FOURTH AMENDMENT
TO
CREDIT AGREEMENT
FOURTH AMENDMENT, dated as of August 28, 2003 (the "Amendment"), to
Credit Agreement dated June 30, 2000 (as amended, the "Agreement") by and
between AeroCentury Corp., a Delaware corporation ("AeroCentury"), the banking
institutions signatories hereto and such other institutions that hereafter
become a "Bank" pursuant to Section 10.4 hereof (collectively the "Banks" and
individually a "Bank") and National City Bank, a national banking association,
as agent for the Banks under this Agreement ("National City" which shall mean in
its capacity as agent unless specifically stated otherwise). All capitalized
terms used herein and not otherwise defined shall have the respective meanings
ascribed to them in the Agreement.
Preliminary Statement
WHEREAS, National City and AeroCentury, together with the other Banks,
desire to amend the Agreement in the manner hereinafter set forth;
WHEREAS, AeroCentury has requested and National City and the Banks have
agreed to waive AeroCentury's breach of the financial covenant contained in
Section 7.2 of the Agreement as of June 30, 2003; and
WHEREAS, Section 10.2 of the Credit Agreement requires that the written
consent of the Banks be obtained for certain amendments, modifications or
waivers contemplated herein.
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. Amendments to Agreement.
(a) Amended Definition of Net Worth. The following definition as set forth in
Section 1.1 of the Agreement is hereby amended and restated in its entirety:
"Net Worth" shall mean the sum of capital stock, plus paid-in
capital, plus retained earnings, minus the net worth of any
Unrestricted Subsidiaries.
(b) New Definitions. The following new definitions are hereby inserted in their
respective alphabetical location in Section 1.1 of the Agreement:
"EBITDA" shall mean the sum of Net Income plus the amounts
deducted from Net Income as expenses for interest, taxes,
depreciation and amortization.
"Interest" shall mean that amount of interest expense with
respect to a Fiscal Quarter as calculated in accordance with
GAAP.
(c) Section 2.1 of the Agreement. The Revolver Termination Date of "August 28,
2003" as set forth on the fourth line of Section 2.1 of the Agreement shall be
and hereby is amended to "August 31, 2004".
(d) Conditions Precedent. The following new section is inserted at the end
of Section 4.1 of the Agreement:
-
"4.1(f). Required Consent. At least twenty (20) days prior to
the purchase of Equipment or entering into leasing
arrangements with lessees of Equipment, AeroCentury shall
notify National City and provide National City with such
information as it shall require with respect to such
anticipated purchase or lease arrangements. AeroCentury hereby
agrees it will not purchase Equipment or enter into such
leasing arrangements with lessees until such time as National
City and the Banks shall provide their unanimous written
consent to AeroCentury."
(e) Article 7 of the Agreement. The following sections as set forth in Article 7
of the Agreement are hereby amended and restated in their entirety to be as
follows:
"7.1. Minimum Tangible Net Worth. Effective as of the Fiscal
Quarter ending June 30, 2003 through the Fiscal Quarter ending
March 31, 2004, the Tangible Net Worth will not at any time be
less than $16,000,000. Effective as of the Fiscal Quarter
ending June 30, 2004, the Tangible Net Worth will not at any
time be less than $17,000,000.
7.2. EBITDA to Interest Ratio. The ratio of EBITDA to Interest
will not at any time be less than 2.25:1.
7.4. Absence of Net Loss. AeroCentury Corp. will not suffer a
consolidated net loss at any time during the term of the
Agreement."
(f) Amended and Restated Exhibit D to the Agreement. Exhibit D to the Agreement
shall be and is hereby amended and restated in its entirety as attached hereto.
(g) Amended and Restated Schedule 2 to the Agreement. Effective October 1, 2003,
Schedule 2 to the Agreement shall be and is hereby amended and restated in its
entirety as attached hereto.
2. 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.
3. 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.
4. Waiver. With respect to the Fiscal Quarter ending as of June 30, 2003 only,
National City hereby waives the financial covenant requirement set forth in
Section 7.2 "Debt Service Coverage Ratio" which AeroCentury was required to
maintain so long as the Revolving Loan Commitments are in effect or any
Obligation remains unpaid or outstanding.
5. 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 dates(s) provided in the
Agreement or any other Loan Document, as such documents may be amended hereby.
6. 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.
7. 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 ________________________
Name:
Title:
NATIONAL CITY BANK
By ________________________
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
CALIFORNIA BANK & TRUST
By ________________________
Name:
Title:
EXHIBIT D
FORM OF COVENANT COMPLIANCE CERTIFICATE
SCHEDULE 2
APPLICABLE MARGINS, COMMITMENT FEE
Ration of Funded
Debt to Tangible Alternate Base LIBO Commitment
Net Worth Rate Margin Rate Margin Fee
> 2.00 000 xx 000 xx 00 bp
1.50 - 2.00 000 xx 000 xx 00 bp
< 1.50 00 xx 000 xx 00 bp
