AMENDMENT NO. 2
TO
CREDIT AGREEMENT
Amendment No. 2, dated July 16, 1999 (the "Amendment"), to Credit
Agreement dated June 30, 1998 (as amended, the "Agreement") by and between
AeroCentury Corp., a Delaware corporation ("AeroCentury"), the banking
institutions signatories hereto and named in Exhibit A attached hereto and such
other institutions that hereafter become a "Bank" pursuant to '10.4 hereof
(collectively the "Banks" and individually a "Bank") and FIRST UNION NATIONAL
BANK, a national banking association, as agent for the Banks under the Agreement
("First Union" which shall mean in its capacity as agent unless specifically
stated otherwise). All capitalized terms used herein and not otherwise defined
shall have the respective meanings ascribed to them in the Agreement.
Preliminary Statement
WHEREAS, First Union and AeroCentury, together with the other Banks,
desire to amend the Agreement in the manner hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and promises
hereinafter set forth and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Section 1.1 of the Agreement. The following definitions set forth in
Section 1.1 of the Agreement are hereby added, or amended and restated in their
entireties, as applicable, to be as follows:
"Collateral" shall mean those assets defined as "Collateral" in the
Security Agreement (including but not limited to the Equipment and the
related leases therefor)."
"Eligible Collateral" shall mean the sum of (1) Equipment included in
the Collateral which is subject to an Eligible Lease, and (2) Equipment
included in the Collateral which is not subject to a lease, provided
that (a) the aggregate of such Equipment shall not at any time exceed
10% of the Aggregate Revolving Loan Commitment, and (b) the maximum
period for which any item of such Equipment shall not have been subject
to an Eligible Lease does not exceed four months. In order to be
Eligible Collateral, First Union as Agent shall possess a first
priority security interest in said Collateral to secure the payment,
promptly when due, and the punctual performance of all of the
"Liabilities" as defined in the Security Agreement."
"Loan Documents" shall mean this Agreement, the Notes, the Security
Agreement, and all other documents directly related or incidental to
said documents, the Loans or the Collateral, but shall not include any
Swap Agreement."
"Obligations" shall mean all now existing or hereafter arising debts,
obligations, covenants, and duties of payment or performance of every
kind, matured or unmatured, direct or contingent, owing, arising, due,
or payable to the Banks or First Union, as Agent, by or from
AeroCentury arising out of this Agreement or any other Loan Document,
including, without limitation, all obligations to repay principal of
and interest on the Loans, and to pay interest, fees, costs, charges,
expenses, professional fees, and all sums chargeable to AeroCentury or
for which AeroCentury is liable as indemnitor under the Loan Documents,
whether or not evidenced by any note or other instrument as well as
well as any and all existing and future obligations of AeroCentury
under or in connection with Swap Agreements with any one or more of the
Banks, including but not limited to First Union, pertaining to the
Loans hereunder."
"Security Agreement" shall mean all writings, agreements, and documents
in any jurisdiction, whether within the United States or outside of the
United States, the intended purpose of which is to grant a security
interest in property, whether then owned by AeroCentury or thereafter
acquired, and all replacements of said property, as collateral security
for the payment and performance of the Obligations, including but not
limited to (1) the Mortgage and Security Agreement, dated August 11,
1998 by First Security Bank, N.A. trustee under Trust Agreement
(N272EP) dated as of October 31, 1991 in favor of First Union National
Bank, as Agent, (2) the Mortgage and Security Agreement, dated August
11, 1998 by First Security Bank, N.A. trustee under Trust Agreement
(N272EP) dated as of October 31, 1991 and trustee under Trust Agreement
(N12303) dated as of November 15, 1989, in favor of First Union
National Bank, as Agent, (3) the Mortgage and Security Agreement, dated
March 31, 1999 by AeroCentury in favor of First Union National Bank, as
Agent, (4) the Security Agreement, dated December 21, 1998, between
AeroCentury Corp., as debtor, and First Union, as Agent, and (5) all
amendments, modifications, supplements, amendments and restatements,
replacements and substitutions of each of the foregoing."
"Swap Agreement" shall have the meaning set forth in 11 U.S.C. '101 and
shall include but not be limited to interest rate swap agreements,
interest rate cap agreements, interest collar agreements, interest rate
hedging agreements, interest rate floor agreements or other similar
agreements or arrangements.
2. Section 2.7(b) of the Agreement. The reference to "'2.1(f)" as set
forth in the last line of Section 2.7(b) of the Agreement shall be and hereby is
amended to be "2.1(i)".
3. Section 8.1(e) of the Agreement. Section 8.1 (e) of the Agreement shall
be and hereby is amended and restated to be as follows:
"(e) Certain Other Defaults. (1) AeroCentury shall fail to pay when due
any Indebtedness for Borrowed Money which singularly exceeds $250,000,
or in the aggregate exceeds $250,000, and such failure shall continue
beyond any applicable cure period, or (2) AeroCentury shall suffer to
exist any default or event of default in the performance or observance,
subject to any applicable grace period, of any agreement, term,
condition or covenant with respect to any agreement or document
relating to Indebtedness for Borrowed Money if the effect of such
default is to permit, with the giving of notice or passage of time or
both, the holders thereof, or any trustee or agent for said holders, to
terminate or suspend any commitment (which is equal to or in excess of
$250,000 in any individual case or $250,000 in the aggregate) to lend
money or to cause or declare any portion of any borrowings thereunder
to become due and payable prior to the date on which it would otherwise
be due and payable, or (3) any default shall exist under any Swap
Agreement; provided that during any applicable cure period the Banks'
obligations hereunder to make further Loans shall be suspended."
4. Section 8.1(i) of the Agreement. The reference to "6.2, 6.3" as set
forth in the last line of Section 8.1(i) of the Agreement shall be and hereby is
amended to be "6.3".
5. Section 8.1 of the Agreement. The paragraph at the end of Section
8.1 of the Agreement which begins with the phrase "THEN and in every such event"
shall be and hereby is amended to be as follows:
"THEN and in every such event other than that specified in 8.1(d),
First Union as Agent may, or at the written request of the Required
Banks shall, immediately terminate the Revolving Loan Commitments and
declare the Notes and all other Obligations, including without
limitation accrued interest but excluding any obligation under any Swap
Agreement then in existence, to be, and they shall thereupon forthwith
become due and payable without presentment, demand, or notice of any
kind, all of which are hereby expressly waived by AeroCentury. Upon the
occurrence of any event specified in 8.1(d), the Revolving Loan
Commitments shall automatically terminate and the Notes and all other
Obligations, including without limitation accrued interest but
excluding any obligation under any Swap Agreement then in existence,
shall immediately be due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly
waived by AeroCentury. Any date on which the Notes and such other
obligations are declared due and payable pursuant to this 8.1 shall be
Revolver Termination Date for purposes of this Agreement. From and
after the date an Event of Default shall have occurred and for so long
as an Event of Default shall be continuing, the Loans shall bear
interest at the Default Rate whether or not a Revolver Termination Date
shall have occurred."
6. Section 9.7 of the Agreement. Section 9.7 of the Agreement shall be
and hereby is deleted in its entirety.
7. Section 10.2 of the Agreement. The phrase "modify the definition of
"Required Banks"" as set forth in Section 10.2 of the Agreement shall be and
hereby is amended to be "modify the definitions of "Borrowing Base", "Eligible
Collateral", "Eligible Lease" or "Required Banks"."
8. Section 10.7(b) of the Agreement. Section 10.7(b) of the Agreement
shall be and hereby is amended and restated to be as follows:
" (b) If an Event of Default or Potential Default shall have
occurred and be continuing the Agent and each Bank and AeroCentury
agree that all payments on account of the Loans shall be applied by the
Agent and the Banks as follows:
First, to the Agent for any Agent fees then due and payable under
this Agreement until such fees are paid in full;
Second, to the Agent for any fees, costs or expenses (including
expenses described in '10.8) incurred by the Agent under any of
the Loan Documents or this Agreement, then due and payable and not
reimbursed by AeroCentury or the Banks until such fees, costs and
expenses are paid in full;
Third, to the Banks for their percentage shares of the Commitment
Fee then due and payable under this Agreement until such fee is
paid in full;
Fourth, to the Banks for their respective shares of all costs,
expenses and fees then due and payable from AeroCentury until such
costs, expenses and fees are paid in full;
Fifth, to the Banks for their percentage shares of all interest
then due and payable from AeroCentury until such interest is paid
in full, which percentage shares shall be calculated by
determining each Bank's percentage share of the amounts allocated
in (a) above determined as set forth in said clause (a);
Sixth, to the Banks for their percentage shares of the principal
amount of the Loans then due and payable from AeroCentury until
such principal is paid in full, which percentage shares shall be
calculated by determining each Bank's percentage share of the
amounts allocated in (a) above determined as set forth in said
clause (a); and
Seventh, tothe Banks in respect of any Obligations of AeroCentury
under or in connection with any Swap Agreements pro rata, it being
understood and agreed that any benefits or income received by the
Banks or any of them under or in connection with any Swap
Agreement shall belong strictly to the applicable Bank and shall
not be considered as benefits or income to be shared by all of the
Banks pursuant to this Agreement."
9. Section 10.8 of the Agreement. The reference to "Bank" as set forth
in the first sentence of Section 10.8 of the Agreement shall be and hereby is
amended to be "Banks".
10. Section 10.9 of the Agreement. The reference to "2.10" as set forth
in Section 10.9 of the Agreement shall be and hereby is amended to be "2.9".
11. Section 10.19 of the Agreement. A new section "'10.19" shall be and
hereby is added to the Agreement which shall be as follows:
"10.19. Swap Agreements. Notwithstanding any to the contrary contained
in this Agreement, AeroCentury and any Bank may enter into a swap
agreement or swap agreements at any time and from time to time or amend
or otherwise modify any such agreement and such entry, amendment,
modification and/or the existence of any such agreement shall not
constitute a breach of any provision of this Agreement or any other
Loan Document, or be in any manner restricted by this Agreement or any
other Loan Document."
12. Amended and Restated Exhibit A to Agreement. Exhibit A to the
Agreement shall be and is hereby amended and restated in its entirety as
attached hereto.
13. Exhibit D to Agreement. Exhibit D to the Agreement shall be and is
hereby deleted.
14. Amended and Restated Schedule 1 to Agreement. Schedule 1 to the
Agreement shall be and is hereby amended and restated in its entirety as
attached hereto.
15. Conditions Precedent. Simultaneous with the execution and delivery
of this Amendment, AeroCentury shall provide to each Bank all items referred to
Section 4.1(b) of the Agreement to the extent no heretofore provided to each
Bank, including but not limited to the execution and delivery to Sanwa Bank of
California of its Revolving Credit Note in the principal amount of $7,500,000.
Further, AeroCentury shall provide to each Bank (a) a Secretary's Certificate
dated the date of this Amendment certifying and attaching copies of its Articles
of Incorporation and Bylaws as currently in effect, evidence of corporate
authorization of this Amendment and the Agreement as amended, and the signatures
of the officer or officers authorized to execute and deliver this Amendment and
the Note to Sanwa Bank of California, (b) good standing certificates for
AeroCentury Corp. in California and Delaware, (c) the legal opinion of
Xxxxxxxxxxx X. Xxxxx, Esq., General Counsel to AeroCentury, in form and
substance satisfactory to each Bank, and (d) such other documents and agreements
as any Bank shall reasonably request.
16. Representations and Warranties. AeroCentury hereby restates the
representations and warranties made in the Agreement, including but not limited
to Article 3 thereof, on and as of the date hereof as if originally given on
this date.
17. Covenants. AeroCentury hereby represents and warrants that it is in
compliance and has complied with each and every covenant set forth in the
Agreement (including this amendment), including but not limited to Articles 5
and 6 thereof, on and as of the date hereof.
18. Affirmation. AeroCentury hereby affirms its absolute and
unconditional promise to pay to the Banks the Loans and all other amounts due
under the Agreement and any other Loan Document on the maturity date(s) provided
in the Agreement or any other Loan Document, as such documents may be amended
hereby.
19. Effect of Amendment. This Amendment amends the Agreement only to
the extent and in the manner herein set forth, and in all other respects the
Agreement is ratified and confirmed.
20. Amendment of Rio Sul Lease. AeroCentury has amended the Aircraft
Operating Lease Agreement No. AOLA 1364.007 with Rio Sul Servicos Aereos
Regionais S.A., copies of which have been furnished to each of the Banks. The
Lease Agreement as amended shall be deemed to be an Eligible Lease for purposes
of the Agreement notwithstanding the amendment if the Lease as amended otherwise
qualifies as an Eligible Lease.
21. Re-Funding of Loans. Promptly following the effectiveness of this
Amendment including but not limited to the delivery to Sanwa Bank of California
of its Note as contemplated above, the Agent shall coordinate with each of the
Banks (a) to provide for funding by Sanwa Bank of California of Loans to
AeroCentury under the Credit Agreement, as amended, equal to its proportionate
share of the aggregate principal amount of Loans then outstanding to AeroCentury
based on its Revolving Loan Commitment Percentage and (b) application of the
proceeds of such Loans to repayment to California Bank & Trust and First Union
National Bank, in its individual capacity, of Loans by each of them then in
effect such that the aggregate Loans of each Bank shall not exceed the
proportionate share of each Bank based on its Revolving Loan Commitment
Percentage applied to the aggregate principal amount of outstanding Loans by the
Banks to AeroCentury on such date.
22. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have each caused this Amendment
to be duly executed by their duly authorized representatives as of the date
first above written.
AEROCENTURY CORP.
By ______________________________
FIRST UNION NATIONAL BANK
By ______________________________
Xxxx X. Xxxxxxxx
Vice President
CALIFORNIA BANK & TRUST
By ______________________________
Xxxxxx X. Xxxxx, Xx.
Vice President &
Senior Relationship Manager
SANWA BANK CALIFORNIA
By ______________________________
Xxxxxxx Xxxxxxxx
Vice President
EXHIBIT A
BANKS' COMMITMENTS AND PERCENTAGES
Bank Commitment Percentage
First Union National Bank $15,000,000 50.00%
Transportation and Leasing Division
FC 1-8-11-24
0000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
FAX No. (000) 000-0000
California Bank & Trust $7,500,000 25.00%
000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
FAX No. (000) 000-0000
Sanwa Bank of California $ 7,500,000 25.00%
000 Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
FAX No. (415)
SCHEDULE I
DISCLOSURE SCHEDULE
Section 3.2 Stock Ownership
AeroCentury Corp.: Principal Stockholders
Class Total Authorized Total Issued
Common 3,000,000 1,606,557
Preferred Stock 2,000,000 -0-
Series A 100,000 -0-
undesignated 1,900,000 -0-
In connection with the adoption of a shareholders rights plan, AeroCentury
issued rights to its shareholders as of April 23, 1998, entitling each such
shareholder the right to purchase 1/100th of a share of Series A Preferred Stock
for each share of Common Stock held by the shareholder.
Principal Shareholders
To AeroCentury=s best knowledge, the only shareholder of AeroCentury that holds
5% or more of the Common Stock of AeroCentury is JetFleet Holding Corp., which
holds 147, 667 shares of Common Stock or approximately 9.2% of that class.
Section 3.3 Litigation
None
Section 3.5 Material Adverse Changes
None
Section 3.7 Taxes
None
Section 3.12 Subsidiaries
None
Section 3.13 Liens
None
