Form of Investors Rights Agreement


    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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (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. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (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;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (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;

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (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. 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (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.


     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    



    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]


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    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]