formofsecondamend.htm


    EXECUTION
VERSION SECOND AMENDMENT TO SECURITIES PURCHASE AGREEMENT

     

    AMENDMENT,
dated as of July 21, 2008 (the “Amendment”) to the
Securities Purchase Agreement (the “Agreement”) dated as
of April 17, 2007 by and between AeroCentury Corp. (the “Issuer”), Satellite
Fund II, L.P., Satellite Fund IV, L.P., The Apogee Group, LLC, and Satellite
Fund V, LLC (collectively the “Purchasers” and
together with the Issuer the “Parties,” each a
“Party”).

     

    WHEREAS,
the Agreement: (i) provides, subject to satisfaction of certain material
conditions, that on certain dates the Purchasers will purchase, and the Issuer
will issue, Notes in an aggregate principal amount of $28,000,000; and (ii)
granted to the Purchasers Warrants to purchase an aggregate 171,473 shares of
Common Stock; and

     

    WHEREAS,
following discussions between the Issuer and Purchasers, the Issuer and
Purchasers have agreed to amend the Agreement to: (i) reduce the Purchasers’
total commitment to purchase Notes from $28,000,000 to $14,000,000; (ii) provide
for a Final Closing at which the Purchasers will purchase and the Issuer will
sell Notes for an aggregate principal amount of $4,000,000; and (iii) cancel
90,249 of the 171,473 outstanding Warrants.

     

    ACCORDINGLY,
the Issuer and the Purchasers hereby agree as follows:

    


    1. Defined Terms. 
Unless otherwise defined herein, all capitalized terms herein shall have the
meanings set forth in the Agreement. The following terms shall have the meanings
provided below and be added to Section 1.1 of the Agreement:

    


    
      	
               
      

            	
              a.  
      “Final
      Closing” shall have the meaning in Section 4.2 of the Agreement as
      amended below.

            


    

    


    
      	
               
      

            	
              b. 
       “First
      Amendment to the Securities Purchase Agreement” shall mean the
      Letter Agreement by and among the Issuer and the Purchasers dated June 18,
      2008.

            


    

    


    
      	
               
      

            	
              c. 
       “Second
      Amendment to the Securities Purchase Agreement” shall mean the
      Second Amendment to the Securities Purchase Agreement dated July 21, 2008
      by and among the Issuer and the
Purchasers.

            


    

    


    2. Amendments to
Agreement.

    


    
      	
               
      

            	
              a.  
      The headings to Section 4.2 in the Table of Contents and in the text of
      the Agreement shall be deleted in their entirety and replaced with the
      following: “Final Closing.”

            


    

    


    
      	
               
      

            	
              b.  
      The definition of Final Closing Date in Section 1.1 of the Agreement is
      deleted in its entirety and replaced with the
  following:

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    


    


    “‘Final Closing Date’
shall mean the date of the execution of this Second Amendment to the Securities
Purchase Agreement or such later Business Day as may be agreed to by the Issuer
and each Purchaser.”

    


    
      	
               
      

            	
              c.  
      The definition of Operative Documents in Section 1.1 of the Agreement
      shall be amended by inserting the words “the First Amendment to the
      Securities Purchase Agreement and the Second Amendment to the Securities
      Purchase Agreement,” after the words “this
  Agreement.”

            


    

    


    
      	
               
      

            	
              d. 
       The definitions of Available Amount, Sale Notice, Subsequent Closing
      and Subsequent Closing Date are deleted from Section 1.1 of the Agreement
      in their entirety.

            


    

    


    
      	
               
      

            	
              e. 
       Section 2(a) is amended by replacing “171,473” with “81,224” and by
      replacing “10%” with “5%.”

            


    

    


    
      	
               
      

            	
              f.  
      Section 2(b) is amended by replacing “$28,000,000” with
      “$14,000,000.”

            


    

    


    
      	
               
      

            	
              g.  
      The references to “a/any/each/such Subsequent Closing” and “a Subsequent
      Closing Date” in the definitions of Closing, Closing Date, and Purchase
      Price and in Sections 4.3 and 5.1 of the Agreement are amended by
      replacing “a/any/each/such Subsequent Closing” with “the Final Closing”
      and by replacing “a Subsequent Closing Date” with “the Final Closing
      Date.” To the extent not otherwise addressed by this Amendment, any
      reference in the Agreement to a Subsequent Closing or a Subsequent Closing
      Date shall be read as references to the Final Closing and the Final
      Closing Date, respectively.

            


    

    


    
      	
               
      

            	
              h.  
      Sections 4.2(a) and 4.2(b) shall be deleted in their entirety and replaced
      with the following Section 4.2: “Final Closing. On the Final Closing Date,
      subject to the terms and conditions hereof (including, without limitation
      Section 5) and in reliance upon the representations and warranties of the
      Issuer contained herein and in the other Operative Documents, the
      Purchasers shall purchase and the Issuer shall sell Notes in an aggregate
      principal amount of $4,000,000 (such purchase and sale the “Final
      Closing”). On the Final Closing Date, each Purchaser will purchase
      from the Issuer, at the applicable Purchase Price, Notes for the principal
      amount and with the registration numbers set forth next to each
      Purchaser’s name in Annex F to this Second Amendment. The Issuer will
      deliver to each Purchaser the Notes to be purchased by such Purchaser in
      the form of a single Note (or such greater number of Notes in
      denominations of at least $100,000 as such Purchaser
  may

            


    

    


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              request) in the form of Annex D
      to this Second Amendment to the Securities Purchase Agreement, dated such
      Final Closing Date and registered in such Purchaser’s name (or in the name
      of its nominee), against delivery by such Purchaser to the Issuer or its
      order of immediately available funds in the amount of the Purchase Price
      therefor by wire transfer of immediately available funds for the account
      of the Issuer as designated by
it.”

            


    

    


    
      	
               
      

            	
              i.  
      Section 4.4 shall be deleted in its entirety and replaced with the
      following Section 4.4: “On the last day of each month, commencing on May
      31, 2007 and ending on June 30, 2008, the Issuer shall pay to the
      Purchasers ratably in accordance with their respective Commitment
      Percentages in immediately available funds a fee (herein called an “Unused
      Commitment Fee”) on the amount, if any, by which (i) the Average
      Principal Balance during such month is less than (ii) $14,000,000, at the
      rate of 0.50% per annum, calculated on the basis of a year of 360 days for
      the actual number of days elapsed. The Unused Commitment Fee shall be paid
      to each Purchaser in accordance with the payment instructions provided for
      on Schedule
      I.” For the avoidance of doubt the “June 30, 2008” date in this
      Section is meant to supersede the “July 31, 2008” date in the First
      Amendment to the Securities Purchase Agreement as it applies to Section
      4.4 of the Agreement.

            


    

    


    
      	
               
      

            	
              j.  
      Section 6.10 is amended by replacing “Schedule 6.10”
      with “Annex B to the Second Amendment to the Securities Purchase
      Agreement.”

            


    

    


    
      	
               
      

            	
              k.  
      Section 6.19(d) is amended by replacing “Schedule 6.19”
      with “Annex B to the Second Amendment to the Securities Purchase
      Agreement.”

            


    

    


    
      	
               
      

            	
              l.  
      Section 6.19(e) is amended by replacing “Schedule 6.19”
      with “Annex B to the Second Amendment to the Securities Purchase
      Agreement,” by replacing “171,473” with “81,224,” by replacing “10%” with
      “5%,” and by replacing “Initial Closing” with “Final
    Closing.”

            


    

    


    
      	
               
      

            	
              m.  
      Section 6.24 is amended by inserting “, as amended by Annex B to the
      Second Amendment to the Securities Purchase Agreement,” after “Schedule 6.24,”
      and by inserting: “The Issuer shall provide lease abstracts in the form
      used in Schedule
      6.24 of the Agreement for the new leases disclosed in Annex B to
      this Second Amendment within 3 Business Days of the Final Closing
      Date.”

            


    

    


    
      	
               
      

            	
              n.  
      Section 9.1(b) is deleted in its
entirety.

            


    

    


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              o.  
      Section 9.1(c) is amended by re-labeling it Section
    “9.1(b).”

            


    

    


    
      	
               
      

            	
              p.  
      Section 9.2(a) is amended by replacing “$500,000” with “$250,000,” by
      replacing “$5,000,000” with “$2,500,000,” by replacing “10%” with “3%” and
      by replacing “5%” with “2%.”

            


    

    


    
      	
               
      

            	
              q.  
      Section 9.2(b) is amended by replacing “$500,000” with “$250,000” and by
      replacing “$3,000,000” with
“$1,500,000.”

            


    

    


    
      	
               
      

            	
              r.  
      Schedule 13.5 of the Agreement is deleted in its entirety and replaced
      with Annex A to this Amendment. All references to “Schedule 13.5,”
      including but not limited to those in the definition of “Maximum
      Outstanding Balance” and in Sections 9.1(a) and 13.5, are amended by
      replacing “Schedule 13.5” with “Annex A to the Second Amendment to the
      Securities Purchase Agreement.”

            


    

    


    3.  
Warrants. The
Purchasers hereby agree that 90,249 of the 171,473 Warrants issued pursuant to
the Agreement shall be canceled on the Final Closing Date, and that the number
of Warrants held by each Purchaser will be reduced on a pro rata basis. Upon
receipt of the Purchase Price and the refunds contemplated by Sections 4 and 5
of this Second Amendment, the Issuer will deliver to the Purchasers Amended and
Restated Warrants to purchase an aggregate 81,224 of Common Stock. The Amended
and Restated Warrants will be in the form of Annex E to this Second Amendment
and shall bear the registration numbers and entitle each Purchaser to purchase
Common Stock in the amount set forth next to each Purchaser’s name in Annex F to
this Second Amendment. Upon receipt of the Amended and Restated Warrants, the
Purchasers will deliver the outstanding Warrants originally issued under the
Agreement to the Issuer.

    


    4.  
Commitment Fee. The Purchasers agree to refund $85,750 of the Unused Commitment
Fees paid to them pursuant to Section 4.4 of the Agreement. This refund will be
paid on the Final Closing Date in the manner contemplated by Section 4.2 of the
Agreement. The Issuer is hereby released from any obligation to pay any Unused
Commitment Fees accrued and unpaid as of the date hereof.

    


    5.  
Purchase Price. The Purchasers agree to refund to AeroCentury $200,000 of the
$500,000 amount by which the Purchase Price of Initial Notes was reduced from
99% of the aggregate face amount of such Notes per the definition of “Purchase
Price” in the Agreement. This refund will be paid on the Final Closing Date in
the manner contemplated by Section 4.2 of the Agreement.

    


    6.   Legal Fees. The
Purchasers agree to pay their own legal fees in connection with this Amendment,
the First Amendment to the Securities Purchase Agreement and the Final Closing.
To the extent that Sections 5.8 and 19 of the Agreement require the Issuer to
pay the Purchasers’ legal fees in connection with the Final Closing or any
transaction that antedates the Final Closing, including but not limited to the
First and Second Amendments to the Agreement, the Purchasers hereby waive their
rights to such payment or reimbursement. The Purchasers do not waive any rights
or claims that they have under Sections 5.8 and 19 of the Agreement (i) to
payment, compensation or reimbursement 

    


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    of costs,
fees, expenses or disbursements, other than legal fees, in connection with the
Final Closing or transactions that antedate the Final Closing or (ii) to
payment, compensation or reimbursement of costs, fees, expenses or disbursements
in connection with transactions, amendments or waivers that postdate this
Amendment or the Final Closing. The Purchasers confirm that there are no accrued
and unpaid legal fees owed by the Issuer to any Purchaser.

    


    7.   Continuing
Effect. All other provisions of the Agreement that are not expressly amended or
waived in this Amendment or the First Amendment to the Securities Purchase
Agreement (attached as Annex C hereto) shall remain unchanged and in full force
and effect in accordance with their terms.

    


    8.   Reservation of
Rights. Subject to the amendments contained herein or in the First Amendment to
the Securities Purchase Agreement, nothing herein shall be construed to
constitute a waiver of the rights of any Party under the Agreement with respect
to Events of Default that may have occurred under the Agreement or any other
Operative Document or may from time to time occur after the date hereof. The
Purchasers hereby reserve the right to exercise from time to time any additional
rights, powers or privileges and/or remedies the Purchasers have and/or to which
the Purchasers are entitled to under the Agreement or under any other Operative
Document. Neither this Amendment nor the First Amendment to the Securities
Purchase Agreement constitute a waiver of any right, power or privilege that the
Purchasers are entitled to exercise as a result of such other Event of Default
under the Agreement, any Operative Document or otherwise.

    


    9.   Governing Law;
Jurisdiction; Waiver of Jury Trial. This Amendment shall be construed in
accordance with and governed by the domestic substantive laws of the State of
New York without giving effect to any choice of law or conflicts of law
provision or rule that would cause the application of the domestic substantive
laws of any other jurisdiction. The Issuer, to the extent that it may lawfully
do so, hereby consents to service of process, and to be sued, in the State of
New York and consents to the jurisdiction of the courts of the State of New York
and the United States District Court for the Southern District of New York, as
well as to the jurisdiction of all courts to which an appeal may be taken from
such courts, for the purpose of any suit, action or other proceeding arising out
of any of its obligations hereunder or thereunder or with respect to the
transactions contemplated hereby or thereby, and expressly waives any and all
objections it may have as to venue in any such courts. The Issuer further agrees
that a summons and complaint commencing an action or proceeding in any of such
courts shall be properly served and shall confer personal jurisdiction if served
personally or by certified mail to it at its address referred to in Section 21
of the Agreement or as otherwise provided under the laws of the State of New
York. Notwithstanding the foregoing, the Issuer agrees that nothing contained in
this Section 9 shall preclude the institution of any such suit, action or other
proceeding in any jurisdiction other than the State of New York. THE ISSUER
IRREVOCABLY WAVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER
PROCEEDING INSTITUTED BY OR AGAINST IT IN RESPECT OF ITS OBLIGATIONS HEREUNDER
OR UNDER ANY OTHER OPERATIVE DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY.

    


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    10.
Counterparts. This Amendment may be executed by the parties hereto on separate
counterparts but all such counterparts shall together constitute but one in the
same instrument.

    


    [Signature
Pages Follow]

     

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    AEROCENTURY
CORP.

    By:


    Name:


    Title:

     

    SATELLITE
FUND II, L.P. By: Satellite Advisors, L.L.C. Its General Partner

    By:

    Name:

    Title:

     

    SATELLITE
FUND IV, L.P.

    By:
Satellite Advisors, L.L.C.

    Its:
 General
Partner

    By:


    Name:


    Title:

     

    THE
APOGEE GROUP, LLC

    By:
Satellite Asset Management, L.P.

    Its:
Manager

    By:


    Name:

     Title:

     

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    SATELLITE
FUND V, LLC

    By:
Satellite Asset Management, L.P.

    Its:
Manager

    By:


    Name:


    Title: