Document:

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]Form of Senior Credit Agreement

    

     

    

     

    

     

    Second
      Amended and Restated

     

    CREDIT
      AGREEMENT

     

    

     

    among

     

    

     

    AEROCENTURY
      CORP.

     

    

     

    and

     

    

     

    Certain
      Banking Institutions Named Herein

     

    

     

    with

     

    

     

    NATIONAL
      CITY BANK

     

    as
      Agent

     

    

     

    April
      17, 2007

     

    

     

    

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    [table
      of contents omitted]

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    Second
      Amended and Restated

     

    Credit
      Agreement

     

    This
      Second Amended and Restated Credit Agreement, dated April 17, 2007 (the
      "Agreement"), is entered into by and between AeroCentury
      Corp.,
      a
      Delaware corporation ("AeroCentury"),
      the
      banking institutions signatories hereto and named in Exhibit A attached hereto
      and such other institutions that hereafter become a "Bank" pursuant to §10.4
      hereof (collectively the "Banks"
      and
      individually a "Bank")
      and
National
      City Bank,
      a
      national banking association, as agent for the Banks under this Agreement
      ("National
      City"
      which
      shall mean in its capacity as agent unless specifically stated
      otherwise).

     

    Preliminary
      Statement

     

    WHEREAS,
      AeroCentury desires to have available to it a credit facility the proceeds
      of
      which may be used for (a) the purchase of Equipment (as defined herein) for
      lease to unaffiliated persons, said Equipment and related leases to constitute
      part of the Collateral (as defined herein), (b) working capital needs and
      (c) general corporate purposes.

     

    WHEREAS,
      AeroCentury has requested that the Bank or Banks, as applicable, make available
      to it such credit facility and make loans to it under the terms and conditions
      hereinafter set forth.

     

    WHEREAS,
      the Bank or Banks, as applicable, is or are willing to make available such
      credit facility and to make loans to AeroCentury under the terms and conditions
      hereinafter set forth.

     

    NOW,
      THEREFORE, in consideration of the premises and promises hereinafter set forth
      and intending to be legally bound hereby, the parties hereto agree as
      follows:

     

    
      	1.  	
              Certain
                Definitions

            

    

     

    
      	1.1.  	
              Definitions.

            

    

     

    "Additional
      Amount"
      shall
      have the meaning set forth in §2.1(h).

     

    "Affiliate"
      shall
      mean any Person: (1) which directly or indirectly controls, or is
      controlled by, or is under common control with AeroCentury; (2) which
      directly or indirectly beneficially owns or holds ten percent (10%) or more
      of
      any class of voting stock of AeroCentury; or (3) of which ten percent (10%)
      or more of the voting stock is directly or indirectly beneficially owned or
      held
      by AeroCentury. The term "Control" means the possession, directly or indirectly,
      of the power to direct or cause the direction of the management and policies
      of
      a Person, whether through the ownership of voting securities, by contract,
      or
      otherwise.

     

    "Agent"
      shall
      mean National City Bank.

     

    "Aggregate
      Revolving Loan Commitment"
      shall
      have the meaning set forth in §2.1(a).

     

    "Agreement"
      shall
      mean this Credit Agreement, as amended, supplemented, modified, replaced,
      substituted for or restated from time to time and all exhibits and schedules
      attached hereto.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    "Alternate
      Base Rate"
      shall
      mean, for any day, the higher of the Federal Funds Rate plus 1⁄2 of 1% or the
      prime commercial lending rate of National City Bank, as announced from time
      to
      time at its head office, calculated on the basis of the actual number of days
      elapsed in a year of 365 or 366 days, in the case of a leap year.

     

    "Amended
      and Restated Credit Agreement"
      shall
      mean the Credit Agreement, dated June 28, 2000 as amended March 7, 2002, January
      1, 2003, June 28, 2003, August 28, 2003, August 30, 2003, January 4, 2004,
      October 28, 2004, November 4, 2004, October 31, 2005, November 9, 2005, December
      19, 2005 and May 15, 2006, among AeroCentury, the banking institutions
      signatories thereto and named in Exhibit A attached thereto and National City
      Bank, as Agent.

     

    "Applicable
      Borrowing Margin"
      shall
      have the meanings set forth in Schedule 2 attached to this Agreement as it
      pertains to Base Rate Loans and LIBO Rate Loans.

     

    "Base
      Rate Loans"
      shall
      mean Revolving Credit Loans accruing interest based on the Alternate Base Rate
      plus the Applicable Borrowing Margin.

     

    "Borrowing"
      shall
      mean a borrowing hereunder consisting of Loans made to AeroCentury by the Banks
      on a given occasion.

     

    "Borrowing
      Base"
      shall
      mean 75% of the lowest of (1) the acquisition cost of each item of Equipment
      included in Eligible Collateral, or (2) the net book value of each item of
      Equipment included in Eligible Collateral, or (3) the aggregate appraised value
      of all items of Equipment included in Eligible Collateral based on the most
      recent independent appraisal completed on behalf of AeroCentury. Net book value
      shall be calculated using AeroCentury’s then current depreciation practices and
      both (1) and (2) above shall be calculated in accordance with GAAP. The
      foregoing test shall be determined separately for each item of Equipment
      included in Eligible Collateral. Notwithstanding the foregoing, Equipment
      subject to Eligible Leases which have remaining lease terms of less than three
      months shall not at any time be included in the Borrowing Base to the extent
      such Equipment constitutes more than 20% of the Borrowing Base. Remaining lease
      terms shall not include renewal options.

     

    "Borrowing
      Base Certificate"
      shall
      mean a certificate in substantially the form attached hereto as Exhibit C which
      shall be signed by the chief executive officer, chief operating officer, chief
      financial officer or a Senior Vice President of AeroCentury.

     

    "Business
      Day"
      shall
      mean any day other than a Saturday, Sunday, or other day on which commercial
      banks are authorized or required to close under the laws of the Commonwealth
      of
      Pennsylvania or the State of California and, if the applicable day relates
      to a
      LIBO Rate Loan, or notice with respect to a LIBO Rate Loan, a day on which
      dealings in Dollar deposits are also carried on in the London interbank market
      and banks are open for business in London ("London Business Day").

     

    "Capitalized
      Lease"
      shall
      mean all lease obligations of any Person for any property (whether real,
      personal or mixed) which have been or should be capitalized on the books of
      the
      lessee in accordance with Generally Accepted Accounting Principles.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    "Capitalized
      Lease Obligations"
      with
      respect to any Person, shall mean the aggregate amount which, in accordance
      with
      GAAP, is required to be reported as a liability on the balance sheet of such
      Person at such time in respect of such Person's interest as lessee under a
      Capitalized Lease.

     

    "Closing"
      shall
      mean the consummation of all requirements set forth in this Agreement such
      that
      AeroCentury shall be entitled to request and receive Loans
      hereunder.

     

    "Closing
      Date"
      shall
      mean the first date on which both (i) this Agreement shall have been
      executed and delivered by AeroCentury and each Bank, and (ii) the
      conditions to the first loan as set forth in §4.2 shall have been
      met.

     

    "Code"
      shall
      mean the Internal Revenue Code of 1986, as amended from time to time, and all
      rules and regulations with respect thereto in effect from time to
      time.

     

    "Collateral"
      shall
      mean those assets defined as "Collateral" in the Security Agreement (including
      but not limited to the Equipment and the related leases therefor).

     

    "Covenant
      Compliance Certificate"
      shall
      mean a certificate in substantially the form attached hereto as Exhibit D,
      or
      such other form as National City shall request from time to time, which shall
      be
      signed by the chief executive officer, chief operating officer, chief financial
      officer or a Senior Vice President of AeroCentury.

     

    "Debt"
      shall
      mean, as of any date of determination with respect to AeroCentury, without
      duplication, (i) all items which in accordance with GAAP would be included
      in determining total liabilities as shown on the liability side of a balance
      sheet of AeroCentury as of the date on which Debt is to be determined,
      (ii) all indebtedness of others with respect to which AeroCentury has
      become liable by way of a guarantee or endorsement (other than for collection
      or
      deposit in the ordinary course of business), (iii) all contingent
      liabilities of AeroCentury, including letters of credit, required to be either
      accrued or disclosed in accordance with GAAP, (iv) lease obligations that,
      in conformity with GAAP, have been capitalized on AeroCentury's balance sheet,
      and (v) the present value of any outstanding Operating Lease payments
      discounted at 10%, LESS (vi) Non-Recourse Debt and (vii) Subordinated
      Debt.

     

    "Debt
      Service" shall
      mean the sum of (i) current maturities (amounts due within the next twelve
      months) of all Recourse Debt, excluding any lump sum payments due at the
      expiration of any Recourse Debt, (ii) current amounts due (within the next
      twelve months) in respect of all leases, but excluding any lump sum payments
      due
      at the expiration of any lease, and (iii) 1/12th of the average principal
      balance of the Notes outstanding for the four most recent Fiscal
      Quarters.

     

    "Default
      Rate"
      on any
      Loan shall mean 2% per annum above the Alternate Base Rate plus Applicable
      Borrowing Margin then in effect. In the case of Letter of Credit fees such
      fees
      shall be fees then payable plus 2% per annum in addition thereto calculated
      on
      the same base as such fees.

     

    "Dollars"
      shall
      mean the lawful currency of the United States of America.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    "EBITDA"
      shall
      mean the sum of Net Income plus the amounts deducted from Net Income as expenses
      for interest, taxes, depreciation and amortization.

     

    "Eligible
      Collateral"
      shall
      mean the sum of (1) Equipment included in the Collateral which is subject
      to an Eligible Lease, and (2) Equipment included in the Collateral which is
      not subject to a lease, provided that
      (a) the aggregate of such Equipment shall not at any time exceed 10% of the
      Aggregate Revolving Loan Commitment, and (b) the maximum period for which
      any item of such Equipment shall not have been subject to an Eligible Lease
      does
      not exceed four months. In order to be Eligible Collateral, National City as
      Agent shall possess a first priority security interest in said Collateral to
      secure the payment, promptly when due, and the punctual performance of all
      of
      the "Liabilities" as defined in the Security Agreement.

     

    "Eligible
      Lease Receivables"
      shall
      mean a lease for Equipment to an unaffiliated Person in which
      (i) AeroCentury is the sole lessor or lessor of the Equipment,
      (ii) the lease arose in the ordinary course of business of AeroCentury,
      (iii) the Equipment has been delivered to the lessee and is currently
      subject to the lease, (iv) neither the lease nor the Equipment is subject
      to any currently outstanding assignment, claim, lien, security interest or
      other
      limitation on the absolute title of AeroCentury, (v) the lease payments are
      not more than 30 days past due with respect to any payment required thereby
      (based on the contractual terms in existence at the date the lease was included
      in the Collateral and not including any subsequent amendment or modification
      thereof, unless National City has specifically consented thereto in writing),
      (vi) the lease is freely assignable by the lessor (with any notices or
      consents required in connection therewith having been previously obtained,
      and
      subject to any lease requirements concerning the net worth of the assignee),
      (vii) the lease and the Equipment being leased constitute Collateral,
      (viii) the remaining lease term at the time of assignment to the Bank is
      for a period of seven years or less, (ix) the lease is a noncancellable,
      triple net lease in which the lessee may not assert, as an offset, any defenses
      or claims against the lessor arising from the condition or the intended use
      of
      the subject matter, except in the case of leases with terms of less than twelve
      months in which AeroCentury may be responsible for maintenance and except in
      the
      case of a lease where AeroCentury assumes the obligation to pay some or all
      of
      the cost of engine overhaul, airworthiness directives or manufacturer or
      government ordered modifications required during the term of the lease, so
      long
      as the lease states that such obligation is solely that of AeroCentury and
      imposes no obligation on the Banks (whether as secured parties or successor
      in
      interest to AeroCentury's ownership interest in the leased aircraft) and
      lessee's only remedy for breach of the obligation is an independent action
      against AeroCentury, and lessee waives any and all right to offset such
      obligation against lease payments owed AeroCentury, and (x) the lessee is
      not a resident of, and the Equipment will not be subject to the laws of any,
      foreign jurisdiction in which, in the sole determination of National City,
      the
      ability of the Bank to perfect a first priority security interest in the
      Equipment is unsatisfactory or the ability of National City to foreclose upon
      the Equipment and receive possession to or sell said Equipment is
      unsatisfactory.

     

    "Environmental
      Control Statutes"
      shall
      mean each and every applicable federal, state, county or municipal environmental
      statute, ordinance, rule, regulation, order, directive or requirement, together
      with all successor statutes, ordinances, rules, regulations, orders, directives
      or requirements, of any Governmental Authority, including without limitation
      laws in any way related to hazardous substances.

     

    "Equipment"
      shall
      mean new and used regional aircraft and related aircraft engines each of which
      is either subject to an existing lease or is intended to be leased or re-leased
      within four months immediately following the date in question. The aircraft
      or
      the aircraft engine, as applicable, shall have been manufactured within 28
      years
      immediately preceding the date in question, shall be in good working order
      immediately or within a reasonable period of time, as determined by National
      City, and shall be usable for commercial flight purposes immediately or within
      a
      reasonable period of time, as determined by National City.

     

    "ERISA"
      shall
      mean the Employee Retirement Income Security Act of 1974, as it may be amended
      from time to time.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    "ERISA
      Affiliate"
      shall
      mean any corporation which is a member of the same controlled group of
      corporations as AeroCentury within the meaning of §414(b) of the Code, or any
      trade or business which is under common control with AeroCentury within the
      meaning of §414(c) of the Code.

     

    "Event
      of Default"
      shall
      have the meaning set forth in §8.1.

     

    "Federal
      Funds Rate"
      shall
      mean, for any day, the rate per annum (rounded upwards, if necessary, to the
      nearest 1/100 of 1%) equal to the weighted average of the rates on overnight
      Federal funds transactions with members of the Federal Reserve System arranged
      by Federal funds brokers on such day, as published by the Federal Reserve Bank
      of New York on the Business Day next succeeding such day, provided that if
      the
      day for which such rate is to be determined is not a Business Day, the Federal
      Funds Rate for such day shall be such rate on such transactions on the next
      preceding Business Day as so published on the next succeeding Business
      Day.

     

    "Fiscal
      Quarter"
      shall
      mean a fiscal quarter of AeroCentury, which shall be any quarterly period ending
      on March 31, June 30, September 30 or December 31 of any year.

     

    "Fiscal
      Year"
      shall
      mean a fiscal year of AeroCentury, which shall end on the last day of
      December.

     

    "Generally
      Accepted Accounting Principles" or "GAAP"
      shall
      mean generally accepted accounting principles as in effect from time to time
      in
      the United States, consistently applied.

     

    "Governmental
      Authority"
      shall
      mean the federal, state, county or municipal government, or any department,
      agency, bureau or other similar type body obtaining authority therefrom or
      created pursuant to any laws.

     

    "Intangible
      Assets"
      shall
      mean all assets which would be classified as intangible assets under GAAP
      consistently applied, including, without limitation, goodwill (whether
      representing the excess of cost over book value of assets acquired or
      otherwise), patents, trademarks, trade names, copyrights, franchises, and
      deferred charges (including, without limitation, unamortized debt discount
      and
      expense, organization costs, and research and development costs). For purposes
      of this definition, prepayments of taxes, license fees and other expenses shall
      not be deemed Intangible Assets.

     

    "Interest"
      shall
      mean that amount of interest expense with respect to a Fiscal Quarter as
      calculated in accordance with GAAP.

     

    "Interest
      Period"
      shall
      mean with respect to any LIBO Rate Loan, each period commencing on the date
      any
      such Loan is made, or, with respect to a Loan being renewed, the last day of
      the
      next preceding Interest Period with respect to a Loan, and ending on the
      numerically corresponding day (or, if there is no numerically corresponding
      day,
      on the last day of the calendar month) in the first, second, third or sixth
      calendar month thereafter as selected under the procedures specified in § 2.3,
      if the Banks are then offering LIBO Rate Loans for such period; provided that
      each LIBO Rate Loan Interest Period which would otherwise end on a day which
      is
      not a Business Day (or, for purposes of Loans to be repaid on a London Business
      Day, such day is not a London Business Day) shall end on the next succeeding
      Business Day (or London Business Day, as appropriate) unless such next
      succeeding Business Day (or London Business Day, as appropriate) falls in the
      next succeeding calendar month, in which case the Interest Period shall end
      on
      the next preceding Business Day (or London Business Day, as
      appropriate).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    "Investment"
      in any
      Person shall mean (a) the acquisition (whether for cash, property, services
      or securities or otherwise) of capital stock, bonds, notes, debentures,
      partnership or other ownership interests or other securities of such Person;
      (b) any deposit with, or advance, loan or other extension of credit to,
      such Person (other than any such deposit, advance, loan or extension of credit
      having a term not exceeding 90 days in the case of unaffiliated Persons and
      120
      days in the case of Affiliates representing the purchase price of inventory
      or
      supplies purchased in the ordinary course of business) or guarantee or
      assumption of, or other contingent obligation with respect to, Recourse Funded
      Debt or other liability of such Person; and (c) (without duplication of the
      amounts included in (a) and (b)) any amount that may, pursuant to the terms
      of
      such investment, be required to be paid, deposited, advanced, lent or extended
      to or guaranteed or assumed on behalf of such Person.

     

    "JMC"
      shall
      have the meaning set forth in §6.6.

     

    "Letter
      of Credit"
      shall
      mean only those letters of credit issued pursuant to a completed application
      on
      the form of letter of credit application required by National City Bank at
      the
      time of the request for each Letter of Credit.

     

    "LIBO
      Rate"
      shall
      mean, for the applicable Interest Period, (i) the rate, rounded upwards to
      the next one-sixteenth of one percent, determined by National City two London
      Business Days prior to the date of the corresponding LIBO Rate Loan, at which
      National City is offered deposits in dollars at approximately 11:00 a.m., London
      time by leading banks in the interbank eurodollar or eurocurrency market for
      delivery on the date of such Loan in an amount and for a period comparable
      to
      the amount and Interest Period of such Loan and in like funds, divided by
      (ii) a number equal to one (1.0) minus the LIBO Rate Reserve Percentage.
      The LIBO Rate shall be adjusted automatically with respect to any LIBO Rate
      Loan
      outstanding on the effective date of any change in the LIBO Rate Reserve
      Percentage, as of such effective date. LIBO Rate shall be calculated on the
      basis of the number of days elapsed in a year of 360 days.

     

    "LIBO
      Rate Reserve Percentage"
      shall
      mean, for any LIBO Rate Loan for any Interest Period, the daily average of
      the
      stated maximum rate (expressed as a decimal) at which reserves (including any
      marginal, supplemental, or emergency reserves) are required to be maintained
      during such Interest Period under Regulation D by any Bank against "Eurocurrency
      liabilities" (as such term is used in Regulation D) but without benefit of
      credit proration, exemptions, or offsets that might otherwise be available
      to
      any Bank from time to time under Regulation D. Without limiting the effect
      of
      the foregoing, the LIBO Rate Reserve Percentage shall reflect any other reserves
      required to be maintained by National City against (1) any category of
      liabilities which includes deposits by reference to which the rate for LIBO
      Rate
      Loans is to be determined; or (2) any category of extension of credit or
      other assets which include LIBO Rate Loans.

     

    "LIBO
      Rate Loans"
      shall
      mean Revolving Credit Loans accruing interest based on the LIBO Rate plus the
      Applicable Borrowing Margin.

     

    "Lien"
      shall
      mean any lien, mortgage, security interest, chattel mortgage, pledge or other
      encumbrance (statutory or otherwise) of any kind securing satisfaction of any
      obligation to any Person, including any agreement to give any of the foregoing,
      any conditional sales or other title retention agreement, any lease in the
      nature thereof, and the filing of or the agreement to give any financing
      statement under the Uniform Commercial Code of any jurisdiction or similar
      evidence of any encumbrance, whether within or outside the United
      States.

     

    "Loan"
      or "Loans"
      shall
      have the meanings set forth in §2.1.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    "Loan
      Documents"
      shall
      mean this Agreement, the Notes, the Security Agreement, and all other documents
      directly related or incidental to said documents, the Loans or the Collateral,
      but shall not include any Swap Agreement.

     

    "Management
      Agreement"
      shall
      have the meaning set forth in §6.6.

     

    "Material
      Adverse Change"
      shall
      mean any event or condition which (a) is reasonably likely to result, in
      the determination of National City or the Required Banks, in a material adverse
      change in the financial condition, business, properties or prospects of
      AeroCentury, or (b) gives reasonable grounds to conclude that AeroCentury
      will not be able to perform or observe (in the normal course) its existing
      obligations under the Loan Documents to which it is a party, including but
      not
      limited to the Notes.

     

    "Material
      Adverse Effect"
      shall
      mean a material adverse effect on (i) the financial condition, business,
      properties, or prospects of AeroCentury, (ii) the ability of AeroCentury to
      perform its existing obligations under this Agreement, the Notes and the other
      Loan Documents, or (iii) the legality, validity or enforceability of this
      Agreement or the Notes or the rights and remedies of the holders of the
      Loans.

     

    "Monthly
      Lease Portfolio"
      shall
      mean a report in summary form of the status of accounts receivable in respect
      of
      all leases which are part of the Collateral in form and substance reasonably
      satisfactory to the Required Banks.

     

    "Multiemployer
      Plan"
      shall
      mean a multiemployer plan as defined in ERISA §4001(a)(3), which covers
      employees of AeroCentury or any ERISA Affiliate.

     

    "Net
      Income"
      shall
      mean net income after income taxes as shown on the income
      statement.

     

    "Net
      Worth"
      shall
      mean the sum of capital stock, plus paid-in-capital, plus retained earnings,
      plus the portion of unsecured subordinated debt which is due and payable after
      the Revolver Termination Date, minus the net worth of any Unrestricted
      Subsidiaries.

     

    "Non-Recourse
      Debt"
      shall
      mean Debt with respect to which the creditor or lender does not have recourse
      against AeroCentury by reason of any guaranty or other obligation on the part
      of
      AeroCentury.

     

    "Note"
      or "Notes"
      shall
      have the meaning set forth in §2.2.

     

    "Obligations"
      shall
      mean all now existing or hereafter arising debts, obligations, covenants, and
      duties of payment or performance of every kind, matured or unmatured, direct
      or
      contingent, owing, arising, due, or payable to the Banks or National City,
      as
      Agent, by or from AeroCentury arising out of this Agreement or any other Loan
      Document, including, without limitation, all obligations to repay principal
      of
      and interest on the Loans, and to pay interest, fees, costs, charges, expenses,
      professional fees, and all sums chargeable to AeroCentury or for which
      AeroCentury is liable as indemnitor under the Loan Documents, whether or not
      evidenced by any note or other instrument as well as any and all existing and
      future obligations of AeroCentury under or in connection with Swap Agreements
      with any one or more of the Banks, including but not limited to National City,
      pertaining to the Loans hereunder.

     

    "Operating
      Lease",
      with
      respect to any Person, shall mean the aggregate amount which, in accordance
      with
      GAAP, is not required to be reported as a liability on the balance sheet of
      such
      Person at such time in respect of such Person's interest as lessee under an
      Operating Lease.

     

    "PBGC"
      shall
      mean the Pension Benefit Guaranty Corporation and any successor
      thereto.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    "Pension
      Plan"
      shall
      mean, at any time, any Plan (including a Multiemployer Plan), the funding
      requirements of which (under ERISA §302 or Code §412) are, or at any time within
      the six years immediately preceding the time in question, were in whole or
      in
      part, the responsibility of AeroCentury or any ERISA Affiliate.

     

    "Permitted
      Debt"
      shall
      mean (a) Debt of AeroCentury under this Agreement and the Notes,
      (b) Debt incurred in the ordinary course of AeroCentury's business which is
      unsecured and does not constitute Recourse Funded Debt, (c) Debt of the Issuer
      existing as of the Initial Closing Date and included on Schedule 1 hereto,
      (d) Debt which is subordinated to Debt under this Agreement and the Notes
      on terms and conditions acceptable to the Banks, in their sole discretion,
      including the Satellite Notes, (e) Debt of an Unrestricted Subsidiary for
      which AeroCentury is not a guarantor in whole or in part or otherwise liable,
      (f) Debt for which the Issuer is a guarantor but which the only recourse to
      the
      Issuer in connection with such Debt is limited solely to the equity interests
      of
      such Unrestricted Subsidiary owned by the Issuer so long as in either case
      the
      aggregate principal amount of such Debt does not exceed an amount equal to
      75%
      of the aggregate book value of the assets of such Unrestricted
      Subsidiary.

     

    "Permitted
      Liens"
      shall
      mean (a) any Liens for current taxes, assessments and other governmental
      charges not yet due and payable or being contested in good faith by AeroCentury
      by appropriate proceedings and for which adequate reserves have been established
      by AeroCentury as reflected in AeroCentury's financial statements; (b) any
      mechanic's, materialman's, carrier's, warehousemen's or similar Liens for sums
      not yet due or being contested in good faith by AeroCentury by appropriate
      proceedings and for which adequate reserves have been established by AeroCentury
      as reflected in AeroCentury's financial statements; (c) easements,
      rights-of-way, restrictions and other similar encumbrances on the real property
      or fixtures of AeroCentury incurred in the ordinary course of business which
      individually or in the aggregate are not substantial in amount and which do
      not
      in any case materially detract from the value or marketability of the property
      subject thereto or interfere with the ordinary conduct of the business of
      AeroCentury; (d) Liens (other than Liens imposed on any property of
      AeroCentury pursuant to ERISA or §412 of the Code) incurred or deposits made in
      the ordinary course of business, including Liens in connection with workers'
      compensation, unemployment insurance and other types of social security and
      Liens to secure performance of tenders, statutory obligations, surety and appeal
      bonds (in the case of appeal bonds such Lien shall not secure any reimbursement
      or indemnity obligation in an amount greater than $250,000), bids, leases that
      are not Capitalized Leases, performance bonds, sales contracts and other similar
      obligations, in each case, not incurred in connection with the obtaining of
      credit or the payment of a deferred purchase price, and which do not, in the
      aggregate, result in a Material Adverse Effect; (e) Liens, if any, existing
      on the date hereof and listed in Schedule 1 hereto; and (f) Liens on the
      assets of Unrestricted Subsidiaries.

     

    "Person"
      shall
      mean any individual, corporation, partnership, joint venture, association,
      company, business trust or entity, or other entity of whatever
      nature.

     

    "Plan"
      shall
      mean an employee benefit plan as defined in §3(3) of ERISA, other than a
      Multiemployer Plan, whether formal or informal and whether legally binding
      or
      not.

     

    "Potential
      Default"
      shall
      mean an event, condition or circumstance that with the giving of notice or
      lapse
      of time or both would become an Event of Default.

     

    "Prohibited
      Transaction"
      shall
      mean a transaction that is prohibited under Code §4975 or ERISA §406 and not
      exempt under Code §4975 or ERISA §408.

     

    "Recourse
      Debt"
      shall
      mean Debt with respect to which the creditor or lender has or may have recourse
      against AeroCentury by reason of any guaranty or other obligation on the part
      of
      AeroCentury.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    "Recourse
      Funded Debt"
      shall
      mean (i) all indebtedness, liabilities, and obligations, now existing or
      hereafter arising, for money borrowed by AeroCentury on a recourse basis whether
      or not evidenced by any note, indenture, or agreement (including, without
      limitation, the Note, any indebtedness for money borrowed from an Affiliate
      and
      all outstanding letters of credit) and (ii) all indebtedness of others for
      money
      borrowed (including indebtedness of an Affiliate) with respect to which
      AeroCentury has become liable on a recourse basis by way of a guarantee or
      indemnity. For the avoidance of doubt, Recourse Funded Debt shall not include
      unsecured Subordinated Debt.

     

    "Regulation"
      shall
      mean any statute, law, ordinance, regulation, order or rule of any United States
      or foreign, federal, state, local or other government or governmental body,
      including, without limitation, those covering or related to banking, financial
      transactions, securities, public utilities, environmental control, energy,
      safety, health, transportation, bribery, record keeping, zoning,
      antidiscrimination, antitrust, wages and hours, employee benefits, and price
      and
      wage control matters.

     

    "Regulation
      D"
      shall
      mean Regulation D of the Board of Governors of the Federal Reserve System,
      as it
      may be amended from time to time.

     

    "Regulatory
      Change"
      shall
      mean any change after the date of this Agreement in any Regulation (including
      Regulation D) or the adoption or making after such date of any interpretations,
      directives or requests of or under any Regulation (whether or not having the
      force of law) by any court or governmental or monetary authority charged with
      the interpretation or administration thereof applying to a class of banks
      including any one of the Banks but excluding any foreign office of any
      Bank.

     

    "Reportable
      Event"
      shall
      mean, with respect to a Pension Plan: (a) Any of the events set forth in
      ERISA Sections 4043(b) (other than a reportable event as to which the provision
      of 30 days' notice to the PBGC is waived under applicable regulations) or
      4063(a) or the regulations thereunder, (b) an event requiring any
      AeroCentury or any ERISA Affiliate to provide security to a Pension Plan under
      Code §401 (a)(29) and (c) any failure by any AeroCentury or any ERISA
      Affiliate to make payments required by Code §412(m).

     

    "Request
      for Advance"
      shall
      have the meaning set forth in §2.3.(a).

     

    "Required
      Banks" at
      any
      time shall mean Banks whose Revolving Loan Commitments equal or exceed 66 2/3
      %
      of the total of such Revolving Loan Commitments if no Loans are outstanding
      or,
      if Loans are outstanding, Banks whose outstanding Loans equal or exceed 66
      2/3 %
      of the Loans.

     

    "Revolver
      Termination Date"
      shall
      have the meaning set forth in §2.1(a). 

     

    "Revolving
      Loan Commitment"
      shall
      have the meaning set forth in §2.1(a).

     

    "Revolving
      Loan Commitment Percentage"
      shall
      mean with respect to each Bank the percentage set forth opposite its name in
      Exhibit A hereto.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    "Revolving
      Credit Loan"
      shall
      have the meaning set forth in §2.1(a). 

     

    "Revolving
      Credit Note"
      shall
      have the meaning set forth in §2.2.

     

    “Satellite
      Notes" shall
      mean the senior subordinated notes issued by AeroCentury from time to time,
      pursuant to that certain Note Purchase Agreement, dated as of April 17, 2007,
      in
      the aggregate principal amount of up to $28,000,000.00, in favor of the
      purchasers listed on Schedule I thereto.

     

    "Security
      Agreement"
      shall
      mean all writings, agreements, and documents in any jurisdiction, whether within
      the United States or outside of the United States, the intended purpose of
      which
      is to grant a security interest in property, whether then owned by AeroCentury
      or thereafter acquired, and all replacements of said property, as collateral
      security for the payment and performance of the Obligations, including but
      not
      limited to (1) the Mortgage and Security Agreement, dated August 11, 1998
      by First Security Bank, N.A. trustee under Trust Agreement (N272EP) dated as
      of
      October 31, 1991 in favor of First Union National Bank, as Agent, which has
      been
      assigned to National City, as successor Agent, (2) the Mortgage and
      Security Agreement, dated August 11, 1998 by First Security Bank, N.A. trustee
      under Trust Agreement (N272EP) dated as of October 31, 1991 and trustee under
      Trust Agreement (N12303) dated as of November 15, 1989, First Union National
      Bank, as Agent, which has been assigned to National City, as successor Agent,
      (3) the Mortgage and Security Agreement, dated March 31, 1999 by
      AeroCentury First Union National Bank, as Agent, which has been assigned to
      National City, as successor Agent, (4) the Security Agreement dated June 28,
      2000 (which amends, restates and supersedes that certain Security Agreement,
      dated December 21, 1998) between AeroCentury Corp., as debtor, and National
      City
      Bank, as Agent, as further amended on April 17, 2007, and (5) all amendments,
      modifications, supplements, amendments and restatements, replacements and
      substitutions of each of the foregoing.

     

    "Solvent"
      shall
      mean, with respect to any Person, that the aggregate present fair saleable
      value
      of such Person's assets is in excess of the total amount of its probable
      liabilities on its existing debts as they become absolute and matured, such
      Person has not incurred debts beyond its foreseeable ability to pay such debts
      as they mature, and such Person has capital adequate to conduct the business
      it
      is presently engaged in or is about to engage in.

     

    "Subordinated
      Debt"
      shall
      mean the Satellite Notes and any other Debt which is subordinated in right
      of
      payment and all other respects to the Obligations, including but not limited
      to
      the Notes, pursuant to a written subordination agreement in form and substance
      satisfactory to the Banks.

     

    "Subsidiary"
      shall
      mean a corporation, limited liability company or other entity the shares of
      stock, membership interests or other equity interests of which having ordinary
      voting power (other than stock, membership interests or other equity interests
      having such power only by reason of the happening of a contingency) to elect
      a
      majority of the board of directors or other managers of such corporation are
      at
      the time owned, or the management of which is otherwise controlled, directly
      or
      indirectly through one or more intermediaries or both, by
      AeroCentury.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    "Swap
      Agreement"
      shall
      have the meaning set forth in 11 U.S.C. § 101 and shall include but not be
      limited to interest rate swap agreements, interest rate cap agreements, interest
      collar agreements, interest rate hedging agreements, interest rate floor
      agreements or other similar agreements or arrangements.

     

    "Tangible
      Net Worth"
      shall
      mean Net Worth, minus Intangible Assets.

     

    "Termination
      Event"
      shall
      mean, with respect to a Pension Plan: (a) a Reportable Event, (b) the
      termination of a Pension Plan, or the filing of a notice of intent to terminate
      a Pension Plan, or the treatment of a Pension Plan amendment as a termination
      under ERISA §4041(c), (c) the institution of proceedings to terminate a
      Pension Plan under ERISA §4042 or (d) the appointment of a trustee to
      administer any Pension Plan under ERISA §4042.

     

    "Unfunded
      Pension Liabilities"
      shall
      mean, with respect to any Pension Plan at any time, the amount determined by
      taking the accumulated benefit obligation, as disclosed in accordance with
      Statement of Accounting Standards No. 87, over the fair market value of Pension
      Plan assets.

     

    "Unrecognized
      Retiree Welfare Liability"
      shall
      mean, with respect to any Plan that provides postretirement benefits other
      than
      pension benefits, the amount of the accumulated post-retirement benefit
      obligation, as determined in accordance with Statement of Financial Accounting
      Standards No. 106, as of the most recent valuation date. Prior to the date
      such
      statement is applicable to AeroCentury, such amount of the obligation shall
      be
      based on an estimate made in good faith.

     

    "Unrestricted
      Subsidiaries"
      shall
      mean Subsidiaries which are special purpose or bankruptcy remote that have
      debt
      on their respective balance sheets which when consolidated with AeroCentury
      is
      deemed to be Non-Recourse Debt to AeroCentury.

     

    “Unrestricted
      Subsidiary Investment"
      shall
      have the meaning specified in §6.6.

     

    “Unrestricted
      Subsidiary Investment Amount"
      shall
      mean, at any time with respect to any Unrestricted Subsidiary, an amount equal
      to 5% of the net book value of the assets of such Unrestricted Subsidiary at
      such time.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    1.2. Accounting
      Terms.
      All
      accounting terms not specifically defined herein shall be construed in
      accordance with Generally Accepted Accounting Principles consistent with those
      applied in the preparation of the financial statements referred to in §3.5, and
      all financial data submitted pursuant to this Agreement shall be prepared in
      accordance with such principles.

     

    
      	2.  	
              The
                Credit

            

    

     

    
      	2.1.  	
              The
                Loans.

            

    

     

    (a) Revolving
      Credit Loans; Commitment. 

     

    (i)
      Subject to the terms and conditions herein set forth, each Bank agrees,
      severally and not jointly, to make revolving credit loans (collectively, the
      "Revolving
      Credit Loans"
      or the
"Loans",
      and
      individually a "Revolving
      Credit Loan"
      or a
"Loan")
      to
      AeroCentury from time to time during the period beginning on the date hereof
      and
      ending on March 31, 2010 or on the earlier date of termination in full, pursuant
      to §2.6 or §8.1 hereof, of the obligations of such Bank under this §2.1 (March
      31, 2010 or such earlier date of termination being herein called the
"Revolver
      Termination Date")
      in
      amounts not to exceed at any time outstanding, in the aggregate, the commitment
      amount set forth opposite the name of such Bank on Exhibit A hereto (each such
      amount, as the same may be reduced pursuant to §2.6 hereof or increased pursuant
      to §2.1(a)(ii) hereof, being hereinafter called such Bank's "Revolving
      Loan Commitment").
      The
      Banks' collective commitment to make Loans shall be the "Aggregate
      Revolving Loan Commitment".
      All
      Loans shall be made by the Banks simultaneously and pro rata
      in
      accordance with their respective Commitments. All Loans shall be made to
      AeroCentury at the principal office of National City in Cleveland,
      Ohio.

     

    (ii)
      AeroCentury may at any time and from time to time, upon prior written notice
      by
      AeroCentury to National City, increase the Aggregate Revolving Loan Commitment
      by up to an additional $30,000,000.00, with additional Revolving Loan
      Commitments from any existing Bank or new Revolving Loan Commitments from any
      other Person selected by AeroCentury and approved by the Agent; provided
      that:

     

    (A) any
      such
      increase shall be in a minimum principal amount of $5,000,000.00 and in integral
      multiples of $5,000,000.00 in excess thereof;

     

    (B) no
      Event
      of Default shall have occurred and be continuing at the time of any such
      increase;

     

    (C) no
      existing Bank shall be under any obligation to increase its Revolving Loan
      Commitment and any such decision whether to increase its Revolving Loan
      Commitment shall be in such Bank’s sole and absolute discretion;
      and

     

    (D) any
      new
      Person providing a Revolving Loan Commitment shall join this Agreement by
      executing such joinder documents reasonable required by the Agent, whereupon
      such Person shall be a “Bank” hereunder.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    In
      connection with any such increase in the Aggregate Revolving Loan Commitments,
      Exhibit A shall be revised by the Agent to reflect the new Revolving Loan
      Commitments and distributed to the Banks.

     

    (b) Interest
      Rate Options.
      AeroCentury may request Revolving Credit Loans to bear interest at the Alternate
      Base Rate or LIBO Rate options (described in §2.4). The Loans outstanding at any
      one time may involve any combination of such interest rate options in such
      amounts as AeroCentury may determine, subject to the terms and conditions
      hereof, including the requirements concerning minimum Loan requests and the
      requirements that (i) no request may be made which would require more than
      one interest rate option or more than one Interest Period to apply to Loans
      made
      on any single date, and (ii), in the case of LIBO Rate Loans, (a) not
      more than six such Loans may be outstanding at any one time, unless there shall
      not be any Base Rate Loans outstanding in which case the number may be seven,
      and (b) no LIBO Rate Loan may have an Interest Period extending beyond the
      Revolver Termination Date.

     

    (c) Maximum
      Loans Outstanding.
      AeroCentury shall not be entitled to any new Revolving Credit Loan if, after
      giving effect to such Loan, the unpaid amount of the then outstanding Loans
      would exceed the lesser of (i) the Aggregate Revolving Loan Commitment or
      (ii) the then current Borrowing Base, as stated in the most recent
      Borrowing Base Certificate furnished to National City as provided herein. For
      purposes of determining the amount of Revolving Credit Loans outstanding, the
      Letters of Credit issued pursuant to §2.1(i) hereof shall be deemed Revolving
      Credit Loans and shall be added to the Revolving Credit Loans outstanding to
      determine the aggregate Revolving Credit Loans outstanding.

     

    (d) Minimum
      Loan Amount.
      Except
      for Loans which exhaust the full remaining amount of the Aggregate Revolving
      Loan Commitment and conversions which result in the conversion of all Loans
      subject to a particular interest rate option, each of which may be in lesser
      amounts, (i) each LIBO Rate Loan when made (and each conversion of Base
      Rate Loans into LIBO Rate Loans) shall be in an amount at least equal to
      $3,000,000 or, if greater, then in such minimum amount plus $100,000 multiples,
      and (ii) each Base Rate Loan when made (and each conversion of LIBO Rate
      Loans into Base Rate Loans) shall be in an amount at least equal to $250,000
      or,
      if greater, then in such minimum amount plus $25,000 multiples.

     

    (e) Prepayment
      and Reborrowing.
      Prior to
      the Revolver Termination Date and within the limits of the Aggregate Revolving
      Loan Commitment and the Borrowing Base, AeroCentury may borrow, prepay and
      reborrow Revolving Credit Loans. All Revolving Credit Loans shall mature and
      be
      due and payable on the Revolver Termination Date.

     

    (f) Revolving
      Loan Commitment Percentages.
      The
      obligation of each Bank to make a Loan to AeroCentury at any time shall be
      limited to its percentage (the "Revolving
      Loan Commitment Percentage")
      as set
      forth opposite its name on Exhibit A hereto multiplied by the aggregate
      principal amount of the Loan requested. The principal amounts of the respective
      Loans made by the Banks on the occasion of each Borrowing shall be pro rata
      in
      accordance with their respective Revolving Loan Commitment Percentages. No
      Bank
      shall be required or permitted to make any Loan if, immediately after giving
      effect to such Loan, and the application of the proceeds of a Loan to the extent
      applied to the repayment of the Loans, the sum of such Bank's Loans outstanding
      would exceed such Bank's Revolving Loan Commitment.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (g) Several
      Obligations.
      The
      failure of any one or more Banks to make Loans in accordance with its or their
      obligations shall not relieve the other Banks of their several obligations
      hereunder, but in no event shall the aggregate amount at any one time
      outstanding which any Bank shall be required to lend hereunder exceed its
      Revolving Loan Commitment.

     

    (h) Payment
      of Additional Amount.
      If any
      principal of a LIBO Rate Loan shall be repaid (whether upon prepayment,
      reduction of the Aggregate Revolving Loan Commitment after acceleration or
      for
      any other reason) or converted to a Base Rate Loan prior to the last day of
      the
      Interest Period applicable to such LIBO Rate Loan or if AeroCentury fails for
      any reason to borrow a LIBO Rate Loan after giving irrevocable notice pursuant
      to §2.3, it shall pay to each Bank, in addition to the principal and interest
      then to be paid, such additional amounts as maybe necessary to compensate each
      Bank for all direct and indirect costs and losses (including losses resulting
      from redeployment of prepaid or unborrowed funds at rates lower than the cost
      of
      such funds to such Bank, and including lost profits incurred or sustained by
      such Bank) as a result of such repayment or failure to borrow (the "Additional
      Amount").
      The
      Additional Amount (which each Bank shall take reasonable measures to minimize)
      shall be specified in a written notice or certificate delivered to AeroCentury
      by National City, as Agent, in the form provided by each Bank sustaining such
      costs or losses. Such notice or certificate shall contain a calculation in
      reasonable detail of the Additional Amount to be compensated and shall be
      conclusive as to the facts and the amounts stated therein, absent manifest
      error.

     

    (i) Letters
      of Credit.
      National
      City, as Agent, under the terms and subject to the conditions of this Agreement,
      on behalf of itself and each other Bank in the same proportions as each Bank's
      Revolving Loan Commitment bears to the Aggregate Revolving Loan Commitment,
      shall provide Letters of Credit to AeroCentury, from time to time prior to
      the
      Revolver Termination Date, as requested by AeroCentury, provided that
      (A) the aggregate amount of Letters of Credit outstanding at any one time
      shall not exceed $5,000,000 or such lesser amount, if any, as will, when added
      to the amount of the Revolving Credit Loans then outstanding, aggregate more
      than the Aggregate Revolving Loan Commitment (or such lesser amount as
      AeroCentury is entitled to borrow hereunder at such time by reason of the
      limitation of the Borrowing Base or otherwise), and (B) no Letter of Credit
      shall be for a term longer than 180 days.

     

    AeroCentury
      shall request a Letter of Credit by delivering a completed letter of credit
      application to National City on such form as may be specified by National City
      not less than three Business Days prior to the date specified by AeroCentury
      as
      the date the Letter of Credit is to be issued. The standard form of National
      City letter of credit application as currently in effect shall be
      used.

     

    Letters
      of Credit shall not bear interest until drawn upon but shall each be subject
      to
      an annual charge, payable quarterly in arrears from the date of issuance, equal
      to (a) the Applicable Borrowing Margin for LIBO Rate Loans as in effect
      from time to time times the aggregate amount of all Letters of Credit
      outstanding which shall be shared among the Banks pro rata in the same
      proportions that each Bank's Loan Commitment bears to the Aggregate Loan
      Commitment, and (b) 25 basis points (1/4 of 1%) times the face amount of
      each Letter of Credit outstanding which shall be payable to the issuing
      Bank.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    If
      any
      obligation of AeroCentury to pay money in connection with any Letter of Credit
      is not met when requested by National City, as Agent, as permitted by the
      applicable letter of credit application and the reimbursement agreement
      contained therein, the amount due shall be funded automatically by a Revolving
      Credit Loan which Loan shall be made without regard to any minimum borrowing
      requirement, condition precedent herein, or Event of Default hereunder which
      would otherwise entitle any Bank or the Banks not to provide such Revolving
      Credit Loan, and each Bank shall make its proportionate share of such Revolving
      Credit Loan. Any obligation of AeroCentury to pay money in connection with
      any
      Letter of Credit or the application therefor shall be deemed secured as if
      made
      as a Loan hereunder. In the event AeroCentury shall terminate the Aggregate
      Revolving Loan Commitment as provided in §2.6 and shall pay the outstanding
      principal amount of the Revolving Credit Loans in full and with interest or
      the
      Revolver Termination Date shall occur at a time when one or more Letters of
      Credit remain outstanding, then AeroCentury shall furnish to National City,
      as
      Agent, within two Business Days such amount of cash, to be held as cash
      collateral and invested in certificates of deposit of National City with
      interest payable to AeroCentury, as will pay the maximum amount which may be
      drawn by beneficiaries of Letters of Credit outstanding at the date of such
      termination or the Revolver Termination Date, as applicable.

     

    2.2. The
      Notes.
      The
      Revolving Credit Loans made by each Bank shall all be evidenced by a single
      promissory note of AeroCentury (each such promissory note as it may be amended,
      extended, modified or renewed a "Revolving
      Credit Note"
      or a
"Note"
      and
      together the "Revolving
      Credit Notes"
      or the
"Notes")
      in
      principal face amount equal to such Bank's Revolving Loan Commitment, payable
      to
      the order of such Bank and otherwise in the form attached hereto as Exhibit
      B.
      The Revolving Credit Notes shall be dated the Closing Date (or as to any
      Revolving Credit Note issued pursuant to an increase in any Revolving Loan
      Commitment or the addition of a new Bank pursuant to §2.1(a)(ii) hereof, the
      date of such increase or addition), shall bear interest at the rate per annum
      and be payable as to principal and interest in accordance with the terms hereof.
      The Revolving Credit Notes shall mature upon the Revolver Termination Date
      and,
      upon maturity, each outstanding Revolving Credit Loan evidenced thereby shall
      be
      due and payable. Notwithstanding the stated amount of any Revolving Credit
      Note,
      the liability of AeroCentury under each Revolving Credit Note shall be limited
      at all times to the outstanding principal amount of the Revolving Credit Loans
      by each Bank evidenced thereby, plus all interest accrued thereon and the amount
      of all costs and expenses then payable hereunder, as established by each such
      Bank's books and records, which books and records shall be conclusive absent
      manifest error.

     

    2.3. Funding
      Procedures.

     

    (a) Request
      for Advance.
      Each
      request for a Revolving Credit Loan or the conversion or renewal of an interest
      rate with respect to a Loan shall be made not later than 1:00 p.m. EST on a
      Business Day by delivery to National City of a written request signed by
      AeroCentury or, in the alternative, a telephone request followed promptly by
      written confirmation of the request (a "Request
      for Advance"),
      specifying the date and amount of the Loan to be made, converted or renewed,
      selecting the interest rate option applicable thereto, and in the case of LIBO
      Rate Loans, specifying the Interest Period applicable to such Loans. The form
      of
      request to be used in connection with the making, conversion or renewal of
      Revolving Credit Loans shall be that form provided to AeroCentury by National
      City. Each request shall be received not less than one Business Day prior to
      the
      date of the proposed borrowing, conversion or renewal in the case of Base Rate
      Loans, and three London Business Days prior to the date of the proposed
      borrowing, conversion or renewal in the case of LIBO Rate Loans. No request
      shall be effective until actually received in writing by National City, as
      the
      Agent.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b) Actions
      by Agent.
      Upon
      receipt of a Request for Advance and if the conditions precedent provided herein
      shall be satisfied at the time of such request, National City promptly shall
      notify each Bank of such request and of such Bank's ratable share of such Loan.
      Upon receipt by National City of a Request for Advance, the request shall not
      be
      revocable by AeroCentury.

     

    (c) Availability
      of Funds.
      Not
      later than 2:00 p.m. EST on the date of each Loan, each Bank shall make
      available (except as provided in clause (d) below) its ratable share of such
      Loan, in immediately available funds, to National City at the address set forth
      opposite its name on the signature page hereof or at such account in London
      as
      National City shall specify to AeroCentury and the Banks. Unless National City
      knows that any applicable condition specified herein has not been satisfied,
      it
      will make the funds so received from the Banks immediately available to
      AeroCentury on the date of each Loan by a credit to the account of AeroCentury
      at National City at the aforesaid address.

     

    (d) Funding
      Assumptions.
      Unless
      National City shall have been notified by any Bank at least one Business Day
      prior to the date of the making, conversion or renewal of any LIBO Rate Loan,
      or
      by 3:00 p.m. EST on the date a Base Rate Loan is requested, that such Bank
      does
      not intend to make available to National City, such Bank's portion of the total
      amount of the Loan to be made, converted or renewed on such date, National
      City
      may assume that such Bank has made such amount available to National City on
      the
      date of the Loan and National City may, in reliance upon such assumption, make
      available to AeroCentury a corresponding amount. If and to the extent such
      Bank
      shall not have so made such funds available to National City, such Bank agrees
      to repay National City forthwith on demand such corresponding amount together
      with interest thereon, for each day from the date such amount is made available
      to AeroCentury until the date such amount is repaid to National City, at the
      Federal Funds Rate plus 50 basis points for three Business Days, and thereafter
      at the Alternate Base Rate plus the Applicable Borrowing Margin. If such Bank
      shall repay to National City such corresponding amount, such amounts so repaid
      shall constitute such Bank's Loan for purposes of this Agreement. If such Bank
      does not repay such corresponding amount forthwith upon National City's demand
      therefor, National City shall promptly notify AeroCentury, and AeroCentury
      shall
      immediately pay such corresponding amount to National City, without any
      prepayment penalty or premium, but with interest on the amount repaid, for
      each
      day from the date such amount is made available to AeroCentury until the date
      such amount is repaid to National City, at the rate of interest applicable
      at
      the time to such Loan. Nothing herein shall be deemed to relieve any Bank of
      its
      obligation to fulfill its Revolving Loan Commitment hereunder or to prejudice
      any rights which AeroCentury may have against any Bank as a result of any
      default by such Bank hereunder.

     

    (e) Proceeds
      of Loan Being Repaid.
      If the
      Banks make a Loan on a day on which all or any part of an outstanding Loan
      from
      the Banks is to be repaid, each Bank shall apply the proceeds of its new Loan
      to
      make such repayment and only an amount equal to the difference (if any) between
      the amount being borrowed and the amount being repaid shall be made available
      by
      such Bank to National City as provided in clause (c).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.4. Interest
      Rates.

     

    (a) Alternate
      Base Rate.
      Each
      Base Rate Loan shall bear interest on the principal amount thereof from the
      date
      made until such Loan is paid in full or converted, at a rate per annum equal
      to
      the Alternate Base Rate determined from time to time plus the Applicable
      Borrowing Margin for Base Rate Loans.

     

    (b) LIBO
      Rate.
      Each
      LIBO Rate Loan shall bear interest on the principal amount thereof from the
      date
      made until such Loan is paid in full, renewed, or converted, at a rate per
      annum
      equal to the LIBO Rate plus the Applicable Borrowing Margin for LIBO Rate Loans.
      After receipt of a request for a LIBO Rate Loan, National City shall proceed
      to
      determine the LIBO Rate to be applicable thereto. National City shall give
      prompt notice by telephone or facsimile to AeroCentury and to each Bank of
      the
      LIBO Rate thus determined in respect of each LIBO Rate Loan or any change
      therein. In the event AeroCentury fails or is not permitted to select an
      Interest Period for any LIBO Rate Loan which is maturing within the time period
      and otherwise as provided herein, such Loan shall be automatically converted
      into a Base Rate Loan on the last day of the Interest Period for such
      Loan.

     

    (c) Renewals
      and Conversions.
      AeroCentury shall have the right to convert Base Rate Loans into LIBO Rate
      Loans, and vice versa, and to renew LIBO Rate Loans from time to time, provided
      that: (i) AeroCentury shall give National City notice of each permitted
      conversion or renewal; (ii) LIBO Rate Loans may be converted or renewed
      only as of the last day of the applicable Interest Period for such Loans;
      (iii) without the consent of each of the Banks, no Base Rate Loan may be
      converted into a LIBO Rate Loan, and no Interest Period may be renewed if on
      the
      proposed date of conversion an Event of Default, or Potential Default exists
      or
      would thereby occur. National City shall use its best efforts to notify
      AeroCentury of the effectiveness of such conversion or renewal, and the new
      interest rate to which the converted or renewed Loan is subject, as soon as
      practicable after the conversion; provided, however, that any failure to give
      such notice shall not affect AeroCentury's obligations or the Banks' rights
      and
      remedies hereunder in any way whatsoever.

     

    (d) Reinstatements.
      The
      liability of AeroCentury under this §2.4 shall continue to be effective or be
      automatically reinstated, as the case may be, if at any time payment, in whole
      or in part, of any of the payments to the Banks is rescinded or must otherwise
      be restored or returned upon the insolvency, bankruptcy, dissolution,
      liquidation or reorganization of AeroCentury or any other person, or upon or
      as
      a result of the appointment of a custodian, receiver, trustee or other officer
      with similar powers with respect to AeroCentury or any other Person or any
      substantial part of its property, or otherwise, all as though such payment
      had
      not been made.

     

    2.5. Fees.

     

    (a) Commitment
      Fee.
      AeroCentury agrees to pay to National City, as the Agent, for the account of
      each Bank, a commitment fee (the "Commitment
      Fee")
      computed on the basis of a year of 365 days or 366 days, in the case of a leap
      year, for the actual number of days elapsed at the rate per annum set forth
      in
      Schedule 2 attached to this Agreement times the average daily amount of the
      unused portion of the Aggregate Revolving Loan Commitment. The Commitment Fee
      shall be payable commencing with the date hereof and shall continue to and
      including the Revolver Termination Date. The unused portion of the Aggregate
      Revolving Loan Commitment shall mean the Aggregate Revolving Loan Commitment
      less the unpaid principal amount of all Loans. The Commitment Fee shall be
      payable in quarterly installments on the last Business Day of each calendar
      quarter and on the Revolver Termination Date.

     

    (b) Structuring
      and Arranging Fee; Administrative Fee.
      A
      Structuring and Arranging Fee as well as an Administrative Fee shall be payable
      to National City as set forth in a separate letter agreement between National
      City and AeroCentury. 

     

    2.6. Termination
      or Reduction of Aggregate Revolving Loan Commitment.

     

    (a) Voluntary.
      AeroCentury may at any time, on not less than three Business Days' written
      notice, terminate or permanently reduce the Aggregate Revolving Loan Commitment
      pro rata among the Banks, provided that any reduction shall be in the minimum
      amount of $5,000,000 and that no such reduction shall cause the principal amount
      of Loans outstanding to exceed the Aggregate Revolving Credit Commitment as
      reduced or the Borrowing Base, whichever is less.

     

    (b) Termination.
      In the
      event the Aggregate Revolving Loan Commitment is terminated, the Revolver
      Termination Date shall accelerate and AeroCentury shall, simultaneously with
      such termination, repay the Base Rate Loans and LIBO Rate Loans in accordance
      with §2.8.

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

        2.7. Loan
      Prepayments (Optional and Mandatory).

     

    (a) Base
      Rate Loans.
      On one
      Business Day's notice to the Banks, AeroCentury may, at its option, prepay
      the
      Base Rate Loans in whole at any time or in part from time to time, provided
      that
      each partial prepayment shall be in at least the principal amount of $25,000
      or,
      if greater, then in $10,000 multiples.

     

    (b) LIBO
      Rate Loans.
      AeroCentury may, at its option prepay any LIBO Rate Loan provided that if it
      shall prepay a LIBO Rate Loan prior to the last day of the applicable Interest
      Period, or shall fail to borrow any LIBO Rate Loan on the date such Loan is
      to
      be made, it shall pay to each Bank, in addition to the principal and interest
      then to be paid in the case of a prepayment, on such date of prepayment, the
      Additional Amount incurred or sustained by such Bank as a result of such
      prepayment or failure to borrow as provided in §2.1(h).

     

    (c) Mandatory
      Prepayments.
      AeroCentury shall prepay Base Rate Loans and LIBO Rate Loans, in such order
      and
      combination as it may elect, in an amount equal to 100% of the net proceeds
      received by it from the sale of any assets which sale was not made in the
      ordinary course of the business of AeroCentury and the aggregate proceeds from
      any individual assets or group of assets sold at the same approximate time
      was
      at least equal to $100,000. Such prepayment shall be made promptly but in no
      event later than three Business Days following the receipt of any said net
      proceeds. 

     

    2.8. Payments.

     

    (a) Base
      Rate Loans.
      Accrued
      interest on all Base Rate Loans shall be due and payable on the last Business
      Day of each calendar quarter and upon the Revolver Termination
      Date.

     

    (b) LIBO
      Rate Loans.
      Accrued
      interest on LIBO Rate Loans with Interest Periods of one, two or three months
      shall be due and payable on the last day of such Interest Period. Accrued
      interest on LIBO Rate Loans with Interest Periods of six months shall be due
      and
      payable at the end of the third month and on the last day of the Interest
      Period.

     

    (c) Form
      of Payments, Application of Payments, Payment Administration,
      Etc.
      Provided
      that no Event of Default or Potential Default then exists, all payments and
      prepayments shall be applied to the Loans in such order and to such extent
      as
      shall be specified by AeroCentury, by written notice to National City at the
      time of such payment or prepayment. Except as otherwise provided herein, all
      payments of principal, interest, fees, or other amounts payable by AeroCentury
      hereunder shall be remitted to National City on behalf of the Banks at the
      address set forth opposite its name on the signature page hereof or at such
      office or account as National City shall specify to AeroCentury and the Banks,
      in immediately available funds not later than 2:00 p.m. EST on the day when
      due.
      National City will promptly distribute to each Bank by wire transfer in
      immediately available funds each Bank's pro rata share of such payment based
      upon such Bank's Revolving Loan Commitment Percentage. Whenever any payment
      is
      stated as due on a day which is not a Business Day, the maturity of such payment
      shall, except as otherwise provided in the definition of "Interest Period",
      be
      extended to the next succeeding Business Day and interest and commitment fees
      shall continue to accrue during such extension. AeroCentury authorizes National
      City to deduct from any account of AeroCentury maintained at National City
      or
      over which National City has control any amount payable under this Agreement,
      the Notes or any other Loan Document which is not paid in a timely manner.
      National City's failure to deliver any bill, statement or invoice with respect
      to amounts due under this Section or under any Loan Document shall not affect
      AeroCentury's obligation to pay any installment of principal, interest or any
      other amount under this Agreement when due and payable.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d) Net
      Payments.
      All
      payments made to the Banks and National City, as the Agent, by AeroCentury
      hereunder, under any Note or under any other Loan Document will be made without
      set off, counterclaim or other defense. All such payments will be made free
      and
      clear of, and without deduction or withholding for, any present or future taxes,
      levies, imposts, duties, fees, assessments or other charges of whatever nature
      now or hereafter imposed by any jurisdiction or any political subdivision or
      taxing authority thereof or therein (but excluding, except as provided below,
      any tax imposed on or measured by the gross or net income of a Bank (including
      all interest, penalties or similar liabilities related thereto) pursuant to
      the
      laws of the United States of America or any political subdivision thereof,
      or
      taxing authority of the United States of America or any political subdivision
      thereof, in which the principal office or applicable lending office of such
      Bank
      is located), and all interest, penalties or similar liabilities with respect
      thereto (collectively, together with any amounts payable pursuant to the next
      sentence, "Taxes").
      AeroCentury shall also reimburse each Bank, upon the written request of such
      Bank, for Taxes imposed on or measured by the gross or net income of such Bank
      pursuant to the laws of the United States of America (or any State or political
      subdivision thereof), or the jurisdiction (or any political subdivision or
      taxing authority thereof) in which the principal office or applicable lending
      office of such Bank is located as such Bank shall determine are payable by
      such
      Bank due to the amount of Taxes paid to or on behalf of such Bank pursuant
      to
      this or the preceding sentence. If any Taxes are so levied or imposed,
      AeroCentury agrees to pay the full amount of such Taxes, and such additional
      amounts as may be necessary so that every payment of all amounts due hereunder,
      under any Note or under any other Loan Document, after withholding or deduction
      for or on account of any Taxes, will not be less than the amount provided for
      herein or in such Note. AeroCentury will furnish to National City upon request
      certified copies of tax receipts evidencing such payment by AeroCentury.
      AeroCentury will indemnify and hold harmless National City and each Bank, and
      reimburse National City or such Bank upon its written request, for the amount
      of
      any Taxes so levied or imposed and paid or withheld by such Bank.

     

    Notwithstanding
      the preceding paragraph, AeroCentury shall be entitled, to the extent required
      to do so by law, to deduct or withhold Taxes imposed by the United States of
      America (or any political subdivision or taxing authority thereof) from
      interest, fees or other amounts payable hereunder for the account of any Person
      other than a Bank (x) that is a domestic corporation (as such term is
      defined in Section 7701 of the Code) for federal income tax purposes (but
      excluding any foreign office of any Bank) or (y) that has necessary forms
      on file with AeroCentury for the applicable year to the extent deduction or
      withholding of such Taxes is not required as a result of the filing of such
      forms, provided that if AeroCentury shall so deduct or withhold any such Taxes,
      it shall provide a statement to National City and such Bank, setting forth
      the
      amount of such Taxes so paid or withheld, the applicable rate and any other
      information or documentation which such Bank may reasonably request for
      assisting such Bank to obtain any allowable credits or deductions for the taxes
      so deducted or withheld in the jurisdiction or jurisdictions in which such
      Bank
      is subject to tax.

     

    (e) Demand
      Deposit Account.
      AeroCentury shall maintain at least one demand deposit account with National
      City for purposes of this Agreement. AeroCentury authorizes National City (but
      National City shall not be obligated) to deposit into said account all amounts
      to be advanced to AeroCentury hereunder. AeroCentury authorizes National City
      (but National City shall not be obligated) to deduct from said account, or
      any
      other account maintained by AeroCentury at National City, as the Agent, any
      amount payable hereunder on or after the date upon which it is due and payable.
      Such authorization shall include but not be limited to amounts payable with
      respect to principal, interest, fees and expenses.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    2.9. Change
      in Circumstances, Yield Protection.

     

    (a) Certain
      Regulator Chances.
      If any
      Regulatory Change or compliance by the Banks with any request made after the
      date of this Agreement by the Board of Governors of the Federal Reserve System
      or by any Federal Reserve Bank or other central bank or fiscal, monetary or
      similar authority (in each case whether or not having the force of law) shall
      (i) impose, modify or make applicable any reserve, special deposit, Federal
      Deposit Insurance Corporation premium or similar requirement or imposition
      against assets held by, or deposits in or for the account of, or loans made
      by,
      or any other acquisition of funds for loans or advances by, the Banks;
      (ii) impose on the Banks any other condition regarding the Notes;
      (iii) subject the Banks to, or cause the withdrawal or termination of any
      previously granted exemption with respect to, any tax (including any withholding
      tax but not including any income tax not currently causing the Banks to be
      subject to withholding) or any other levy, impost, duty, charge, fee or
      deduction on or from any payments due from AeroCentury; or (iv) change the
      basis of taxation of payments from AeroCentury to the Banks (other than by
      reason of a change in the method of taxation of a Bank's net income); and the
      result of any of the foregoing events is to increase the cost to a Bank of
      making or maintaining any Loan or to reduce the amount of principal, interest
      or
      fees to be received by the Bank hereunder in respect of any Loan, National
      City
      will immediately so notify AeroCentury. If a Bank determines in good faith
      that
      the effects of the change resulting in such increased cost or reduced amount
      cannot reasonably be avoided or the cost thereof mitigated, then upon notice
      by
      National City to AeroCentury, AeroCentury shall pay to such Bank on each
      interest payment date of the Loan, such additional amount as shall be necessary
      to compensate the Bank for such increased cost or reduced amount.

     

    (b) Capital
      Adequacy.
      If any
      Bank shall determine that any Regulation regarding capital adequacy or the
      adoption of any Regulation regarding capital adequacy, which Regulation is
      applicable to banks (or their holding companies) generally and not such Bank
      (or
      its holding company) specifically, or any change therein, or any change in
      the
      interpretation or administration thereof by any governmental authority, central
      bank or comparable agency charged with the interpretation or administration
      thereof, or compliance by such Bank (or its holding company) with any such
      request or directive regarding capital adequacy (whether or not having the
      force
      of law) of any such authority, central bank or comparable agency, has the effect
      of reducing the rate of return on such Bank's capital as a consequence of its
      obligations hereunder to a level below that which such Bank could have achieved
      but for such adoption, change or compliance (taking into consideration such
      Bank's policies with respect to capital adequacy) by an amount deemed by such
      Bank to be material, AeroCentury shall promptly pay to National City for the
      account of such Bank, upon the demand of such Bank, such additional amount
      or
      amounts as will compensate such Bank for such reduction.

     

    (c) Ability
      to Determine LIBO Rate.
      If
      National City shall determine (which determination will be made after
      consultation with any Bank requesting same and shall be, in the absence of
      fraud
      or manifest error, conclusive and binding upon all parties hereto) that by
      reason of abnormal circumstances affecting the interbank eurodollar or
      applicable eurocurrency market adequate and reasonable means do not exist for
      ascertaining the LIBO Rate to be applicable to the requested LIBO Rate Loan
      or
      that eurodollar or eurocurrency funds in amounts sufficient to fund all the
      LIBO
      Rate Loans are not obtainable on reasonable terms, National City shall give
      notice of such inability or determination by telephone to AeroCentury and to
      each Bank at least two Business Days prior to the date of the proposed Loan
      and
      thereupon the obligations of the Banks to make, convert other Loans to, or
      renew
      such LIBO Rate Loan shall be excused, subject, however, to the right of
      AeroCentury at any time thereafter to submit another request.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d) Yield
      Protection.
      Determination by a Bank for purposes hereof of the effect of any Regulatory
      Change or other change or circumstance referred to above on its costs of making
      or maintaining Loans or on amounts receivable by it in respect of the Loans
      and
      of the additional amounts required to compensate such Bank in respect of any
      additional costs, shall be made in good faith and shall be evidenced by a
      certificate, signed by an officer of such Bank and delivered to AeroCentury,
      as
      to the fact and amount of the increased cost incurred by or the reduced amount
      accruing to the Bank owing to such event or events. Such certificate shall
      be
      prepared in reasonable detail and shall be conclusive as to the facts and
      amounts stated therein, absent manifest error.

     

    (e) Notice
      of Events.
      The
      affected Bank will notify AeroCentury of any event occurring after the date
      of
      this Agreement that will entitle such Bank to compensation pursuant to this
      Section as promptly as practicable after it obtains knowledge thereof and
      determines to request such compensation. Said notice shall be in writing, shall
      specify the applicable Section or Sections of this Agreement to which it relates
      and shall set forth the amount or amounts then payable pursuant to this Section.
      AeroCentury shall pay such Bank the amount shown as due on such notice within
      10
      days after its receipt of the same.

     

    2.10. Illegality.
      Notwithstanding any other provision in this Agreement, if the adoption of any
      applicable Regulation, or any change therein, or any change in the
      interpretation or administration thereof by any governmental authority, central
      bank, or comparable agency charged with the interpretation or administration
      thereof, or compliance by the Banks with any request or directive (whether
      or
      not having the force of law) of any such authority, central bank, or comparable
      agency shall make it unlawful or impossible for the Banks to (1) maintain
      their Revolving Loan Commitments, then upon notice to AeroCentury by National
      City, the Revolving Loan Commitments shall terminate; or (2) maintain or
      fund their LIBO Rate Loans, then upon notice to the Borrower of such event,
      the
      Borrower's outstanding LIBO Rate Loans shall be converted into Base Rate
      Loans.

     

    2.11. Discretion
      of Bank as to Manner of Funding.
      Notwithstanding any provision of this Agreement to the contrary, each Bank
      shall
      be entitled to fund and maintain its funding of all or any part of its Loans
      in
      any manner it sees fit, it being understood, however, that for the purposes
      of
      this Agreement all determinations hereunder shall be made as if each Bank had
      actually funded and maintained each LIBO Rate Loan during each Interest Period
      for such Loan through the purchase of deposits in the relevant interbank market
      having a maturity corresponding to such Interest Period and bearing an interest
      rate equal to the LIBO Rate plus the Applicable Borrowing Margin for such
      Interest Period.

     

    3.
      Representations and Warranties

     

    AeroCentury
      represents and warrants to the Banks that:

     

    3.1. Organization,
      Standing.
      It
      (i) is a corporation duly organized, validly existing and in good standing
      under the laws of the jurisdiction of its incorporation, (ii) has the
      corporate power and authority necessary to own its assets, carry on its business
      and enter into and perform its obligations hereunder, under each Loan Document
      to which it is a party, and (iii) is qualified to do business and is in
      good standing in each jurisdiction where the nature of its business or the
      ownership of its properties requires such qualification, except where the
      failure to be so qualified would not have a Material Adverse
      Effect.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.2. Corporate
      Authority, Validity, Etc.
      The
      making and performance of the Loan Documents to which it is a party are within
      its power and authority and have been duly authorized by all necessary corporate
      action. The making and performance of the Loan Documents do not and under
      present law will not require any consent or approval of any of AeroCentury's
      shareholders or any other person, do not and under present law will not violate
      any law, rule, regulation order, writ, judgment, injunction, decree,
      determination or award, do not violate any provision of its charter or by-laws,
      do not and will not result in any breach of any material agreement, lease or
      instrument to which it is a party, by which it is bound or to which any of
      its
      assets are or may be subject, and do not and will not give rise to any Lien
      upon
      any of its assets. The number of shares and classes of the capital stock of
      AeroCentury and the ownership thereof are accurately set forth on Schedule
      1
      attached hereto; all such shares are validly issued, fully paid and
      non-assessable, and the issuance and sale thereof are in compliance with all
      applicable federal and state securities and other applicable laws. AeroCentury
      is not in default under any such agreement, lease or instrument except to the
      extent such default reasonably could not have a Material Adverse Effect. No
      authorizations, approvals or consents of, and no filings or registrations with,
      any governmental or regulatory authority or agency are necessary for the
      execution, delivery or performance by AeroCentury of any Loan Document to which
      it is a party or for the validity or enforceability thereof. Each Loan Document,
      when executed and delivered, will be the legal, valid and binding obligation
      of
      AeroCentury enforceable against each in accordance with its terms.

     

    3.3. Litigation.
      Except
      as disclosed on Schedule 1, there are no actions, suits or proceedings pending
      or, to its knowledge, threatened against or affecting it or any of its assets
      before any court, government agency, or other tribunal which if adversely
      determined reasonably could have a Material Adverse Effect or upon the ability
      of it to perform under the Loan Documents. If there is any disclosure on
      Schedule 1, the status (including the tribunal, the nature of the claim and
      the
      amount in controversy) of each such litigation matter as of the date of this
      Agreement is set forth in Schedule 1.

     

    3.4. ERISA.
      (a) AeroCentury and each ERISA Affiliate are in compliance in all material
      respects with all applicable provisions of ERISA and the regulations promulgated
      thereunder; and, neither AeroCentury, nor any ERISA Affiliate maintains or
      contributes to or has maintained or contributed to any multiemployer plan (as
      defined in §4001 of ERISA) under which AeroCentury or any ERISA Affiliate could
      have any withdrawal liability; (b) neither AeroCentury nor any ERISA
      Affiliate, sponsors or maintains any Plan under which there is an accumulated
      funding deficiency within the meaning of §412 of the Code, whether or not
      waived; (c) the aggregate liability for accrued benefits and other
      ancillary benefits under each Plan that is or will be sponsored or maintained
      by
      AeroCentury or any ERISA Affiliate (determined on the basis of the actuarial
      assumptions prescribed for valuing benefits under terminating single-employer
      defined benefit plans under Title IV of ERISA) does not exceed the aggregate
      fair market value of the assets under each such defined benefit pension Plan;
      (d) the aggregate liability of AeroCentury and each ERISA Affiliate arising
      out of or relating to a failure of any Plan to comply with the provisions of
      ERISA or the Code, will not have a Material Adverse Effect; and (e) there
      does not exist any unfunded liability (determined on the basis of actuarial
      assumptions utilized by the actuary for the plan in preparing the most recent
      Annual Report) of AeroCentury or any ERISA Affiliate under any plan, program
      or
      arrangement providing post-retirement life or health benefits.

     

    3.5. Financial
      Statements.
      The
      consolidated financial statements of AeroCentury as of and for the Fiscal Year
      ending December 31, 2005 and the consolidated and consolidating financial
      statements of AeroCentury and its subsidiaries as of and for the Fiscal Year
      ending December 31, 2006, consisting in each case of a balance sheet, statement
      of income, a statement of shareholders’ equity (except in the case of any
      interim financial statements), statement of cash flows, and accompanying notes
      to financial statements, furnished to the Banks in connection herewith, present
      fairly, in all material respects, the financial position, and results of
      operations of AeroCentury as of the dates and for the periods referred to,
      in
      conformity with Generally Accepted Accounting Principles. Except as set forth
      on
      Schedule 1 hereto, there are no liabilities, fixed or contingent, which are
      not
      reflected in such financial statements, other than liabilities which are not
      required to be reflected in such balance sheets. There has been no Material
      Adverse Change since December 31, 2006.

     

    3.6. Not
      in Default, Judgments, Etc.
      No Event
      of Default or Potential Default under any Loan Document has occurred and is
      continuing. AeroCentury has satisfied all judgments and is not in default with
      respect to any judgment, writ, injunction, decree, rule, or regulation of any
      court, arbitrator, or federal, state, municipal, or other governmental
      authority, commission, board bureau, agency, or instrumentality, domestic or
      foreign.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.7. Taxes.
      AeroCentury has filed all federal, state, local and foreign tax returns and
      reports which it is required by law to file and as to which its failure to
      file
      would have a Material Adverse Effect, and has paid all taxes, including wage
      taxes, assessments, withholdings and other governmental charges which are
      presently due and payable, other than those being contested in good faith by
      appropriate proceedings, if any, and disclosed on Schedule 1. The tax charges,
      accruals and reserves on the books of AeroCentury are adequate to pay all such
      taxes that have accrued but are not presently due and payable.

     

    3.8. Permits,
      Licenses, Etc.
      AeroCentury possesses all permits, licenses, franchises, trademarks, trade
      names, copyrights and patents necessary to the conduct of its business as
      presently conducted or as presently proposed to be conducted, except where
      the
      failure to possess the same would not have a Material Adverse
      Effect.

     

    3.9. Compliance
      with Laws, Etc.
      AeroCentury is in compliance in all material respects with all Regulations
      applicable to its business (including obtaining all authorizations, consents,
      approvals, orders, licenses, exemptions from, and making all filings or
      registrations or qualifications with, any court or governmental department,
      public body or authority, commission, board, bureau, agency, or
      instrumentality), the noncompliance with which reasonably could have a Material
      Adverse Effect.

     

    3.10. Solvency.
      AeroCentury is, and after giving effect to the transactions contemplated hereby,
      will be, Solvent.

     

    3.11. No
      Burdensome Agreements.
      AeroCentury is not subject to any charter, corporate or other legal restriction,
      or any judgment, decree, order, rule or regulation which in the judgment of
      its
      directors or officers has or is expected in the future to have a materially
      adverse effect on its operations, business, assets, liabilities or upon the
      ability of AeroCentury to perform under the Loan Documents. AeroCentury is
      not a
      party to any contract or agreement which in the judgment of its directors or
      officers has or is expected to have any materially adverse effect on its
      business, except as otherwise reflected in adequate reserves.

     

    3.12. Subsidiaries,
      Etc.
      AeroCentury has no Subsidiaries except for special purpose entities formed
      in
      connection with financings which are non-recourse to AeroCentury. Set forth
      in
      Schedule 1 hereto is a complete and correct list, as of the date of this
      Agreement, of all special purpose entities owned by AeroCentury and all
      Investments held by AeroCentury in any joint venture or other
      Person.

     

    3.13. Title
      to Properties, Leases.
      AeroCentury has good and marketable title to all assets and properties reflected
      as being owned by it in its financial statements as well as to all assets and
      properties acquired since said date (except property disposed of since said
      date
      in the ordinary course of business). Except for the Liens set forth in Schedule
      1 hereto and any other Permitted Liens, there are no Liens on any of such assets
      or properties. It has the right to, and does, enjoy peaceful and undisturbed
      possession under all material leases under which it is leasing property as
      a
      lessee. All such leases are valid, subsisting and in full force and effect,
      and
      none of such leases is in default, except where such default, either
      individually or in the aggregate, could not have a Material Adverse
      Effect.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    3.14. Public
      Utility Holding Company; Investment Company.
      AeroCentury is not a "public utility company" or a "holding company", or a
      "subsidiary company" of a "holding company", or an "affiliate" of a "holding
      company" or of a "subsidiary company" of a "holding company", as such terms
      are
      defined in the Public Utility Holding Company Act of 1935, as amended; or a
      "public utility" within the meaning of the Federal Power Act, as amended.
      Further, AeroCentury is not an "investment company" or an "affiliated person"
      of
      an "investment company" or a company "controlled" by an "investment company"
      as
      such terms are defined in the Investment Company Act of 1940, as
      amended.

     

    3.15. Margin
      Stock.
      AeroCentury is not and will not be engaged principally or as one of its
      important activities in the business of extending credit for the purpose of
      purchasing or carrying or trading in any margin stocks or margin securities
      (within the meaning of Regulation U of the Board of Governors of the Federal
      Reserve System as amended from time to time). AeroCentury will not use or permit
      any proceeds of the Loans to be used, either directly or indirectly, for the
      purpose, whether immediate, incidental or ultimate, of buying or carrying margin
      stocks or margin securities.

     

    3.16. Use
      of Proceeds.
      AeroCentury will use the proceeds of each Loan to be made pursuant hereto for
      (a) the purchase or financing of Equipment to be leased to unaffiliated
      persons and the warehouse financing of the lease of that Equipment,
      (b) working capital needs, and/or (c) general corporate
      purposes.

     

    3.17. Depreciation
      Policies.
      AeroCentury's current depreciation policies are as set forth in Exhibit E.
      These
      policies have been in effect without change since January 1, 1997.

     

    3.18. Anti-Terrorism
      Laws.  AeroCentury
      is not an “enemy” nor an “ally of the enemy” within the meaning of Section 2 of
      the Trading with the Enemy Act of the United States of America (50 U.S.C. App.
      §§ 1 et seq.), as amended. AeroCentury is not in violation of (a) the Trading
      with the Enemy Act, as amended, (b) any of the foreign assets control
      regulations of the United States Treasury Department (31 CFR, Subtitle B,
      Chapter V, as amended) or any enabling legislation or executive order relating
      thereto or (c) the Patriot Act (as defined in Section 10.22). AeroCentury (i)
      is
      not a blocked person described in Section 1 of the Anti-Terrorism Order or
      (ii)
      to the best of its knowledge, does not engage in any dealings or transactions,
      or is otherwise associated, with any such blocked person.

     

    3.19. Compliance
      with OFAC Rules and Regulations.
      AeroCentury (a) is not a Sanctioned Person, (b) does not have more than 15%
      of
      its assets in Sanctioned Countries, and (c) does not derive more than 15% of
      its
      operating income from investments in, or transactions with Sanctioned Persons
      or
      Sanctioned Countries. No part of the proceeds of the Loans will be used directly
      or indirectly to fund any operations in, finance any investments or activities
      in or make any payments to, a Sanctioned Person or a Sanctioned
      Country

     

    3.20. Compliance
      with FCPA.
      AeroCentury is in compliance with the Foreign Corrupt Practices Act, 15 U.S.C.
      §§ 78dd-1, et seq., and any foreign counterpart thereto. AeroCentury has not
      made a payment, offering, or promise to pay, or authorized the payment of,
      money
      or anything of value (a) in order to assist in obtaining or retaining business
      for or with, or directing business to, any foreign official, foreign political
      party, party official or candidate for foreign political office, (b) to a
      foreign official, foreign political party or party official or any candidate
      for
      foreign political office, or (c) with the intent to induce the recipient to
      misuse his or her official position to direct business wrongfully to AeroCentury
      or to any other Person, in violation of the Foreign Corrupt Practices Act,
      15
      U.S.C. §§ 78dd-1, , et seq.

     

    3.21. Disclosure
      Generally.
      The
      representations and statements made by AeroCentury or on its behalf in
      connection with this credit facility and the Loans, including representations
      and statements in each of the Loan Documents, do not and will not contain any
      untrue statement of a material fact or omit to state a material fact or any
      fact
      necessary to make the representations made not materially misleading. No written
      information, exhibit, report, brochure or financial statement furnished by
      AeroCentury or on its behalf to the Bank in connection with this credit
      facility, the Loans, or any Loan Document contains or will contain any material
      misstatement of fact or omit to state a material fact or any fact necessary
      to
      make the statements contained therein not misleading.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.
      Conditions Precedent

     

    4.1. All
      Loans.
      The
      obligation of each Bank to make any Loan (including but not limited to the
      first
      Loan hereunder) or National City, as Agent, to issue any Letter of Credit,
      is
      conditioned upon the following:

     

    (a) Documents.
      AeroCentury shall have delivered and the Bank shall have received a Request
      for
      Advance in such form as National City may request from time to
      time.

     

    (b) Borrowing
      Base Certificate.
      AeroCentury shall have delivered and National City shall have received a
      Borrowing Base Certificate dated the date of the Loan requested under this
      Agreement.

     

    (c) Covenants;
      Representations.
      AeroCentury shall be in compliance with all covenants, agreements and conditions
      in each Loan Document and each representation and warranty contained in each
      Loan Document shall be true with the same effect as if such representation
      or
      warranty had been made on the date such Loan or Letter of Credit, as applicable,
      is made or issued.

     

    (d) Defaults.
      Immediately prior to and after giving effect to such transaction, no Event
      of
      Default or Potential Default shall exist.

     

    (e) Material
      Adverse Change.
      Since
      December 31, 2006, there shall not have been any Material Adverse Change with
      respect to AeroCentury, and there shall not be any other event or circumstance
      which gives National City, as the Agent, or any Bank reasonable grounds to
      conclude that AeroCentury may not or will not be able to perform or observe
      (in
      the normal course) its obligations hereunder and under the Notes or the other
      Loan Documents.

     

    (f) Required
      Consent.
      At
      least
      twenty (20) days prior to the purchase of Equipment or entering into leasing
      arrangements with lessees of Equipment, AeroCentury shall notify National City
      and provide National City with such information as it shall require with respect
      to such anticipated purchase or lease arrangements. AeroCentury hereby agrees
      it
      will not purchase Equipment or enter into such leasing arrangements with lessees
      until such time as National City and the Banks shall provide their unanimous
      written consent to AeroCentury. 

     

    4.2. Conditions
      to First Loan.
      In
      addition to the conditions to all Loans and Letters of Credit as provided in
      §4.1, the obligation of each Bank to make the first Loan is conditioned upon
      the
      following:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (a) Articles,
      Bylaws.
      Each
      Bank shall have received copies of the Articles or Certificate of Incorporation
      and Bylaws of AeroCentury certified by its Secretary or Assistant Secretary;
      together with Certificate of Good Standing from any jurisdiction where the
      nature of its business or the ownership of its properties requires such
      qualification except where the failure to be so qualified would not have a
      Material Adverse Effect.

     

    (b) Evidence
      of Authorization.
      Each
      Bank shall have received copies certified by the Secretary or Assistant
      Secretary of AeroCentury or any other appropriate official (in the case of
      a
      Person other than AeroCentury) of all corporate or other action taken by each
      Person other than the Banks who is a party to any Loan Document to authorize
      its
      execution and delivery and performance of the Loan Documents and to authorize
      the Loans, together with such other related papers as National City, as the
      Agent, shall reasonably require.

     

    (c) Legal
      Opinions.
      Each
      Bank shall have received a favorable written opinion in form and substance
      satisfactory to the Bank from Christopher B. Tigno, Esq., General Counsel to
      AeroCentury, which shall be addressed to the Bank and be dated the date of
      the
      first Loan.

     

    (d) Incumbency.
      National
      City, as the Agent, shall have received a certificate signed by the secretary
      or
      assistant secretary of AeroCentury together with the true signature of the
      officer or officers authorized to execute and deliver the Loan Documents and
      certificates thereunder, upon which the Banks shall be entitled to rely
      conclusively until it shall have received a further certificate of the secretary
      or assistant secretary of AeroCentury amending the prior certificate and
      submitting the signature of the officer or officers named in the new certificate
      as being authorized to execute and deliver Loan Documents and certificates
      thereunder.

     

    (e) Notes.
      Each
      Bank shall have received a Revolving Credit Note duly executed, completed and
      issued in accordance herewith.

     

    (f) Documents.
      National
      City, as the Agent, shall have received all certificates, instruments and other
      documents then required to be delivered pursuant to any Loan Documents, in
      each
      instance in form and substance reasonably satisfactory to it.

     

    (g) Consents.
      AeroCentury shall have provided to each Bank evidence satisfactory to it that
      all governmental, shareholder and third party consents and approvals necessary
      in connection with the transactions contemplated hereby have been obtained
      and
      remain in effect.

     

    (h) Other
      Agreements.
      AeroCentury shall have executed and delivered each other Loan Document required
      hereunder.

     

    (i) Fees,
      Expenses.
      AeroCentury shall simultaneously pay or shall have paid all fees and expenses
      due hereunder or any other Loan Document.

     

    (j) JMC
      Subordination Agreement.
      Each
      Bank shall have received a subordination agreement signed by JMC and in form
      and
      substance satisfactory to the Banks.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (k) Evidence
      of Issuance of Satellite Notes.
      National
      City, as the Agent, shall have received evidence of the issuance of the
      Satellite Notes on the terms and conditions, and pursuant to documents and
      agreements, satisfactory to National City and the Banks.

     

    5.
      Affirmative Covenants

     

    AeroCentury
      covenants and agrees that, without the prior written consent of the Required
      Banks, from and after the date hereof and so long as the Revolving Loan
      Commitments are in effect or any Obligation remains unpaid or outstanding,
      it
      will:

     

    5.1. Financial
      Statements and Reports.
      Furnish
      to the Banks the following financial information:

     

    (a) Annual
      Statements.
      As soon
      as available but no later than ninety (90) days after the end of each Fiscal
      Year, the consolidated and consolidating balance sheet of AeroCentury as of
      the
      end of such year and the prior year in comparative form, and related
      consolidated and consolidating statements of income, shareholders' equity,
      and
      cash flows for the Fiscal Year and the prior Fiscal Year in comparative form
      (except in the case of the balance sheet which shall be only for the current
      year). The financial statements shall be in reasonable detail with appropriate
      notes and be prepared in accordance with Generally Accepted Accounting
      Principles. The annual financial statements shall be certified (without any
      qualification or exception) by BDO Seidman, LLP or
      other
      independent public accountants acceptable to the Required Banks. Such financial
      statements shall be accompanied by a report of such independent certified public
      accountants stating that, in the opinion of such accountants, the consolidated
      financial statements present fairly, in all material respects, the financial
      position, and the results of operations and the cash flows of AeroCentury for
      the period then ended in conformity with Generally Accepted Accounting
      Principles, except for inconsistencies resulting from changes in accounting
      principles and methods agreed to by such accountants and specified in such
      report, and that, in the case of such financial statements, the examination
      by
      such accountants of such financial statements has been made in accordance with
      generally accepted auditing standards and accordingly included examining, on
      a
      test basis, evidence supporting the amounts and disclosures in the financial
      statements and assessing the accounting principles used and significant
      estimates made, as well as evaluating the overall financial statement
      presentation. In addition to the annual financial statements, AeroCentury shall,
      promptly upon receipt thereof, furnish to the Bank a copy of each other report
      submitted to its board of directors by its independent accountants in connection
      with any annual, interim or special audit made by them of the financial records
      of AeroCentury. The
      timely filing of AeroCentury’s Annual Report on Form 10-KSB with the SEC over
      the EDGAR system shall be deemed to satisfy this covenant in respect of the
      consolidated financials.

     

    (b) Quarterly
      Statements.
      As soon
      as available but no later than sixty (60) calendar days after the end of each
      Fiscal Quarter of each Fiscal Year, the consolidated and consolidating balance
      sheet and related statements of income, and cash flows of AeroCentury for such
      quarterly period and for the period from the beginning of such fiscal year
      to
      the end of such Fiscal Quarter and a corresponding statement of income and
      cash
      flow for the same period in the preceding Fiscal Year, certified by the chief
      executive officer, chief operating officer or chief financial officer of
      AeroCentury as having been prepared in accordance with Generally Accepted
      Accounting Principles (subject to changes resulting from audits and year-end
      adjustments). The
      timely filing of AeroCentury’s Quarterly Report on Form 10-QSB with the SEC over
      the EDGAR system shall be deemed to satisfy this covenant in respect of the
      consolidated financials.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) No
      Default.
      Within
      sixty (60) calendar days after the end of each of the first three Fiscal
      Quarters of each Fiscal Year and within ninety (90) calendar days after the
      end
      of each Fiscal Year, a certificate signed by the chief executive officer, chief
      operating officer or chief financial officer of AeroCentury certifying that,
      to
      the best of such officer's knowledge, after due inquiry, (i) AeroCentury
      has complied with all covenants, agreements and conditions in each Loan Document
      and that each representation and warranty contained in each Loan Document is
      true and correct with the same effect as though each such representation and
      warranty had been made on the date of such certificate (except to the extent
      such representation or warranty related to a specific prior date), and
      (ii) no event has occurred and is continuing which constitutes an Event of
      Default or Potential Default, or describing each such event and the remedial
      steps being taken by AeroCentury.

     

    (d) ERISA.
      All
      reports and forms filed with respect to all Plans, except as filed in the normal
      course of business and that would not result in an adverse action to be taken
      under ERISA, and details of related information of a Reportable Event, promptly
      following each filing.

     

    (e) Material
      Changes.
      Notification to National City, as the Agent, and each other Bank, of any
      litigation, administrative proceeding, investigation, business development,
      or
      change in financial condition which could reasonably have a Material Adverse
      Effect, promptly following its discovery.

     

    (f) Other
      Information.
      AeroCentury will provide to National City, as the Agent, and each other Bank
      (i) all shareholder and Securities and Exchange Commission notices, reports
      and filings (excluding Forms 3, 4, 5, 13-D and 13-G under the Securities
      Exchange Act of 1934), (ii) any material press releases simultaneously with
      their release, (iii) by December 31 of each fiscal year, budgets and forecasts
      for the ensuing fiscal year (iv) the annual “desktop” appraisal of all
      aircraft owned by AeroCentury. In addition, promptly, upon request by National
      City or any other Bank from time to time (which may be on a monthly or other
      basis), AeroCentury shall provide such other information and reports regarding
      its operations, business affairs, prospects and financial condition as National
      City, as the Agent, or the Banks may reasonably request.

     

    (g) Borrowing
      Base Certificates.
      In the
      event AeroCentury shall not have delivered a Borrowing Base Certificate to
      the
      Banks during any calendar month, it will deliver to the Banks, no later than
      30
      days after the end of such calendar month as of the last day of the preceding
      calendar month, a Borrowing Base Certificate signed by the chief executive
      officer, chief operating officer, chief financial officer or a Senior Vice
      President of AeroCentury.

     

    (h) Covenant
      Compliance Certificate.
      AeroCentury will deliver to the Banks, no later than 60 days after the end
      of
      each calendar quarter, a Covenant Compliance Certificate.

     

    (i) Monthly
      Lease Portfolio and Receivables Report.
      AeroCentury will deliver to the Banks, no later than 30 days after the end
      of
      each calendar month, a lease portfolio listing and lease receivables aging
      report (in form and substance reasonably satisfactory to National City)
      applicable to all leases included in the Collateral.

     

    (j) Maintenance
      of Current Depreciation Policies.
      AeroCentury will maintain its method of depreciating its assets substantially
      consistent with past practices as set forth in Exhibit E and will promptly
      notify the Bank of any deviation from such practices.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.2. Corporate
      Existence.
      Preserve
      its corporate existence and all material franchises, licenses, patents,
      copyrights, trademarks and trade names consistent with good business practice;
      and maintain, keep, and preserve all of its properties (tangible and intangible)
      necessary or useful in the conduct of its business in good working order and
      condition, ordinary wear and tear excepted.

     

    5.3. ERISA.
      Comply
      in all material respects with the provisions of ERISA to the extent applicable
      to any Plan maintained for the employees of AeroCentury or any ERISA Affiliate;
      do or cause to be done all such acts and things that are required to maintain
      the qualified status of each Plan and tax exempt status of each trust forming
      part of such Plan; not incur any material accumulated funding deficiency (within
      the meaning of ERISA and the regulations promulgated thereunder), or any
      material liability to the PBGC (as established by ERISA); not permit any event
      to occur as described in §4042 of ERISA or which may result in the imposition of
      a lien on its properties or assets; notify the Banks in writing promptly after
      it has come to the attention of senior management of AeroCentury of the
      assertion or threat of any "reportable event" or other event described in §4042
      of ERISA (relating to the soundness of a Plan) or the PBGC's ability to assert
      a
      material liability against it or impose a lien on its, or any ERISA Affiliates',
      properties or assets; and refrain from engaging in any Prohibited Transactions
      or actions causing possible liability under §5.02 of ERISA.

     

    5.4. Compliance
      with Regulations.
      Comply
      in all material respects with all Regulations applicable to its business, the
      noncompliance with which reasonably could have a Material Adverse
      Effect.

     

    5.5. Conduct
      of Business; Permits and Approvals, Compliance with
      Laws.
      Continue
      to engage in an efficient and economical manner in a business of the same
      general type as conducted by it on the date of this Agreement; maintain in
      full
      force and effect, its franchises, and all licenses, patents, trademarks, trade
      names, contracts, permits, approvals and other rights necessary to the
      profitable conduct of its business.

     

    5.6. Maintenance
      of Insurance.
      Maintain
      insurance with financially sound and reputable insurance companies or
      associations in such amounts and covering such risks as are usually carried
      by
      companies engaged in the same or a similar business and similarly situated,
      which insurance may provide for reasonable deductibility from coverage
      thereof.

     

    5.7. Payment
      of Debt; Payment of Taxes, Etc.
      Where
      the amount involved exceeds $250,000 or where the non-payment or non-discharge
      would otherwise have a Material Adverse Effect on AeroCentury or any of its
      assets: promptly pay and discharge (a) all of its Debt in accordance with
      the terms thereof; (b) all taxes, assessments, and governmental charges or
      levies imposed upon it or upon its income and profits, upon any of its property,
      real, personal or mixed, or upon any part thereof, before the same shall become
      in default; (c) all lawful claims for labor, materials and supplies or
      otherwise, which, if unpaid, might become a lien or charge upon such property
      or
      any part thereof; provided, however, that so long as AeroCentury first notifies
      National City, as the Agent, of its intention to do so, AeroCentury shall not
      be
      required to pay and discharge any such Debt, tax, assessment, charge, levy
      or
      claim so long as the failure to so pay or discharge does not constitute or
      result in an Event of Default or a Potential Default hereunder and so long
      as no
      foreclosure or other similar proceedings shall have been commenced against
      such
      property or any part thereof and so long as the validity thereof shall be
      contested in good faith by appropriate proceedings diligently pursued and it
      shall have set aside on its books adequate reserves with respect
      thereto.

     

    5.8. Notice
      of Events.
      Promptly
      upon discovery of any of the following events, AeroCentury shall provide
      telephone notice to National City (confirmed within three (3) calendar days
      by
      written notice), describing the event and all action AeroCentury proposes to
      take with respect thereto:

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (a) an
      Event
      of Default or Potential Default under this Agreement or any other Loan
      Document;

     

    (b) any
      default or event of default under a contract or contracts and the default or
      event of default involves payments by AeroCentury in an aggregate amount equal
      to or in excess of $200,000;

     

    (c) a
      default
      or event of default under or as defined in any evidence of or agreements for
      Recourse Funded Debt under which AeroCentury's liability is equal to or in
      excess of $200,000, singularly or in the aggregate, whether or not an event
      of
      default thereunder has been declared by any party to such agreement or any
      event
      which, upon the lapse of time or the giving of notice or both, would become
      an
      event of default under any such agreement or instrument or would permit any
      party to any such instrument or agreement to terminate or suspend any commitment
      to lend to AeroCentury or to declare or to cause any such indebtedness to be
      accelerated or payable before it would otherwise be due;

     

    (d) the
      institution of, any material adverse determination in, or the entry of any
      default judgment or order or stipulated judgment or order in, any suit, action,
      arbitration, administrative proceeding, criminal prosecution or governmental
      investigation against AeroCentury in which the amount in controversy is in
      excess of $200,000, singularly or in the aggregate; or

     

    (e) any
      change in any Regulation, including, without limitation, changes in tax laws
      and
      regulations, which would have a Material Adverse Effect.

     

    5.9. Inspection
      Rights; Collateral Appraisal.
      At any
      time during regular business hours and as often as requested of AeroCentury
      by
      National City, permit National City or any Bank, or any authorized officer,
      employee, agent, or representative of any of them to examine and make abstracts
      from the records and books of account of AeroCentury, wherever located, and
      to
      visit the properties of AeroCentury; and to discuss the affairs, finances,
      and
      accounts of AeroCentury with its chief executive officer, chief operating
      officer, chief financial officer or independent accountants. In addition,
      National City shall cause an appraisal and audit of the Collateral to be made
      annually commencing with the Fiscal Year ending December 31, 2007. If no Event
      of Default or Potential Default shall be in existence, AeroCentury shall
      reimburse National City for the reasonable expense of the Collateral appraisal
      and audit not to exceed $7,500 in any calendar year whether the examination
      is
      performed by National City or a third party approved by National City. If any
      inspection or collateral appraisal and audit shall be made during the
      continuance of a Potential Default or an Event of Default, AeroCentury shall
      reimburse National City for the reasonable expense of such inspection or
      collateral appraisal and audit without limit. At all times, it is understood
      and
      agreed by AeroCentury that all expenses in connection with any such inspection
      which may be incurred by AeroCentury, any officers and employees thereof and
      the
      attorneys and independent certified public accountants therefor shall be
      expenses payable by AeroCentury and shall not be expenses of the
      Banks.

     

    5.10. Generally
      Accepted Accounting Principles.
      Maintain
      books and records at all times in accordance with Generally Accepted Accounting
      Principles.

     

    5.11. Compliance
      with Material Contracts.
      It will
      comply in all material respects with all obligations, terms, conditions and
      covenants, as applicable, in all Debt applicable to it and all instruments
      and
      agreements related thereto, and all other instruments and agreements to which
      it
      is a party or by which it is bound or any of its properties is affected and
      in
      respect of which the failure to comply reasonably could have a Material Adverse
      Effect.

     

    5.12. Use
      of Proceeds.
      AeroCentury will use the proceeds of each Loan for (a) the purchase or
      financing of Equipment to be leased to unaffiliated persons and the warehouse
      financing of the lease of that Equipment, (b) working capital needs, and/or
      (c) general corporate purposes.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.13. Further
      Assurances.
      Do such
      further acts and things and execute and deliver to National City, as the Agent,
      such additional assignments, agreements, powers and instruments, as the Banks
      may reasonably require or reasonably deem advisable to carry into affect the
      purposes of this Agreement or to better assure and confirm unto the Banks their
      rights, powers and remedies hereunder.

     

    5.14. Restrictive
      Covenants in Other Agreements.
      In the
      event that AeroCentury shall be or become subject to or suffer to exist any
      agreement pertaining to Debt (including without limitation the Securities
      Purchase Agreement, dated as of April 17, 2007, by and among AeroCentury and
      the
      purchasers named on Schedule I thereto) which contains covenants or restrictions
      that are more restrictive on it than the covenants and restrictions contained
      in
      this Agreement, each and every such covenant and restriction shall be deemed
      incorporated herein by reference as fully as if set forth herein for so long
      as
      and in such form as such covenants or restrictions shall remain in effect.
      If
      and to the extent that any such covenant or restriction shall be inconsistent
      with or otherwise be in conflict with any covenant or restriction set forth
      herein (other than by reason of its being more restrictive), this Agreement
      shall govern.

     

    6.
      Negative Covenants

     

    AeroCentury
      covenants and agrees that, without the prior written consent of the Required
      Banks, from and after the date hereof and so long as the Revolving Loan
      Commitments are in effect or any Obligation remains unpaid or outstanding,
      it
      will not:

     

    6.1. Merger,
      Consolidation.
      Merge or
      consolidate with or into any corporation except, if no Potential Default or
      Event of Default shall have occurred and be continuing either immediately prior
      to or upon the consummation of such transaction, any Person may be merged into
      AeroCentury as long as AeroCentury is the surviving entity.

     

    6.2. Debt.
      Create,
      assume or permit to exist any Debt except for Permitted Debt.

     

    6.3. Liens.
      Create,
      assume or permit to exist any Lien on any of its property or assets, whether
      now
      owned or hereafter acquired, or upon any income or profits therefrom, except
      Permitted Liens.

     

    6.4. Guarantees.
      Guarantee or otherwise in any way become or be responsible for indebtedness
      or
      obligations (including working capital maintenance, take-or-pay contracts)
      of
      any other Person, contingently or otherwise, other than guarantees in the nature
      of performance guarantees which arise in the ordinary course of AeroCentury's
      business.

     

    6.5. Margin
      Stock.
      Use or
      permit any proceeds of the Loans to be used, either directly or indirectly,
      for
      the purpose, whether immediate, incidental or ultimate, of buying or carrying
      margin stock within the meaning of Regulation U of The Board of Governors of
      the
      Federal Reserve System, as amended from time to time.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.6. Acquisitions
      and Investments.
      Except
      as may arise in the ordinary course of AeroCentury's aircraft leasing business,
      purchase or otherwise acquire (including without limitation by way of share
      exchange) any part or amount of the capital stock or assets of, or make any
      Investments in any other Person; or enter into any new business activities
      or
      ventures not directly related to its present business; or create any Subsidiary,
      except (a) it may acquire and hold stock, obligations or securities
      received in settlement of debts (created in the ordinary course of business)
      owing to it, (b) it may make and own (i) Investments in certificates
      of deposit or time deposits having maturities in each case not exceeding one
      year from the date of issuance thereof and issued by a Bank, or any FDIC-insured
      commercial bank incorporated in the United States or any state thereof having
      a
      combined capital and surplus of not less than $150,000,000,
      (ii) Investments in marketable direct obligations issued or unconditionally
      guaranteed by the United States of America, any agency thereof, or backed by
      the
      full faith and credit of the United States of America, in each case maturing
      within one year from the date of issuance or acquisition thereof,
      (iii) Investments in commercial paper issued by a corporation incorporated
      in the United States or any State thereof maturing no more than one year from
      the date of issuance thereof and, at the time of acquisition, having a rating
      of
      A-1 (or better) by Standard & Poor's Corporation or P-1 (or better) by
      Moody's Investors Service, Inc., and (iv) investments in money market
      mutual funds all of the assets of which are invested in cash or investments
      described in the immediately preceding clauses (i), (ii) and (iii), (c) it
      may acquire all of the outstanding capital stock or assets of JetFleet Holding
      Corp., a California corporation ("JHC"),
      under
      substantially the terms and conditions set forth in that certain Amended and
      Restated Management Agreement (the "Management
      Agreement")
      between
      AeroCentury and JetFleet Management Corp. ("JMC"),
      a
      California corporation, entered into as of April 23, 1998, and (d) Investments
      in Unrestricted Subsidiaries after the Closing Date other than Investments
      constituting Restricted Payments to the extent permitted by §6.8 (“Unrestricted
      Subsidiary Investments”)
      so long
      as all Unrestricted Subsidiary Investments (i) are for the maintenance, repair
      and storage expenses (or expenses otherwise necessary to preserve and maintain
      the aircraft owned by such Unrestricted Subsidiary) or to pay the reasonable
      legal costs and expenses incurred in connection with the refinancing of the
      aircraft of such Unrestricted Subsidiary, (ii) as a result of such Unrestricted
      Subsidiary Investment the aggregate amount of Unrestricted Subsidiary
      Investments in respect of such Unrestricted Subsidiary shall not exceed the
      Unrestricted Subsidiary Investment Amount for such Unrestricted Subsidiary
      and
      (iii) immediately prior to and immediately following such Unrestricted
      Subsidiary Investment no Default or Event of Default exists or would exist;
      provided, however, that notwithstanding the foregoing AeroCentury may make
      Unrestricted Subsidiary Investments in respect of taxes, franchise fees and
      miscellaneous administrative expenses of the Unrestricted Subsidiaries so long
      as the aggregate amount thereof does not exceed $5,000 in any Fiscal
      Year.

     

    6.7. Transfer
      of Assets; Nature of Business.
      Sell,
      transfer, pledge, assign or otherwise dispose of any of its assets unless such
      sale or disposition shall be in the ordinary course of its business for value
      received; or discontinue, liquidate or change in any material respect any
      substantial part of its operations or business. Sales of individual or small
      groups of leases and related equipment from time to time and sales of groups
      of
      leases in securitization transactions and transfers of assets in connection
      with
      non-recourse financing transactions shall be deemed to be in the ordinary course
      of the business of AeroCentury. Notwithstanding the foregoing and provided
      that
      no Potential Default or Event of Default shall have occurred and be continuing
      either immediately prior to or upon the consummation of any transaction,
      AeroCentury may sell, transfer or dispose of assets constituting up to ten
      percent (10%) of its total assets during any period of twelve
      months.

     

    6.8. Restricted
      Payments.
      Declare
      or pay any cash dividends or redeem or retire any shares of the outstanding
      capital stock of AeroCentury, provided however, if no Event of Default or
      Potential Default exists either immediately prior to or would exist immediately
      following, cash dividends, redemptions and/or retirements may be made in an
      aggregate amount not in excess of 50% of Net Income earned in the immediately
      preceding Fiscal Year as disclosed in the financial statements delivered
      pursuant to §5.1(a) hereof.

     

    6.9. Accounting
      Change.
      Make or
      permit any change in financial accounting policies or financial reporting
      practices, except as required by Generally Accepted Accounting Principles or
      regulations of the Securities and Exchange Commission, if
      applicable.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.10. Transactions
      with Affiliates.
      Enter
      into any transaction (including, without limitation, the purchase, sale or
      exchange of property, the rendering of any services or the payment of management
      fees) with any Affiliate, except transactions in the ordinary course of, and
      pursuant to the reasonable requirements of its business, including the payment
      of standard and customary brokerage fees, provided such transactions are in
      good
      faith and upon commercially reasonable terms. Sales of individual or small
      groups of leases and related equipment from time to time and sales of groups
      of
      leases in securitization transactions and/or other sales of assets to an
      Unrestricted Subsidiary shall be deemed to be in the ordinary course of the
      business of AeroCentury. Management fees paid to JMC in accordance with the
      Management Agreement as in effect on April 23, 1998 shall be permitted
      hereunder. 

     

    6.11. Limitations
      on Restrictive Agreements.
      AeroCentury
      will not enter into, or permit to exist, any agreement with any Person which
      prohibits or limits the ability of AeroCentury and/or any of its Subsidiaries
      to
      (a) pay dividends or make other distributions or prepay any Debt (except for
      Permitted Debt) owed to AeroCentury and/or its Subsidiaries, (b) make loans
      or
      advances to AeroCentury and/or its Subsidiaries, (c) transfer any of its
      Properties to AeroCentury and/or its Subsidiaries or (d) create, incur, assume
      or suffer to exist any Lien upon any of AeroCentury’s and/or its Subsidiaries’
Property whether now owned or hereafter acquired other than a Permitted Lien;
      provided that the foregoing shall not apply to restrictions in effect on the
      Closing Date contained in agreements governing Debt outstanding on the Closing
      Date.

     

    6.12. Restriction
      on Amendment of this Agreement.
      Enter
      into or otherwise become subject to or suffer to exist any agreement which
      would
      require it to obtain the consent of any other person as a condition to the
      ability of the Banks and AeroCentury to amend or otherwise modify this
      Agreement.

     

    7.
      Financial Covenants

     

    AeroCentury
      covenants and agrees that from and after the date hereof and so long as the
      Revolving Loan Commitments are in effect or any Obligation remains unpaid or
      outstanding, it will maintain the following financial covenants:

     

    7.1. Minimum
      Tangible Net Worth.
      Tangible
      Net Worth will not at any time be less than the sum of (i) $16,000,000, (ii)
      50%
      of Net Income for each Fiscal Quarter ending on March 31, 2007 and thereafter,
      without deduction for net losses, (iii) 50% of the net proceeds from any sale
      of
      equity securities after the date of this Agreement, (iv) 50% of the fair value
      of any equity securities issued after the date of this Agreement in connection
      with any acquisition permitted hereunder or by waiver hereto and (v) 100% of
      any
      Subordinated Debt.

     

    7.2. EBITDA
      to Interest Ratio.
      The
      ratio of EBITDA to Interest as at the end of any Fiscal Quarter and for the
      period of such Fiscal Quarter will not be less than 2.15:1.0; provided, however,
      that if AeroCentury raises unsecured Subordinated Debt of at least $10,000,000
      during any Fiscal Quarter, the ratio of EBITDA to Interest as at the end of
      such
      Fiscal Quarter and as at the end of any Fiscal Quarter thereafter, and for
      the
      period of such Fiscal Quarters so long as unsecured Subordinated Debt in the
      principal amount of at least $10,000,000 remains outstanding, will not be less
      than 1.6:1.0.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    7.3. Recourse
      Funded Debt to Tangible Net Worth.
      The
      ratio
      of Recourse Funded Debt to Tangible Net Worth will not at each Fiscal Quarter
      end exceed 4.00:1.0.

     

    7.4. Absence
      of Net Loss.
      AeroCentury will not suffer a consolidated net loss, as measured on a
      consecutive, four-quarter basis.

     

    7.5. Borrowing
      Base.
      The
      aggregate principal amount of Loans outstanding shall not at any time exceed
      the
      Borrowing Base or the Aggregate Revolving Loan Commitment, whichever is less;
      provided, however, that this covenant shall not be deemed breached if, at the
      time such aggregate amount exceeds said level, within three Business Days after
      the earlier of the date AeroCentury first has knowledge of such excess or the
      date of the next Borrowing Base Certificate disclosing the existence of such
      excess, a prepayment of Loans shall be made in an amount sufficient to assure
      continued compliance with this covenant in the future.

     

    7.6. Effect
      of FASB Staff Position AUG AIR-1, Accounting for Planned Major Maintenance
      Activities.
      All
      calculations made in Sections 7.1, 7.2, 7.3, 7.4 and 7.5 and referenced
      definitions used herein shall be adjusted to (i) deduct the amount of
      non-refundable maintenance reserves received by the Company and recorded as
      income and (ii) add back the payments made from non-refundable maintenance
      reserves and recorded as expense, both such deductions adjusted, as applicable,
      by the tax rate applicable to the subject reporting period.

     

    8.
      Default

     

    8.1. Events
      of Default.
      AeroCentury shall be in default if any one or more of the following events
      (each
      an "Event
      of Default")
      occurs:

     

    (a) Payments.
      AeroCentury fails to pay (1) any principal of or interest on the Notes when
      due and payable (whether at maturity, by notice of intention to prepay, or
      otherwise), or (2) any other amount payable under any Loan Document when it
      is due and payable, and such failure shall continue in either case for a period
      of five Business Days or more.

     

    (b) Covenants.
      AeroCentury fails to observe or perform (1) any term, condition or covenant
      set forth in §§5.1(a), 5.1(b), 5.1(c), 5.1(g), 5.1(h) or 5.1(j), §5.2 (first
      clause only), all sections of Articles 6 and 7 or §8.1(a) of this Agreement, as
      and when required, or (2) any term, condition or covenant contained in this
      Agreement or any other Loan Document other than as set forth in (1) above,
      as
      and when required and such failure shall continue for a period of 10 Business
      Days or more.

     

    (c) Representations,
      Warranties.
      Any
      representation or warranty made or deemed to be made by AeroCentury herein
      or in
      any Loan Document or in any exhibit, schedule, report or certificate delivered
      pursuant hereto or thereto shall prove to have been false, misleading or
      incorrect in any material respect when made or deemed to have been
      made.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (d) Bankruptcy.
      AeroCentury is dissolved or liquidated, makes an assignment for the benefit
      of
      creditors, files a petition in bankruptcy, is adjudicated insolvent or bankrupt,
      petitions or applies to any tribunal for any receiver or trustee, commences
      any
      proceeding relating to itself under any bankruptcy, reorganization, readjustment
      of debt, dissolution or liquidation law or statute of any jurisdiction, has
      commenced against it any such proceeding which remains undismissed for a period
      of sixty (60) days, or indicates its consent to, approval of or acquiescence
      in
      any such proceeding, or any receiver of or trustee for AeroCentury or any
      substantial part of the property of AeroCentury is appointed, or if any such
      receivership or trusteeship continues undischarged for a period of sixty (60)
      days.

     

    (e) Certain
      Other Defaults.
      (1) AeroCentury shall fail to pay when due any Recourse Funded Debt which
      singularly exceeds $250,000, or in the aggregate exceeds $250,000, and such
      failure shall continue beyond any applicable cure period, or
      (2) AeroCentury shall suffer to exist any default or event of default in
      the performance or observance, subject to any applicable grace period, of any
      agreement, term, condition or covenant with respect to any agreement or document
      relating to Recourse Funded Debt if the effect of such default is to permit,
      with the giving of notice or passage of time or both, the holders thereof,
      or
      any trustee or agent for said holders, to terminate or suspend any commitment
      (which is equal to or in excess of $250,000 in any individual case or $250,000
      in the aggregate) to lend money or to cause or declare any portion of any
      borrowings thereunder to become due and payable prior to the date on which
      it
      would otherwise be due and payable, or (3) any default shall exist under
      any Swap Agreement; provided that during any applicable cure period the Banks'
      obligations hereunder to make further Loans shall be suspended.

     

    (f) Judgments.
      Any
      judgments against AeroCentury or against its assets or property for amounts
      in
      excess of $1,000,000 in the aggregate remain unpaid, unstayed on appeal,
      undischarged, unbonded and undismissed for a period of thirty (30)
      days.

     

    (g) Attachments.
      Any
      assets of AeroCentury shall be subject to attachments, levies, or garnishments
      for amounts in excess of $1,000,000 in the aggregate which have not been
      dissolved or satisfied within thirty (30) days after service of notice thereof
      to AeroCentury.

     

    (h) Change
      in Management.
      Neal D.
      Crispin and Toni M. Perazzo shall cease to be executive officers of AeroCentury
      or JMC shall cease to be the management company for AeroCentury as contemplated
      by the Management Agreement dated as of April 23, 1998.

     

    (i) Security
      Interests.
      Any
      security interest created pursuant to any Loan Document shall cease to be in
      full force and effect, or shall cease in any material respect to give the Bank,
      the Liens, rights, powers and privileges purported to be created thereby
      (including, without limitation, a perfected security interest in, and Lien
      on,
      all of the Collateral), superior to and prior to the rights of all third
      Persons, and subject to no other Liens (except as permitted by
§6.3).

     

    (j) Material
      Adverse Change.
      Any
      Material Adverse Change shall have occurred.

     

    THEN
      and in
      every such event other than that specified in §8.1(d), National City as Agent
      may, or at the written request of the Required Banks shall, immediately
      terminate the Revolving Loan Commitments and declare the Notes and all other
      Obligations, including without limitation accrued interest but excluding any
      obligation under any Swap Agreement then in existence, to be, and they shall
      thereupon forthwith become due and payable without presentment, demand, or
      notice of any kind, all of which are hereby expressly waived by AeroCentury.
      Upon the occurrence of any event specified in §8.1(d), the Revolving Loan
      Commitments shall automatically terminate and the Notes and all other
      Obligations, including without limitation accrued interest but excluding any
      obligation under any Swap Agreement then in existence, shall immediately be
      due
      and payable without presentment, demand, protest or other notice of any kind,
      all of which are hereby expressly waived by AeroCentury. Any date on which
      the
      Notes and such other obligations are declared due and payable pursuant to this
      §8.1 shall be the Revolver Termination Date for purposes of this Agreement.
      From
      and after the date an Event of Default shall have occurred and for so long
      as an
      Event of Default shall be continuing, the Loans shall bear interest at the
      Default Rate whether or not a Revolver Termination Date shall have
      occurred.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    9.
      Agent

     

    9.1. Appointment
      and Authorization.
      Each
      Bank hereby irrevocably appoints and authorizes National City, as Agent, to
      take
      such action on its behalf and to exercise such powers under this Agreement
      and
      the Loan Documents as are specifically delegated to it as Agent by the terms
      hereof or thereof, together with such other powers as are reasonably incidental
      thereto. The relationship between National City and each Bank has no fiduciary
      aspects, and National City's duties as Agent hereunder are acknowledged to
      be
      only ministerial and not involving the exercise of discretion on its part.
      Nothing in this Agreement or any Loan Document shall be construed to impose
      on
      National City any duties or responsibilities other than those for which express
      provision is made herein or therein. In performing its duties and functions
      hereunder, National City does not assume and shall not be deemed to have
      assumed, and hereby expressly disclaims, any obligation with or for AeroCentury.
      As to matters not expressly provided for in this Agreement or any Loan Document,
      National City shall not be required to exercise any discretion or to take any
      action or communicate any notice, but shall be fully protected in so acting
      or
      refraining from acting upon the instructions of the Required Banks and their
      respective successors and assigns; provided, however, that in no event shall
      National City be required to take any action which exposes it to personal
      liability or which is contrary to this Agreement, any Loan Document or
      applicable law, and National City shall be fully justified in failing or
      refusing to take any action hereunder unless it shall first be specifically
      indemnified to its satisfaction by the Banks against any and all liability
      and
      expense which may be incurred by it by reason of taking or omitting to take
      any
      such action. If an indemnity furnished to National City for any purpose shall,
      in its reasonable opinion, be insufficient or become impaired, National City
      may
      call for additional indemnity from the Banks and not commence or cease to do
      the
      acts for which such indemnity is requested until such additional indemnity
      is
      furnished.

     

    9.2. Duties
      and Obligations.
      In
      performing its functions and duties hereunder on behalf of the Banks, National
      City shall exercise the same care and skill as it would exercise in dealing
      with
      loans for its own account. Neither National City nor any of its directors,
      officers, employees or other agents shall be liable for any action taken or
      omitted to be taken by it or them under or in connection with this Agreement
      or
      any Loan Document except for its or their own gross negligence or willful
      misconduct. Without limiting the generality of the foregoing, National City
      (a) may consult with legal counsel and other experts selected by it and
      shall not be liable for any action taken or omitted to be taken by it in good
      faith and in accordance with the advice of such experts; (b) makes no
      representation or warranty to any Bank as to, and shall not be responsible
      to
      any Bank for, any recital, statement, representation or warranty made in or
      in
      connection with this Agreement, any Loan Document or in any written or oral
      statement (including a financial or other such statement), instrument or other
      document delivered in connection herewith or therewith or furnished to any
      Bank
      by or on behalf of AeroCentury; (c) shall have no duty to ascertain or
      inquire into AeroCentury's performance or observance of any of the covenants
      or
      conditions contained herein or to inspect any of the property (including the
      books and records) of AeroCentury or inquire into the use of the proceeds of
      the
      Revolving Credit Loans or (unless the officers of National City active in their
      capacity as officers of National City on AeroCentury's account have actual
      knowledge thereof or have been notified in writing thereof) to inquire into
      the
      existence or possible existence of any Event of Default or Potential Default;
      (d) shall not be responsible to any Bank for the due execution, legality,
      validity, enforceability, effectiveness, genuineness, sufficiency,
      collectability or value of this Agreement or any other Loan Document or any
      instrument or document executed or issued pursuant hereto or in connection
      herewith, except to the extent that such may be dependent on the due
      authorization and execution by National City itself; (e) except as
      expressly provided herein in respect of information and data furnished to
      National City for distribution to the Banks, shall have no duty or
      responsibility, either initially or on a continuing basis, to provide to any
      Bank any credit or other information with respect to AeroCentury, whether coming
      into its possession before the making of the Loans or at any time or times
      thereafter, and (f) shall incur no liability under or in respect of this
      Agreement or any other Loan Document for, and shall be entitled to rely and
      act
      upon, any notice, consent, certificate or other instrument or writing (which
      may
      be by facsimile (telecopier), telegram, cable, or other electronic means)
      believed by it to be genuine and correct and to have been signed or sent by
      the
      proper party or parties.

     

    9.3. National
      City Bank as a Bank.
      With
      respect to its Revolving Loan Commitment and the Loans made and to be made
      by
      it, National City shall have the same rights and powers under this Agreement
      and
      all other Loan Documents as the other Banks and may exercise the same as if
      it
      were not the Agent. The terms "Bank" and "Banks" as used herein shall, unless
      otherwise expressly indicated, include National City in its individual capacity.
      National City and any successor Agent which is a commercial bank, and their
      respective affiliates, may accept deposits from, lend money to, act as trustee
      under indentures of and generally engage in any kind of business with,
      AeroCentury and its affiliates from time to time, all as if such entity were
      not
      the Agent hereunder and without any duty to account therefor to any
      Bank.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    9.4. Independent
      Credit Decisions.
      Each
      Bank acknowledges to National City that it has, independently and without
      reliance upon National City or any other Bank, and based upon such documents
      and
      information as it has deemed appropriate, made its own independent credit
      analysis and decision to enter into this Agreement. Each Bank also acknowledges
      that it will, independently or through other advisers and representatives but
      without reliance upon National City or any other Bank, and based upon such
      documents and information as it shall deem appropriate at the time, continue
      to
      make its own credit decisions in taking or refraining from taking any action
      under this Agreement or any Loan Document.

     

    9.5. Indemnification.
      The
      Banks agree to indemnify National City (to the extent not previously reimbursed
      by AeroCentury), ratably in proportion to each Bank's Commitment Percentage,
      from and against any and all liabilities, obligations, losses, damages,
      penalties, actions, judgments, suits, costs, expenses and disbursements of
      any
      kind or nature whatsoever which may be imposed on, incurred by or asserted
      against National City in its capacity as Agent in any way relating to or arising
      out of this Agreement or any Loan Document or any action taken or omitted to
      be
      taken by National City in its capacity as Agent hereunder or under any Loan
      Document; provided that none of the Banks shall be liable for any portion of
      such liabilities, obligations, losses, damages, penalties, actions, judgments,
      suits, costs, expenses or disbursements resulting from National City's gross
      negligence or willful misconduct. Without limiting the generality of the
      foregoing, each Bank agrees to reimburse National City, promptly on demand,
      for
      such Bank's ratable share (based upon the aforesaid apportionment) of any
      out-of-pocket expenses (including counsel fees and disbursements) incurred
      by
      National City in connection with the preparation, execution, administration
      or
      enforcement of, or the preservation of any rights under, this Agreement and
      the
      Loan Documents to the extent that National City is not reimbursed for such
      expenses by AeroCentury.

     

    9.6. Successor
      Agent.
      National
      City may resign at any time by giving written notice of such resignation to
      the
      Banks and AeroCentury, such resignation to be effective only upon the
      appointment of a successor Agent as hereinafter provided. Upon any such notice
      of resignation, the Banks shall jointly appoint a successor Agent upon written
      notice to AeroCentury and National City. If no successor Agent shall have been
      jointly appointed by such Banks and shall have accepted such appointment within
      thirty (30) days after National City shall have given notice of resignation,
      National City may, upon notice to AeroCentury and the Banks, appoint a successor
      Agent. Upon its acceptance of any appointment as Agent hereunder, the successor
      Agent shall succeed to and become vested with all the rights, powers, privileges
      and duties of National City, and National City shall be discharged from its
      duties and obligations as Agent under this Agreement and the Loan Documents.
      After National City's resignation hereunder, the provisions hereof shall inure
      to its benefit as to any actions taken or omitted to be taken by it while it
      was
      the Agent under this Agreement and the Loan Documents.

     

    10.
      Miscellaneous

     

    10.1. Waiver.
      No
      failure or delay on the part of National City or any Bank or any holder of
      any
      Note in exercising any right, power or remedy under any Loan Document shall
      operate as a waiver thereof; nor shall any single or partial exercise of any
      such right, power or remedy preclude any other or further exercise thereof
      or
      the exercise of any other right, power or remedy under any Loan Document. The
      remedies provided under the Loan Documents are cumulative and not exclusive
      of
      any remedies provided by law.

     

    10.2. Amendments.
      No
      amendment, modification, termination or waiver of any Loan Document or any
      provision thereof nor any consent to any departure by AeroCentury therefrom
      shall be effective unless the same shall have been approved in writing by the
      Required Banks, be in writing and be signed by National City and AeroCentury,
      and then any such waiver or consent shall be effective only in the instance
      and
      for the specific purpose for which given. No notice to or demand on AeroCentury
      shall entitle AeroCentury to any other or further notice or demand in similar
      or
      other circumstances. Notwithstanding any other provision contained in any Loan
      Document, no amendment, modification, termination or waiver shall affect the
      payment of principal (including without limitation the date when due), reduce
      any interest rate margin or any fee provided herein, increase any Revolving
      Loan
      Commitment, extend the Revolver Termination Date, modify the definitions of
      "Borrowing Base", "Eligible Collateral", "Eligible Lease" or "Required Banks"
      or
      any voting rights of the Banks without the written consent of all the Banks.
      The
      rights and responsibilities of National City as the Agent hereunder cannot
      be
      changed without its prior written consent.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    10.3. Governing
      Law.
      The Loan
      Documents and all rights and obligations of the parties thereunder shall be
      governed by and be construed and enforced in accordance with the laws of the
      Commonwealth of Pennsylvania without regard to Pennsylvania or federal
      principles of conflict of laws.

     

    10.4. Participations
      and Assignments.
      AeroCentury hereby acknowledges and agrees that any Bank may at any time:
      (a) grant participations in all or any portion of its Note or of its right,
      title and interest therein or in or to this Agreement (collectively,
"Participations")
      to any
      other lending office or to any other bank, lending institution or other entity
      which has the requisite sophistication to evaluate the merits and risks of
      investments in Participations ("Participants");
      provided, however, that: (i) all amounts payable by AeroCentury shall be
      determined as if such Bank had not granted such Participation; and (ii) any
      agreement pursuant to which a Bank may grant a Participation; (x) shall
      provide that such Bank shall retain the sole right and responsibility to enforce
      the obligations of AeroCentury including, without limitation, the right to
      approve any amendment, modification or waiver of any provisions of this
      Agreement; (y) such participation agreement may provide that such Bank will
      not agree to any modification, amendment or waiver of this Agreement without
      the
      consent of the Participant if such modification, amendment or waiver would
      reduce the principal of or rate of interest on any Loan or postpone the date
      fixed for any payment of principal of or interest on any Loan; and
      (z) shall not relieve such Bank from its obligations, which shall remain
      absolute, to make Loans hereunder; and (b) each Bank may assign all or part
      of its Note and its Revolving Credit Commitment (but only with the consent
      of
      AeroCentury and National City, as the Agent, which consent shall not be
      unreasonably withheld), provided that each such assignment shall be in an amount
      of at least $5,000,000 (unless, after giving effect to such assignment and
      all
      other such assignments by such assigning Bank occurring simultaneously or
      substantially simultaneously therewith, such assigning Bank shall hold no
      Revolving Credit Commitment or any portion of its Note hereunder); and
      (ii) each such assignment by a Bank of its Note or a portion thereof, or
      Revolving Credit Commitment or a portion thereof shall be made in such manner
      so
      that the same portion of its Loans, Note and Revolving Credit Commitment is
      assigned to the respective assignee. Upon execution and delivery by the assignee
      to AeroCentury and National City, as the Agent, of an instrument in writing
      pursuant to which such assignee agrees to become a "Bank" hereunder (if not
      already a Bank) having the Commitment(s) and Note interest specified in such
      instrument, and upon consent thereto by AeroCentury and National City, as the
      Agent, to the extent required above, the assignee shall have, to the extent
      of
      such assignment (unless otherwise provided in such assignment with the consent
      of AeroCentury and National City, as the Agent), the obligations, rights and
      benefits of a Bank hereunder holding the Revolving Credit Commitment(s) and
      Loans (or portions thereof) assigned to it (in addition to the Revolving Credit
      Commitment(s) and Note interest, if any, theretofore held by such assignee)
      and
      the assigning Bank shall, to the extent of such assignment, be released from
      the
      Commitment(s) (or portion(s) thereof) so assigned. Upon each such assignment
      the
      assigning Bank shall pay National City as the Agent an assignment fee of
      $3,500.

     

    10.5. Captions.
      Captions
      in the Loan Documents are included for convenience of reference only and shall
      not constitute a part of any Loan Document for any other purpose.

     

    10.6. Notices.
      All
      notices, requests, demands, directions, declarations and other communications
      between the Banks and AeroCentury provided for in any Loan Document shall,
      except as otherwise expressly provided, be mailed by registered or certified
      mail, return receipt requested, or telegraphed, or faxed, or delivered in hand
      to the applicable party at its address indicated opposite its name on the
      signature pages hereto. The foregoing shall be effective and deemed received
      five (5) days after being deposited in the mails, postage prepaid, addressed
      as
      aforesaid and shall whenever sent by telegram, telegraph or fax or overnight
      courier service or delivered in hand be effective when received. Any party
      may
      change its address by a communication in accordance herewith.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    10.7. Sharing
      of Collections, Proceeds and Set-Offs; Application of
      Payments.

     

    (a) If
      any
      Bank, by exercising any right of set-off, counterclaim or foreclosure against
      trade collateral or otherwise, receives payment of principal or interest or
      other amount due on any Note which is greater than the percentage share of
      such
      Bank (determined as set forth below), the Bank receiving such proportionately
      greater payment shall purchase such participation in the Loans held by the
      other
      Banks, and such other adjustments shall be made as may be required, so that
      all
      such payments shall be shared by the Banks on the basis of their percentage
      shares; provided that if all or any portion of such proportionately greater
      payment of such indebtedness is thereafter recovered from, or must otherwise
      be
      restored by, such purchasing Bank, the purchase shall be rescinded and the
      purchase price restored to the extent of such recovery, but without interest
      being paid by such purchasing Bank. The percentage share of each Bank shall
      be
      based on the portion of the outstanding Loans of such Bank (prior to receiving
      any payment for which an adjustment must be made under this Section) in relation
      to the aggregate outstanding Loans of all the Banks. AeroCentury agrees, to
      the
      fullest extent it may effectively do so under applicable law, that any holder
      of
      a participation in a Loan or reimbursement obligation, whether or not acquired
      pursuant to the foregoing arrangements, may exercise rights of set-off or
      counterclaim and other rights with respect to such participation as fully as
      if
      such holder of a participation were a direct creditor of AeroCentury in the
      amount of such participation. If under any applicable bankruptcy, insolvency
      or
      other similar law, any Bank receives a secured claim in lieu of a set-off to
      which this Section would apply, such Bank shall, to the extent practicable,
      exercise its rights in respect of such secured claim in a manner consistent
      with
      the rights of the Banks entitled under this Section to share in the benefits
      of
      any recovery on such secured claim.

     

    (b) If
      an
      Event of Default or Potential Default shall have occurred and be continuing
      the
      Agent and each Bank and AeroCentury agree that all payments on account of the
      Loans shall be applied by the Agent and the Banks as follows:

     

    First,
      to the
      Agent for any Agent fees then due and payable under this Agreement until such
      fees are paid in full;

     

    Second,
      to the
      Agent for any fees, costs or expenses (including expenses described in § 10.8)
      incurred by the Agent under any of the Loan Documents or this Agreement, then
      due and payable and not reimbursed by AeroCentury or the Banks until such fees,
      costs and expenses are paid in full;

     

    Third,
      to the
      Banks for their percentage shares of the Commitment Fee then due and payable
      under this Agreement until such fee is paid in full;

     

    Fourth,
      to the
      Banks for their respective shares of all costs, expenses and fees then due
      and
      payable from AeroCentury until such costs, expenses and fees are paid in
      full;

     

    Fifth,
      to the
      Banks for their percentage shares of all interest then due and payable from
      AeroCentury until such interest is paid in full, which percentage shares shall
      be calculated by determining each Bank's percentage share of the amounts
      allocated in (a) above determined as set forth in said clause (a);
      and

     

    Sixth,
      to the
      Banks for their percentage shares of the aggregate principal amount of the
      Loans
      then due and payable from AeroCentury and any Obligations of AeroCentury under
      or in connection with any Swap Agreements, which percentage shares shall be
      calculated by determining each Bank's percentage share of the aggregate of
      all
      Loans and Swap Agreement Obligations outstanding at the time of the calculation
      based on the aggregate amount of Loans and Swap Agreement Obligations held
      by
      each Bank in proportion to all Loans and Swap Agreement Obligations
      outstanding.

     

    10.8. Expenses;
      Indemnification.
      AeroCentury will from time to time reimburse National City as the Agent promptly
      following demand for all reasonable out-of-pocket expenses (including the
      reasonable fees and expenses of legal counsel) in connection with (i) the
      preparation of the Loan Documents (not to exceed $25,000), (ii) the making
      of any Loans, (iii) the administration or revision of the Loan Documents,
      and (iv) the enforcement of the Loan Documents; and reimburse the Banks for
      all reasonable out-of-pocket expenses (including reasonable fees and expenses
      of
      legal counsel) in connection with the enforcement of the Loan Documents. In
      addition to the payment of the foregoing expenses, AeroCentury hereby agrees
      to
      indemnify, protect and hold the Agent, each Bank and any holder of each Note
      and
      the officers, directors, employees, agents, affiliates and attorneys of the
      Agent, each Bank and such holder (collectively, the "Indemnitees")
      harmless from and against any and all liabilities, obligations, losses, damages,
      penalties, actions, judgments, suits, costs, expenses and disbursements of
      any
      kind or nature, including reasonable fees and expenses of legal counsel, which
      may be imposed on, incurred by, or asserted against such Indemnitee by
      AeroCentury or other third parties and arise out of or relate to this Agreement
      or the other Loan Documents or any other matter whatsoever related to the
      transactions contemplated by or referred to in this Agreement or the other
      Loan
      Documents; provided, however, that AeroCentury shall have no obligation to
      an
      Indemnitee hereunder to the extent that the liability incurred by such
      Indemnitee has been determined by a court of competent jurisdiction to be the
      result of gross negligence or willful misconduct of such
      Indemnitee.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    10.9. Survival
      of Warranties and Certain Agreements.
      All
      agreements, representations and warranties made or deemed made herein shall
      survive the execution and delivery of this Agreement, the making of the Loans
      hereunder and the execution and delivery of the Note. Notwithstanding anything
      in this Agreement or implied by law to the contrary, the agreements of
      AeroCentury in §§2.1(f), 2.5(b), 2.9 and 10.8 and the agreements of the Banks
      set forth in §§9.1, 9.5 and 10.8 shall survive the payment of the Loans and the
      termination of this Agreement. This Agreement shall remain in full force and
      effect until the repayment in full of all amounts owed by AeroCentury under
      the
      Notes or any other Loan Document.

     

    10.10. Severability.
      The
      invalidity, illegality or unenforceability in any jurisdiction of any provision
      in or obligation under this Agreement, the Notes or other Loan Documents shall
      not affect or impair the validity, legality or enforceability of the remaining
      provisions or obligations under this Agreement, the Notes or other Loan
      Documents or of such provision or obligation in any other
      jurisdiction.

     

    10.11. Banks'
      Obligations Several; Independent Nature of Banks'
      Rights.
      The
      obligation of each Bank hereunder is several and not joint and no Bank shall
      be
      the agent of any other (except to the extent the Agent is authorized to act
      as
      such hereunder). No Bank shall be responsible for the obligation or commitment
      of any other Bank hereunder. In the event that any Bank at any time should
      fail
      to make a Loan as herein provided, the other Banks, or any of them as may then
      be agreed upon, at their sole option, may make the Loan that was to have been
      made by the Bank so failing to make such Loan. Nothing contained in any Loan
      Document and no action taken by Agent or any Bank pursuant hereto or thereto
      shall be deemed to constitute the Banks to be a partnership, an association,
      a
      joint venture or any other kind of entity. The amounts payable at any time
      hereunder to each Bank shall be a separate and independent debt, and, subject
      to
      the terms of this Agreement, each Bank shall be entitled to protect and enforce
      its rights arising out of this Agreement and it shall not be necessary for
      any
      other Bank to be joined as an additional party in any proceeding for such
      purpose.

     

    10.12. No
      Fiduciary Relationship.
      No
      provision in this Agreement or in any of the other Loan Documents and no course
      of dealing between the parties shall be deemed to create any fiduciary duty
      of
      any Bank to AeroCentury.

     

    10.13. CONSENT
      TO JURISDICTION AND SERVICE OF PROCESS.
      AEROCENTURY, THE AGENT AND EACH BANK EACH HEREBY CONSENTS TO THE JURISDICTION
      OF
      ANY STATE OR FEDERAL COURT LOCATED WITHIN THE EASTERN DISTRICT OF PENNSYLVANIA
      AND IRREVOCABLY AGREES THAT, ANY ACTIONS OR PROCEEDINGS ARISING OUT OF OR
      RELATING TO THE NOTE, THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY BE
      LITIGATED IN SUCH COURTS. EACH PARTY TO THIS AGREEMENT ACCEPTS FOR ITSELF AND
      IN
      CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
      JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
      CONVENIENT, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
      IN CONNECTION WITH THIS AGREEMENT, ANY NOTE, OR SUCH OTHER LOAN
      DOCUMENT.

     

    10.14. WAIVER
      OF JURY TRIAL.
      AEROCENTURY, THE AGENT AND EACH BANK EACH HEREBY WAIVES ITS RESPECTIVE RIGHTS
      TO
      A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
      AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS BETWEEN THEM RELATING
      TO
      THE SUBJECT MATTER OF THIS AGREEMENT AND THE LENDERIBORROWER RELATIONSHIP
      ESTABLISHED HEREBY THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL-ENCOMPASSING
      OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE
      SUBJECT MATTER OF THIS TRANSACTION, INCLUDING WITHOUT LIMITATION, CONTRACT
      CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
      STATUTORY CLAIMS. AEROCENTURY, THE AGENT AND EACH BANK EACH ACKNOWLEDGES THAT
      THIS WAIVER IS A MATERIAL INDUCEMENT TO THE TRANSACTION, THAT EACH HAS ALREADY
      RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE
      TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. AEROCENTURY, THE AGENT
      AND EACH BANK EACH FURTHER WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS
      WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES
      ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER
      IS
      IRREVOCABLE, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
      SUPPLEMENTS, MODIFICATIONS, REPLACEMENTS OR RESTATEMENTS TO THIS AGREEMENT,
      THE
      LOAN DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS.
      IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
      TO
      A TRIAL BY THE COURT.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    10.15. Counterparts;
      Effectiveness.
      This
      Agreement and any amendment hereto or waiver hereof may be signed in any number
      of counterparts, each of which shall be an original, with the same effect as
      if
      the signatures thereto and hereto were upon the same instrument. This Agreement
      and any amendments hereto or waivers hereof shall become effective when the
      Agent shall have received signed counterparts or notice by fax of the signature
      page that the counterpart has been signed and is being delivered to it or
      facsimile that such counterparts have been signed by all the parties hereto
      or
      thereto.

     

    10.16. Use
      of Defined Terms.
      All
      words used herein in the singular or plural shall be deemed to have been used
      in
      the plural or singular where the context or construction so requires. Any
      defined term used in the singular preceded by "any" shall be taken to indicate
      any number of the members of the relevant class.

     

    10.17. Offsets.
      Nothing
      in this Agreement shall be deemed a waiver or prohibition of any Bank's right
      of
      banker's lien or offset.

     

    10.18. Entire
      Agreement.
      This
      Agreement, the Notes issued hereunder and the other Loan Documents constitute
      the entire understanding of the parties hereto as of the date hereof with
      respect to the subject matter hereof and thereof and supersede any prior
      agreements, written or oral, with respect hereto or thereto.

     

    10.19. Swap
      Agreements.
      Notwithstanding anything to the contrary contained in this Agreement,
      AeroCentury and any Bank may enter into a swap agreement or swap agreements
      at
      any time and from time to time or amend or otherwise modify any such agreement
      and such entry, amendment, modification and/or the existence of any such
      agreement shall not constitute a breach of any provision of this Agreement
      or
      any other Loan Document, or be in any manner restricted by this Agreement or
      any
      other Loan Document.

     

    10.20. Amended
      and Restated Credit Agreement.
      This
      Agreement shall be deemed to, and does hereby, amend and restate in its entirety
      the Amended and Restated Credit Agreement. Simultaneous with the execution
      and
      delivery of this Agreement, the commitment of each Bank party to the Amended
      and
      Restated Credit Agreement is hereby modified to be as set forth in Exhibit
      A to
      this Agreement.

     

    10.21. Re-Funding
      of Loans, Etc.
      Promptly
      following the effectiveness of this Agreement, National City, as the Agent
      under
      this Agreement, shall coordinate with each of the Banks (a) to provide for
      funding by National City Bank, in its individual capacity, and each of the
      other
      Banks of Loans to AeroCentury under this Agreement equal to the proportionate
      share of each Bank of the aggregate principal amount of Loans then outstanding
      to AeroCentury based on the Revolving Loan Commitment Percentage of each Bank
      and (b) to provide for application of the proceeds of such Loans to
      repayment to each such Bank as shall be necessary to cause the Loans by each
      such Bank not to exceed its proportionate share based on its Revolving Loan
      Commitment Percentage applied to the aggregate principal amount of outstanding
      Loans by the Banks to AeroCentury on such date.

     

    10.22. USA
      Patriot Act.
      Each
      Bank that is subject to the requirements of the USA Patriot Act (Title III
      of
      Pub. L. 107-56 (signed into law October 26, 2001)) (the "Patriot
      Act")
      hereby
      notifies AeroCentury that pursuant to the requirements of the Patriot Act,
      it is
      required to obtain, verify and record information that identifies AeroCentury,
      which information includes the name and address of AeroCentury and other
      information that will allow such Bank to identify AeroCentury in accordance
      with
      the Patriot Act.

     

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    IN
      WITNESS WHEREOF, the parties hereto have each caused this Agreement to be duly
      executed by their duly authorized representatives as of the date first above
      written.

     

    
      	 	
              AeroCentury
                Corp.

               

               

              By   

              Name: Toni
                M. Perazzo

              Title: Senior
                Vice President-Finance

            
	
              Notices
                To:

              AeroCentury
                Corp.

              1440
                Chapin Avenue, #310

              Burlingame,
                CA 94010

              FAX
                No. (650) 696-3929

              Att: Toni
                M. Perazzo

              Senior
                Vice President-Finance

            	 
	 	
              NATIONAL
                CITY BANK

               

               

              By   

              Name:
                Michael J. Labrum

              Title:
                Senior Vice President

            
	
              Notices
                To:

              Michael
                J. Labrum

              Senior
                Vice President

              National
                City Bank

              Specialized
                Banking Group,

              Philadelphia
                Region

              One
                South Broad Street, 

              13th
                Floor, Loc. 01-5997

              Philadelphia,
                PA 19107

              FAX
                No. (267) 256-4001

            	 
	 	
              CALIFORNIA
                BANK & TRUST

               

               

              By   

              Name:
                J. Michael Sullivan

              Title:
                Vice President 

            
	
              Notices
                To:

              Mr.
                J. Michael Sullivan

              Vice
                President

              California
                Bank & Trust

              San
                Francisco Regional Corporate Banking

              465
                California Street, First Floor

              San
                Francisco, CA 94104

              FAX:
                (415) 875-1456

            	 
	 	
              FIRST
                BANK

               

               

              By   

              Name:
                Eva Y. Cheung

              Title:
                Vice President

            
	
              Notices
                To:

              Ms.
                Eva Y. Cheung

              Vice
                President

              First
                Bank

              550
                Montgomery Street,

              10th
                Floor

              San
                Francisco, CA 94111

              FAX
                No. (415) 398-7190

            	 
	 	
              BRIDGE
                BANK, NATIONAL ASSOCIATION

               

               

              By   

              Name:
                Lori Edwards

              Title:
                Executive Vice President

            
	
              Notices
                to:

              Ms.
                Lori Edwards

              Executive
                Vice President

              Bridge
                Bank, National Association

              55
                Almaden Boulevard, #100

              San
                Jose, CA 95113

              FAX
                No. (408) 282-1680

            	 

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Reference
      Table of Definitions

     

    [omitted]

     

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    

    

    
      
        
          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    EXHIBIT
      A

    BANKS’
      COMMITMENTS AND PERCENTAGES

    

    Bank                                  Commitment                          Percentage

    

    National
      City Bank                               
      $35,000,000                            43.75%

    Specialized
      Banking Group, 

    Philadelphia
      Region

    One
      South
      Broad Street, 

    13th
      Floor, Loc. 01-5997

    Philadelphia,
      PA 19107

    FAX
      No.
      (267) 256-4001

    

    California
      Bank & Trust                          $20,000,000                          25.00%

    San
      Francisco Regional Corporate Banking

    465
      California Street, First Floor

    San
      Francisco, CA 94104

    FAX:
      (415) 875-1456

    

    First
      Bank                                
$15,000,000                        18.75%

    550
      Montgomery Street,

    10th
      Floor

    San
      Francisco, CA 94111

    FAX
      No.
      (415) 398-7190

    

    Bridge
      Bank, National Association               
$10,000,000                       
12.50%

    55
      Almaden Boulevard, #100

    San
      Jose,
      CA 95113

    FAX
      No.
      (408) 282-1680

    

    TOTAL                                      $80,000,000                              100%

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      B

     

    NOTE

     

    $_,000,000Philadelphia,
      PA

     

    ______________,
      ____

     

    For
      Value
      Received, AeroCentury
      Corp.,
      a
      Delaware corporation, hereby promises to pay to the order of _________________
      BANK
      (the
"Bank"),
      in
      lawful currency of the United States of America in immediately available funds
      at principal office of National City Bank in Cleveland, Ohio, on the Revolver
      Termination Date or on such earlier date or dates as provided in the Credit
      Agreement described below, the principal sum of ___________________ DOLLARS
      ($_,000,000)
      or, if
      less, the then unpaid principal amount of all Loans made by the Bank pursuant
      to
      the Credit Agreement.

     

    AeroCentury
      Corp. promises also to pay interest on the unpaid principal amount hereof in
      like money at such office from the date hereof until paid in full at the rates
      and at the times provided in the Credit Agreement.

     

    This
      Note
      amends and restates (but does not satisfy, extinguish or release the absolute
      and unconditional obligation to repay the entire indebtedness evidenced by)
      the
      Note, dated ___________ ___, ______, executed by the Bank in favor of
      AeroCentury Corp., in the original principal amount of ___________________
      Dollars ($_,000,000).

     

    This
      Note
      is one of the Notes referred to in, is entitled to the benefits of and is
      secured by security interests referred to in the Second Amended and Restated
      Credit Agreement, dated April 17, 2007, by and between AeroCentury Corp. and
      the
      banking institutions named therein, with National City Bank as Agent (as such
      may be amended, modified, supplemented, restated or replaced from time to time,
      the "Credit
      Agreement").
      This
      Note is subject to voluntary prepayment and mandatory repayment prior to the
      Revolver Termination Date, in whole or in part, as provided in the Credit
      Agreement.

     

    In
      case
      an Event of Default shall occur and be continuing, the maturity date of the
      principal of and the accrued interest on this Note may be accelerated and be
      declared to be due and payable in the manner and with the effect provided in
      the
      Credit Agreement.

     

    AeroCentury
      hereby waives presentment, demand, protest or notice of any kind in connection
      with this Note.

     

    Notwithstanding
      the face amount of this Note, the undersigned's liability hereunder shall be
      limited, at all times, to the actual aggregate outstanding indebtedness to
      the
      Bank relating to such Bank's Loans, including all principal and interest,
      together with all fees and expenses as provided in the Credit Agreement, as
      established by the Bank's books and records which shall be conclusive absent
      manifest error.

     

    Capitalized
      terms used but not defined herein shall have the respective meanings assigned
      to
      them in the Credit Agreement.

     

    THIS
      NOTE
      SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE
      COMMONWEALTH OF PENNSYLVANIA WITHOUT REGARD TO PENNSYLVANIA OR FEDERAL
      PRINCIPLES OR CONFLICT OF LAWS.

     

    
      	 	
              AeroCentury
                Corp.

               

               

              By   

              Name: 

              Title: 

            

    

    

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    EXHIBIT
      C

     

    BORROWING
      BASE CERTIFICATE

     

    Date
      of
      Certificate:      

     

    Date
      of
      Information:      

     

    

     

    To:
      National
      City Bank, as Agent

     

    

     

    Gentlemen:

     

    This
      Borrowing Base Certificate is delivered to you pursuant to the terms of §5.1 of
      the Second Amended and Restated Credit Agreement, dated April 17, 2007, as
      currently in effect. Capitalized terms used without definition below have the
      same meanings as they have in the Credit Agreement.

     

    We
      hereby
      certify that:

     

    No
      Potential Default or Event of Default has occurred and is continuing as of
      the
      date of this Borrowing Base Certificate.

     

    There
      has
      been no Material Adverse Change since [insert the date of the most recent
      financial statements delivered to the Bank pursuant to the terms of §5.1 of the
      Credit Agreement], except as disclosed on the attached schedules.

     

    The
      information set forth on the attached schedules is true, current and complete
      as
      of the date of this Borrowing Base Certificate.

     

    

    
      	 	
              AeroCentury
                Corp.

               

               

              By   

              Name: 

              Title: 

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    AeroCentury
      Corp.

     

    Computation
      of Borrowing Base Availability

     

    __________________,
      ________

     

    Collateral
      Loan Value

     

    Total
      Borrowing Base $ 

     

    Maximum
      Loans

     

    Revolving
      Loan Commitment $
      80,000,000

     

    Credit
      Usage

     

    Aggregate
      Loan Balance (principal) at date

     

    of
      certificate $ 

     

    Loan
      Availability

     

    Collateral
      Loan Value minus Credit Usage $ 

     

    Maximum
      Loans minus Credit Usage $ 

     

    Loan
      Availability (lesser of two preceding lines) $ 

     

    Amount
      of
      Loan Requested (not to exceed preceding line) $ 

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      D

     

    COVENANT
      COMPLIANCE CERTIFICATE

     

    The
      undersigned, the [chief executive or chief financial] Officer of AeroCentury
      Corp. ("AeroCentury"), does hereby certify to National City Bank, Agent (the
      "Bank"), as required by that certain Second Amended and Restated Credit
      Agreement, dated April 17, 2007, by and between AeroCentury and the Bank, as
      amended (the "Agreement") (terms not otherwise defined herein shall have the
      meanings given to such terms in the Agreement), that as such officer he is
      authorized to execute this Compliance Certificate (this "Certificate") on behalf
      of AeroCentury and does further certify that:

     

    AeroCentury
      has complied and is in compliance with all covenants, agreements and conditions
      in the Agreement and each of the other Loan Documents on the date
      hereof.

     

    Each
      representation and warranty contained in the Agreement and each of the other
      Loan Documents is true and correct on the date hereof.

     

    No
      Potential Default or Event of Default has occurred and is continuing as of
      the
      date of this Compliance Certificate.

     

    There
      has
      been no Material Adverse Change since [insert the date of the most recent
      financial statements delivered to the Bank pursuant to the terms of §5.1 of the
      Credit Agreement], except as disclosed on the attached schedules.

     

    The
      covenant compliance calculations set forth in Attachment 1 hereto are true
      and
      correct on the dates specified.

     

    IN
      WITNESS WHEREOF, the undersigned has executed this Certificate in his capacity
      as an officer of AeroCentury on this _____ day of _________,
      ______.

     

    

    
      	 	
              AEROCENTURY
                CORP.

               

               

              By   

              Name: 

              Title: 

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Attachment
      1 to the

     

    Covenant
      Compliance Certificate

    AEROCENTURY
      CORP.

    COVENANT
      COMPLIANCE CALCULATIONS

    

    For
      the period ending _______

    
      	 	 
	
              §7.1

            	
              MINIMUM
                TANGIBLE NET WORTH

            
	 	 
	 	
              REQUIREMENT:
                -
                Minimum Tangible Net Worth will not at any time be less than the
                sum of
                (i) $16,000,000 (ii) 50% of Net Income for each Fiscal Quarter ending
                on
                or after March
                31, 2007,
                without deduction for net losses, (iii) 50% of the net proceeds from
                any
                sale of equity securities after the date of this Agreement, (iv)
                50% of
                the fair value of any equity securities issued after the date of
                this
                Agreement in connection with any acquisition permitted hereunder
                or by
                waiver hereto and (v) 100% of any Subordinated Debt.

            
	 	 
	 	
              Tangible
                Net Worth on [date]

            
	 	
              Capital
                Stock

            	 	 
	 	
              Paid-In
                Capital

            	 	
               

            
	 	
              Retained
                Earnings, as adjusted on 1/1/07 pursuant to Section 7.6, as of
                [date]

            	 	
               

            
	 	
              less:
                Non-refundable maintenance reserves recorded as income pursuant to
                FSP AUG
                AIR-1 since January 1, 2007, net of tax effect

            	
              (
                )

            	 
	 	
               

              plus:
                Non-refundable maintenance reserves recorded as expense pursuant
                to FSP
                AUG AIR-1 since January 1, 2007, net of tax effect

            	 	 
	 	
               

              Retained
                Earnings, adjusted for 

              FSP
                AUG AIR-1

            	 	 
	 	
               

              plus:
                Unsecured Subordinated Debt due after the Revolver Termination
                Date

            	 	
               

            
	 	
               

              Subtotal

            	 	
               

            
	 	 	 	 
	 	
              less:
                Net Worth of Unrestricted Subsidiaries

            	 	
              (
                )

            
	 	
              less:
                Intangibles

            	 	
              (
                )

            
	 	 	 	 
	 	
              Tangible
                Net Worth

            	 	 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	 	
              Required
                Tangible Net Worth

            	 	 
	 	 	 	 
	 	
              (i)
                $16,000,000

            	 	
              16,000,000

            
	 	
               

              (ii)
                50% of Net Income, adjusted for effect of non-refundable maintenance
                reserves recorded as income and expense pursuant to FSP AUG AIR-1,
                net of
                tax effect

            	 	 
	 	
               

              (iii)
                50% of net proceeds from any sale of equity securities

            	 	
               

            
	 	
               

              (iv)
                50% of the fair value of any equity securities issued after the date
                of
                this Agreement in connection with any permitted
                acquisition.

            	 	
               

            
	 	
               

              (v)
                100% of any subordinated debt

            	 	 
	 	
               

              Required
                Tangible Net Worth

            	 	 
	 	 	 	 
	 	
              EXCESS
                (DEFICIENCY) OF ACTUAL TANGIBLE NET WORTH COMPARED WITH REQUIRED
                TANGIBLE
                NET WORTH

            	 	 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	 	 
	
              §7.2

            	
              EBITDA
                TO INTEREST RATIO

            
	 	 
	 	
              REQUIREMENT:
                -
                The ratio of EBITDA to Interest as at the end of any Fiscal Quarter
                and
                for the period of such Fiscal Quarter will not be less than 2.15:1.0;
                provided, however, that if AeroCentury raises unsecured Subordinated
                Debt
                of at least $10,000,000 during any Fiscal Quarter, the ratio of EBITDA
                to
                Interest as at the end of such Fiscal Quarter and as at the end of
                any
                Fiscal Quarter thereafter, and for the period of such Fiscal Quarters
                so
                long as unsecured Subordinated Debt in the principal amount of at
                least
                $10,000,000 remains outstanding, will not be less than
                1.60:1.0.

            
	 	 
	 	
              EBITDA
                -

            
	 	
              Net
                Income for the

            	 	 
	 	
              Fiscal
                Quarter ended ___________

            	 	 
	 	
               

              Interest
                deducted with respect to

              the
                Fiscal Quarter ended ___________

            	 	 
	 	
               

              Taxes
                deducted with respect to

              the
                Fiscal Quarter ended ___________

            	 	 
	 	
               

              Depreciation
                deducted with respect to

              the
                Fiscal Quarter ended ___________

            	 	 
	 	
               

              Amortization
                deducted with respect to

              Fiscal
                Quarter ended ___________

            	 	 
	 	
               

              Non-refundable
                maintenance reserves recorded as income pursuant to FSP AUG AIR-1,
                with
                respect to the Fiscal Quarter ended ___________

            	
              (
                )

            	 
	 	
               

              Non-refundable
                maintenance reserves recorded as expense pursuant to FSP AUG AIR-1,
                with
                respect to the Fiscal Quarter ended ____________

            	 	 
	 	 	 	 
	
              EBITDA
                for the Fiscal Quarter 

              ended
                ___________

            	 
	 	 	 	 
	 	
              Interest
                -

            	 	 
	 	
              Interest
                for the Fiscal Quarter 

              ended
                ___________

            	 	 
	 	 	 
	 	
              RATIO
                OF EBITDA TO INTEREST

            	 	 

    

    
      	 	 
	
              §7.3

            	
              RECOURSE
                FUNDED DEBT TO TANGIBLE NET WORTH 

            
	 	 
	 	
              REQUIREMENT:
                -
                The ratio of Recourse Funded Debt (including Recourse Funded Debt
                represented by the Notes) to Tangible Net Worth will not at any time
                exceed 4.00:1.0. 

            
	 	 
	 	
              Recourse
                Funded Debt on [date]:

            	 	 
	 	 	 	 
	 	
              Tangible
                Net Worth on [date]

            	 	 
	 	 	 
	 	
              RATIO
                OF RECOURSE FUNDED DEBT TO 

              TANGIBLE
                NET WORTH

            	 
	 	 	 
	 	 	 
	 	 
	 	 
	
              §7.4

            	
              ABSENCE
                OF NET LOSS

            
	 	 
	 	
              REQUIREMENT:
                -
                AeroCentury
                will not suffer a consolidated net loss, as measured on a consecutive,
                four-quarter basis.

               

            
	 	 
	 	
              Net
                Income for the consecutive four quarters ended ________

            	 	 
	 	
               

              less:
                Non-refundable maintenance reserves recorded as income pursuant to
                FSP AUG
                AIR-1, net of tax effect

            	 	
              (
                )

            
	 	
               

              plus:
                Non-refundable maintenance reserves recorded as expense pursuant
                to FSP
                AUG AIR-1, net of tax effect

            	 	 
	 	
               

              NET
                INCOME FOR THE CONSECUTIVE FOUR QUARTERS ENDED __________, ADJUSTED
                FOR
                EFFECTS OF FSP 

              AUG
                AIR-1

            	 	 
	 	 	 	 

    

    

    

    

    
      
        
          

          
            	
                    1-PH/2368172.8 

                  	 	 

          

          

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      E

     

    DEPRECIATION
      POLICIES

     

    AeroCentury
      Corp's interest in aircraft and aircraft engines are recorded at cost, which
      includes acquisition costs and loan fees. Depreciation is completed using the
      straight-line method over the aircraft's estimated economic life (generally
      assumed to be twelve years), to an estimated residual value.

     

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
      1

     

    DISCLOSURE
      SCHEDULE

     

     

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
      2

    

    APPLICABLE
      MARGINS, COMMITMENT FEE

    

    Advances
      under the Revolving Credit shall carry an interest rate based on the Borrower’s
      ratio of Total Funded Recourse Indebtedness to Tangible Net Worth (“Total Funded
      Recourse Debt to TNW”), as outlined below:

    

    

    Ratio
      of Funded

    Debt
      to Tangible  Alternate
      Base  LIBO   Commitment

    Net
      Worth   Rate
      Margin  Rate
      Margin 
 Fee  

    

    >
      3.00   
150
      bp   325
      bp   
      50
      bp 

    ≥
2.00
      but ≤ 3.00            
100
      bp   300
      bp   
      50
      bp

    <
      2.00    
      50
      bp   275
      bp   
      40
      bp 

    

    The
      Commitment Fee is computed based upon the applicable Commitment Fee rate on
      the
      average daily unused portion of the Revolving Credit Loan that is due and
      payable quarterly in arrears.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00121-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00121-of-00352.parquet"}]]