INVESTORS’ RIGHTS AGREEMENT
 
THIS INVESTORS’ RIGHTS AGREEMENT, dated as of April 17, 2007 (as amended,
modified or waived from time to time in accordance herewith, this “Agreement”),
is among (a) AEROCENTURY CORP., a Delaware corporation (the “Company”), (b) each
of the Investors named on the signature pages hereto (the “Initial Investors”),
and (c) each other Person who becomes an Investor hereunder.
 
WHEREAS, the Company has entered into a Securities Purchase Agreement, dated as
of April 17, 2007 (as amended, modified or waived from time to time in
accordance therewith, the “Securities Purchase Agreement”), with each of its
Initial Investors, pursuant to which the Company has issued to each of the
Initial Investors certain Senior Subordinated Notes and certain Common Stock
Purchase Warrants (the “Original Warrants”); and
 
WHEREAS, in connection with, and as a condition precedent to the effectiveness
of, the transactions contemplated by the Securities Purchase Agreement, the
parties hereto wish to set forth their relative rights with regard to
pre-emptive rights upon certain issuances of the Company’s securities, and
registration rights with respect to the Company’s warrants and the shares of
capital stock issuable upon exercise of such warrants;
 
NOW, THEREFORE, the parties to this Agreement hereby agree as follows:
 
1.  DEFINITIONS. Unless otherwise defined herein, all capitalized terms defined
in the Securities Purchase Agreement shall have the same meanings herein as
thereon. For all purposes of this Agreement, the following terms shall have the
meanings set forth below:
 
Agreement. See preamble.
 
Board means the Board of Directors of the Company.
 
Charter means the Company's Certificate of Incorporation, as amended and in
effect.
 
Common Stock means (a) the Company’s Common Stock, $0.01 par value per share,
and (b) any shares of any other class of capital stock of the Company hereafter
issued which are (i) not preferred as to dividends or assets over any class of
stock of the Company, (ii) not subject to redemption pursuant to the terms
thereof, or (iii) issued to the holders of shares of Common Stock upon any
reclassification thereof.
 
 
 

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Company. See preamble.
 
Demand Registration. See Section 4.1(a)(i).
 
Excluded Registrations. See Section 4.2(a)(i).
 
Form S-1. See Section 4.1(b)(i).
 
Holder means any registered holder of Investor Securities.
 
Indemnified Party. See Section 4.7(c)
 
Indemnifying Party. See Section 4.7(c).
 
Initial Investor.  See preamble.
 
Investor means any Initial Investor for so long as such Person holds Investor
Securities and any other Person to whom Investor Securities are transferred for
so long as such Person holds any Investor Securities.
 
Investor Securities means (a) the Original Warrants to purchase shares of Common
Stock issued to the Investors pursuant to the Securities Purchase Agreement, and
all Warrants subsequently issued upon transfer of such Warrants in accordance
with their terms, (b) all shares of Common Stock issued or issuable upon
exercise of such Warrants, and (c) all shares of the Company's capital stock
issued with respect to such securities by way of stock dividend or stock split
or in connection with any merger, consolidation, recapitalization or other
reorganization affecting the Company's capital stock. Investor Securities will
continue to be Investor Securities in the hands of any holder and each
transferee thereof will succeed to the rights and obligations of a holder of
Investor Securities hereunder, provided that shares of Investor Securities will
cease to be Investor Securities when transferred (i) to the Company, or (ii)
pursuant to a Public Sale.
 
Lock-up Period. See Section 4.3(a).
 
Manager means any officer, employee or director of the Company or any of its
Subsidiaries.
 
 
 

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Material Transaction means any material transaction in which the Company or any
of its Subsidiaries proposes to engage or is engaged, including a purchase or
sale of assets or securities, financing, merger, consolidation or any other
transactions that would require disclosure pursuant to the Exchange Act, and
with respect to which the Company's board of directors has reasonably determined
that compliance with this Agreement may be expected to either materially
interfere with the Company's ability to consummate such transaction or require
the Company to disclose material, non-public information prior to such time as
it would otherwise be required to be disclosed.
 
Original Warrants. See recitals.
 
Piggyback Registration. See Section 4.2(a)(i).
 
Prospectus means the prospectus included in any Registration Statement, as
amended or supplemented by any Prospectus supplement with respect to the terms
of the offering of any portion of the Investor Securities covered by such
Registration Statement and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference in such Prospectus.
 
Public Sale means any sale of Common Stock or Warrants to the public pursuant to
a public offering registered under the Securities Act or to the public through a
broker or market-maker pursuant to the provisions of Rule 144 (or any successor
rule) adopted under the Securities Act.
 
registered and registration means a registration effected by preparing and
filing a Registration Statement in compliance with the Securities Act and the
declaration or ordering by the Commission of effectiveness of such Registration
Statement.
 
Registration Expenses. See Section 4.6(a).
 
Registration Statement means any registration statement of the Company which
covers any of the Investor Securities pursuant to the provisions of this
Agreement including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such Registration Statement.
 
Rights Agreement means the Rights Agreement between the Company and Continental
Stock Transfer & Trust Company, dated as of April 8, 1998, and amended and
restated as of January 22, 1999, as amended and in effect from time to time, and
any successor agreement providing similar rights to the holders of Common Stock.
 
Rule 144. See Section 4.9.
 
 
 

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Securities Purchase Agreement. See recitals.
 
Stockholders means, collectively, the Investor and the Other Stockholders.
 
Stock Options means any option to purchase Common Stock of the Company
outstanding on the date hereof or issuable under any stock option plan of the
Company in effect as of the date hereof, as more fully set forth on Schedule
5.19 to the Securities Purchase Agreement.
 
Underwriters’ Maximum Number means, for any Piggyback Registration, Demand
Registration or other registration which is an underwritten registration, that
number of securities to which such registration should, in the opinion of the
managing underwriters of such registration in the light of marketing factors, be
limited.
 
Warrants means the warrants for the purchase of shares of Common Stock issued
pursuant to the Securities Purchase Agreement, including the Original Warrants
and any warrants issued upon transfer of such warrants in accordance with their
terms.
 
Warrant Shares means shares of the Company’s Common Stock issued upon exercise
of the Warrants.
 
2.  LEGEND. So long as any Securities are subject to the provisions hereof, all
certificates or instruments representing Securities will have imprinted on them
the following legend:
 
THESE SECURITIES HAVE THE BENEFITS OF AN INVESTORS’ RIGHTS AGREEMENT DATED AS OF
APRIL 17, 2007, A COPY OF WHICH IS ON FILE IN THE ISSUER’S OFFICES. THE
INVESTORS’ RIGHTS AGREEMENT CONTAINS, AMONG OTHER THINGS, REGISTRATION RIGHTS IN
FAVOR OF THE HOLDER OF THESE SECURITIES.
 
3.  PRE-EMPTIVE RIGHTS.
 
3.1.  Pre-Emptive Rights. If the Company authorizes the issuance and sale of any
class or series of capital stock or any securities convertible into or
containing options or rights to acquire any shares of any class or series of
capital stock (other than (i) as a dividend payable in shares of Common Stock on
outstanding shares of Common Stock, (ii) the Warrants and the Stock Options and
the issuance of Common Stock pursuant thereto, and (iii) so long as the Company
has complied with and is in compliance with Section 5(f) of the Warrants, the
Rights (as defined in the Rights Agreement) and shares of the Company’s Series A
Preferred Stock issuable upon exercise of the Rights, pursuant to and in
accordance with the terms and provisions of the Rights Agreement), the Company
will first offer to sell to each Investor a pro rata portion of such securities
equal to the percentage determined by dividing (a) the number of shares of
Common Stock held by such Investor, assuming exercise in full of all other
Warrants, Stock Options or other securities exercisable for or convertible to
shares of Common Stock then held by such Investor, by (b) the number of shares
of Common Stock then outstanding, assuming exercise in full of all other
Warrants, Stock Options or other securities exercisable for or convertible to
shares of Common Stock then outstanding. Each Investor will be entitled to
purchase all or part of such stock or securities at the same price and on the
same terms as such stock or securities are to be offered to any other Person.
 
3.2.  Stockholders’ Exercise of Right. Each Investor entitled to purchase
securities under this Section 3 must exercise such Investor’s purchase rights
hereunder within fifteen (15) days after receipt of written notice from the
Company describing in reasonable detail the stock or securities being offered,
the purchase price thereof, the payment terms, and such Investor’s percentage
allotment.
 
3.3.  Company’s Exercise of Right. Upon the expiration of the offering period
described above, the Company will be free to sell such stock or securities which
the Investors entitled to purchase such stock or securities have not elected to
purchase during the 180 days following such expiration on terms and conditions
no more favorable to the purchasers thereof, in the aggregate, than those
offered to such Investors. Any such stock or securities offered or sold by the
Company after such 180-day period must be re-offered to the Investors entitled
to purchase such stock or securities pursuant to the terms of this Section 3.
 
 
 

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4.  REGISTRATION RIGHTS.
 
4.1.  Demand Registration.
 
(a) Request for Demand Registration.
 
(i) Subject to the limitations contained in this Section 4, any Holder who
holds, or any group of Holders who collectively hold, a majority of all Investor
Securities may, pursuant to this subparagraph (i), at any time and from time to
time, make a written request to the Company for the registration by the Company
under the Securities Act of all or any part of the Investor Securities of such
Holders (such registration being herein called a "Demand Registration");
provided, however, that the aggregate offering price of the Investor Securities
to be registered exceeds $500,000. Within ten (10) days after the receipt by the
Company of any such written request, the Company will give written notice of
such registration request to all non-requesting Holders of Investor Securities.
 
(ii) Subject to the limitations contained in this Section 4, after the receipt
of such written request for a Demand Registration, (A) the Company will be
obligated and required to include in such Demand Registration all Investor
Securities with respect to which the Company shall receive from the Holders
thereof, within thirty (30) days after the date on which the Company shall have
given to all such Holders a written notice of registration request pursuant to
Section 4.1(a)(i) hereof, the written requests of such Holders for inclusion in
such Demand Registration, and (B) the Company will use its best efforts in good
faith to effect promptly the registration of all such Investor Securities. All
written requests made by Holders of Investor Securities pursuant to this
subparagraph (ii) will specify the number of shares of Investor Securities to be
registered.
 
(b) Limitations on Demand Registration.
 
(i) The Holders of Investor Securities will not be entitled to require the
Company to effect (A) more than one (1) Demand Registration of the Warrants, (B)
more than one (1) Demand Registration on Form S-1 (or any other comparable form
adopted by the Commission) (“Form S-1”) during any twelve-month period, and more
than two (2) Demand Registrations on Form S-1 at any time, (C) more than three
(3) “short form” Demand Registrations on Form S-2 or Form S-3 (or other
comparable “short form” adopted by the Commission); or (D) more than (1) Demand
Registration during any thirteen-month period.
 
(ii) Any registration initiated by Holders of Investor Securities as a Demand
Registration pursuant to Section 4.1(a) hereof shall not count as a Demand
Registration for purposes of Section 4.1(b)(i) hereof (A) unless and until such
registration shall have become effective and shall have been kept effective for
the period required pursuant to Section 4.4(b) or (B) if Holders of a majority
of the Investor Securities initially requested to be registered pursuant to such
Demand Registration withdraw their request for a Demand Registration at any time
because (1) such Holders reasonably believed that the Registration Statement or
Prospectus contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements made therein (in the case of the Prospectus, in the light of the
circumstances under which they were made) not misleading, (2) such Holders
notified the Company of such fact and requested the Company correct such alleged
misstatement or omission and (3) the Company has refused to correct such alleged
misstatement or omission.
 
(iii) The Company shall not be obligated or required to effect the Demand
Registration of any Investor Securities pursuant to Section 4.1(a) hereof during
the period commencing on the date falling thirty (30) days prior to the
Company's estimated date of filing of, and ending on the date one hundred eighty
(180) days following the effective date of, any Registration Statement
pertaining to any underwritten registration initiated by the Company, for the
account of the Company, if the written request of Holders of Investor Securities
for such Demand Registration pursuant to Section 4.1(a)(i) hereof shall have
been received by the Company after the Company shall have given to all Holders
of Investor Securities a written notice stating that the Company is commencing
an underwritten registration initiated by the Company; provided, however, that
the Company will use its best efforts in good faith to cause any such
Registration Statement to be filed and to become effective as expeditiously as
shall be reasonably possible. All Holders agree to maintain the confidentiality
of any notice stating that the Company is commencing an underwritten
registration except that Holders may disclose such information on a confidential
basis to their legal counsel and other advisors to the extent necessary to
exercise their rights under this Agreement.
 
 
 

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(iv) Anything contained herein to the contrary notwithstanding, the Company may
delay the filing or effectiveness of any Registration Statement under this
Section 4 for a period of up to one hundred twenty (120) days after the date of
a request for registration pursuant to this Section 4 if a Material Transaction
exists at the time of such request.
 
(c) Priority on Demand Registrations. If the managing underwriters in any
underwritten Demand Registration shall give written advice to the Company and
the Holders of Investor Securities to be included in such registration of an
Underwriters' Maximum Number, then: (i) the Company will be obligated and
required to include in such registration that number of Investor Securities
requested by the Holders thereof to be included in such registration which does
not exceed the Underwriters' Maximum Number, and such number of Investor
Securities shall be allocated pro rata based on the number of Investor
Securities requested by such Holders to be included in such registration; (ii)
if the Underwriters' Maximum Number exceeds the number of Investor Securities
requested by the Holders thereof to be included in such registration, then the
Company will be entitled to include in such registration that number of
securities which shall have been requested by the Company be included in such
registration for the account of the Company and which shall not be greater than
such excess; and (iii) if the Underwriters' Maximum Number exceeds the sum of
the number of Investor Securities which the Company shall be required to include
in such Demand Registration and the number of securities which the Company
proposes to offer and sell for its own account in such registration, then the
Company may include in such registration that number of other securities which
Persons (other than the Holders of Investor Securities as such) shall have
requested be included in such registration and which shall not be greater than
such excess. The Company shall not be entitled to include any securities in any
underwritten Demand Registration unless the Company shall have agreed in writing
to sell such securities on the same terms and conditions as shall apply to the
Investor Securities to be included in such Demand Registration.
 
(d) Selection of Underwriters. The Holders of a majority of Investor Securities
to be included in any Demand Registration shall determine whether or not such
Demand Registration shall be underwritten and shall select the investment
banker(s) and managing underwriter(s) to administer such offering, subject to
the approval of the Company, not to be unreasonably withheld.
 
4.2.  Piggyback Registrations.
 
(a) Rights to Piggyback.
 
(i) If (and on each occasion that) the Company proposes to register any of its
equity securities under the Securities Act (other than (A) a Demand Registration
pursuant to Section 4.1(a)(i) hereof, which shall be governed by
Section 4.1(a)(i) hereof and not this Section 4.2, (B) the registration of an
offer, sale or other disposition of securities to employees of, or other persons
providing services to, the Company, or any subsidiary pursuant to an employee or
similar benefit plan, (C) pursuant to a registration statement on Form S-4 or
any similar form, (D) in connection with a registration the primary purpose of
which is to register debt securities, including convertible debt securities, or
(E) relating to a merger, acquisition or other transaction of the type described
in Rule 145 under the Securities Act or a comparable or successor rule
(collectively, “Excluded Registrations”)), either for the Company's own account
or for the account of any of its stockholders and the registration form to be
used may also be used for the registration of Investor Securities (each such
registration not withdrawn or abandoned prior to the effective date thereof
being herein called a "Piggyback Registration"), the Company will give written
notice to all Holders of Investor Securities of such proposal not later than the
earlier to occur of (A) the tenth day following the receipt by the Company of
notice of exercise of any registration rights by any Persons, and (B) the
thirtieth day prior to the anticipated filing date of such Piggyback
Registration. The Company shall have the right to terminate or withdraw any
registrations initiated by it under this Section 4.2(a)(i), whether or not any
Holder has elected to include any Investor Securities in such registration.
 
 
 

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(ii) Subject to the provisions contained in paragraph (b) of this Section 4.2
and in the last sentence of this subparagraph (ii), (A) the Company will be
obligated and required to include in each Piggyback Registration all Warrant
Shares with respect to which the Company shall receive from Holders of Warrant
Shares, within fifteen (15) days after the date on which the Company shall have
given written notice of such Piggyback Registration to all Holders of Investor
Securities pursuant to Section 4.2(a)(i) hereof, the written requests of such
Holders for inclusion in such Piggyback Registration, and (B) subject to the
Company’s unconditional right described in the last sentence of Section
4.2(a)(i) to terminate any registration initiated by it, the Company will use
its best efforts in good faith to effect promptly the registration of all such
Warrant Shares. The Holders of Warrant Shares shall be permitted to withdraw all
or any part of their Warrant Shares from any Piggyback Registration at any time
prior to the effective date of such Piggyback Registration unless such Holders
of Investor Securities shall have entered into a written agreement with the
Company's underwriters establishing the terms and conditions under which such
Holders would be obligated to sell such securities in such Piggyback
Registration.
 
(b) Priority on Piggyback Registrations. If a Piggyback Registration is an
underwritten registration, and the managing underwriters shall give written
advice to the Company of an Underwriters' Maximum Number, then: (i) the Company
shall be entitled to include in such registration that number of securities
which the Company proposes to offer and sell for its own account in such
registration and which does not exceed the Underwriters' Maximum Number; (ii) if
the Underwriters' Maximum Number exceeds the number of securities which the
Company proposes to offer and sell for its own account in such registration,
then the Company will be obligated and required to include in such registration
that number of Investor Securities requested by the Holders thereof to be
included in such registration and which does not exceed such excess and such
Investor Securities shall be allocated pro rata among the Holders thereof on the
basis of the number of Investor Securities requested to be included therein by
each such Holder; and (iii) if the Underwriters' Maximum Number exceeds the sum
of the number of Investor Securities which the Company shall be required to
include in such registration pursuant to clause (ii) and the number of
securities which the Company proposes to offer and sell for its own account in
such registration, then the Company may include in such registration that number
of other securities which other Persons shall have requested be included in such
registration and which shall not be greater than such excess.
 
(c) Selection of Underwriters. In any Piggyback Registration, the Company shall
(unless the Company shall otherwise agree) have the right to select the
investment bankers and managing underwriters in such registration.
 
4.3.  Lock-up Agreements.
 
(a) Restrictions on Public Sale by Holders of Investor Securities. Each Holder
of Investor Securities, if the Company or the managing underwriters so request
in connection with any underwritten registration of the Company's securities,
will not, except in connection with such underwritten registration, without the
prior written consent of the Company or such underwriters, effect any Public
Sale or other distribution of any equity securities of the Company, including
any sale pursuant to Rule 144, during the period beginning on the date of such
request from the Company or the managing underwriters, and ending on the 180th
day after the effective date of the applicable registration statement (the
“Lock-Up Period”), or, if required by the managing underwriters, such longer
period of time as is necessary to enable such underwriters to issue a research
report or make a public appearance that relates to an earnings release or
announcement by the Company within eighteen (18) days before or after the last
day of the Lock-Up Period, but in any event not to exceed two hundred ten (210)
days following the effective date of the registration statement relating to such
offering, and upon request by the managing underwriters will execute a lock-up
agreement to that effect.
 
 
 

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(b) Restrictions on Public Sale by the Company. If the managing underwriters so
request in connection with any underwritten registration of the Company’s
securities, the Company will not effect any Public Sale or other distribution of
its equity securities, or any securities convertible into or exchangeable or
exercisable for such equity securities, during the period commencing on the
seventh day prior to, and ending on the ninetieth day following, the effective
date of any underwritten Demand Registration or Piggyback Registration, except
(i) in connection with any such underwritten registration and (ii) for Excluded
Registrations.
 
4.4.  Registration Procedures. Whenever the Holders of Investor Securities have
requested that any Investor Securities be registered pursuant to this Agreement,
the Company will use its best efforts to effect the registration and the sale of
such Investor Securities in accordance with the intended method of disposition
thereof, and pursuant thereto the Company will as expeditiously as possible:
 
(a) prepare and file with the Commission a Registration Statement with respect
to such Investor Securities and use its best efforts to cause such Registration
Statement to become effective (provided, that at least five (5) days before
filing a Registration Statement or Prospectus or any amendments or supplements
thereto, the Company will furnish to counsel selected by the Holders of Investor
Securities covered by such Registration Statement, copies of all such documents
proposed to be filed, which documents will be subject to the timely review of
such counsel and the Company will not file any Registration Statement or
amendment thereto or any Prospectus or any supplement thereto, including
documents incorporated by reference, to which the Holders of a majority of the
Investor Securities covered by such Registration Statement shall reasonably
object), provided, however, that nothing herein shall prevent or limit the
Company’s ability to timely file any required reports with the Commission;
 
(b) prepare and file with the Commission such amendments and supplements to such
Registration Statement and the Prospectus used in connection therewith as may be
necessary to keep such Registration Statement effective until the earlier of (i)
the date on which all securities covered by such Registration Statement have
been disposed of and (ii) the six (6) month anniversary of the effective date of
such Registration Statement, and comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such
Registration Statement during such effective period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
Registration Statement and cause the Prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act;
 
(c) upon request, furnish to each seller of Investor Securities such number of
copies of such Registration Statement, each amendment and supplement thereto,
the Prospectus included in such Registration Statement (including each
preliminary Prospectus and each Prospectus filed under Rule 424 of the
Securities Act) and such other documents as each such seller may reasonably
request in order to facilitate the disposition of the Investor Securities owned
by each such seller (it being understood that the Company consents to the use of
the Prospectus and any amendment or supplement thereto by such seller in
connection with the offering and sale of the Investor Securities covered by the
Prospectus or any amendment or supplement thereto);
 
(d) use its best efforts to register or qualify such Investor Securities under
such other securities or blue sky laws of such jurisdictions as any seller
reasonably requests, use its best efforts to keep each such registration or
qualification effective, including through new filings, amendments or renewals,
during the period such Registration Statement is required to be kept effective,
and do any and all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the Investor Securities owned by such seller; provided that the
Company will not be required (i) to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (d), (ii) to subject itself to taxation in any such jurisdiction or
(iii) to consent to general service of process in any such jurisdiction;
 
 
 

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(e) notify each seller of such Investor Securities, at any time when a
Prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the Prospectus included
in such Registration Statement contains an untrue statement of a material fact
or omits any material fact necessary to make the statements therein not
misleading, and, at the request of any such seller, the Company will promptly
prepare (and, when completed, give notice to each seller of Investor Securities)
a supplement or amendment to such Prospectus so that, as thereafter delivered to
the purchasers of such Investor Securities, such Prospectus will not contain an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading; provided that upon such
notification by the Company, each seller of such Investor Securities will not
offer or sell such Investor Securities pursuant to the Prospectus until the
Company has notified such seller that it has prepared a supplement or amendment
to such Prospectus and delivered copies of such supplement or amendment to such
seller;
 
(f) cause all such Investor Securities to be listed, prior to the date of the
first sale of such Investor Securities pursuant to such registration, on each
securities exchange, if any, on which the same class of securities issued by the
Company are then listed and, if not so listed, to be listed on an inter-dealer
quotation system;
 
(g) provide a transfer agent and registrar for all such Investor Securities not
later than the effective date of such Registration Statement;
 
(h) enter into all such customary agreements (including underwriting agreements
in customary form) and take all such other actions as the Holders of a majority
of the Investor Securities being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such Investor
Securities (including, without limitation, effecting a stock split or a
combination of shares);
 
(i) make available for inspection on a confidential basis by any seller, any
underwriter participating in any disposition pursuant to such Registration
Statement, and any attorney, accountant or other agent retained by any such
seller or underwriter (in each case after reasonable prior notice), all
financial and other records, pertinent corporate documents and properties of the
Company, and cause the Company's officers, directors, employees and independent
accountants to supply on a confidential basis all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such Registration Statement;
 
(j) permit any Holder of Investor Securities which Holder, in the reasonable
judgment of the Company, might be deemed to be an underwriter or a controlling
person of the Company within the meaning of Section 15 of the Securities Act, to
participate in the preparation of such registration or comparable statement and
to permit the insertion therein of material, furnished to the Company in
writing, which in the reasonable judgment of such Holder and its counsel should
be included, provided that such material shall be furnished under such
circumstances as shall cause it to be subject to the indemnification provisions
provided pursuant to Section 4.7(b) hereof;
 
(k) in the event of the issuance of any stop order suspending the effectiveness
of a Registration Statement, or of any order suspending or preventing the use of
any related Prospectus or suspending the qualification of any Investor
Securities included in such Registration Statement for sale in any jurisdiction,
the Company will use all commercially reasonable efforts promptly to obtain the
withdrawal of such order;
 
 
 

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(l) if requested by the managing underwriter or underwriters or any Holder of
Investor Securities in connection with any sale pursuant to a Registration
Statement, promptly incorporate in a Prospectus supplement or post-effective
amendment such information relating to such underwriting as the managing
underwriter or underwriters or such Holder reasonably requests to be included
therein, and make all required filings of such Prospectus supplement or
post-effective amendment as soon as practicable after being notified of the
matters incorporated in such Prospectus supplement or post-effective amendment;
 
(m) cooperate with the Holders of Investor Securities and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing
Investor Securities to be sold under such registration, and enable such Investor
Securities to be in such denominations and registered in such names as the
managing underwriter or underwriters, if any, or such Holders may request;
 
(n) use its best efforts to cause the Investor Securities to be registered with
or approved by such other governmental agencies or authorities within the United
States and having jurisdiction over the Company as may reasonably be necessary
to enable the seller or sellers thereof or the underwriter or underwriters, if
any, to consummate the disposition of such Investor Securities;
 
(o) use all commercially reasonable efforts to obtain:
 
(i) at the time of effectiveness of each registration, a "comfort letter" from
the Company's independent certified public accountants covering such matters of
the type customarily covered by "cold comfort letters" as the Holders of a
majority of the Investor Securities covered by such registration and the
underwriters reasonably request; and
 
(ii) at the time of any underwritten sale pursuant to a Registration Statement,
a "bring-down comfort letter", dated as of the date of such sale, from the
Company's independent certified public accountants covering such matters of the
type customarily covered by comfort letters as the Holders of a majority of the
Investor Securities covered by such Registration Statement and the underwriters
reasonably request;
 
(p) use all commercially reasonable efforts to obtain, at the time of
effectiveness of each Demand Registration or Piggyback Registration and at the
time of any sale pursuant to each registration, an opinion of counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters; and
 
(q) otherwise comply with all applicable rules and regulations of the
Commission, and make generally available to its security holders (as
contemplated by Section 11(a) under the Securities Act) an earnings statement
satisfying the provisions of Rule 158 under the Securities Act no later than
ninety (90) days after the end of the twelve month period beginning with the
first month of the Company's first fiscal quarter commencing after the effective
date of the Registration Statement, which statement shall cover said twelve
month period.
 
 
 

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4.5.  Cooperation by Prospective Sellers, Etc.
 
(a) Each prospective seller of Investor Securities will furnish to the Company
in writing such information as the Company may reasonably require from such
seller, and otherwise reasonably cooperate with the Company in connection with
any Registration Statement with respect to such Investor Securities. In
addition, each such prospective seller will immediately notify the Company, at
any time when a Prospectus relating to the registration of such Investor
Securities is required to be delivered under the Securities Act, upon such
prospective seller’s knowledge of the happening of any event as a result of
which information previously furnished in writing by such prospective seller
specifically for inclusion in such Prospectus contains an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in the light of the
circumstances under which they were made.
 
(b) The failure of any prospective seller of Investor Securities to furnish any
information or documents in accordance with any provision contained in this
Agreement shall not affect the obligations of the Company under this Agreement
to any remaining sellers who furnish such information and documents unless in
the reasonable opinion of counsel to the Company or the underwriters, such
failure impairs or may impair the viability of the offering or the legality of
the Registration Statement or the underlying offering.
 
(c) The Holders of Investor Securities included in any Registration Statement
will not (until further notice) effect sales thereof after receipt of
telegraphic or written notice from the Company to suspend sales to permit the
Company to correct or update such Registration Statement or Prospectus; but the
obligations of the Company with respect to maintaining any Registration
Statement current and effective shall be extended by a period of days equal to
the period such suspension is in effect.
 
(d) At the end of any period during which the Company is obligated to keep any
Registration Statement current and effective as provided by Section 4.4 hereof
(and any extensions thereof required by the preceding paragraph (c) of this
Section 4.5), the Holders of Investor Securities included in such Registration
Statement shall discontinue sales of shares pursuant to such Registration
Statement upon receipt of notice from the Company of its intention to remove
from registration the shares covered by such Registration Statement which remain
unsold, and such Holders shall notify the Company of the number of shares
registered which remain unsold promptly after receipt of such notice from the
Company.
 
4.6.  Registration Expenses.
 
(a) All costs and expenses incurred or sustained in connection with or arising
out of each registration pursuant to Sections 4.1 and 4.2 hereof, including,
without limitation, all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel for the underwriters in connection with the blue sky
qualification of Investor Securities), printing expenses, messenger, telephone
and delivery expenses, fees and disbursements of counsel for the Company,
reasonable fees and disbursements of one counsel representing the Holders of
Investor Securities, such counsel to be selected by the Holders of a majority of
the Investor Securities to be included in such registration, fees and
disbursements of all independent certified public accountants (including the
expenses relating to the preparation and delivery of any special audit or "cold
comfort" letters required by or incident to such registration), fees and
disbursements of underwriters customarily paid by issuers and sellers of
securities (but excluding discounts and commissions), the reasonable fees and
expenses of any special experts retained by the Company of its own initiative or
at the request of the managing underwriters in connection with such
registration, and fees and expenses of all (if any) other Persons retained by
the Company (all such costs and expenses being herein called, collectively, the
"Registration Expenses"), will be borne and paid by the Company. The Company
will, in any case, pay its internal expenses (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, and the fees and expenses
incurred in connection with the listing of the securities to be registered on
each securities exchange on which similar securities of the Company are then
listed.
 
 
 

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(b) The Company will not bear the cost of nor pay for any stock transfer taxes
imposed in respect of the transfer of any Investor Securities to any purchaser
thereof by any Holder of Investor Securities in connection with any registration
of Investor Securities pursuant to this Agreement.
 
(c) To the extent that Registration Expenses incident to any registration are,
under the terms of this Agreement, not required to be paid by the Company, each
Holder of Investor Securities included in such registration will pay all
Registration Expenses that are clearly solely attributable to the registration
of such Holder's Investor Securities so included in such registration, and all
other Registration Expenses not so attributable to one Holder will be borne and
paid by all sellers of securities included in such registration in proportion to
the number of securities so included by each such seller.
 
4.7.  Indemnification.
 
(a) Indemnification by the Company. The Company will indemnify each Holder
requesting or joining in a registration and each underwriter of the securities
so registered, the officers, directors and partners of each such Person and each
Person who controls any thereof (within the meaning of the Securities Act)
against any and all claims, losses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of any material fact contained in any Prospectus, offering
circular or other document incident to any registration, qualification or
compliance (or in any related Registration Statement, notification or the like)
or any omission (or alleged omission) to state therein any material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company and relating to
any action or inaction required of the Company in connection with any such
registration, qualification or compliance, and the Company will reimburse each
such Holder, underwriter, officer, director, partner and controlling person for
any legal and any other expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such claim, loss, damage or liability arises out of or is based
on any untrue statement or omission based upon written information furnished to
the Company in an instrument duly executed by such Holder, underwriter, officer,
director, partner or controlling person and stated to be specifically for use in
such Prospectus, offering circular or other document.
 
(b) Indemnification by Each Holder. Each Holder requesting or joining in a
registration will indemnify each underwriter of the securities so registered,
the Company and its officers and directors and each Person, if any, who controls
any thereof (within the meaning of the Securities Act) and their respective
successors in title and assigns, and any other Holder selling securities under
such registration statement or any of such other Holder’s partners, directors or
officers or any person who controls such Holder, against any and all claims,
losses, damages and liabilities (or actions in respect thereof) arising out of
or based on any untrue statement (or alleged untrue statement) of any material
fact contained in any Prospectus, offering circular or other document incident
to any registration, qualification or compliance (or in any related Registration
Statement, notification or the like) or any omission (or alleged omission) to
state therein any material fact required to be stated therein or necessary to
make the statement therein not misleading, and such Holder will reimburse each
underwriter, the Company and each other Person indemnified pursuant to this
paragraph (b) for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action; provided, however, that this paragraph (b) shall apply only
if (and only to the extent that) such statement or omission was made in reliance
upon written information furnished to such underwriter or the Company in an
instrument duly executed by such Holder and stated to be specifically for use in
such Prospectus, offering circular or other document (or related Registration
Statement, notification or the like) or any amendment or supplement thereto;
and, provided further, that each Holder's liability hereunder with respect to
any particular registration shall be limited to an amount equal to the net
proceeds received by such Holder from the Investor Securities sold by such
Holder in such registration.
 
(c) Limitation on Indemnification. The foregoing indemnity agreements of the
Company and the selling Holders are subject to the condition that, insofar as
they relate to any claims or damages arising from any untrue statement or
alleged untrue statement of a material fact contained in, or omission or alleged
omission of a material fact from, a Prospectus (or necessary to make the
statements therein not misleading) that has been corrected in the form of
Prospectus included in the registration statement at the time it becomes
effective, or any amendment or supplement thereto filed with the Commission
pursuant to Rule 424(b) under the Securities Act, such indemnity agreement shall
not inure to the benefit of any person if a copy of such correcting Prospectus
was furnished to the indemnified party and such indemnified party failed to
deliver, at or before the confirmation of the sale of the shares registered in
such offering, a copy of such correcting Prospectus to the person asserting the
loss, liability, claim, or damage in any case in which such delivery was
required by the Securities Act.
 
 
 

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(d) Indemnification Proceedings. Each party entitled to indemnification pursuant
to this Section 4.7 (the "Indemnified Party") shall give notice to the party
required to provide indemnification pursuant to this Section 4.7 (the
"Indemnifying Party") promptly after such Indemnified Party acquires actual
knowledge of any claim as to which indemnity may be sought, and shall permit the
Indemnifying Party (at its expense) to assume the defense of any claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
reasonably acceptable to the Indemnified Party, and the Indemnified Party may
participate in such defense at such party's expense; and provided, further, that
the failure by any Indemnified Party to give notice as provided in this
paragraph (d) shall not relieve the Indemnifying Party of its obligations under
this Section 4.7 except to the extent that the failure results in a failure of
actual notice to the Indemnifying Party and such Indemnifying Party is damaged
solely as a result of the failure to give notice. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation. The reimbursement required by this
Section 4.7 shall be made by periodic payments during the course of the
investigation or defense, as and when bills are received or expenses incurred.
 
4.8.  Contribution in Lieu of Indemnification. If the indemnification provided
for in Section 4.7 hereof is unavailable to a party that would have been an
Indemnified Party under such Section in respect of any losses, claims, damages
or liabilities (or actions in respect thereof) referred to therein, then each
party that would have been an Indemnifying Party thereunder shall, in lieu of
indemnifying such Indemnified Party, contribute to the amount paid or payable by
such Indemnified Party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Indemnifying Party on the one hand and such
Indemnified Party on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof). The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Indemnifying Party or such Indemnified Party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and each Holder of
Investor Securities agree that it would not be just and equitable if
contribution pursuant to this Section 4.8 were determined by pro-rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 4.8. The amount paid
or payable by an Indemnified Party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
Section 4.8 shall include any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim. Notwithstanding any provision of this Section 4.8 to the
contrary, (a) no Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation and (b) each Holder's liability hereunder with respect to any
particular registration shall be limited to an amount equal to the net proceeds
received by such Holder from the Investor Securities sold by such Holder in such
registration.
 
4.9.  Rule 144 Requirements; Form S-3. The Company will make its best efforts in
good faith (a) to take all steps necessary to ensure that the Company will be
eligible to register securities on Form S-2, S-3 (or any comparable form adopted
by the Commission) as soon thereafter as possible, and (b) to make publicly
available and available to the Holders of Investor Securities, pursuant to Rule
144 of the Commission under the Securities Act, or a comparable or successor
rule (“Rule 144”), such information as shall be necessary to enable the Holders
of Investor Securities to make sales of Investor Securities pursuant to Rule
144. The Company will furnish to any Holder of Investor Securities, upon request
made by such Holder at any time after the undertaking of the Company in the
preceding sentence shall have first become effective, a written statement signed
by the Company, addressed to such Holder, describing briefly the action the
Company has taken or proposes to take to comply with the current public
information requirements of Rule 144. The Company will, at the request of any
Holder of Investor Securities, upon receipt from such Holder of a certificate
certifying (i) that such Holder has held such Investor Securities for the
applicable holding period under Rule 144 with respect to such Holder’s
possession of such Investor Securities, as in effect on the date of such
certificate, (ii) that such Holder has not been an affiliate (as defined in Rule
144) of the Company for more than the ninety (90) preceding days, and (iii) as
to such other matters as may be appropriate in accordance with such Rule, remove
from the stock certificates representing such Investor Securities that portion
of any restrictive legend which relates to the registration provisions of the
Securities Act.
 
4.10.  Participation in Underwritten Registrations. No Person may participate in
any underwritten registration pursuant to this Agreement unless such Person (a)
agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Persons entitled, under the provisions
hereof, to approve such arrangements, and (b) completes and executes all
questionnaires, powers of attorney, indemnities, lock-up agreements (to the
extent the terms and provisions thereof are consistent with Section 4.3 hereof),
underwriting agreements and other documents reasonably required by the terms of
such underwriting arrangements. Any Holder of Investor Securities to be included
in any underwritten registration shall be entitled at any time to withdraw such
Investor Securities from such registration prior to its effective date in the
event that such Holder shall disapprove of any of the terms of the related
underwriting agreement.
 
4.11.  Termination of Registration Rights. The right of any Holder to request
registration or inclusion of Investor Securities in any registration pursuant to
Section 4.1 or Section 4.2 shall terminate when all of such Holder’s Investor
Securities could be sold without restriction under Rule 144(k) under the
Securities Act, or any comparable or successor rule.
 
 
 

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4.12.  Delay of Registration; Furnishing Information. No Holder shall have any
right to obtain or seek an injunction restraining or otherwise delaying any
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 4.
 
5.  SEVERABILITY. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
 
6.  ENTIRE AGREEMENT. Except as otherwise expressly set forth herein, in the
Securities Purchase Agreement, the Warrants and the Charter, this document
embodies the complete agreement and understanding among the parties hereto with
respect to the subject matter hereof and thereof and supersedes and preempts any
prior understandings, agreements or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any way.
 
7.  SUCCESSORS AND ASSIGNS. This Agreement will bind and inure to the benefit of
and be enforceable by the Company and the Investors and their respective
successors and permitted assigns.
 
8.  COUNTERPARTS. This Agreement may be executed in separate counterparts each
of which will be an original and all of which taken together will constitute one
and the same agreement. Any such counterpart may be executed by facsimile
signature or by email with scan or attachment signature with only verbal
confirmation, and when so executed and delivered shall be deemed an original and
such counterpart(s) together shall constitute only one original.
 
9.  REMEDIES. The Investors will be entitled to enforce their rights under this
Agreement specifically (without posting a bond or other security), to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights existing in their favor. The parties hereto agree and
acknowledge that money damages is not an adequate remedy for any breach of the
provisions of this Agreement and that any Investor shall have the remedy of
specific performance and/or injunctive relief in order to enforce or prevent any
violation of the provisions of this Agreement. In the event of any dispute
involving the terms of this Agreement, the prevailing party shall be entitled to
collect reasonable fees and expenses incurred by the prevailing party in
connection with such dispute from the other parties to such dispute.
 
10.  NOTICES. Any notice provided for in this Agreement will be in writing and
will be deemed properly delivered if either personally delivered or sent by
facsimile, electronic mail, overnight courier or mailed certified or registered
mail, return receipt requested, postage prepaid to the recipient (a) if to any
Investor (other than an Initial Investor), at the address listed for such
Investor in the stock records of the Company, (b) if to any Initial Investor, at
the address listed for such Initial Investor in the Securities Purchase
Agreement, with a copy to F. Mark Fucci, Esq., Bingham McCutchen LLP, One State
Street, Hartford, CT 06103-3178, fax: (860) 240-2800, email address:
mark.fucci@bingham.com, and (c) if to the Company, at the address listed for the
Company in the Securities Purchase Agreement, with a copy to Justin Bastian,
Esq., Morrison & Foerster, LLP, 755 Page Mill Road, Palo Alto, CA 94304; fax
(650) 494-0792; email address: jbastian@mofo.com, as each such address may be
changed by at least ten (10) days’ prior written notice of such changed address
to the other parties hereto. Any such notice shall be effective (i) if delivered
personally, by facsimile transmission or by electronic mail, when received,
(ii) if sent by overnight courier, when receipted for, and (iii) if mailed, five
(5) days after being mailed as described above. The Company agrees to make
available to each Investor upon request a list of the most recent addresses
available to the Company of all Investors to ensure correct delivery of all
notices hereunder.
 
11.  AMENDMENT AND WAIVER. No modification, amendment or waiver of any provision
of this Agreement will be effective against the Company or the Investors unless
such modification, amendment or waiver is approved in writing by the holders of
more than 50% of the total number of the then outstanding Investor Securities.
The failure of any party to enforce any of the provisions of this Agreement will
in no way be construed as a waiver of such provisions and will not affect the
right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
 
12.  EMPLOYMENT. Nothing contained in this Agreement is intended to create for
any Investor who is a Manager a right to continued employment with the Company
or any of its Subsidiaries or employment in the same position or on the same
terms as those currently in effect.
 
 
 

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13.  TERMINATION. This Agreement will terminate upon the earlier of (i) the
completion of any voluntary or involuntary liquidation or dissolution of the
Company, or (ii) the Initial Investors or their Affiliates ceasing to hold at
least twenty-five percent (25%) of the Investor Securities originally issued to
the Initial Investors under the Securities Purchase Agreement (calculated
assuming the exercise in full of all of the Warrants).
 
14.  GOVERNING LAW. This Agreement and the obligations of the parties hereunder
shall be deemed to be a contract under seal and shall for all purposes be
governed by and construed in accordance with the internal laws (and not the
choice-of-law rules) of the State of New York, without reference to principles
of conflicts of law.
 
15.  DESCRIPTIVE HEADINGS; TERMS. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this Agreement.
Defined terms will have the meanings specified, applicable to both singular and
plural forms, for all purposes of this Agreement.
 
16.  CONSTRUCTION. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rule of
strict construction will be applied against any party.
 

 
[Balance of Page Intentionally Left Blank]
 

 

 

Investor Rights Agreement/pa-1147621 v1
 

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IN WITNESS WHEREOF, the parties hereto have executed this Investors’ Rights
Agreement on the day and year first above written.
 
THE COMPANY:  
 

 
AEROCENTURY CORP.
 
By: __________________________
       Name:
       Title:
 

[signature page to Investors’ Rights Agreement]

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THE INITIAL INVESTORS:
 
SATELLITE FUND II, L.P.

By: Satellite Advisors, L.L.C.
Its General Partner

By:_________________________________
Name: Simon Raykher
Title: General Counsel

SATELLITE FUND IV, L.P.

By: Satellite Advisors, L.L.C.
Its General Partner

By:_________________________________
Name: Simon Raykher
Title: General Counsel

THE APOGEE GROUP, LLC

By: Satellite Asset Management, L.P.
Its Manager

By:_________________________________
Name: Simon Raykher
Title: General Counsel

SATELLITE FUND V, LLC

By: Satellite Asset Management, L.P.
Its Manager

By:_________________________________
Name: Simon Raykher
Title: General Counsel

[signature page to Investors’ Rights Agreement]