TEMPORARY WAIVER AND CONSENT AND THIRD AMENDMENT TO CREDIT AGREEMENT
TEMPORARY WAIVER AND CONSENT AND
THIRD AMENDMENT TO CREDIT
AGREEMENT
THIS
TEMPORARY WAIVER AND CONSENT THIRD AMENDMENT TO CREDIT AGREEMENT
(this "Agreement")
is made as of December 4, 2019, by and among AEROCENTURY CORP., a
Delaware corporation (“Borrower”), the Lenders
(defined below) and MUFG UNION BANK, N.A., as agent for the Lenders
(in such capacity, "Agent"), with reference to the
following recitals:
RECITALS
A. Borrower, JetFleet
Holding Corp., a California corporation (“Holding Guarantor”), and
JetFleet Management Corp., a California corporation
(“Management
Guarantor” and together with Holding Guarantor,
collectively the “Guarantors”), on the one
hand, and Agent and the lenders (collectively, the
“Lenders”) under that
certain Third Amended and Restated Credit Agreement dated as of
February 19, 2019 (as amended by that First Amendment of
Forbearance Agreement and First Amendment to Credit Agreement dated
as of November 13, 2019 (the “First Amendment”) and
that Second Amendment to Credit Agreement and Consent for Sale of
Collateral dated as of November 26, 2019 (the
“Second
Amendment”), and as may be further amended, extended,
renewed, supplemented or otherwise modified from time to time, the
“Credit
Agreement”), on the other hand, are parties to that
certain Forbearance Agreement dated as of October 28, 2019, as
amended pursuant to the First Amendment (as may be further amended,
extended, renewed, supplemented or otherwise modified from time to
time, the “Forbearance
Agreement”).
B. Pursuant to the
Second Amendment, a Restricted Account (as defined therein) was
established with MUFG Union Bank, N.A., in its capacity as a
depository bank and proceeds of the sale of certain Collateral were
deposited therein. The Second Amendment provided that, during the
Forbearance Period (defined in the Forbearance Agreement), Agent
and the Lenders may consider requests by Borrower for disbursements
from the Restricted Account in accordance with the procedure
outlined therein to fund Borrower’s Liquidity Needs (defined
in the Second Amendment) identified in a Cash Flow Budget that is
approved by the Lenders.
C. On November 27,
2019, Borrower delivered to Agent that certain Compliance
Certificate covering the Fiscal Quarter ending September 30,
2019 (“Q3 Compliance
Certificate”). The Q3 Compliance Certificate disclosed
violation of several financial covenants (“Q3 Events of Default”).
The Q3 Events of Default include the following Events of Default
that are Specified Defaults: Borrower’s failure to maintain
for the third Fiscal Quarter of 2019 (i) Minimum Recourse Debt
Interest Coverage Ratio of at least 2.25x as required by
Section 6.15.4
of the Credit Agreement, (ii) Minimum Recourse Debt Service
Coverage Ratio of at least1.05x as required by Section 6.15.5 of the
Credit Agreement, and (iii) no net loss as required by
Section 6.15.7
of the Credit Agreement. However, in addition to the foregoing, the
Q3 Compliance Certificate discloses the following additional Events
of Default (the “New
Events of Default”): Borrower’s failure to
maintain for the third Fiscal Quarter of 2019: (a) Interest
Coverage Ratio of at least 2.25x as required by Section 6.15.2 of the
Credit Agreement, (b) Debt Service Coverage Ratio of at least
1.05x as required by Section 6.15.3 of the
Credit Agreement, and (c) Minimum Tangible Net Worth as
required by Section
6.15.6 of the Credit Agreement. The Specified Defaults
described in the Forbearance Agreement and the New Events of
Defaults are referred to collectively herein as the
“Existing
Defaults”.
D. Each of the New
Event of Default constitutes a Forbearance Termination Event (as
defined in the Forbearance Agreement), thereby causing the
occurrence of a Forbearance Termination Date on November 27, 2019.
On December 3, 2019, Agent delivered to Borrower and
Guarantors a notice of default and reservation of rights letter
providing notice of the occurrence of the Forbearance Termination
Date and reservation of the respective rights and remedies of
Agent, Lenders and MUFG LTD, which notice is acknowledged by
Borrower and Guarantors as proper and valid.
E. Borrower has
requested that, notwithstanding the occurrence of the Forbearance
Termination Date, (a) Agent and Lenders (i) grant a
temporary waiver of the Existing Defaults, (ii) consider for
approval the Cash Flow Budget delivered to Lenders on
November 27, 2019 (the “November 27 Budget”)
and (iii) to the extent the November 27 Budget is
approved by the Lenders, permit the disbursement from the
Restricted Account to cover Borrower’s Liquidity Needs for
the week ending December 6th, and (b) MUFG Bank,
Ltd. (“MUFG
LTD”) grant a temporary waiver of any event of default
under the Swap Contracts (defined in the Forbearance Agreement)
resulting from the Existing Defaults (the “Swap
Default”).
F. While under no
obligations to do so, Agent, Lenders and MUFG LTD have agreed to
the foregoing request on the terms set forth herein. Additionally,
Lenders have agreed to make certain modifications to the Credit
Agreement on the terms set forth herein.
AGREEMENT
NOW,
THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto represent, warrant and
agree as follows:
1. Recitals. The recitals set
forth above are true and correct and are hereby incorporated
herein.
2. Defined Terms. Unless stated
otherwise, any and all initially-capitalized terms used in this
Agreement not defined herein shall have the respective meanings
specified in the Credit Agreement and/or Forbearance Agreement, as
applicable.
3. Temporary Waiver;
Consent.
(a) Subject to the
terms of this Agreement, until the date (“Waiver Termination Date”)
that is the earlier to occur of (i) 11:59 p.m. (New York Time) on
December 12, 2019 and (ii) the date of the occurrence of a
Waiver Default (as defined below), the Lenders hereby agree to
temporarily waive the Q3 Events of Default and MUFG LTD hereby
agrees to temporarily waive the Swap Default. The waiver set forth
in this Section 3(a) is temporary
in nature and the Existing Defaults and the Swap Default shall,
unless otherwise agreed to in writing by the Requisite Lenders and
MUFG LTD, respectively, be immediately and automatically reinstated
on the Waiver Termination Date and shall constitute an “Event
of Default” under the Credit Agreement and the other Loan
Documents and the Swap Contracts. The waiver by the Lenders and
MUFG LTD described above is contingent upon the satisfaction of the
conditions precedent set forth below and is limited to the Existing
Defaults and the Swap Default, as applicable. This waiver is
limited to the extent described herein and shall not be construed
to be a consent to or a permanent waiver of the Existing Defaults,
the Swap Default or any other terms, provisions, covenants,
warranties or agreements contained in the Credit Agreement or in
any of the other Loan Documents or a waiver of any Default or Event
of Default that may hereafter occur. The Lenders and MUFG LTD
reserve their respective right to exercise any rights and remedies
available to them in connection with any other present or future
defaults with respect to the Credit Agreement or any other
provision of any Loan Document and the Swap Contracts, as
applicable.
(b) Borrower and each
Guarantor hereby agrees and acknowledges that (i) the Existing
Defaults and Swap Default have not been permanently waived as a
result of this Agreement and that such waiver is temporary in
nature, and (ii) concurrent with the Waiver Termination Date, all
rights and remedies of the Lenders and MUFG LTD enjoined as a
result of this Section
3 shall, unless otherwise agreed to in writing by the
Requisite Lenders and MUFG LTD, respectively, be
reinstated.
(c) The following shall
constitute a “Waiver
Default” under this Agreement: (i) the failure of
Borrower or any Guarantor to comply with any covenant or agreement
contained in this Agreement; (ii) any representation or warranty
contained in this Agreement shall be incorrect in any material
respect; or (iii) the existence of any Default or Event of Default
(other than the Existing Defaults).
(d) Notwithstanding the
occurrence of the Forbearance Termination Date or any provision of
the Credit Agreement or the Forbearance Agreement, Lenders hereby
(i) agree to consider for approval the November 27
Budget, (ii) approve the November 27 Budget for the
limited purpose of making disbursements from the Restricted Account
to fund Borrower’s Liquidity Needs identified therein through
the week ending December 6th, and
(iii) authorize Agent to disburse funds from the Restricted
Account to fund Borrower’s Liquidity Needs described in the
November 27 Budget for the week ending December 6, 2019. For
clarity, (i) disbursements after the week ending
December 6th from the Restricted
Account may not resume unless and until such time as agreed to by
all the Lenders in writing and (ii) nothing herein shall be
deemed to constitute a Lender consent of the sale of the aircraft
bearing manufacturer’s serial number 454 projected in the
November 27 Budget for the week ending December 13th.
4. Amendment to Credit Agreement.
The Credit Agreement shall be amended as follows:
(a) The definitions of
“Revolving Commitment” and “Maximum Amount”
shall each be deleted and the following new definitions shall
substitute thereof:
“Revolving Commitment”
means, subject to Section
2.8, Eighty Five Million and 00/100 Dollars
($85,000,000.00). The respective Pro Rata Shares of the Lenders
with respect to the Revolving Commitment are set forth in
Schedule
A.
“Maximum Amount” means
Eighty Five Million and 00/100 Dollars ($85,000,000.00), or such
other decreased amount as provided for under Sections 2.8 of this
Agreement.
(b) All references to
“Revolving Commitment”, the “Maximum
Amount”, the “Revolving Loans” or such similar
terms describing the amount of the Credit Facility in the Credit
Agreement and the other Loan Documents shall be amended to be
references to such respective terms in the amount of
$85,000,000.
(c) Schedule A to the Credit
Agreement shall be amended and replaced with Schedule A attached
hereto.
(d) Section 2.18 of the Credit
Agreement shall be deleted in its entirety and replaced with the
following:
2.18.
Reserved.
5. Representations and Warranties.
Each of Borrower and Guarantors represents and warrants that (a)
after giving effect to this Agreement, except for the
representations and warranties which are made only as of a prior
date, the representations and warranties set forth in the Credit
Agreement and in the other Loan Documents are true and correct in
all respects as of the Effective Date, as if made on and as of such
date; (b) after giving effect to this Agreement, no Default has
occurred and is continuing; (c) the execution, delivery and
performance of this Agreement are within the corporate power and
authority of such Person and have been duly authorized by
appropriate corporate action and proceedings; (d) this Agreement
constitutes a legal, valid, and binding obligation of such Person
enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or
similar laws affecting the rights of creditors generally and
general principles of equity; (e) there are no governmental or
other third party consents, licenses and approvals required in
connection with the execution, delivery, performance, validity and
enforceability of this Agreement; and (f) the Liens under the Loan
Documents are valid and subsisting and secure Borrower’s and
such Person’s obligations under the Loan
Documents.
6. Conditions Precedent. This
Agreement shall become effective on the date (the
“Effective
Date”) each of the following conditions shall have
been satisfied or waived by Agent in its sole
discretion:
(a) This Agreement. Agent shall
have received this Agreement, duly executed by Borrower, Guarantors
and all the Lenders.
(b) No Default. Upon giving effect
to this Agreement, there shall be no Default or Event of Default
(other than the Existing Defaults).
(c) Representations and Warranties.
The representations and warranties in this Agreement shall be true
and correct in all material respects.
7. Reaffirmation; Loan Documents
Unaffected. Each of Borrower and Guarantors hereby reaffirms
all of its respective Obligations under the Loan Documents, and
acknowledges that it has no claims, offsets or defenses with
respect to the payment of sums due under the Credit Agreement, the
Notes or under any Loan Document. This Agreement shall constitute a
Loan Document under the Credit Agreement. Any provision of any Loan
Document which applies to Loan Documents generally shall apply to
this Agreement. There are no promises or inducements that have been
made to any party hereto to cause such party to enter into this
Agreement other than those that are set forth in this Agreement.
Except as otherwise specifically amended hereby, all provisions of
the Credit Agreement and the other Loan Documents (including the
Forbearance Agreement) shall remain in full force and effect and be
unaffected hereby.
8. No Course of Dealing. Each of
Borrower and Guarantor acknowledges and agrees that, (a) this
Agreement is not intended to, nor shall it, establish any course of
dealing between Borrower, Guarantor, Agent and the Lenders that is
inconsistent with the express terms of the Credit Agreement or any
other Loan Document (including the Forbearance Agreement), (b)
notwithstanding any course of dealing between Borrower, Guarantors,
Agent and the Lenders prior to the date hereof, except as set forth
herein, the Lenders shall not be obligated to make any Loan or
permit the use of their cash collateral, and (c) nothing herein
shall be deemed to obligate Agent or any Lender to forbear from
exercising any of its rights or remedies as a result of any Default
or Event of Default, including the Specified Defaults or the Events
of Default disclosed in the Q3 Compliance Certificate.
9. No Waiver. Each of Borrower and
Guarantors acknowledges and agrees that, other than as expressly
set forth in Section
3(a), this Agreement shall not operate as a waiver of any
right, power or remedy of Agent or the Lenders under the Credit
Agreement or any Loan Document, nor shall it constitute a
continuing waiver at any time and (b) nothing herein shall be
deemed to constitute a waiver of any Default or Event of Default
and, nothing herein shall in any way prejudice the rights and
remedies of Agent or the Lenders under the Credit Agreement, any
Loan Document (including the Forbearance Agreement) or applicable
law
10. General Release. Each of
Borrower and Guarantors, on behalf of itself and on behalf of its
Subsidiaries, successors, assigns, legal representatives and
financial advisors (collectively, the “Releasing Parties”),
hereby releases, acquits and forever discharges Agent, the Lenders
and each of their respective past and present directors, officers,
employees, agents, attorneys, affiliates, predecessors, successors,
administrators and assigns (the “Released Parties”) of and
from any and all claims, actions, causes of action, demands,
rights, damages, costs, loss of service, expenses and compensation
whatsoever heretofore or hereafter arising from any events or
occurrences, or anything done, omitted to be done, or allowed to be
done by any of the Released Parties, on or before the date of
execution of this Agreement, WHETHER KNOWN OR UNKNOWN, FORESEEN OR
UNFORESEEN, including, without limitation, any of the same arising
from or related to anything done, omitted to be done, or allowed to
be done by any of the Released Parties and in any way connected
with this Agreement or any of the other Loan Documents, any other
credit facilities provided or not provided, any advances made or
not made, or any past or present deposit or other accounts of any
Releasing Party with any Released Party and the handling of the
same by any Released Party, including, without limitation, the
manner and timing in which items were deposited or credited thereto
or funds transferred therefrom or made available to any of the
Releasing Parties, the honoring or returning of any checks drawn on
any account, and any other dealings between the Releasing Parties
and the Released Parties (the “Released Matters”).
Releasing Parties each further agree never to commence, aid or
participate in (except to the extent required by order or legal
process issued by a court or governmental agency of competent
jurisdiction) any legal action or other proceeding based in whole
or in part upon the Released Matters. In furtherance of this
general release, Releasing Parties each acknowledge and waive the
benefits of California Civil Code Section 1542 (and all similar
ordinances and statutory, regulatory, or judicially created laws or
rules of any other jurisdiction), which provides:
A
GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR
RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER
FAVOR AT THE TIME OF EXECUTING THE RELEASE, AND THAT IF KNOWN BY
HIM OR HER WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT
WITH THE DEBTOR OR RELEASED PARTY.
Releasing Parties
each agree that this waiver and release is an essential and
material of this Agreement, and that the agreements in this
paragraph are intended to be in full satisfaction of any alleged
injuries or damages to or of any Releasing Parties in connection
with the Released Matters. Each Releasing Party represents and
warrants that it has not purported to convey, transfer or assign
any right, title or interest in any Released Matter to any other
person or entity and that the foregoing constitutes a full and
complete release of the Released Matters. Releasing Parties each
also understand that this release shall apply to all unknown or
unanticipated results of the transactions and occurrences described
above, as well as those known and anticipated. Releasing Parties
each have consulted with legal counsel prior to signing this
release, or had an opportunity to obtain such counsel and knowingly
chose not to do so, and each Releasing Party executes such release
voluntarily, with the intention of fully and finally extinguishing
all Released Matters.
11. APPLICABLE LAW. THIS AGREEMENT,
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO, SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
12. WAIVER OF JURY TRIAL. EACH
PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT,
THE FORBEARANCE AGREEMENT (AS AMENDED BY THIS AGREEMENT) OR ANY
OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
13. Review And Construction Of
Documents. Each party hereto hereby acknowledges, and
represents and warrants to the other parties hereto,
that:
(a) it has had the
opportunity to consult with legal counsel of its own choice and has
been afforded an opportunity to review this Agreement with legal
counsel;
(b) it has carefully
reviewed this Agreement and fully understands all terms and
provisions of this Agreement;
(c) it has freely,
voluntarily, knowingly, and intelligently entered into this
Agreement of its own free will and volition;
(d) none of the Lenders
or Agent have a fiduciary relationship with any Obligor and the
Obligor does not have a fiduciary relationship with Agent or the
Lenders, and the relationship between the Lenders or Agent, on the
one hand, and Obligor, on the other hand, is solely that of
creditor and debtor; and
(e) no joint venture
exists among Obligor and the Lenders or Agent.
14. Entire Agreement. This
Agreement and the other agreements referred to herein constitute
all of the agreements among the parties relating to the matters set
forth herein and supersede all other prior or concurrent oral or
written letters, agreements or understandings with respect to the
matters set forth herein.
15. Further Assurances. Borrower
agrees to execute, acknowledge, deliver, file and record such
further certificates, instruments and documents, and to do all
other acts and things, as may be reasonably requested by Agent and
necessary or reasonably advisable to carry out the intents and
purposes of this Agreement.
16. Counterparts. This Agreement
and any amendments, waivers, consents or supplements hereto may be
executed in any number of counterparts and by each party hereto in
separate counterparts, each of which when so executed and delivered
shall be deemed to be an original, but all such counterparts shall
constitute one and the same Agreement. The facsimile or email (PDF)
signature of any party executing this Agreement shall be binding
upon such party and may be relied upon by all other parties
hereto.
[SIGNATURE PAGES
FOLLOW]
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IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the day and year first above
written.
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BORROWER:
AEROCENTURY CORP.,
a Delaware corporation
By: __________________________________
Name: ___________________________
Title: ___________________________
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ACKNOWLEDGED AND
AGREED TO BY:
JETLEET
HOLDING CORP., a California corporation
By:__________________________________
Name:___________________________
Title:___________________________
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JETFLEET MANAGEMENT
CORP.,a California corporation
By:__________________________________
Name:___________________________
Title:___________________________
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S-1
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AGENT
AND LENDER:
MUFG
UNION BANK, N.A.
By:
Name:
Title
MUFG LTD (with respect to Section
3(a)):
MUFG BANK, LTD.
By:
Name:
Title
LENDER:
UMPQUA BANK
By:
Name:
Title
LENDER:
ZIONS
BANCORPORATION, N.A. (fka ZB, N.A.) dba CALIFORNIA BANK AND
TRUST
By:Name:
Title
LENDER:
U.S.
BANK NATIONAL ASSOCIATION
By:Name:
Title
LENDER:
COLUMBIA STATE
BANK
By:Name:
Title
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S-2
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Schedule A
Revolving Commitment
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Lender
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Commitment
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Pro
Rata Share
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MUFG
Union Bank, N.A.
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$21,689,655.17
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25.5172413793%
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Umpqua
Bank
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$20,517,241.38
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24.1379310345%
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Zions
Bancorporation, N.A. (fka ZB, N.A.) dba California Bank &
Trust
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$17,586,206.90
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20.6896551724%
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U.S.
Bank National Association
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$16,413,793.10
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19.3103448276%
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Columbia State
Bank
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$8,793,103.45
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10.3448275862%
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TOTAL:
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$85,000,000.00
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100.0000000000%
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Schedule
A
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