THIRD AMENDMENT
TO
CREDIT AGREEMENT
THIRD AMENDMENT, dated as of June 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; 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. Effectiveness. The amendments set forth in Sections 2 through 7 and Section
10 herein shall be effective as of June 30, 2003 (the "Effective Date") and
remain in full force and effect until such time as the Agreement is otherwise
amended or terminated. From the date hereof until the Effective Date, the same
terms and conditions of the Agreement in effect prior to the date of this
Amendment shall remain in full force and effect under this Amendment.
2. Section 1.1 of the Agreement. The following definitions as set forth in
Section 1.1 of the Agreement are hereby amended and restated in their entirety
to be as follows:
"Borrowing Base" shall mean 75% of the lowest of (1) the acquisition cost
of each item of Equipment included in Eligible Collateral, or (2) the net
book value of each item of Equipment included in Eligible Collateral, or
(3) the aggregate appraised value of all items of Equipment included in
Eligible Collateral based on the most recent independent appraisal
completed on behalf of AeroCentury. Net book value shall be calculated
using AeroCentury's then current depreciation practices and both (1) and
(2) above shall be calculated in accordance with GAAP. The foregoing test
shall be determined separately for each item of Equipment included in
Eligible Collateral. Notwithstanding the foregoing, Equipment subject to
Eligible Leases which have remaining lease terms of less than three months
shall not at any time be included in the Borrowing Base to the extent such
Equipment constitutes more than 20% of the Borrowing Base. Remaining lease
terms shall not include renewal options.
"Debt Service" shall mean the sum of (i) current maturities (amounts due
within the next twelve months) of all Recourse Debt, excluding any lump sum
payments due at the expiration of any Recourse Debt, (ii) current amounts
due (within the next twelve months) in respect of all leases, but excluding
any lump sum payments due at the expiration of any lease, and (iii) 1/12th
of the average principal balance of the Notes outstanding for the four most
recent Fiscal Quarters.
"Equipment" shall mean new and used turboprop aircraft and turboprop
aircraft engines each of which is either subject to an existing lease or is
intended to be leased or re-leased within four months immediately following
the date in question. The aircraft or the aircraft engine, as applicable,
shall have been manufactured within 28 years immediately preceding the date
in question, shall be in good working order immediately or within a
reasonable period of time, as determined by National City, and shall be
usable for commercial flight purposes immediately or within a reasonable
period of time, as determined by National City.
"Required Banks" at any time shall mean Banks whose Revolving Loan
Commitments equal or exceed 66 2/3 % of the total of such Revolving Loan
Commitments if no Loans are outstanding or, if Loans are outstanding, Banks
whose outstanding Loans equal or exceed 66 2/3 % of the Loans.
3. Section 2.1 of the Agreement. The Revolver Termination Date of "June 28,
2003" as set forth on the fourth line of Section 2.1 of the Agreement shall
be and hereby is amended to "August 28, 2003".
4. 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:
"Section 7.1. Minimum Tangible Net Worth. Tangible Net Worth will not at
any time be less than the sum of (i) 16,461,450, (ii) 50% Net Income for
each Fiscal Quarter ending after March 31, 2003, without deduction for any
net losses, (iii) 50% of the net proceeds from any sale of equity
securities after the date of this Agreement, and (iv) 50% of the fair value
of any equity securities issued after the date of this Agreement in
connection with any acquisition permitted hereunder or by waiver hereto.
Section 7.3. Recourse Funded Debt to Tangible Net Worth. The ratio of
Recourse Funded Debt (including Recourse Funded Debt represented by the
Notes) to Tangible Net Worth will not at any time exceed 3.25:1."
5. Amended and Restated Exhibit A to the Agreement. Exhibit A to the
Agreement shall be and is hereby amended and restated in its entirety as
attached hereto.
6. 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.
7. Amended and Restated Schedule 2 to the Agreement. Schedule 2 to the
Agreement shall be and is hereby amended and restated
in its entirety as attached hereto.
8. 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.
9. 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.
10. Acknowledgment and Consent. Notwithstanding the provisions contained
in Section 2.8 of the Agreement requiring the pro-rata share
distribution of payments received by Agent from AeroCentury based on
Bank's Revolving Loan Commitment Percentage, and as required pursuant
to Section 10.2 of the Agreement, the parties signatory hereto hereby
acknowledge and consent to the prepayment in full on the Effective
Date of the outstanding indebtedness to Bank of the West f/k/a Sanwa
Bank California ("BofW") in connection with the Agreement and as
evidenced by the Note in favor of BofW, all as more fully set forth on
Exhibit I as attached hereto. The Banks further acknowledge that upon
the making of such prepayment, the Revolving Loan Commitment
Percentage of each Bank shall be as set forth on Exhibit A referred to
in Section 5 of this Amendment.
11. 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.
12. 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.
13. 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.
Remainder of page intentionally left blank.
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:
The undersigned hereby acknowledges and consents to the first sentence of
Section 9 only, and is not otherwise deemed to be a party to any of the
other agreements of the Banks contained in this Amendment.
Acknowledgment and Consent (as to the first sentence of Section 9 only)
BANK OF THE WEST
By ________________________
Name:
Title:
EXHIBIT A
Bank Commitment Percentage
National City Bank $25,000,000 62.5%
Specialized Banking Group, Philadelphia Region
One South Broad Street, 13th floor, Loc. 01-5997
Xxxxxxxxxxxx, XX 00000
Fax No. (000) 000-0000
California Bank & Trust $15,000,000 37.5%
San Francisco Regional Corporate Banking
000 Xxxxxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Fax No. (000) 000-0000 __________ __________
TOTAL $40,000,000 100%
EXHIBIT D
COVENANT COMPLIANCE CERTIFICATE
The undersigned, the [chief executive or chief financial] Officer of
AeroCentury Corp. ("AeroCentury"), does hereby certify to National City
Bank, Agent (the "Bank"), as required by that certain Credit Agreement,
dated June 28, 2000, by and between AeroCentury and the Bank (as amended,
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 Compliance 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 and each of the other Loan
Documents on the date hereof.
2. Each representation and warranty contained in the Agreement and
each of the other Loan Documents is true and correct on the date hereof.
3. No Potential Default or Event of Default has occurred and is
continuing as of the date of this Compliance Certificate.
4. There has been no Material Adverse Change since [insert the date of
the most recent financial statements delivered to the Bank pursuant to the
terms of ss.5.1 of the Credit Agreement], except as disclosed on the
attached schedules.
5. The covenant compliance calculations 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:
COVENANT COMPLIANCE CALCULATIONS
AeroCentury Corp.
for the (quarter, year) ending _______
Section 7.1 MINIMUM TANGIBLE NET WORTH
REQUIREMENT: - Tangible Net Worth will not at any time be less than
the sum of (i) $_____________, (ii) 50% Net Income for each Fiscal
Quarter ending after March 31, 2003, without deduction for any net
losses, (iii) 50% of the net proceeds from any sale of equity
securities after the date of the Agreement, and (iv) 50% of the fair
value of any equity securities issued after the date of the Agreement
in connection with any acquisition permitted hereunder or by waiver
hereto.
Tangible Net Worth on [date]
Total Assets
less: Total Liabilities
Intangible Assets
Subtotal
Tangible Net Worth
Required Tangible Net Worth
(a) Base Amount $16,461,450
(b) 50% of Net Income for each Fiscal Quarter $
ending after March 31, 2003, without deduction
for any net losses
(c) 50% of the net proceeds from any sale of equity $
securities after the date of the Agreement
(d) 50% of the fair value of any equity securities $
issued after the date of this Agreement in
connection with any acquisition permitted under
the Agreement
Required Tangible Net Worth = (a)+(b)+(c)+(d) $
Excess (deficiency) of Actual Tangible Net Worth $
compared with Required Tangible Net Worth
Section 7.2 DEBT SERVICE COVERAGE RATIO
REQUIREMENT: - The ratio of EBTDA to Debt Service for the four (4)
most recently ended consecutive Fiscal Quarters will not at any time be
less than 1.1:1.
EBTDA
Net Income for the four $
Fiscal Quarters ended ___________
Taxes deducted with respect to + $
four Fiscal Quarters ended ___________
Depreciation deducted with respect to + $
four Fiscal Quarters ended ___________
Amortization deducted with respect to + $
four Fiscal Quarters ended ___________
EBTDA for four Fiscal Quarters just ended $
Debt Service
Current Maturities of $
Recourse Debt (next 12
months)
Lump Sum Payments of $( )
Recourse Debt at
expiration included in
Current Maturities
Current Maturities of Recourse Debt (net) $
Current amounts due in $
respect of all leases
(next 12 months)
Lump Sum Payments due $( )
at expiration of all leases
included in Lump Sum
Payments
Current Lease Payments (net) + $
Average Principal Balance + $
of Loans outstanding (last
12 months) divided by 12
Debt Service $
RATIO OF EBTDA TO DEBT SERVICE ___________
Section 7.3 RECOURSE FUNDED DEBT TO TANGIBLE NET WORTH
REQUIREMENT: - The ratio of Recourse Funded Debt (including Recourse
Funded Debt represented by the Notes) to Tangible Net Worth will not at any
time exceed 3.25:1.
Recourse Funded Debt on [date]: $
Tangible Net Worth on [date] $
RATIO OF RECOURSE FUNDED DEBT TO TANGIBLE NET WORTH
Section 7.4 ABSENCE OF NET LOSS
REQUIREMENT: - It will not suffer a net loss for any two consecutive
Fiscal Quarters or two Fiscal Quarters in any Fiscal Year.
Net Income for the Fiscal Quarter ended __________ $
Section 7.5 BORROWING BASE
REQUIREMENT: - The aggregate principal amount of Loans outstanding
shall not at any time exceed the Borrowing Base or the Aggregate Revolving
Loan Commitment, whichever is less; provided, however, that this covenant
shall not be deemed breached if, at the time such aggregate amount exceeds
said level, within three Business Days after the earlier of the date
AeroCentury first has knowledge of such excess or the date of the next
Borrowing Base Certificate disclosing the existence of such excess, a
prepayment of Loans shall be made in an amount sufficient to assure
continued compliance with this covenant in the future.
Collateral Loan Value $
Total Borrowing Base $
Maximum Loans
Aggregate Revolving Loan Commitment $__,000,000
Credit Usage
Aggregate Loan Balance
(principal) at date of certificate $
Collateral Loan Value exceeds Credit Usage $
Collateral Loan Value is less than Credit Usage $
SCHEDULE 2
APPLICABLE MARGINS, COMMITMENT FEE
Alternate Base LIBO Commitment
Rate Margin Rate Margin Fee
50.0 basis points 275.0 basis points 50.0 basis points
EXHIBIT I
BANK OF THE WEST
Outstanding Revolving Loan Commitment
Principal Payment $ 7,981,000.00
Interest Payment $ 8,055.50
Commitment Fee $ 2,323.96
Total $ 7,991,379.46
