
Payment
on account of Note
Method
Account
information
|
Federal
Funds Wire Transfer
[omitted
from filing]
|
|
Accompanying
information
|
Name
of Issuer: AEROCENTURY
CORP.
Description
of Security: 16%
Senior Subordinated Notes due December
30, 2011
Description
of Securities: Warrants
to purchase Common Stock
If
applicable, due date and application (as among principal, premium
and
interest) of the payment being
made.
|
|
Purchaser
Name
|
SATELLITE
FUND V, LLC
|
|
Address
/ Fax # for all notices
|
Satellite
Fund V, LLC
c/o
Satellite Asset Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxx Xxxxxxx
Phone:
212-xxx-xxxx
Fax:
212-xxx-xxxxx
Email:
xxxxxxxxxxxxxxxxxxxxxxxx
And
Satellite
Fund V, LLC
c/o
Satellite Asset Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxxxxx Xxxxxxxx
Phone:
212-xxx-xxxx
mail:
xxxxxxxxxxxxxxxxxxxxxxxxxxxx
And
Satellite
Fund V, LLC
c/o
Satellite Asset Management, L.P.
000
Xxxxx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention:
Xxxx Xxxxxx
Phone:
212-XXX-XXXX
Email:
XXXXXXXXXXXXXXXXXXX
with
a copy (which shall not constitute notice) to:
Xxxxxxx
XxXxxxxxx LLP
Xxx
Xxxxx Xxxxxx
Xxxxxxxx,
XX 00000
Attention:
F. Xxxx Xxxxx, Esq.
Fax:
(000) 000-0000
|
|
Tax
identification number
|
00-0000000
|
[DISCLOSURE
SCHEDULES OMITTED FROM
FILING]
SCHEDULE
13.5
Maximum
Debt to Value Ratios and Maximum Balances
|
Quarter
End
|
Maximum
Outstanding Balance
|
Maximum
Debt
to
Value Ratio
|
|
3/30/2007
|
28,000,000
|
80.00%
|
|
4/30/2007
|
28,000,000
|
80.00%
|
|
5/30/2007
|
28,000,000
|
80.00%
|
|
6/30/2007
|
28,000,000
|
80.00%
|
|
7/30/2007
|
28,000,000
|
80.00%
|
|
8/30/2007
|
28,000,000
|
80.00%
|
|
9/30/2007
|
28,000,000
|
80.00%
|
|
10/30/2007
|
28,000,000
|
80.00%
|
|
11/30/2007
|
28,000,000
|
80.00%
|
|
12/30/2007
|
28,000,000
|
80.00%
|
|
1/30/2008
|
28,000,000
|
80.00%
|
|
2/29/2008
|
28,000,000
|
80.00%
|
|
3/30/2008
|
28,000,000
|
80.00%
|
|
4/30/2008
|
28,000,000
|
80.00%
|
|
5/30/2008
|
28,000,000
|
80.00%
|
|
6/30/2008
|
28,000,000
|
80.00%
|
|
7/30/2008
|
28,000,000
|
80.00%
|
|
8/30/2008
|
28,000,000
|
80.00%
|
|
9/30/2008
|
28,000,000
|
80.00%
|
|
10/30/2008
|
28,000,000
|
80.00%
|
|
11/30/2008
|
28,000,000
|
80.00%
|
|
12/30/2008
|
28,000,000
|
80.00%
|
|
1/30/2009
|
28,000,000
|
80.00%
|
|
2/28/2009
|
28,000,000
|
80.00%
|
|
3/30/2009
|
28,000,000
|
80.00%
|
|
4/30/2009
|
27,555,000
|
79.59%
|
|
5/30/2009
|
26,433,000
|
79.65%
|
|
6/30/2009
|
25,480,000
|
79.22%
|
|
7/30/2009
|
24,422,000
|
78.95%
|
|
8/30/2009
|
23,396,000
|
78.60%
|
|
9/30/2009
|
22,334,000
|
78.29%
|
|
10/30/2009
|
20,985,000
|
78.13%
|
|
11/30/2009
|
20,006,000
|
77.58%
|
|
12/30/2009
|
18,924,000
|
77.31%
|
|
1/30/2010
|
17,974,000
|
76.90%
|
|
2/28/2010
|
17,005,000
|
76.58%
|
|
3/30/2010
|
16,017,000
|
76.26%
|
|
4/30/2010
|
14,944,000
|
75.98%
|
|
5/30/2010
|
13,887,000
|
75.64%
|
|
6/30/2010
|
12,829,000
|
75.31%
|
|
7/30/2010
|
11,786,000
|
74.97%
|
|
8/30/2010
|
10,742,000
|
74.64%
|
|
9/30/2010
|
9,713,000
|
74.30%
|
|
10/30/2010
|
7,649,000
|
74.62%
|
|
11/30/2010
|
4,818,000
|
74.80%
|
|
12/30/2010
|
4,687,000
|
72.75%
|
|
1/30/2011
|
4,687,000
|
72.26%
|
|
2/28/2011
|
4,123,000
|
72.37%
|
|
3/30/2011
|
3,087,000
|
72.35%
|
|
4/30/2011
|
3,087,000
|
69.88%
|
|
5/30/2011
|
3,087,000
|
69.77%
|
|
6/30/2011
|
3,037,000
|
70.70%
|
|
7/30/2011
|
1,896,000
|
71.11%
|
|
8/30/2011
|
1,896,000
|
69.89%
|
|
9/30/2011
|
1,791,000
|
67.74%
|
|
10/30/2011
|
1,254,000
|
59.71%
|
|
11/30/2011
|
1,254,000
|
66.77%
|
|
12/30/2011
|
0
|
66.97%
|
EXHIBIT
2(a)
[FORM
OF WARRANT]
EXHIBIT
2(b)
[FORM
OF NOTE]
THIS
INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE
IN
THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND
INTERCREDITOR AGREEMENT (THE “SUBORDINATION AGREEMENT”) DATED AS OF APRIL 17,
2007 AMONG SATELLITE FUND II, L.P., SATELLITE FUND IV, L.P., SATELLITE FUND
V,
LLC AND THE APOGEE GROUP, LLC AND NATIONAL CITY BANK (TOGETHER WITH ITS
SUCCESSORS AND ASSIGNS, THE “SENIOR AGENT”), TO THE INDEBTEDNESS (INCLUDING
INTEREST) OWED BY AEROCENTURY CORP. (THE “COMPANY”) PURSUANT TO THAT CERTAIN
SECOND AMENDED AND RESTATED CREDIT AGREEMENT (THE “CREDIT AGREEMENT”) DATED AS
OF APRIL 17, 2007 AMONG THE COMPANY, THE SENIOR AGENT AND THE LENDERS FROM
TIME
TO TIME PARTY THERETO, AND THE OTHER FINANCING DOCUMENTS (AS DEFINED IN THE
CREDIT AGREEMENT) AS SUCH CREDIT
AGREEMENT AND OTHER FINANCING DOCUMENTS MAY BE AMENDED, RESTATED, SUPPLEMENTED
OR OTHERWISE MODIFIED FROM TIME TO TIME AND TO INDEBTEDNESS REFINANCING THE
INDEBTEDNESS THEREUNDER AS CONTEMPLATED BY THE SUBORDINATION AGREEMENT; AND
EACH
HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO
BE
BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.
AEROCENTURY
CORP.
16%
Senior Subordinated Note due December 30, 2011
No.
R-[Date]
$____________
AEROCENTURY
CORP. (together
with its respective successors, the “Issuer”),
a
Delaware corporation, for value received, hereby promises to pay to ________________,
or
registered assigns, the principal amount of ___________
DOLLARS ($________)
on
December 30, 2011, with interest (computed on the basis of the actual number
of
days elapsed over a 360-day year) on the unpaid balance of such principal amount
at the rate of 16% per annum, from the date hereof, payable monthly on the
last
day of each month, commencing on May 31, 2007 (each such date, an “Interest
Payment Date”)
until
the principal hereof shall have become due and payable (whether at maturity
or
at a date fixed for prepayment or by declaration or otherwise), and with
interest on any overdue principal (including any overdue prepayment of
principal) and (to the extent permitted by applicable law) premium, if any,
and
(to the extent permitted by applicable law) on any overdue installment of
interest, at the rate of 18.00% per annum (the “Default
Rate’)
until
paid, payable monthly as aforesaid or, at the option of the holder hereof,
on
demand and, upon acceleration of this Note, together with the Applicable Premium
of Make-Whole Amount specified in the Securities Purchase Agreement hereinafter
referred to, as liquidated damages and not as a penalty; provided that in no
event shall the amount payable as interest on this Note exceed the highest
lawful rate permissible under any law applicable hereto. Payment of principal,
premium, if any, and interest hereon shall be made in lawful money of the United
States of America by the method and at the address for such purpose specified
in
the Securities Purchase Agreement hereinafter referred to, and such payments
shall be overdue for purposes hereof if not made on the originally scheduled
date of payment therefor, without giving effect to any applicable grace period.
In case an Event of Default (as defined in the Securities Purchase Agreement)
shall occur and be continuing, the unpaid balance of the principal of this
Note
shall bear interest at the Default Rate and may be declared and become due
and
payable in the manner and with the effect provided in the Securities Purchase
Agreement.
This
Note
is one of the Issuer’s 16% Senior Subordinated Notes due December 30, 2011,
limited to $28,000,000 aggregate principal amount, issued pursuant to that
certain Securities Purchase Agreement dated April 17, 2007 (as amended from
time
to time, the “Securities
Purchase Agreement”),
and
the holder thereof is entitled to the benefits of the Securities Purchase
Agreement and the other Operative Documents referred to in the Securities
Purchase Agreement and may enforce the agreements contained therein and exercise
the remedies provided for thereby or otherwise available in respect thereof,
all
in accordance with the terms thereof.
This
Note
is subject to prepayment only as specified in the Securities Purchase
Agreement.
This
Note
is in registered form and is transferable only by surrender hereof at the
principal executive office of the Issuer as provided in the Securities Purchase
Agreement. The Issuer may treat the person in whose name this Note is registered
on the Note register maintained at such office pursuant to the Securities
Purchase Agreement as the owner hereof for all purposes, and the Issuer shall
not be affected by any notice to the contrary.
The
parties hereto, including the maker and all guarantors and endorsers of this
Note, hereby waive presentment, demand, notice, protest and all other demands
and notices in connection with the delivery, acceptance, performance or
enforcement of this Note.
[The
remainder of this page is intentionally left blank.]
THIS
NOTE AND THE SECURITIES PURCHASE AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH
AND GOVERNED BY THE DOMESTIC SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTS OF LAW PROVISION OR RULE THAT
WOULD CAUSE THE APPLICATION OF DOMESTIC SUBSTANTIVE LAWS OF ANY OTHER
JURISDICTION.
AEROCENTURY
CORP.
By:
Name:
Title:
FORM
OF
ASSIGNMENT
[To
be
signed only upon transfer of Note]
For
value
received, the undersigned hereby sells, assigns and transfers unto _____________
the within Note, and appoints ________________ Attorney to transfer such Note
on
the books of AEROCENTURY CORP. (together with its successors), with full power
of substitution in the premises.
Date:
___________________________________
(Signature
must conform in all respects to name of Holder as specified on the face of
the
Note)
Signed
in
presence of
__________________________________
EXHIBIT
4
INSTRUCTIONS
FOR WIRE TRANSFER OF FUNDS AT CLOSING
[omitted
from filing]
EXHIBIT
5.4
FORM
OF SUBORDINATION AGREEMENT
See
attached
EXHIBIT
5.5
FORM
OF MANAGEMENT SUBORDINATION AGREEMENT
See
attached
EXHIBIT
7(c)
COVENANT
COMPLIANCE CERTIFICATE
The
undersigned, the [chief financial officer or treasurer] Officer of AeroCentury
Corp. (“AeroCentury”),
does
hereby certify to each holder of Notes (as defined in the Agreement referred
to
below), as required by that certain Securities Purchase Agreement dated April
17, 2007, by and between AeroCentury and the Purchasers (as defined therein)
(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 Officer’s
Certificate (this “Certificate”)
on
behalf of AeroCentury and does further certify that:
1. AeroCentury
has complied and is in compliance with all covenants, agreements and conditions
in the Agreement on the date hereof.
2. Each
representation and warranty contained in the Agreement is true and correct
on
the date hereof.
3. No
Change
of Control or Default or Event of Default has occurred and is continuing as
of
the date of this Certificate.
4. There
has
been no Material Adverse Change since [insert the date of the most recent
financial statements delivered to the Purchaser pursuant to the terms of Section
7
of the
Agreement], except as disclosed on the attached schedules.
5. The
officer’s calculations of the financial covenants in Section 13
of the
Agreement 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:
