SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
__________________________
 
FORM 8-K
__________________________
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
 
Date of Report (Date of earliest event reported): June 23, 2020
 
 
AEROCENTURY CORP.
(Exact name of Registrant as specified in its charter)

 
                                     Delaware
                               94-3263974
                                             (State of Incorporation)
           (I.R.S. Employer Identification No.)
 
000-1036848
(Commission File Number)
 
1440 Chapin Avenue, Suite 310
Burlingame, CA 94010
(Address of principal executive offices including Zip Code)
 
650-340-1888
(Registrant's telephone number, including area code)
 
Not applicable
(Former name and former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
 ☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)
 
Securities registered pursuant to Section 12(b) of the Act:
 
 
 
Title of each class
Name of each exchange on which registered
Common Stock, par value $0.001 per share
NYSE American Exchange
 
Securities registered pursuant to Section 12(g) of the Act: None
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).Emerging growth company 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
 
 
 
 
Item 1.01  Entry into a Material Definitive Agreement
 
As previously disclosed in the Form 10-Q for the quarterly period ended March 31, 2020, filed by AeroCentury Corp. (the “Company”) with the Securities and Exchange Commission on June 4, 2020, one of the Company’s customers, which leases two regional jet aircraft that serve as collateral under the Company’s non-recourse term loan financing with Norddeutsche Landesbank Girozentrale, New York Branch (“Nord LB”), did not make its quarterly rent payment in March 2020, which, in turn, resulted in a default under the term loans ("Nord Loans") made to the Company’s two special-purpose subsidiaries that own those aircraft (the “Borrowers”). In April 2020, the Borrowers drew on the customers' letters of credit that served as security deposits under their aicraft leases, and used the proceeds to fund the Borrowers' overdue March 2020 interest payments under their Nord Loans.  In May 2020, the Borrowers and the customer agreed to defer the customer's payment of the balance of the March 2020 rent not covered by the letter of credit proceeds until June 2020, which deadline the customer subequently did not meet. 
 
On June 23, 2020, the Borrowers entered into a Deferral Agreement (the "Loan Deferral Agreement") with Nord LB, as agent and participant, Nord Norddeutsche Landesbank Girozentrale, as swap counterparty ("Swap Counterparty"), Wilmington Trust Company, as security trustee, and a third special purpose subsidiary of the Company that also owns aircraft subject to the Nord financing, with respect to the payments due from the two Borrowers under the Nord Loans and the related interest rate swap agreements with respect to the Nord Loan indebtedness (the "Nord Swap Contracts"). The Loan Deferral Agreement provides that any unpaid principal amounts due under the Borrowers' Nord Loans ("Unpaid Nord Principal") will be added to the principal amount of each Borrower's Nord Loan, and that such Unpaid Nord Principal, together with interest accrued thereon at the default interest rate, are to be repaid in full to Nord LB by the respective Borrower on or before September 24, 2020. The deferral of the Unpaid Nord Principal is conditioned upon no other event of default occurring under the Nord Loans through September 24, 2020.
 
The foregoing description of the Loan Deferral Agreement is qualified in its entirety by reference to the full text of such agreement filed as Exhibit 10.1 hereto.
 
Item 9.01
 
(d) Exhibits
 


  10.1
Deferral Agreement (MSNs 19002 and 19003) as of June 23, 2020 among ACY SN 19002 Limited, ACY SN 19003 Limited, and ACY E-175 LLC,  Norddeutsche Landesbank Girozentrale, as swap counterparty (the “Swap Counterparty”), Norddeutsche Landesbank Girozentrale, New York Branch, as agent and participant and Wilmington Trust Company, as security trustee (the “Security Trustee”).      
 
 SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 



 
AEROCENTURY CORP.
 
 
 
 
 
 
Date: June 25, 2020
  By:
 /s/  Harold M. Lyons
Harold M. Lyons
Senior Vice President, Finance

 
 
exh101nordlb_acy
EXHIBIT 10.1
 
 
DEFERRAL AGREEMENT (MSNs 19002 and 19003)
 
THIS DEFERRAL AGREEMENT (MSNs 19002 and 19003) is dated as of June 23, 2020 (this “Agreement”) among ACY SN 19002 LIMITED (the “19002 Borrower”), ACY SN 19003 LIMITED (the “19003 Borrower”) and ACY E-175 LLC (the “E175 Borrower” and, together with the 19002 Borrower and the 19003 Borrower, each individually, a “Borrower” and, collectively, the “Borrowers”), each of the participants that is a signatory hereto identified under the caption “PARTICIPANTS” on the signature pages hereto (individually, a “Participant” and, collectively, the “Participants”), NORDDEUTSCHE LANDESBANK GIROZENTRALE, as swap counterparty (the “Swap Counterparty”), NORDDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, as agent (the “Agent”) and WILMINGTON TRUST COMPANY, as security trustee (the “Security Trustee”).
 
WHEREAS, the Borrowers, the Participants, the Swap Counterparty, the Agent and the Security Trustee have entered into that certain Credit Agreement dated as of February 7, 2019 (as amended, modified or supplemented from time to time, the “Credit Agreement”);
 
WHEREAS, the Borrowers, the other mortgagors from time to time party thereto, and the Security Trustee have entered into that certain Security Agreement dated as of February 7, 2019 (as amended, modified or supplemented from time to time, the “Security Agreement”); and
 
WHEREAS, the parties hereto desire to supplement the Credit Agreement and the Security Agreement in certain respects.
 
NOW THEREFORE, for good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree that notwithstanding any other provision in the Facility Agreements to the contrary:
 
Section 1. Definitions.
 
Except as otherwise defined in this Agreement, the capitalized terms used herein shall have the meanings ascribed to such terms in the Credit Agreement and the Security Agreement.
 
Section 2. Deferral.
 
(a) Notwithstanding anything to the contrary set forth in the Credit Agreement, the Security Agreement or the other Loan Operative Documents, in connection with each Loan with respect to an Air Nostrum Aircraft, the parties hereto agree that:
 
(i)           with retroactive effect to and as of the Payment Date in March 2020 (the “March Payment Date”), an amount equal to 100% of the installment of Original Amount for such Loan payable by the 19002 Borrower or the 19003 Borrower, as the case may be, on the March Payment Date (the “March Deferred Amount”) shall be capitalized and form part of the principal amount of such Loan, which March Deferred Amount (together with interest which shall accrue thereon at the Past Due Rate) shall be repaid in full by the 19002 Borrower or the 19003 Borrower, as the case may be, on or prior to September 24, 2020;
 
(ii)           an amount equal to 100% of the installment of Original Amount for such Loan payable by the 19002 Borrower or the 19003 Borrower, as the case may be, on the Payment Date in June 2020 (the “June Deferred Amount” and, together with the March Deferred Amount, the “Deferred Amounts”) shall be capitalized and form part of the principal amount of such Loan, which June Deferred Amount (together with interest which shall accrue thereon at the Past Due Rate) shall be repaid in full by the 19002 Borrower or the 19003 Borrower, as the case may be, on or prior to September 24, 2020; and
 
(iii)           an amount equal to 100% of the sum of (A) all accrued and unpaid interest on such Loan and (B) all Swap Obligations due to the Swap Counterparty under the Swap Agreement in respect of such Loan, in each case payable by the 19002 Borrower or the 19003 Borrower, as the case may be, on the Payment Date in June 2020 shall be paid to the Security Trustee for distribution to the Participants and the Swap Counterparty on a pro rata basis from amounts on deposit in the Collateral Account for such Loan;
 
provided that, except as explicitly waived or deferred in writing by the Participants and the Swap Counterparty, no other Event of Default has occurred and is continuing under the Credit Agreement during the period commencing on the March Payment Date and terminating on September 24, 2020 (the “Deferral Period”).
 
(b) Notwithstanding the foregoing, if an Event of Default occurs during the Deferral Period under the Credit Agreement, including as a result of the failure to make payments in accordance with Section 2(a), the deferral constituted by this Agreement shall immediately cease and the Agent may demand the full amounts due and payable in accordance with the Credit Agreement and the Security Agreement, including the then outstanding Deferred Amounts under the Credit Agreement, together with accrued interest thereon at the Past Due Rate from the Payment Date under the Credit Agreement upon which any such amount would otherwise have been payable but for this Agreement.
 
Section 3. Representations and Warranties. Each Borrower hereby represents to each other party hereto on the date hereof that the representations and warranties of such Borrower set forth in Section 4.1(a)-(g) of the Credit Agreement are true and correct in all material respects on and as of the date hereof, or, as to any such representation or warranty that refers to a specific date, as of such specific date.
 
Section 4. Governing Law; Miscellaneous.
 
(a) This Agreement shall in all respects be governed by, and construed in accordance with, the law of the State of New York, United States of America without reference to principles of conflicts of law other than Section 5-1401 and Section 5-1402 of the New York General Obligations Law.
 
(b) This Agreement is a limited conditional agreement and shall not be construed as a course of dealing or waiver of any other previous, current or future obligation or covenant and shall not limit any person’s rights, powers or privileges under the Credit Agreement, the Security Agreement and the other Operative Documents, or preclude any exercise thereof or the exercise of any other right, power or privilege (all such rights, powers and privileges being hereby reserved).
 
(c) Except as supplemented by this Agreement, each party hereto agrees and acknowledges that each of the Credit Agreement and the Security Agreement shall continue and remain in full force and effect in all respects and each of the parties hereby confirms and ratifies its obligations under each of the Credit Agreement and the Security Agreement.
 
(d) This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument, and any of the parties hereto may execute this Agreement by signing any such counterpart.
 
(e) The Borrowers agree that they shall be responsible for all costs and expenses incurred by the Lenders, the Agent and the Security Trustee in connection with this Agreement (including, without limitation, any reasonable fees and expenses of Vedder Price P.C., counsel to the Participants) pursuant to Section 7.11 of the Credit Agreement.
 
(f) By its signature below, each Participant and the Swap Counterparty hereby instructs the Agent and the Security Trustee to execute and deliver this Agreement.
 
(g) Each Party hereby confirms that this Agreement shall be a “ Loan Operative Document” for all purposes of the Credit Agreement and the other Loan Operative Documents.
 
 
[Signature pages follow.]
 
 
 
 
 
 

[Deferral Agreement (MSNs 19002 and 19003)]
 
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto by their duly authorized officer or representative as of the date set forth above.
 
 
ACY SN 19002 LIMITED,as a Borrower
By: /s/ Barry Norman Fredirick Mills
Name: Barry Norman Fredirick Mills
Title: Director
 
 
ACY SN 19003 Limited,as a Borrower
By: /s/ Barry Norman Fredirick Mills
Name: Barry Norman Fredirick Mills
Title: Director
 
 
ACY E-175 LLC,as a Borrower
By: AeroCentury Corp.,
its Manager
    By: /s/ Frank Pegueros   
    Name: Frank Pegueros   
    Title: SVP Operations
 
 
 
 
PARTICIPANTS
 
NORDDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, as a Participant

By:      /s/ Claudia Ziemer                                                                
Name: Claudia Ziemer
Title:    Senior Director
 
By:       /s/ Andreas Trunk                                                             
Name:   Andreas Trunk
Title:     Senior Director
 
 
NORDDEUTSCHE LANDESBANK GIROZENTRALE, as Swap Counterparty
 
By:      /s/ Sascha Lotze                                                        
Name:  Dr.  Sascha Lotze      
Title:    Senior Legal Counsel Authorized Signatory
 
By:        /s/ Carsten Meinecke                                                   
Name:   Carsten Meinecke
Title:      Senior Legal Counsel Authorized Signatory
 
 
 
 
NORDDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, as Agent
 
By:     /s/ Claudia Ziemer                                                         
            Name:  Claudia Ziemer
Title:    Senior Director
 
By:      /s/ Andreas Trunk                                                          
Name:  Andreas Trunk
Title:    Senior Director