Document:

THIS
      INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE
      IN
      THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND
      INTERCREDITOR AGREEMENT (THE “SUBORDINATION AGREEMENT”) DATED AS OF APRIL 17,
      2007 AMONG SATELLITE FUND II, L.P., SATELLITE FUND IV, L.P., SATELLITE FUND
      V,
      LLC AND THE APOGEE GROUP, LLC AND NATIONAL CITY BANK (TOGETHER WITH ITS
      SUCCESSORS AND ASSIGNS, THE “SENIOR AGENT”), TO THE INDEBTEDNESS (INCLUDING
      INTEREST) OWED BY AEROCENTURY CORP. (THE “COMPANY”) PURSUANT TO THAT CERTAIN
      SECOND AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF APRIL 17, 2007 AMONG
      THE COMPANY, THE SENIOR AGENT AND THE LENDERS FROM TIME TO TIME PARTY THERETO,
      AND THE OTHER LOAN DOCUMENTS (AS DEFINED IN THE CREDIT AGREEMENT) AS
      SUCH CREDIT
      AGREEMENT AND OTHER LOAN DOCUMENTS MAY BE AMENDED, RESTATED, SUPPLEMENTED OR
      OTHERWISE MODIFIED FROM TIME TO TIME AND TO INDEBTEDNESS REFINANCING THE
      INDEBTEDNESS THEREUNDER AS CONTEMPLATED BY THE SUBORDINATION AGREEMENT; AND
      EACH
      HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO
      BE
      BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.

     

    AEROCENTURY
      CORP.

     

    SECURITIES
      PURCHASE AGREEMENT

     

    $28,000,000
      16% Senior Subordinated Notes due December 30, 2011

     

    171,473
      Warrants to Purchase Common Stock

     

    April
      17,
      2007

     

     

    

     

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

     

    TABLE
      OF CONTENTS

     

     

    Page

    [omitted
      from filing]

     

    
      
        
          i

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    Schedules
      and Exhibits

     

    
      	
              Schedule
                I

            	
              --

            	
              Information
                as to Purchasers

            
	 	 	 
	
              Schedule
                1.1

            	
              --

            	
              Core
                Lease Provisions

            
	
              Schedule
                6.5

            	
              --

            	
              Litigation

            
	
              Schedule
                6.7

            	
              --

            	
              Tax
                Returns and Payment

            
	
              Schedule
                6.8

            	
              --

            	
              Subsidiaries;
                Joint Ventures

            
	
              Schedule
                6.10

            	
              --

            	
              Other
                Debt, Guarantees and Capitalized Leases

            
	
              Schedule
                6.14

            	
              --

            	
              Patents,
                Trademarks, Copyrights, Licenses, Etc.

            
	
              Schedule
                6.15

            	
              --

            	
              Environmental
                and Safety and Health Matters

            
	
              Schedule
                6.19

            	
              --

            	
              Capital
                Stock of Issuer

            
	
              Schedule
                6.24

            	
              --

            	
              Aircraft
                and Aircraft Lease Terms

            
	
              Schedule
                12.1

            	
              --

            	
              Existing
                Debt

            
	
              Schedule
                12.2

            	
              --

            	
              Closing
                Date Liens

            
	
              Schedule
                13.5

            	
              --

            	
              Maximum
                LTV Ratios and Balances

            
	 	 	 
	
              Exhibit
                2(a)

            	 	
              Form
                of Warrant

            
	
              Exhibit
                2(b)

            	
              --

            	
              Form
                of Note

            
	
              Exhibit
                4

            	
              --

            	
              Instructions
                for Wire Transfer of Funds at Closing

            
	
              Exhibit
                5.4

            	
              --

            	
              Form
                of Subordination Agreement

            
	
              Exhibit
                5.5

            	
              --

            	
              Form
                of Management Subordination Agreement

            
	
              Exhibit
                7(c)

            	
              --

            	
              Covenant
                Compliance Certificate

            

    

    

    
      
        
           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    AEROCENTURY
      CORP.

    1440
      Chapin Avenue

     

    Suite
      310

     

    Burlingame,
      CA 94010

     

    April
      17,
      2007

     

    To
      Each
      of the Purchasers Named

     

    on
      Schedule
      I
      Attached
      Hereto

     

    Ladies
      and Gentlemen:

     

    AEROCENTURY
      CORP.,
      a
      Delaware corporation (together with its successors permitted hereunder, the
      “Issuer”),
      agrees with each Purchaser named on Schedule I attached hereto (each a
“Purchaser”
and
      collectively the “Purchasers”)
      as
      follows. 

     

    
      	1.  	
              DEFINITIONS.

            

    

     

    1.1.  Definitions
      of Capitalized Terms.

     

    The
      terms
      defined in this Section 1.1,
      whenever used in this Agreement, shall, unless the context otherwise requires,
      have the following respective meanings:

     

    “Affiliate”
shall
      mean any Person (a) which directly or indirectly through one or more
      intermediaries controls, is controlled by or is under common control with any
      one or more of the Issuer or any Subsidiaries, (b) which directly or indirectly
      through one or more intermediaries beneficially owns or holds or has the power
      to direct the voting power of ten percent (10%) or more of any class of Capital
      Stock of the Issuer or any Subsidiary, (c) which has ten percent (10%) or more
      of any class of its Capital Stock beneficially owned or held, directly or
      indirectly, by the Issuer or any Subsidiary or (d) who is a director, officer,
      manager or employee of the Issuer or any Subsidiary; provided, however, that
      no
      holder of Securities shall be deemed an Affiliate of an Issuer or Subsidiary
      hereunder. For purposes of this definition, “control” shall mean the power to
      direct the management and policies of a Person, directly or indirectly, whether
      through the ownership of voting securities, by contract or
      otherwise.

     

    “Agreement”
shall
      mean this Securities Purchase Agreement, as amended, modified or waived from
      time to time in accordance with Section 17.

     

    “Aircraft
      Acquisition Fees”
shall
      mean fees charged by JMC in connection with the acquisition of aircraft by
      the
      Issuer consistent with past practices as described to the
      Purchasers.

     

    “Aircraft
      Portfolio”
shall
      mean, at any time, each aircraft owned by the Issuer and that is leased by
      the
      Issuer pursuant to a lease agreement so long as such lease agreement contains
      terms and conditions substantially similar in all material respects those as
      set
      forth on Schedule
      1.1
      attached
      hereto.

     

    “Aircraft
      Regulatory Authority”
shall
      mean, as applicable, the FAA or any similar regulatory authority of any
      jurisdiction in which any aircraft in the Aircraft Portfolio is registered
      or
      operated.

     

    “Applicable
      Premium”
shall
      have the meaning specified in Section 9.2.

     

    “Available
      Amount”
shall
      mean, at any time with respect to any Sale Notice, (i) $18,000,000, minus
      (ii) the
      aggregate principal amount of Notes purchased and sold pursuant to a Sale Notice
      in accordance with the terms of this Agreement at any prior Subsequent Closing,
      minus
      (iii)
      the
      aggregate principal amount of Notes which are the subject of a prior Sale Notice
      that have not yet been purchased and sold hereunder prior to such
      time.

     

    “Average
      Principal Balance”
-
      means, with respect to any period, the sum of the aggregate outstanding balance
      of all Notes on each day of such period divided
      by
      the
      number of days in such period.

     

    “Bankruptcy
      Code”
means
      the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §101, et
      seq.),
      as
      amended and in effect from time to time and the regulations issued from time
      to
      time thereunder.

     

    “Business
      Day”
shall
      mean any day other than a Saturday, Sunday or other day which shall be in
      Burlingame, California, or New York, New York, a legal holiday or a
      day on
      which banking institutions therein are authorized by law to close.

     

    “Capital
      Stock”
shall
      mean, with respect to any corporation, limited liability company, partnership
      or
      other entity, any capital stock, membership interests, partnership interests
      or
      other equity interests of or in such corporation, limited liability company,
      partnership or other entity and any warrants, rights or options to purchase
      or
      acquire any such capital stock, membership interests, partnership interests
      or
      other equity interests.

     

    “Capitalized
      Lease”
shall
      mean any lease of Property, whether real and/or personal, by a Person as lessee
      which in accordance with GAAP is required to be capitalized on the balance
      sheet
      of such Person.

     

    “Capitalized
      Lease Obligations”
of
      any
      Person shall mean, as of the date of any determination thereof, the amount
      at
      which the aggregate rental obligations due and to become due under all
      Capitalized Leases under which such Person is a lessee would be reflected as
      a
      liability on a balance sheet of such Person in accordance with
      GAAP.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “CERCLA”
shall
      mean the Comprehensive Environmental Response, Compensation and Liability Act
      of
      1980, as amended by the Superfund Amendments and Reauthorization Act of 1986,
      42
      U.S.C. §9601 et seq., and as the same may from time to time be further
      amended.

     

    “Change
      of Control”
shall
      have the meaning specified in Section 9.3(b).

     

    “Closing”
shall
      mean the Initial Closing or a Subsequent Closing, as applicable.

     

    “Closing
      Date”
shall
      mean, the Initial Closing Date or a Subsequent Closing Date, as
      applicable.

     

    “Code”
shall
      mean the Internal Revenue Code of 1986, as amended, and any successor statute
      of
      similar import, together with the regulations thereunder, in each case as in
      effect from time to time. References to sections of the Code shall be construed
      to also refer to any successor sections.

     

    “Commission”
shall
      mean the United States Securities and Exchange Commission or any other federal
      agency of the United States from time to time administering the Securities
      Act
      and/or the Exchange Act.

     

    “Commitment
      Percentage”
shall
      mean, with respect to any Purchaser, the amount of such Purchaser’s commitment
      percentage as set forth on Schedule
      I
      with
      respect to such Purchaser.

     

    “Common
      Stock”
shall
      mean the common stock of the Issuer.

     

    “Debt”
shall
      mean, as of any date of determination with respect to any Person, without
      duplication, (a) all indebtedness, liabilities and obligations of such Person
      for borrowed money or which have been incurred in connection with the purchase
      or other acquisition of Property (excluding trade accounts payable and accrued
      expenses arising in the ordinary course), (b) all indebtedness, liabilities
      and
      obligations secured by any Lien on, or payable out of the proceeds of or
      production from, any Property owned by such Person, whether or not such Person
      has assumed or become liable for the payment of such obligations, (c) all
      indebtedness, liabilities and obligations of third parties, including joint
      ventures and partnerships of which such Person is a venturer or general partner,
      to the extent recourse to which may be had against such Person, (d) all
      indebtedness, liabilities, and obligations created or arising under any
      conditional sale or other title retention agreement with respect to Property
      acquired by such Person, notwithstanding the fact that the rights and remedies
      of the seller, lender or lessor under such agreement in the event of default
      are
      limited to repossession or sale of such Property, (e) Capitalized Lease
      Obligations of such Person, (f) the aggregate undrawn face amount of all letters
      of credit issued for the account of and/or upon the application of such Person
      together with all unreimbursed drawings with respect thereto, (g) all
      indebtedness, liabilities and obligations of such Person to pay the deferred
      purchase price of property or services, (h) the Swap Termination Value under
      any
      Swap Contract to which such Person is a party to the extent such Swap
      Termination Value is owed or would be owed by such Person, (i) the present
      value
      of any outstanding Operating Lease Payments discounted at 10% and (j)
      indebtedness, liabilities and obligations of such Person under Guarantees,
      including, without limitation, any obligations of the Issuer to Guarantee the
      residual value of any aircraft. 

     

    “Default”
shall
      mean any condition or event which constitutes or, after notice or lapse of
      time
      or both, would constitute an Event of Default.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Defaulted
      Lease”
shall
      mean any aircraft lease the lease payments (or any other monetary payments)
      of
      which are past due (based on the contractual terms in existence at the later
      of
      the Initial Closing Date and the commencement of such lease) provided however
      if
      the Issuer has a security deposit in respect of such aircraft lease in excess
      of
      the amounts past due such aircraft lease shall not be a Defaulted Lease until
      such time as any past due amount is overdue for more than 45 days. 

     

    “Disclosure
      Schedules”
shall
      have the meaning specified in the introductory paragraph to Section 6.

     

    “Discounted
      Aircraft Portfolio Value”
shall
      mean, with respect to the Aircraft Portfolio and any determination date, the
      amount obtained by discounting all Remaining Scheduled Aircraft Portfolio
      Payments with respect to each aircraft in the Aircraft Portfolio from their
      respective scheduled due dates to such determination date, in accordance with
      accepted financial practice and at a discount factor (applied on the same
      periodic basis as that on which interest on the Notes is payable) equal to
      the
      Lease Discount Rate; provided that (a) with respect to any aircraft not then
      subject to lease or subject to a Defaulted Lease, the value thereof will be
      the
      most recent (which shall not be older than twelve months) desktop appraisal
      provided by Ascend, a division of Airclaims, as adjusted for any write downs
      to
      book value taken by the Issuer since the date of such appraisal and (b) with
      respect to any aircraft or engine that is the subject of an insurance claim,
      such aircraft or engine shall no longer be part of the Aircraft Portfolio
      commencing on the earlier of the date the lease in respect of such aircraft
      terminates or the date the Issuer receives the stipulated loss value in respect
      thereof.

     

    “EBITDA”
shall
      mean, for any period, the sum of Net Income for such period plus the amount
      deducted from such Net Income as expenses for Interest, taxes, depreciation
      and
      amortization.

     

    “Environmental
      Claim” shall
      mean any administrative, regulatory or judicial action, judgment, order, consent
      decree, suit, demand, demand letter, claim, Lien, notice of non-compliance
      or
      violation, investigation or other proceeding arising (a) pursuant to any
      Environmental Law or governmental or regulatory approval issued under any such
      Environmental Law, (b) from the presence, use, generation, storage, treatment,
      Release, threatened Release, disposal, remediation or other existence of any
      Hazardous Substance, (c) from any removal, remedial, corrective or other
      response action pursuant to an Environmental Law or the order of any
      governmental or regulatory authority or agency, (d) from any third party seeking
      damages, contribution, indemnification, cost recovery, compensation, injunctive
      or other relief in connection with a Hazardous Substance or arising from alleged
      injury or threat of injury to health, safety, natural resources or the
      environment or (e) from any Lien against any Property owned, leased or operated
      by the Issuer or any Subsidiary in favor of any governmental or regulatory
      authority or agency in connection with a Release, threatened Release or disposal
      of a Hazardous Substance.

     

    “Environmental
      Law”
shall
      mean any Federal, state, local, foreign or other statute, law, rule, regulation,
      order, consent decree, judgment, permit, license, code, covenant, deed
      restriction, common law, treaty, convention, ordinance or other requirement
      relating to public health, safety or the environment, including, without
      limitation, those relating to Releases, discharges or emissions to air, water,
      land or groundwater, to the withdrawal or use of groundwater, to the use and
      handling of polychlorinated biphenyls or asbestos, to the disposal, treatment,
      storage or management of hazardous or solid waste, Hazardous Substances or
      crude
      oil, or any fraction thereof, to exposure to toxic or hazardous materials,
      to
      the handling, transportation, discharge or release of gaseous or liquid
      Hazardous Substances and any rule, regulation, order, notice or demand issued
      pursuant to such law, statute or ordinance, in each case applicable to any
      of
      the Property owned, leased or operated by the Issuer or any Subsidiary or the
      operation, construction or modification of any such Property, including, without
      limitation, the following: CERCLA, the Solid Waste Disposal Act, as amended
      by
      the Resource Conservation and Recovery Act of 1976 and the Hazardous and Solid
      Waste Amendments of 1984, the Hazardous Materials Transportation Act, as
      amended, the Federal Water Pollution Control Act, as amended by the Clean Water
      Act of 1976, the Safe Drinking Water Control Act, the Clean Air Act of 1966,
      as
      amended, the Toxic Substances Control Act of 1976, the Occupational Safety
      and
      Health Act of 1970, as amended, the Emergency Planning and Community
      Right-to-Know Act of 1986, the National Environmental Policy Act of 1975, the
      Oil Pollution Act of 1990 and any similar or implementing state or local law,
      and any state or local statute and any further amendments to these laws
      providing for financial responsibility for cleanup or other actions with respect
      to the Release or threatened Release of Hazardous Substances or crude oil,
      or
      any fraction thereof and all rules and regulations promulgated
      thereunder.

     

    “ERISA”
shall
      mean the Employee Retirement Income Security Act of 1974, as amended, and any
      successor statute of similar import, together with the regulations thereunder,
      in each case as in effect from time to time. References to sections of ERISA
      shall be construed to also refer to any successor sections.

     

    “ERISA
      Affiliate”
shall
      mean any corporation, trade or business that is, along with the Issuer or any
      Subsidiary, a member of a controlled group of corporations or a controlled
      group
      of trades or businesses, as described in Sections 414(b) and 414(c),
      respectively, of the Code or Section 4001 of ERISA.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Event
      of Default”
shall
      have the meaning specified in Section 14.1.

     

    “Exchange
      Act”
shall
      mean the Securities Exchange Act of 1934, as amended, or any successor federal
      statute, and the rules and regulations of the Commission promulgated thereunder,
      all as the same shall be in effect from time to time.

     

    “FAA”
shall
      mean the Federal Aviation Authority of the United States Department of
      Transportation or any successor thereof.

     

    “Final
      Closing Date”
shall
      mean the Subsequent Closing Date on or before June 30, 2008 on which the Issuer
      shall have issued, and the Purchasers shall have purchased, $28,000,000 in
      aggregate principal amount of Notes.

     

    “Final
      Maturity Date”
shall
      mean December 30, 2011.

     

    “Fiscal
      Quarter”
      shall
      mean a fiscal quarter of the Issuer, 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 the Issuer, which shall end on the last day of
      December.

     

    “GAAP”
shall
      mean, at any time, generally accepted accounting principles at such time in
      the
      United States.

     

    “Guarantee” by
      any
      Person shall mean any obligation (other than endorsements of negotiable
      instruments for deposit or collection in the ordinary course of business),
      contingent or otherwise, of such Person guaranteeing, or in effect guaranteeing,
      any Debt, liability, dividend or other obligation of any other Person (the
      “primary obligor”) in any manner, whether directly or indirectly, including,
      without limitation, all obligations incurred through an agreement, contingent
      or
      otherwise, by such Person: (a) to purchase such Debt or obligation or any
      Property constituting security therefor, (b) to advance or supply funds (i)
      for
      the purchase or payment of such Debt or obligation, (ii) to maintain working
      capital or other balance sheet condition or otherwise to advance or make
      available funds for the purchase or payment of such Debt or obligation, (iii)
      to
      lease property or to purchase securities or other property or services primarily
      for the purpose of assuring the owner of such Debt or obligation of the ability
      of the primary obligor to make payment of the Debt or obligation or (iv)
      otherwise to assure the owner of the Debt or obligation of the primary obligor
      against loss in respect thereof. For the purposes of all computations made
      under
      this Agreement, a Guarantee in respect of any Debt for borrowed money shall
      be
      deemed to be Debt equal to the then outstanding principal amount of such Debt
      for borrowed money which has been guaranteed or such lesser amount to which
      the
      maximum exposure of the guarantor shall have been specifically limited, and
      a
      Guarantee in respect of any other obligation or liability or any dividend shall
      be deemed to be Debt equal to the maximum aggregate amount of such obligation,
      liability or dividend or such lesser amount to which the maximum exposure of
      the
      guarantor shall have been specifically limited. Guarantee when used as a verb
      shall have a correlative meaning.

     

    “Guarantee
      Agreement”
shall
      have the meaning specified in Section 11.10.

     

    “Hazardous
      Substance”
shall
      mean any hazardous or toxic material, substance or waste, any pollutant or
      any
      contaminant, in each case, as regulated under any Environmental Law, including,
      without limitation, any such material, substance or waste which is: (a) defined
      as a hazardous substance under Section 311 of the Federal Water Pollution
      Control Act (33 U.S.C. §§1317), as amended; (b) regulated as a hazardous waste
      under Section 1004 or Section 3001 of the Federal Solid Waste Disposal Act,
      as
      amended by the Resource Conservation and Recovery Act (42 U.S.C. §§6901 et
      seq.), as amended; (c) defined as a hazardous substance under Section 101 of
      the
      Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
      §§9601 et seq.), as amended; or (d) defined or regulated as a hazardous
      substance or hazardous waste under any rules or regulations promulgated under
      any of the foregoing statutes.

     

    “Initial
      Closing”
shall
      have the meaning specified in Section 4.1.

     

    “Initial
      Closing Date”
shall
      have the meaning specified in Section 4.1.

     

    “Initial
      Notes”
shall
      mean Notes to be issued on the Initial Closing Date in the aggregate principal
      amount of $10,000,000.

     

    “Insolvency
      Proceeding”
means
      (a) any case, action or proceeding before any court or other governmental
      authority relating to bankruptcy, reorganization, insolvency, liquidation,
      receivership, dissolution, winding-up or relief of debtors, or (b) any general
      assignment for the benefit of creditors, composition, marshaling of assets
      for
      creditors, or other, similar arrangement in respect of its creditors generally
      or any substantial portion of its creditors; in each case in (a) and (b) above,
      undertaken under U.S. federal, state or foreign law, including the Bankruptcy
      Code.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “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 interest expense of the Issuer with respect to a Fiscal Quarter as
      calculated in accordance with GAAP.

     

    “Investment”
shall
      mean any investment by the Issuer or any Subsidiary in any Person, whether
      payment therefor is made in cash or Capital Stock of the Issuer or any
      Subsidiary, and whether such investment is by acquisition of stock or Debt,
      or
      by loan, advance, transfer of Property, capital contribution, equity or profit
      sharing interest or extension of credit.

     

    “Issuer”
shall
      have the meaning specified in the introductory paragraph hereto.

     

    “Issuer
      Administrative Expense”
shall
      mean all expenses of the Issuer other than aircraft maintenance expenses, taxes,
      the JMC Management Fee, Re-Sale Fees, Aircraft Acquisition Fees and interest
      expense in respect of Debt permitted hereunder.

     

    “JHC”
shall
      have the meanings specified in Section 12.8.

     

    “JMC”
shall
      mean JetFleet Management Corp., a California corporation.

     

    “JMC
      Management Agreement”
shall
      have the meanings specified in Section 12.8.

     

    “JMC
      Management Fee”
shall
      mean the management fee payable to JMC pursuant to Section 3.4 of the Management
      Agreement.

     

    “Lease
      Discount Rate “
shall
      mean, at any time, the lesser of (a) the blended cost of capital assuming that
      the aggregate commitment under the Senior Bank Agreement (or any Permitted
      Refinancing thereof) has been fully advanced (giving effect to the borrowing
      base provided for therein) and the Issuer has issued Notes equal to the Maximum
      Outstanding Balance permitted at such time and (b) the blended cost of capital,
      calculated as the weighted average of the rates in effect under the Senior
      Bank
      Agreement (or any Permitted Refinancing thereof) and on the Notes.

     

    “Lien”
shall
      mean any interest in Property securing an obligation owed to, or a claim by,
      a
      Person other than the owner of the Property, whether such interest is based
      on
      common law, statute or contract, including, without limitation, any security
      interest, mortgage, deed of trust, pledge, hypothecation, judgment lien or
      other
      lien or encumbrance of any kind or nature whatsoever, any conditional sale
      or
      trust receipt, any lease, consignment or bailment for security purposes and
      any
      Capitalized Lease. The term “Lien” shall include reservations, exceptions,
      encroachments, easements, rights-of-way, covenants, conditions, restrictions,
      leases and other title exceptions and encumbrances affecting
      Property.

     

    “Maintenance
      Reserve”
shall
      mean, at any time for any aircraft, the amount equal to 3% of the aggregate
      rents payable under the aircraft lease with respect to such aircraft at such
      time.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Make-Whole
      Amount”
shall
      have the meaning specified in Section 9.3(d).

     

    “Management”
shall
      mean Neal D. Crispin or Toni M. Perazzo.

     

    “Management
      Fee”
shall
      mean, any management fee, consulting fee, investment banking fee, re-sale fee,
      similar fee or any payment under the JMC Management Agreement, including without
      limitation, the JMC Management Fee.

     

    “Management
      Subordination Agreement”
shall
      have the meaning specified in Section 5.5.

     

    “Mandatory
      Payment Date”
shall
      have the meaning specified in Section 9.1(a).

     

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

     

    “Maximum
      Debt to Value Ratio”
shall
      mean, as the last day of any calendar month, the ratio of the aggregate amount
      of Debt of the Issuer outstanding at such time to the Discounted Aircraft
      Portfolio Value at such time.

     

    “Maximum
      Outstanding Balance”
shall
      mean, with respect to any calendar month, the amount set forth on Schedule
      13.5
      hereto
      opposite such month under the column “Maximum Outstanding Balance.”

     

    “Multi-Employer
      Plan” shall
      mean a “multi-employer plan” as defined in Section 4001(a)(3) of ERISA which is
      maintained for employees of the Issuer, any Subsidiary or any ERISA Affiliate
      or
      to which the Issuer, any Subsidiary or any ERISA Affiliate has contributed
      in
      the past or currently contributes.

     

    “Net
      Income”
shall
      mean, for any period, the net income of the Issuer after income taxes as shown
      on the income statement of the Issuer delivered in accordance with clause (a)
      of
      (b) of Section 7
      for such
      period.

     

    “Net
      Worth”
shall
      mean, at any time with respect to the Issuer, the sum of, (a) Capital Stock
      plus
      (b) paid-in-capital, plus (c) retained earnings, plus (d) the portion of
      unsecured subordinated debt which is due and payable after the Revolver
      Termination Date (as defined in the Senior Bank Agreement), minus (e) 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 the Issuer or any Subsidiary by reason of any guaranty or other
      obligation on the part of the Issuer or any Subsidiary (other than Debt
      permitted by Section 12.1(d)(ii)).

     

    “Notes”
shall
      have the meaning specified in Section 2(b).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Occupational
      Safety and Health Laws”
shall
      mean the Occupational Safety and Health Act of 1970, as amended, and any other
      Federal, state or local statute, law, ordinance, code, rule, regulation, order
      or decree regulating, relating to or imposing liability or standards of conduct
      concerning employee health and/or safety, as now or at any time hereafter in
      effect.

     

    “Officer’s
      Certificate”
shall
      mean, with respect to any Person, a certificate signed on behalf of such Person
      by the president or one of the vice presidents of such Person except that with
      respect to any Officer’s Certificate due pursuant to Section 7(c),
      such
      certificate shall be signed by the chief financial officer or treasurer of
      the
      Issuer and shall be substantially in the form attached hereto as Exhibit
7(c).

     

    “Operating
      Lease”
shall
      mean any lease of Property, whether real and/or personal, by a Person as lessee
      which is not a Capitalized Lease.

     

    “Operative
      Documents”
shall
      mean this Agreement, the Securities, the Guarantee Agreements, the Subordination
      Agreement, the Management Subordination Agreement and each of the other
      agreements, documents and instruments executed in connection herewith and
      therewith, each as it may from time to time be amended, modified or
      supplemented.

     

    “Patriot
      Act” means
      the
      Uniting and Strengthening America by Providing Appropriate Tools Required to
      Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001 of the United
      States of America.

     

    “PBGC”
shall
      mean the Pension Benefit Guaranty Corporation and any entity succeeding to
      any
      or all of its functions under ERISA.

     

    “Pension
      Plan”
shall
      mean a “pension plan,” as such term is defined in Section 3(2) of ERISA, which
      is established or maintained by the Issuer, any Subsidiary or any ERISA
      Affiliate, other than a Multi-Employer Plan.

     

    “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 the Issuer
      or any Subsidiary by appropriate proceedings and for which adequate reserves
      have been established by the Issuer or such Subsidiary as reflected in the
      Issuer’s consolidated 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 the Issuer or any Subsidiary by appropriate
      proceedings and for which adequate reserves have been established by the Issuer
      as reflected in Issuer’s consolidated financial statements; (c) easements,
      rights-of-way, restrictions and other similar encumbrances on the real property
      or fixtures of the Issuer or any Subsidiary 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 the Issuer or such Subsidiary; (d) Liens (other than Liens
      imposed on any property of the Issuer 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 securing the Debt under the Senior Bank Agreement (and any
      Permitted Refinancing thereof) and any other Liens, if any, existing on the
      Initial Closing Date hereof and listed in Schedule
      12.2
      hereto
      and (f) Liens of the Issuer securing Debt of the Issuer permitted by Section
      12.1(d)(ii) so long as such Lien attaches only to the Capital Stock of the
      applicable Unrestricted Subsidiary.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Permitted
      Refinancing”
shall
      mean any refinancing or replacement of the Senior Bank Documents permitted
      pursuant to Section 3 of the Subordination Agreement.

     

    “Person”
shall
      mean an individual, a corporation, a limited liability company, an association,
      a joint-stock company, a business trust or other similar organization, a
      partnership, a joint venture, a trust, an unincorporated organization or a
      government or any agency, instrumentality or political subdivision
      thereof.

     

    “Property”
shall
      mean any interest in any kind of property or asset, whether real, personal
      or
      mixed, or tangible or intangible. Properties shall mean the plural of Property.
      For purposes of this Agreement, the Issuer and each Subsidiary shall be deemed
      to be the owner of any Property which it has acquired or holds subject to a
      conditional sale agreement, financing lease or other arrangement pursuant to
      which title to the Property has been retained by or vested in some other Person
      for security purposes.

     

    “Purchase
      Price”
shall
      mean (a) with respect to the Initial Notes, an aggregate amount equal to 99%
      of
      the aggregate face amount of such Notes less $500,000 and (b) with respect
      to
      any Notes issued at any Subsequent Closing, 99% of the face amount
      thereof.

     

    “Purchasers”
shall
      have the meaning specified in the introductory paragraph to this
      Agreement.

     

    “Qualifying
      Equity Event”
shall
      have the meaning specified in Section 9.2.

     

    “Recourse
      Funded Debt”
shall
      mean (i) all indebtedness, liabilities, and obligations, now existing or
      hereafter arising, for money borrowed by the Issuer on a recourse basis whether
      or not evidenced by any note, indenture, or agreement (including, without
      limitation, the Notes, 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 the
      Issuer 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.

     

    “Release”
shall
      mean any spilling, leaking, pumping, pouring, emitting, emptying, discharging,
      injecting, escaping, leaching, dumping or disposing into the environment,
      including, without limitation, the abandonment or discarding of barrels, drums,
      containers, tanks and/or other receptacles containing any Hazardous
      Substance.

     

    “Remaining
      Scheduled Aircraft Portfolio Payments”
shall
      mean, at any date of determination with respect to each aircraft in the Aircraft
      Portfolio that is in effect on such date of determination and not subject to
      a
      Defaulted Lease (an “Existing
      Lease”),
      the
      expected lease rental payments and residual payments due in respect of such
      aircraft reduced by the expected Management Fees and Maintenance Reserves in
      respect of such aircraft and assuming for such calculation (without
      duplication):

     

    (a) that
      the
      lease rental payments under each Existing Lease will be paid in accordance
      with
      the terms of such aircraft lease;

     

    (b) that
      each
      aircraft that (i) is subject to an Existing Lease and (ii) which Existing Lease
      terminates prior to the 12th anniversary of the date on which the Issuer (or
      an
      Affiliate) acquired such aircraft, will be re-leased at the expiration of its
      current term for a series of successor lease terms, each (A) for a period equal
      to the lesser of (I) 4 years or (II) 11.5 years less the number of months since
      the acquisition of such aircraft by the Issuer (or an Affiliate), (B) commencing
      3 months after the expiration of the immediately preceding lease term and (C)
      at
      a lease rate 10% less than the lease rate under the immediately preceding
      lease;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c) that
      each
      aircraft that (i) is subject of an Existing Lease and (ii) which Existing Lease
      will terminate after the 12th anniversary of the date on which the Issuer (or
      an
      Affiliate) acquired such aircraft, will be leased to the end of its current
      lease term and that the Residual Value will be realized 6 months following
      the
      termination of such lease term;

     

    (d) that
      each
      aircraft that (i) is subject to an Existing Lease and (ii) which Existing Lease
      will terminate prior to the 12th anniversary of the date the Issuer (or an
      Affiliate) acquired such aircraft will be leased in accordance with clause
      (b)
      above and that the Residual Value of each such aircraft will be realized 6
      months following the termination of the lease term that ends 11.5 years from
      the
      date of acquisition. 

     

    “Reportable
      Event”
shall
      have the meaning given to such term in ERISA.

     

    “Required
      Holders”
shall
      mean, at any date, the holder or holders of 51% or more in principal amount
      of
      Notes at such time outstanding (excluding all Notes at the time owned by the
      Issuer or any Affiliate of the Issuer).

     

    “Re-Sale
      Fees”
      shall
      mean fees charged by JMC in connection with the sale of aircraft by the Issuer
      consistent with past practices as described to the Purchasers.

     

    “Residual
      Value”
shall
      mean, at any time (i) with respect to any aircraft owned by the Issuer on the
      Initial Closing Date, 90% of the appraised fair market residual value as of
      the
      date of acquisition (unless at such time a desktop appraisal for such aircraft
      is available, in which case the fair market residual value shall be determined
      from the most recent desktop appraisal then available) adjusted on a linear
      basis for the difference between the then expected disposition date and the
      current expected disposition date or, (ii) with respect to any aircraft acquired
      by the Issuer after the Initial Closing Date, an amount equal to the lesser
      of
      (a) 36% of the acquisition price of such aircraft (exclusive of any Aircraft
      Acquisition Fees) and (b) 90% of the appraised fair market residual value of
      such aircraft as of the date of acquisition (unless at such time a desktop
      appraisal for such aircraft is available, in which case the fair market residual
      value shall be determined from the most recent desktop appraisal then
      available), adjusted on a linear basis for the difference between the then
      expected disposition date and the current expected disposition. 

     

    “Responsible
      Officer”
of
      any
      Person shall mean the chief executive officer, president, chief financial
      officer or any vice president of such Person and any other officer or similar
      official thereof responsible for the administration of the obligations of such
      Person in respect of this Agreement.

     

    “Restricted
      Payment”
in
      respect of any corporation, limited liability company, partnership or other
      entity shall mean (a) any dividend or other distribution (whether in cash,
      securities, promissory notes or other property) on or in respect of any of
      the
      Capital Stock of or in such corporation, limited liability company, partnership
      or other entity, (b) any payment (whether in cash, securities, promissory notes
      or other property), including any sinking fund or similar deposit, for or in
      respect of the purchase, redemption, retirement, acquisition, cancellation
      or
      termination of any Capital Stock of or in such corporation, limited liability
      company, partnership or other entity or of any warrants, rights or other options
      to purchase any such Capital Stock and (c) any Investment in any Unrestricted
      Subsidiary or any payment, directly or indirectly, by the Issuer to or on behalf
      of an Unrestricted Subsidiary, in each case, in connection with the obligation
      of such Unrestricted Subsidiary to pay Management Fees.

     

    “Restricted
      Payment Amount”
      shall
      mean, with respect to any Restricted Payment in any Fiscal Year, 50% of Net
      Income earned in the immediately preceding Fiscal Year as disclosed in the
      financial statements delivered pursuant to 7(b)
      hereof.

     

    “Sale
      Notice”
shall
      mean an irrevocable written notice of a Responsible Officer of the Issuer
      delivered to each Purchaser which notice shall 

     

    (i) specify
      the aggregate principal amount of Notes covered thereby, which shall not be
      less
      than the lesser of (x) $6,000,000 or (y) the entire amount of the Available
      Amount, if the Available Amount shall be less than $6,000,000 at the time such
      Sale Notice is made, and shall not be greater than the Available
      Amount,

     

    (ii) specify
      the proposed date (the “Subsequent
      Closing Date”)
      for
      the closing of the purchase and sale of such Notes, which, which shall be a
      Business Day not less than ten days and not more than 20 days after the delivery
      of such Sale Notice and in any event prior to June 30, 2008, 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (vi) specify
      the number of the account and the name and address of the depository institution
      to which the aggregate Purchase Price of such Notes is to be transferred on
      the
      Subsequent Closing Date for such purchase and sale, and 

     

    (vii) certify
      that, exclusive of those exceptions noted on an exhibit attached thereto, the
      representations and warranties contained in Section 6
      are true
      on and as of the date of such Sale Notice and that there exists on the date
      of
      such Sale Notice no Event of Default or Default.

     

    Each
      Sale
      Notice shall be in writing and shall be deemed made when received by the
      Purchasers.

     

    “Securities”
shall
      mean the Notes and the Warrants each of which is a “Security”.

     

    “Securities
      Act”
shall
      mean the Securities Act of 1933, as amended, or any successor federal statute,
      and the rules and regulations of the Commission promulgated thereunder, all
      as
      the same shall be in effect from time to time.

     

    “Senior
      Agent”
shall
      mean National City Bank, a national banking association, as agent on behalf
      of
      the lenders party to the Senior Bank Agreement (or any successor to National
      City Bank in such capacity).

     

    “Senior
      Bank Agreement”
shall
      mean the Second Amended and Restated Credit Agreement, dated as of April 17,
      2007 among the Issuer, the Senior Banks, and the Senior Agent, as from time
      to
      time in effect.

     

    “Senior
      Bank Documents”
shall
      mean the Senior Bank Agreement or any agreement evidencing a Permitted
      Refinancing thereof and the other agreements, documents and instruments related
      thereto.

     

    “Senior
      Banks”
shall
      mean National City Bank, a national banking association, and the other lenders
      from time to time under the Senior Bank Agreement or financial institutions
      a
      party to any agreement evidencing a Permitted Refinancing thereof.

     

    “Subordinated
      Debt”
shall
      mean, as of the date of any determination thereof, the aggregate advanced
      principal amount of all Debt of the Issuer outstanding as of such date which
      is
      subordinated to the Debt in respect of the Senior Bank Agreement as permitted
      thereunder, including the Notes.

     

    “Subordination
      Agreement”
shall
      have the meaning specified in Section 5.4.

     

    “Subsequent
      Closing”
shall
      have the meaning specified in Section 4.2(b).

     

    “Subsequent
      Closing Date”
shall
      have the meaning specified in the definition of Sale Notice in this Section
      1.1.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Subsidiary”
of
      any
      Person at any date shall mean (a) any other Person a majority (by number of
      votes) of the Voting Stock of which is owned by such first-mentioned Person
      and/or by one or more other Subsidiaries of such first-mentioned Person and
      (b)
      any other Person with respect to which such first-mentioned Person and/or any
      one or more other Subsidiaries of such first-mentioned Person (i) is entitled
      to
      more than 50% of such Person’s profits or losses or more than 50% of such
      Person’s assets on liquidation or (ii) holds an equity interest in such Person
      of more than 50%. As used herein, unless the context clearly requires otherwise,
      the term “Subsidiary” refers to a Subsidiary of the Issuer and excludes any
      Unrestricted Subsidiary (except in the case of Section 6).

     

    “Swap
      Contract”
shall
      mean (a) any and all rate swap transactions, basis swaps, credit derivative
      transactions, forward rate transactions, commodity swaps, commodity options,
      forward commodity contracts, equity or equity index swaps or options, bond
      or
      bond price or bond index swaps or options or forward bond or forward bond price
      or forward bond index transactions, interest rate options, forward foreign
      exchange transactions, cap transactions, floor transactions, collar
      transactions, currency swap transactions, cross-currency rate swap transactions,
      currency options, spot contracts or any other similar transactions or any
      combination of any of the foregoing (including any options to enter into any
      of
      the foregoing), whether or not any such transaction is governed by or subject
      to
      any master agreement, and (b) any and all transactions of any kind, and the
      related confirmations, which are subject to the terms and conditions of, or
      governed by, any form of master agreement published by the International Swaps
      and Derivatives Association, Inc., any International Foreign Exchange Master
      Agreement, or any other master agreement (any such master agreement, together
      with any related schedules, a “Master Agreement”), including any such
      obligations or liabilities under any Master Agreement.

     

    “Swap
      Termination Value”
shall
      mean, in respect of any Swap Contract, after taking into account the effect
      of
      any legally enforceable netting agreement relating to such Swap Contract, (a)
      for any date on or after the date such Swap Contract has been closed out and
      a
      termination value determined in accordance therewith, such termination value
      and
      (b) for any date prior to the date referenced in clause (a), the amount
      determined as the mark-to-market value for such Swap Contract, as determined
      based upon one or more mid-market or other readily available quotations provided
      by any recognized dealer in such Swap Contract.

     

    “Tangible
      Net Worth”
      shall
      mean Net Worth, minus Intangible Assets.

     

    “Unrestricted
      Subsidiaries”
      shall
      mean Subsidiaries of the Issuer which are special purpose entities or bankruptcy
      remote entities from the Issuer that have debt on their respective balance
      sheets which when consolidated with the Issuer is deemed to be Non-Recourse
      Debt
      to the Issuer.

     

    “Unrestricted
      Subsidiary Investment”
      shall
      have the meaning specified in Section 12.8.

     

    “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.

     

    “Unused
      Commitment Fee”
shall
      have the meaning specified in Section 4.4

     

    “Voting
      Stock”,
      when
      used with reference to any Person, shall mean shares (however designated) of
      such Person having ordinary voting power for the election of a majority of
      the
      members of the board of directors (or other governing body) of such Person,
      other than shares having such power only by reason of the happening of a
      contingency.

     

    “Warrants”
shall
      have the meaning specified in Section 2(a).

     

    “Welfare
      Plan”
shall
      mean a “welfare plan” as such term is defined in Section 3(1) of ERISA, which is
      established or maintained by the Issuer, any Subsidiary or any ERISA Affiliate,
      other than a Multi-Employer Plan.

     

    “Wholly-Owned
      Subsidiary”
shall
      mean as to any Person at any time, another Person all of the Capital Stock
      of
      which (except directors’ qualifying shares) is at such time directly or
      indirectly owned by such Person and/or another Wholly-Owned Subsidiary of such
      Person. Unless the context otherwise requires, each reference to a Wholly-Owned
      Subsidiary herein shall be a reference to a Wholly-Owned Subsidiary of the
      Issuer.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    1.2.  Other
      Definitions.

     

    The
      terms
      defined in this Section 1.2,
      whenever used in this Agreement, shall, unless the context otherwise requires,
      have the respective meanings hereinafter specified.

     

    “this
      Agreement”
(and
      similar references to any of the other Operative Documents) shall mean, and
      the
      words “herein”
(and
      “therein”),
      “hereof”
(and
      “thereof”),
      “hereunder”
(and
      “thereunder”)
      and
      words of similar import shall refer to, such instruments as they may from time
      to time be amended, modified or supplemented.

     

    a
      “class”
of
      Securities shall refer to the Notes or the Warrants, as the case may be, each
      of
      which is a separate class.

     

    “corporation”
shall
      include an association, joint stock company, limited liability company, business
      trust or other similar organization.

     

    “premium”
when
      used in conjunction with references to principal of and interest on the Notes,
      shall mean any amount due upon any payment or prepayment of any of the Notes,
      other than principal and interest and shall include the Applicable
      Premium.

     

    “shares”
of
      any
      Person shall include any and all shares of Capital Stock of such Person of
      any
      class or other shares, interests, participations or other equivalents (however
      designated) in the capital of such Person.

     

    1.3.  Accounting
      Terms and Principles; Laws.

     

    (a)  All
      accounting terms used herein which are not expressly defined in this Agreement
      shall be construed in accordance with GAAP; all computations made pursuant
      to
      this Agreement shall be made in accordance with GAAP and all financial
      statements shall be prepared in accordance with GAAP. If any changes in GAAP
      are
      hereafter required or permitted and are adopted by the Issuer, and such changes
      in GAAP result in a change in the method of calculation or the interpretation
      of
      any of the financial covenants, standards or terms found in any provision of
      this Agreement, conforming adjustments shall be made to such affected terms
      and
      provisions to reflect such changes in GAAP so as to cause the criteria for
      evaluating the Issuer’s financial condition to be the same after such changes in
      GAAP as they would have been had such changes in GAAP not been
      effected.

     

    (b)  All
      references herein to laws, statutes, rules, regulations and/or to other
      governmental restrictions, standards and/or requirements shall, unless the
      context clearly requires otherwise, be deemed to refer to those promulgated,
      issued and/or enforced by any domestic or foreign federal, state or local
      government, governmental agency, authority, court, instrumentality or regulatory
      body, including, without limitation, those of the United States of America
      or
      any state thereof or the District of Columbia.

     

    
      	2.  	
              AUTHORIZATION
                OF SECURITIES; GUARANTIES.

            

    

     

    The
      Issuer has authorized the issue and sale of 

     

    (a)  its
      warrants (herein, together with any warrants issued in exchange therefor or
      replacement thereof, called the “Warrants”)
      evidencing
      rights to purchase, in the aggregate 171,473 shares of Common Stock representing
      10% of the total common equity of the Issuer; the Warrants are to be
      substantially in the form of Exhibit 2(a)
      attached
      hereto;
      and

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)  its
      16%
      Senior Subordinated Notes due December 30, 2011 (herein, together with any
      notes
      issued in exchange therefor or replacement thereof, called the “Notes”)
      in the
      aggregate principal amount of up to $28,000,000; the Notes are to be
      substantially in the form of Exhibit
      2(b)
      attached
      hereto.

     

    The
      Notes
      are to be guaranteed (as to principal, premium, interest and other amounts)
      in
      accordance with Section 11.10.

     

    
      	3.  	
              SALE
                AND PURCHASE OF
                SECURITIES.

            

    

     

    The
      Issuer will issue and sell to each of the Purchasers and, subject to the terms
      and conditions hereof and in reliance upon the representations and warranties
      of
      the Issuer contained herein and in the other Operative Documents, each Purchaser
      will purchase from the Issuer, at the applicable Purchase Price and at the
      Closings provided in Section 4,
      the
      principal amount of Notes equal to such Purchaser’s Commitment Percentage of the
      aggregate principal amount of Notes being issued at such Closing. In connection
      with such purchase and sale, and as an inducement for each of the Purchasers
      to
      purchase Notes, the Issuer will, subject to the terms and conditions contained
      herein and in the Warrants, issue to each of the Purchasers on the Initial
      Closing Date a Warrant to purchase the aggregate number of shares of Common
      Stock set forth below such Purchaser’s name on Schedule
      I
      hereto.

     

    The
      Purchasers’ obligations hereunder are several and not joint obligations and no
      Purchaser shall have any liability to any Person for the performance or
      non-performance of any obligation by any other Purchaser hereunder.

     

    
      	4.  	
              CLOSING.

            

    

     

    4.1.  Initial
      Closing.

     

    The
      closing of the sale and purchase of the Initial Notes and the Warrants hereunder
      (the “Initial
      Closing”)
      shall
      take place at the office of Bingham McCutchen LLP, One State Street, Hartford,
      CT 06103, on April 17, 2007 (the “Initial
      Closing Date”)
      not
      later than 1:00 P.M. New York time (the Purchasers’ reinvestment deadline). At
      the Closing the Issuer will deliver to each Purchaser:

     

    (a)  the
      Initial Notes to be purchased by such Purchaser in the denominations indicated
      on Schedule
      I,
      dated
      the Initial Closing Date, bearing interest from the Initial Closing Date and
      payable to the holder indicated on Schedule
      I
      against
      payment of the Purchase Price therefor to (or for the benefit of) the Issuer
      in
      immediately available funds in accordance with the wire instructions set forth
      on Exhibit
      4
      hereto;
      and

     

    (b)  the
      Warrants to purchase the number of shares of Common Stock as set forth below
      such Purchaser’s name on Schedule
      I),
      and
      registered in the name of the holder indicated on Schedule
      I.

     

    4.2.  Notice
      of Subsequent Closing; Subsequent Closing.

     

    (a)  Sale
      Notice.
      Subsequent to the date hereof, the Issuer may deliver to the Purchasers one
      or
      more Sale Notices specifying the sale of up to the Available Amount of Notes,
      which sales must occur on or before June 30, 2008, and, subject to the terms
      and
      conditions hereof (including, without limitation Section 5)
      and in
      reliance upon the representations and warranties of the Issuer contained herein
      and in the other Operative Documents, each Purchaser will purchase from the
      Issuer, at the applicable Purchase Price and at the Subsequent Closing provided
      in such Sale Notice, the principal amount of Notes equal to such Purchaser’s
      Commitment Percentage of the aggregate principal amount of Notes being issued
      at
      such Subsequent Closing.

     

    (b)  Subsequent
      Closing.
      The
      sale and purchase of the Notes to be purchased by each of the Purchasers on
      a
      Subsequent Closing Date shall occur at the offices of Bingham
      McCutchen LLP, One State Street, Hartford, CT 06103, at 1:00 p.m.,
      local time, at a closing (the “Subsequent
      Closing”)
      on the
      Subsequent Closing Date or on such later Business Day as may be agreed upon
      by
      the Issuer and the Purchasers. At the Subsequent Closing, the Issuer will
      deliver to each Purchaser the Notes to be purchased by such Purchaser in the
      form of a single Note (or such greater number of Notes in denominations of
      at
      least $100,000 as such Purchaser may request), dated such Subsequent Closing
      Date and registered in such Purchaser’s name (or in the name of its nominee),
      against delivery by such Purchaser to the Issuer or its order of immediately
      available funds in the amount of the Purchase Price therefor by wire transfer
      of
      immediately available funds for the account of the Issuer as set forth in the
      Sale Notice.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    4.3.  Failure
      of the Issuer to Deliver.

     

    If
      at the
      Initial Closing the Issuer shall fail to tender the Securities or at any
      Subsequent Closing the Issuer shall fail to tender the Notes to be delivered
      to
      any Purchaser as provided herein, or if at any Closing any of the conditions
      specified in Section 5
      shall
      not have been fulfilled to each Purchaser’s satisfaction, each Purchaser shall,
      at its election, be relieved of all further obligations under this Agreement,
      without thereby waiving any other rights such Purchaser may have by reason
      of
      such failure or such non-fulfillment.

     

    4.4.  Unused
      Commitment Fee.

     

    On
      the
      last day of each month, commencing on May 31, 2007 and ending on the earlier
      of
      June 30, 2008 or the Final Closing Date, the Issuer shall pay to the Purchasers
      ratably in accordance with their respective Commitment Percentages in
      immediately available funds a fee (herein called an “Unused
      Commitment Fee”)
      on the
      amount, if any, by which (i) the Average Principal Balance during such month
      (or, in the case of the payment due on May 31, 2007, the period commencing
      on
      the Initial Closing Date and ending on such date, and, in the case of the
      payment due with respect to the Final Closing Date, the period commencing on
      the
      first day of the then current month and ending on such date) is less than (ii)
      $28,000,000, at the rate of 0.50% per annum, calculated on the basis of a year
      of 360 days for the actual number of days elapsed. The Unused Commitment Fee
      shall be paid to each Purchaser in accordance with the payment instructions
      provided for on Schedule
      I.

     

    
      	5.  	
              CONDITIONS
                TO CLOSING.

            

    

     

    The
      obligation of the Issuer to deliver the Notes to each relevant Purchaser on
      the
      applicable Closing Date is subject to the Issuer receiving the Purchase Price
      therefor. Each Purchaser’s obligation to purchase and pay for the Notes to be
      sold to such Purchaser on a Closing Date is subject to the fulfillment to such
      Purchaser’s satisfaction, prior to or on such Closing Date, of the following
      conditions:

     

    5.1.  Representations
      and Warranties Correct.

     

    The
      representations and warranties of the Issuer in this Agreement shall be correct
      (a) when made as of the date hereof and (b) with respect to each Subsequent
      Closing, on the date of such Subsequent Closing, in each case, after giving
      effect to the transactions contemplated by this Agreement at each of the
      Closings.

     

    5.2.  Performance:
      No Default

     

    The
      Issuer shall have performed and complied with all agreements and conditions
      contained in this Agreement required to be performed or complied with by it
      prior to or on such Closing Date and, after giving effect to the issue and
      sale
      of the Notes (and the application of the proceeds thereof as contemplated by
      Section 6.21)
      on such
      Closing Date, no Default or Event of Default shall have occurred and be
      continuing. No condition shall exist since December 31, 2006 which has resulted
      in a material adverse effect on the financial condition or business of the
      Issuer, or could reasonably be expected to result in, a Material Adverse
      Effect.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.3.  Sale
      of Securities to Purchasers.

     

    At
      such
      Closing, the Issuer shall sell and issue to each Purchaser the Securities to
      be
      purchased at such Closing by such Purchaser pursuant to this Agreement and
      shall
      receive payment in full of the purchase price thereof.

     

    5.4.  Subordination
      Agreement.

     

    Prior
      to
      or simultaneously with the Initial Closing, each of the Purchasers and the
      Senior Agent (on behalf of itself and the Senior Banks) shall have entered
      into
      a subordination agreement substantially in the form of Exhibit
      5.4
      attached
      hereto (the “Subordination
      Agreement”),
      and
      such agreement shall be in full force and effect.

     

    5.5.  Management
      Subordination Agreement.

     

    Prior
      to
      or simultaneously with the Initial Closing, each of the Purchasers and JMC
      shall
      have entered into a subordination agreement substantially in the form of
Exhibit
      5.5
      attached
      hereto (the “Management
      Subordination Agreement”),
      and
      such agreement shall be in full force and effect.

     

    5.6.  Compliance
      Certificate.

     

    (a)  Officer’s
      Certificate.
      The
      Issuer shall have delivered to each Purchaser an Officer’s Certificate, dated
      the applicable Closing Date, certifying that the conditions specified in
      Sections 5.1
      and
5.2
      have
      been fulfilled.

     

    (b)  Secretary’s
      Certificate.
      The
      Issuer shall have delivered to each Purchaser a certificate of its Secretary
      or
      Assistant Secretary, dated the applicable Closing Date, certifying as to the
      resolutions attached thereto and other corporate proceedings relating to the
      authorization, execution and delivery of the Securities and this
      Agreement.

     

    5.7.  Opinion
      of Counsel for the Issuer.

     

    At
      the
      Initial Closing, each Purchaser shall have received an opinion, dated the date
      of such Closing, from Morrison & Foerster, LLP, special counsel for the
      Issuer, in form and substance satisfactory to the Purchasers.

     

    5.8.  Payment
      of Transaction Costs.

     

    The
      Issuer shall have paid all reasonable fees, expenses and disbursements incurred
      by the Purchasers at or prior to the time of such Closing in connection with
      the
      transactions contemplated by the Agreement, including, without limitation,
      the
      reasonable fees, expenses and disbursements of Bingham McCutchen LLP and World
      Star Aviation Services, Inc. and travel and other expenses incurred by the
      Purchasers in connection with the transactions contemplated hereby.

     

    5.9.  Purchase
      Permitted By Applicable Law, Etc.

     

    On
      each
      Closing Date, each Purchaser’s purchase of Notes to be purchased on such Closing
      Date shall (a) not violate any applicable law or regulation (including,
      without limitation, Regulation T, U or X of the Board of Governors of the
      Federal Reserve System) and (b) not subject such Purchaser to any tax,
      penalty or liability under or pursuant to any applicable law or regulation,
      which law or regulation was not in effect on the date hereof. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.10.  Proceedings
      and Documents.

     

    All
      proceedings in connection with the transactions contemplated by the Operative
      Documents and all agreements, documents and instruments incident to such
      transactions shall be reasonably satisfactory in substance and form to the
      Purchasers and their special counsel, and the Purchasers and their special
      counsel shall have received all such counterpart originals or copies thereof
      as
      the Purchasers or their special counsel may reasonably request in connection
      therewith.

     

    
      	6.  	
              REPRESENTATIONS
                AND WARRANTIES.

            

    

     

    As
      of the
      date hereof and as of each Closing Date (except where the representation or
      warranty is expressly made as of another date, in which case such representation
      or warranty is made only as of such other date), the Issuer hereby represents
      and warrants to each of the Purchasers, subject to such exceptions as are
      specifically disclosed in writing in the disclosure schedules attached hereto
      (the “Disclosure
      Schedules”),
      as
      follows:

     

    6.1.  Existence
      and Power.

     

    The
      Issuer: (a) is duly organized, validly existing and in good standing under
      the
      laws of the jurisdiction of its organization; (b) has all requisite corporate
      power required to carry on its business as now conducted; (c) has all requisite
      governmental and regulatory licenses, authorizations, consents and approvals
      required to carry on its business as now conducted and (d) is qualified to
      transact business as a foreign corporation or other form of foreign entity
      in,
      and is in good standing under the laws of, all jurisdictions in which it is
      required by applicable law to maintain such qualification and good standing
      except for those states in which the failure to qualify or maintain good
      standing could not reasonably be expected to have a Material Adverse
      Effect.

     

    6.2.  Authorization.

     

    The
      execution, delivery and performance by the Issuer of this Agreement and the
      other Operative Documents are within the corporate powers of the Issuer and
      have
      been duly authorized by all necessary corporate action.

     

    6.3.  Binding
      Effect.

     

    This
      Agreement, the Securities and the other Operative Documents have been duly
      executed and delivered by the Issuer and constitute the legal, valid and binding
      obligations of the Issuer enforceable in accordance with their respective terms,
      except as such enforceability may be limited by (a) bankruptcy, insolvency
      or
      other similar laws affecting the enforcement of creditors’ rights generally and
      (b) general principles of equity (regardless of whether such enforceability
      is
      considered in a proceeding in equity or at law). 

     

    6.4.  Financial
      Statements. 

     

    The
      Issuer has furnished each Purchaser with the following financial statements:
      (a)
      consolidated and consolidating financial statements of the Issuer and its
      Subsidiaries as of and for the Fiscal Years ended December 31, 2006 and December
      31, 2005 consisting of a balance sheet, statement of income, a statement of
      shareholders’ equity, statement of cash flows, and accompanying notes to
      financial statements, all such financial statements present fairly, in all
      material respects, the consolidated financial position, and results of
      operations of the Issuer as of the dates and for the periods referred to, in
      conformity with GAAP. 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. 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    6.5.  Litigation. 

     

    Except
      as
      disclosed on Schedule
      6.5
      hereto,
      there is no action or proceeding pending or, to the knowledge of the Issuer,
      threatened against or affecting the Issuer or any Subsidiary before any court,
      arbitrator or any governmental, regulatory or administrative body, agency,
      instrumentality, authority or official which, if determined adversely against
      the Issuer or any Subsidiary, could reasonably be expected to have a Material
      Adverse Effect. Neither the Issuer nor any Subsidiary is in default with respect
      to any order, writ, injunction, decision or decree of any court, arbitrator
      or
      any governmental, regulatory or administrative body, agency, instrumentality,
      authority or official, a default under which could reasonably be expected to
      have a Material Adverse Effect. There are no outstanding judgments against
      the
      Issuer or any Subsidiary.

     

    6.6.  Pension
      and Welfare Plans. 

     

    (a)  Each
      Pension Plan and Welfare Plan complies in all material respects with ERISA
      and
      all other applicable statutes and governmental and regulatory rules and
      regulations; no Reportable Event has occurred and is continuing with respect
      to
      any Pension Plan; neither the Issuer nor any ERISA Affiliate has withdrawn
      from
      any Multi-Employer Plan in a “complete withdrawal” or a “partial withdrawal” as
      defined in Sections 4203 or 4205 of ERISA, respectively; neither the Issuer
      nor
      any ERISA Affiliate has entered into an agreement pursuant to Section 4204
      of
      ERISA; neither the Issuer nor any ERISA Affiliate has in the past contributed
      to
      or currently contributes to a Multi-Employer Plan; neither the Issuer nor any
      ERISA Affiliate has any withdrawal liability with respect to a Multi-Employer
      Plan; no steps have been instituted by the Issuer or any ERISA Affiliate to
      terminate any Pension Plan; no condition exists or event or transaction has
      occurred in connection with any Pension Plan, Multi-Employer Plan or Welfare
      Plan which could result in the incurrence by the Issuer or any ERISA Affiliate
      of any material liability, fine or penalty; and neither the Issuer nor any
      ERISA
      Affiliate is a “contributing sponsor” as defined in Section 4001(a)(13) of ERISA
      of a “single employer plan” as defined in Section 4001(a)(15) of ERISA which has
      two or more contributing sponsors at least two of whom are not under common
      control. Except as disclosed on the consolidated financial statements of the
      Issuer and its Subsidiaries delivered by the Issuer to each Purchaser, neither
      the Issuer nor any ERISA Affiliate has any unfunded liability with respect
      to
      any Welfare Plan.

     

    (b)  The
      consummation of the transactions contemplated hereunder will not involve any
      transaction that is subject to the prohibitions of section 406 of ERISA or
      in
      connection with which a tax could be imposed pursuant to section
      4975(c)(1)(A)-(D) of the Code. 

     

    6.7.  Tax
      Returns and Payment. 

     

    The
      Issuer and each Subsidiary has filed all Federal, state, local and other income
      and other material tax returns which are required to be filed and has paid
      all
      taxes which have become due and payable pursuant to such returns and all other
      taxes, assessments, fees and other governmental charges upon the Issuer or
      such
      Subsidiary, as the case may be, and upon its Properties, income and franchises
      which have become due and payable by the Issuer or such Subsidiary, as the
      case
      may be, except those wherein the amount, applicability or validity are (a)
      being
      contested by the Issuer or such Subsidiary, as the case may be, by appropriate
      proceedings being diligently conducted in good faith and in respect of which
      adequate reserves in accordance with GAAP have been established or (b)
      immaterial to the conduct of the Issuer’s business. Except as disclosed on
Schedule
      6.7
      attached
      hereto, there is no asserted or assessed (or to the Issuer’s knowledge,
      proposed) tax deficiency against the Issuer or any Subsidiary which, if
      determined adversely against the Issuer or any Subsidiary, could reasonably
      be
      expected to have a Material Adverse Effect.

     

    6.8.  Subsidiaries;
      Joint Ventures. 

     

    The
      Issuer has no Subsidiaries except for special purpose entities formed in
      connection with financings which are permitted by Section 12.1.
      Set
      forth in Schedule
      6.8
      hereto
      is a complete and correct list, as of the date of this Agreement, of all special
      purpose entities owned by the Issuer and all Investments held by the Issuer
      in
      any joint venture or other Person

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.9.  Compliance
      With Other Instruments; None Burdensome.

     

    Neither
      the Issuer nor any Subsidiary is a party to any contract, agreement, document
      or
      instrument or subject to any charter or other corporate, limited liability
      company or other restriction which could reasonably be expected to have a
      Material Adverse Effect and which is not disclosed in the financial statements
      heretofore submitted to each Purchaser; none of the execution and delivery
      by
      the Issuer of the Operative Documents, the consummation of the transactions
      therein contemplated or the compliance with the provisions thereof will violate
      any law, rule, regulation, order, writ, judgment, injunction, decree or award
      binding on the Issuer, or any of the provisions of the certificate of
      incorporation, operating agreement or bylaws of any of the Issuer or any of
      the
      provisions of any indenture, agreement, document, instrument or undertaking
      to
      which the Issuer is a party or subject, or by which the Issuer or any Property
      of the Issuer is bound, or conflict with or constitute a default thereunder
      or
      result in the creation or imposition of any Lien pursuant to the terms of any
      such indenture, agreement, document, instrument or undertaking (other than
      in
      favor of the Senior Agent pursuant to the Senior Bank Documents). No order,
      consent, approval, license, authorization or validation of, or filing, recording
      or registration with, or exemption by, any governmental, regulatory,
      administrative or public body or authority, or any subdivision thereof, or
      any
      other Person is required to authorize, or is required in connection with, the
      execution, delivery or performance by the Issuer of, or the legality, validity,
      binding effect or enforceability of, any of the Operative
      Documents.

     

    6.10.  Other
      Debt, Guarantees and Capitalized Leases. 

     

    Except
      as
      disclosed on Schedule
      6.10
      attached
      hereto, neither the Issuer nor any Subsidiary is a borrower, guarantor or
      obligor with respect to, or a lessee under, any Debt (including, without
      limitation, any Swap Contracts, Capitalized Leases and/or Guarantees
      constituting Debt) other than unasserted claims by lessees against maintenance
      reserve balances held by the Issuer in respect of aircraft owned by the Issuer.
      

     

    6.11.  Title
      to Property. 

     

    The
      Issuer and each Subsidiary 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 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.

     

    6.12.  Regulation
      U. 

     

    The
      Issuer is not engaged principally, or as one of its important activities, in
      the
      business of extending credit for the purpose of purchasing or carrying margin
      stock (within the meaning of Regulation U of The Board of Governors of the
      Federal Reserve System, as amended) and no part of the proceeds of any Security
      will be used, whether directly or indirectly, and whether immediately,
      incidentally or ultimately (a) to purchase or carry margin stock or to extend
      credit to others for the purpose of purchasing or carrying margin stock, or
      to
      refund or repay indebtedness originally incurred for such purpose or (b) for
      any
      purpose which entails a violation of, or which is inconsistent with, the
      provisions of any of the Regulations of The Board of Governors of the Federal
      Reserve System, including, without limitation, Regulations U, T or X thereof,
      as
      amended. 

     

    6.13.  Public
      Utility Holding Company Act; Investment Company Act of 1940.

     

    The
      Issuer 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, the Issuer 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.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.14.  Patents,
      Trademarks, Copyrights, Licenses, Etc. 

     

    Except
      as
      disclosed on Schedule
      6.14
      attached
      hereto, neither the Issuer nor any Subsidiary has any patents, patent
      applications, patent rights, trademarks, trademark applications, trademark
      rights, copyrights, licenses or other intellectual property which are material
      to the business of the Issuer or any Subsidiary. The Issuer and each Subsidiary
      possesses all patents, patent rights, trademarks, trademark rights, trade names,
      trade name rights, copyrights, licenses and other intellectual property
      necessary to conduct its business as presently conducted without conflict with
      any patent, patent right, trademark, trademark right, trade name, copyright,
      license or other intellectual property of any other Person, except where the
      failure to possess the same could not reasonably be expected to have a Material
      Adverse Effect.

     

    6.15.  Environmental
      and Safety and Health Matters. 

     

    Except
      as
      disclosed on Schedule
      6.15
      attached
      hereto: (a) the operations of the Issuer and each Subsidiary comply with all
      applicable Environmental Laws and all applicable Occupational Safety and Health
      Laws, the violation or noncompliance with which could reasonably be expected
      to
      have a Material Adverse Effect; (b) none of the operations of the Issuer or
      any
      Subsidiary are subject to any Environmental Claim or any judicial, governmental,
      regulatory or administrative proceeding alleging the violation of any
      Occupational Safety and Health Law, which, if determined adversely against
      the
      Issuer or any Subsidiary, could reasonably be expected to have a Material
      Adverse Effect; (c) none of the operations of the Issuer or any Subsidiary
      is
      the subject of any Federal or state investigation evaluating whether any
      remedial action is needed to respond to any Release of Hazardous Substances
      or
      any unsafe or unhealthful condition at any premises owned, leased or operated
      by
      the Issuer or such Subsidiary, which, if determined adversely to the Issuer
      or
      any Subsidiary, could reasonably be expected to have a Material Adverse Effect;
      (d) neither the Issuer nor any Subsidiary has filed any notice under any
      Environmental Law or Occupational Safety and Health Law indicating or reporting
      (i) any past or present spillage, leakage or Release into the environment of,
      or
      treatment, storage or disposal of, any Hazardous Substance or (ii) any unsafe
      or
      unhealthful condition at any premises owned, leased or operated by the Issuer
      or
      such Subsidiary; and (e) neither the Issuer nor any Subsidiary has any material
      contingent liability in connection with (i) any spillage, disposal or Release
      into the environment of, or otherwise with respect to, any Hazardous Substances
      or (ii) any unsafe or unhealthful condition at any premises owned, leased or
      operated by the Issuer or such Subsidiary.

     

    6.16.  No
      Default; Compliance with Law. 

     

    No
      Default or Event of Default under this Agreement has occurred and is continuing.
      There is no existing default or event of default under or with respect to any
      indenture, contract, agreement, lease or other instrument to which the Issuer
      or
      any Subsidiary is a party or by which any Property of the Issuer or any
      Subsidiary is bound or affected, a default under which could reasonably be
      expected to have a Material Adverse Effect. The Issuer and each Subsidiary
      has
      and is in full compliance with and in good standing with respect to all
      governmental and/or regulatory permits, licenses, certificates, consents and
      franchises necessary to continue to conduct its business as previously conducted
      by it and to own or lease and operate its Properties as now owned or leased
      by
      it, the failure to have or noncompliance with which could reasonably be expected
      to have a Material Adverse Effect, and, to the best of the Issuer’s knowledge,
      none of said permits, certificates, consents or franchises contain any term,
      provision, condition or limitation more burdensome than such as are generally
      applicable to Persons engaged in the same or similar business as the Issuer
      or
      such Subsidiary, as the case may be. Neither the Issuer nor any Subsidiary
      is in
      violation of any applicable statute, law, rule, regulation or ordinance of
      the
      United States of America, of any state, city, town, municipality, county or
      of
      any other jurisdiction, or of any agency thereof, a violation of which could
      reasonably be expected to have a Material Adverse Effect.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.17.  Disclosure. 

     

    The
      representations and statements made by the Issuer or on its behalf in connection
      with this Agreement and the issuance of the Securities, including
      representations and statements in each of the Operative 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 the Issuer or on its behalf to the Purchasers
      in connection with this Agreement or any Operative 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.

     

    6.18.  Solvency.
      

     

    After
      giving effect to the transactions contemplated by this Agreement, (a) the fair
      salable value of the assets of the Issuer is and will be greater than the total
      amount of the liabilities of the Issuer (including contingent, subordinated,
      unmatured and unliquidated liabilities, whether or not includable on its balance
      sheet in accordance with GAAP), (b) the present fair salable value of the assets
      of the Issuer is and will be greater than the amount that will be required
      to
      pay the probable liabilities of the Issuer as they become absolute and matured,
      (c) the Issuer will be able to realize upon its assets, or will have sufficient
      cash flow, to enable the Issuer to pay its debts, other liabilities, contingent
      obligations and other commitments as they mature in the ordinary course of
      business, (d) the Issuer does not have an unreasonably small amount of capital
      with which to engage in its anticipated businesses, (e) the fair salable value
      of the assets of each Subsidiary is and will be greater than the total amount
      of
      the liabilities of such Subsidiary (including contingent, subordinated,
      unmatured and unliquidated liabilities, whether or not includable on its balance
      sheet in accordance with GAAP), (f) the present fair salable value of the assets
      of each Subsidiary is and will be greater than the amount that will be required
      to pay the probable liabilities of such Subsidiary as they become absolute
      and
      matured, (g) each Subsidiary will be able to realize upon its assets, or will
      have sufficient cash flow, to enable such Subsidiary to pay its debts, other
      liabilities, contingent obligations and other commitments as they mature in
      the
      ordinary course of business and (h) none of the Subsidiaries has an unreasonably
      small amount of capital with which to engage in its anticipated businesses.
      For
      purposes of the foregoing, the “fair salable value” of any asset or investment
      has been and shall be determined on the basis of the amount which may be
      realized within a reasonable time, either through collection or sale of such
      asset or investment at its regular market value, conceiving the latter as the
      amount which could be obtained therefor within such period by a capable and
      diligent businessman from an interested buyer who is willing to purchase under
      ordinary selling conditions.

     

    6.19.  Capital
      Stock of Issuer.

     

    (a)  Schedule
      6.19
      hereto
      correctly specifies, as of the Initial Closing Date, the authorized Capital
      Stock of the Issuer.

     

    (b)  Schedule
      6.19
      hereto
      correctly specifies the authorized Capital Stock or other equity interests
      of
      each Subsidiary (“Subsidiary
      Stock”).
      Immediately following the Initial Closing, and as of the Initial Closing Date,
      all of the issued and outstanding shares of Subsidiary Stock will be owned
      as
      set forth on Schedule
      6.19,
      of
      record and beneficially and free of any Lien, proxy, voting agreement, voting
      trust or similar agreement or restriction (other than Permitted
      Liens)

     

    (c)  
      All of
      the outstanding equity capital of the Issuer, including without limitation
      all
      the Warrants, have been (or will have been) offered, issued and sold by the
      Issuer in accordance with all applicable laws.

     

    (d)  Except
      as
      set forth on Schedule
      6.19
      attached
      hereto: (i) there are no outstanding rights, options, warrants or agreements
      for
      the purchase from, or sale or issuance by, the Issuer of any of its Capital
      Stock or securities convertible into or exercisable or exchangeable for such
      Capital Stock; (ii) there are no agreements on the part of the Issuer to issue,
      sell or distribute any of its securities or assets; (iii) the Issuer has no
      obligation (contingent or otherwise) to purchase, redeem or otherwise acquire
      any of its securities or Capital Stock or any interest therein or to pay any
      dividend or make any distribution in respect thereof; and (iv) no Person is
      entitled to (A) any preemptive or similar right with respect to the issuance
      of
      any securities of the Issuer, including upon the issuance of the Warrants or
      (B)
      any rights with respect to the registration of any securities of the Issuer
      under the Securities Act.

     

    (e)  The
      Issuer has authorized and unissued and reserved for issuance, a sufficient
      number of shares of Common Stock (such number being set forth on Schedule
      6.19
      to
      permit, after giving effect to the transaction hereunder, the exercise of all
      of
      the shares of Common Stock issuable pursuant to the Warrants and all other
      options, warrants and rights exercisable or convertible into Common Stock.
      The
      171,473 shares of Common Stock issuable upon exercise of the Warrants issued
      pursuant hereto constitute at least 10% of the total Common Stock immediately
      following the Initial Closing determined on a fully-diluted basis.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    6.20.  Offer
      of Securities. 

     

    Neither
      the Issuer nor any Person acting on their behalf (a) has directly or indirectly
      offered the Securities or any part thereof or any similar securities for issue
      or sale to, or solicited any offer to buy any of the same from, anyone other
      than the Purchasers, (b) has taken or will take any action which would bring
      the
      issuance and sale of the Securities within the provisions of section 5 of the
      Securities Act or the registration or qualification provisions of any applicable
      blue sky or other securities laws, or (c) has dealt with any broker, finder,
      commission agent or other similar Person in connection with the sale of the
      Securities and the other transactions contemplated by the Operative
      Documents.

     

    6.21.  Use
      of Proceeds. 

     

    The
      proceeds of the sale of the Securities will be used for (a) the purchase or
      financing of aircraft and related equipment by the Issuer to be leased to
      unaffiliated Persons and (b) for general working capital purposes of the
      Issuer.

     

    6.22.  Certain
      Laws

     

    (a)  The
      Issuer: (i) is not a person whose property or interest in property is blocked
      or
      subject to blocking pursuant to Section 1 of Executive Order 13224 of September
      23, 2001, Blocking Property and Prohibiting Transactions With Persons Who
      Commit, Threaten to Commit, or Support Terrorism (31 CFR Part 595 et seq.);
      (ii)
      does not engage in any dealings or transactions prohibited by Section 2 of
      such
      executive order, or is otherwise associated with any such person in any manner
      that violates Section 2; or (iii) is not a Person on the list of Specially
      Designated Nationals and Blocked Persons or subject to the limitations or
      prohibitions under any other U.S. Department of Treasury’s Office of Foreign
      Assets Control regulation or executive order.

     

    (b)  The
      Issuer is in compliance, in all material respects, with the Patriot Act. No
      part
      of the proceeds of the Securities will be used, directly or indirectly, for
      any
      payments to any governmental official or employee, political party, official
      of
      a political party, candidate for political office, or anyone else acting in
      an
      official capacity, in order to obtain, retain or direct business or obtain
      any
      improper advantage, in violation of the United States Foreign Corrupt Practices
      Act of 1977, as amended.

     

    6.23.  Aircraft
      Regulatory Authority. 

     

    The
      Issuer holds all permits, certificates and authorizations for the operation
      of
      its business as are necessary and required by each applicable Aircraft
      Regulatory Authority.

     

    6.24.  Aircraft
      Leases.

     

    Schedule
      6.24
      attached
      hereto is a listing of each aircraft owned by the Issuer and a description
      of
      the relevant material lease terms in which, to the Issuer’s knowledge, there are
      not material inaccuracies.

     

    
      	7.  	
              FINANCIAL
                STATEMENTS AND
                INFORMATION.

            

    

     

    The
      Issuer will furnish to each Purchaser, so long as such Purchaser shall be
      obligated to purchase Notes hereunder or shall hold any of the Notes, and to
      each other holder from time to time of the Notes; provided, however, that the
      Issuer’s filing of such financial statements and any other information required
      by this Section 7
      with the
      Securities and Exchange Commission over the EDGAR system within the time period
      required therefore shall be deemed to satisfy the following
      covenants:

     

    (a)  as
      soon
      as available and in any event within sixty (60) days after the end of each
      Fiscal Quarter, the unaudited consolidated and consolidating balance sheets
      of
      the Issuer as at the end of such period and the related unaudited consolidated
      and consolidating statements of income and cash flows for such period and for
      the portion of the Fiscal Year then ended, in each case setting forth in
      comparative form the corresponding figures for the same period and the portion
      of the preceding Fiscal Year;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (b)  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 the Issuer as of
      the
      end of such Fiscal Year and related consolidated and consolidating statements
      of
      income, shareholders equity and cash flows for such Fiscal Year in each case
      setting forth in comparative form the corresponding figures for the preceding
      Fiscal Year, which financial statements shall be in reasonable detail with
      appropriate notes and be prepared in accordance with GAAP and shall be certified
      (without any qualification or exception) by BDO Seidman, LLP or other
      independent public accountants acceptable to the Required Holders; such
      financial statements shall be accompanied by (i) 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 consolidated financial position, and the results of operations and the
      cash
      flows of the Issuer for the period then ended in conformity with GAAP, 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;

     

    (c)  together
      with each delivery of financial statements pursuant to Sections 7(a)
      and
7(b),
      an
      Officer’s Certificate;

     

    (d)  promptly
      upon the receipt thereof (but in any event not later than five Business Days),
      any reports (including, without limitation, any management letters) submitted
      to
      the Issuer or any Subsidiary (other than reports previously delivered pursuant
      to Section 7(b)
      above)
      by independent accountants in connection with any annual, interim or special
      audit made by them of the books of the Issuer or any Subsidiary;

     

    (e)  as
      promptly as practicable (but in any event not later than five days) after the
      same are available, copies of (i) all material press releases issued by the
      Issuer or any Subsidiary, and all notices, proxy statements, financial
      statements, reports and documents as the Issuer shall send or make available
      generally to its holders or as any Subsidiary shall send or make available
      generally to its holders other than the Issuer and (ii) all periodic and special
      reports, documents and registration statements (other than on Forms 3,4, 5,
      13-D
      and 13-G) which the Issuer or any Subsidiary furnishes or files, or any officer
      or director or stockholder of the Issuer or any of its Subsidiaries furnishes
      or
      files with respect to the Issuer or any of its Subsidiaries, with the Commission
      (or any analogous foreign governmental authority) or any national securities
      exchange;

     

    (f)  written
      notice within three (3) Business Days after any Responsible Officer of the
      Issuer has actual knowledge thereof, describing the same and, if applicable,
      the
      steps being taken by the Person(s) affected with respect thereto;

     

    (i)  the
      occurrence of any Default or Event of Default;

     

    (ii)  the
      occurrence of any default or event of default by the Issuer or any Subsidiary
      under any material note, indenture, loan agreement, mortgage, deed of trust,
      security agreement, lease or other similar agreement, document or instrument
      to
      which the Issuer or any Subsidiary, as the case may be, is a party or by which
      it is bound or to which it is subject;

     

    (iii)  the
      institution of any litigation, arbitration proceeding or governmental or
      regulatory proceeding affecting the Issuer or any Subsidiary, whether or not
      considered to be covered by insurance, in which the prayer or claim for relief
      seeks recovery of an amount in excess of $200,000.00 (or, if no dollar amount
      is
      specified in the prayer or claim for relief, in which there is a reasonable
      likelihood of recovery of an amount in excess of $200,000.00) or any form of
      equitable relief which, if granted, could reasonably be expected to have a
      Material Adverse Effect;

     

    (iv)  the
      entry
      of any judgment or decree against the Issuer or any Subsidiary;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (v)  the
      occurrence of a Reportable Event with respect to any Pension Plan for which
      a
      thirty (30) day notice is required under applicable PBGC regulations; the filing
      of a notice of intent to terminate a Pension Plan by the Issuer, any ERISA
      Affiliate or any Subsidiary; the institution of proceedings to terminate a
      Pension Plan by the PBGC or any other Person; the withdrawal in a “complete
      withdrawal” or a “partial withdrawal” as defined in Sections 4203 and 4205,
      respectively, of ERISA by the Issuer, any ERISA Affiliate or any Subsidiary
      from
      any Multi-Employer Plan; or the incurrence of any material increase in the
      contingent liability of the Issuer or any Subsidiary with respect to any
“employee welfare benefit plan” as defined in Section 3(1) of ERISA which covers
      retired employees and their beneficiaries; and

     

    (vi)  the
      occurrence of any event which could reasonably be expected to have a Material
      Adverse Effect;

     

    (g)  contemporaneously
      with its delivery or receipt, a copy of such other material information relating
      to the Issuer or any of the Subsidiaries as shall be furnished to or received
      from the Senior Agent and/or the Senior Banks pursuant to the Senior Bank
      Agreement (including any Permitted Refinancing thereof) or furnished to or
      received from any other bank, financial institution or other Person to which
      the
      Issuer or any of the Subsidiaries is indebted for borrowed money or for any
      letters of credit (or similar instruments) (other than information relating
      solely to collateral therefor); 

     

    (h)  contemporaneously
      with its delivery, the annual “desktop” appraisal of all aircraft owned by the
      Issuer;

     

    (i)  no
      later
      than
      thirty
      (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
      the Required Holders of Notes) applicable to all leases included in the Aircraft
      Portfolio; 

     

    (j)  at
      the
      time that payment is made to the holders of Notes in accordance with Section
      9.1(a),
      a
      calculation of the Discounted Aircraft Portfolio Value and the Maximum Debt
      to
      Value Ratio; 

     

    (k)  by
      December 31 of each year, budgets and forecasts for the ensuing fiscal year;
      and

     

    (l)  such
      other information as from time to time may reasonably be requested.

     

    
      	8.  	
              INSPECTION.

            

    

     

    The
      Issuer shall permit a representative of each holder of Notes, at the expense
      of
      the Issuer to visit and inspect (with those representatives of holders desiring
      to inspect visiting together as a group) any of the offices or properties of
      the
      Issuer or any Subsidiary, to examine all their respective books of account,
      records, reports and other papers, to make copies and extracts therefrom, and
      to
      discuss their respective affairs, finances and accounts with their respective
      officers and independent public accountants (and by this provision the Issuer
      authorizes said accountants to discuss the affairs, finances and accounts of
      the
      Issuer and its Subsidiaries), all at such times and as often as may be
      requested; provided however so long as no Default or Event of Default shall
      have
      occurred and be continuing (i) there shall be no more than two (2) such
      inspections during any Fiscal Year, (ii) all such visits and inspections shall
      be at such reasonable times and as often as may be reasonably requested in
      writing and (iii) the aggregate amount that the Issuer shall be required to
      reimburse the holders of Notes in respect of such inspections and visits shall
      not exceed $10,000 in any Fiscal Year.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	9.  	
              PREPAYMENT
                OF NOTES.

            

    

     

    9.1.  Mandatory
      Principal Payments.

     

    (a)  On
      the
      last day of each month (each a “Mandatory
      Payment Date”)
      the
      Issuer will prepay a principal amount equal to the Required Amortization Amount
      of the Notes at par and without payment of the Make-Whole Amount or any
      Applicable Premium. For purposes hereof the “Required
      Amortization Amount”
      for any
      Mandatory Payment Date shall be equal to the amount necessary to cause both
      the
      Maximum Debt to Value Ratio and the Maximum Outstanding Balance of the Notes
      for
      the month then ended to not exceed the amounts therefor set forth opposite
      such
      month on Schedule
      13.5
      hereto.

     

    (b)  If
      on or
      before June 30, 2008, the Issuer shall not have sold pursuant to this Agreement
      Notes in an aggregate principal amount of $28,000,000 then on such date the
      entire then outstanding principal amount of the Notes shall become due and
      payable together with interest accrued to such date and the Applicable Premium
      on such principal amount; provided however, that the failure of any Purchaser
      to
      acquire Notes hereunder due to any matter arising under Section 5.9
      shall
      not give rise to a prepayment obligation under this Section 9.1(b).

     

    (c)  As
      provided therein, the entire unpaid principal balance of the Notes, together
      with all accrued interest to such date, shall be due and payable on the Final
      Maturity Date.

     

    9.2.  Optional
      Prepayment of Notes With Premium.

     

    (a) With
      Premium.
      At any
      time or from time to time after April 17, 2009, the Issuer may, at its option,
      upon notice as set forth in Section 9.5,
      prepay
      all or any part of the Notes (in an integral multiple of $500,000 and a minimum
      of $5,000,000 or such lesser principal amount thereof as shall then be
      outstanding); provided that (a) the funds used to make such prepayment are
      funded by a Qualifying Equity Event and (b) the Issuer concurrently pays an
      amount equal to a percentage of the principal amount to be prepaid pursuant
      to
      this Section 9.2
      (the
“Applicable
      Premium”),
      such
      percentage to be that set forth in the table below opposite the period in which
      the date fixed for such prepayment occurs:

     

    
      	
              Period

            	
              Applicable
                Premium

            
	
              April
                18, 2009 through April 17, 2010

            	
              10%

            
	
              April
                18, 2010 through April 17, 2011

            	
              5%

            
	
              April
                18, 2011 and thereafter

            	
              0%

            

    

    

    For
      purposes of this Section 9.2,
      the
      term “Qualifying
      Equity Event”
shall
      mean an equity offering of securities for the account of the Issuer so long
      as
      the aggregate amount received by the Issuer in such offering is at least
      $5,000,000.

     

    (b) Without
      Premium.
      At any
      time or from time to time after April 17, 2009, the Issuer may, at its option,
      upon notice as set forth in Section 9.5,
      prepay
      all or any part of the Notes (in an integral multiple of $500,000 and a minimum
      of $3,000,000 or such lesser principal amount thereof as shall then be
      outstanding), provided that the funds used to make such prepayment are funded
      solely from operating cash flow of the Issuer as certified to the holders of
      Notes in an Officer’s Certificate of the Issuer.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    9.3.  Prepayment
      upon a Change of Control.

     

    (a)  If
      any
      Change of Control is to occur, then not less than 30 days (or such later date
      as
      the Issuer first obtains knowledge thereof) nor more than 60 days prior to
      the
      occurrence of such Change of Control, the Issuer will notify in writing each
      holder of Notes of such pending Change of Control and the date upon which it
      is
      scheduled to occur. The Issuer will prepay all of the Notes held by each holder
      then outstanding, together with all accrued interest to such date and an amount
      equal to the Make-Whole Amount for the date of such prepayment. Each such
      prepayment shall occur on the date upon which the Change of Control occurs,
      unless the Issuer and such holder of Notes agrees to a different date, and
      no
      prepayment requested pursuant to this Section 9.3
      shall be
      due unless the Change of Control shall occur.

     

    (b)  For
      purposes of this Section 9.3,
      the
      term “Change
      of Control”
shall
      mean

     

    (i) Management
      and JHC shall fail to, directly or indirectly, beneficially own and control
      at
      least 80% of the Common Stock owned by such Persons on the Initial Closing
      Date
      (provided that any transfer of the Common Stock by JHC to employees of JHC
      and
      its Subsidiaries as a bonus or otherwise in consideration of their employment
      will be considered to be held by JHC for the purposes of this clause (i));
      

     

    (ii) Management
      shall fail to, directly or indirectly, (A) beneficially own and control 51%
      of
      the equity interests of JHC (determined on a fully diluted basis) other than
      as
      a result of the acquisition of such equity interests by the Issuer pursuant
      to
      the JMC Management Agreement or (B) have the right to appoint a majority of
      the
      board of directors of JHC; 

     

    (iii) any
      Person (other than members of Management), together with “affiliates” and
“associates” of such Person, within the meaning of Rule 12b-2 of the Commission
      under the Exchange Act, shall acquire beneficial ownership (including beneficial
      ownership resulting from the formation of a “group” within the meaning of Rule
      13d-5 of the Exchange Act) of 33% or more of the outstanding shares of Common
      Stock or of any other class of Voting Stock of the Issuer;

     

    (iv) any
      directors nominated by the board of directors of the Company shall fail to
      be
      elected by the shareholders of the Company; or

     

    (v) if
      at any
      time (A) one or more of members of Management shall cease to be executive
      officers of the Issuer unless such member of Management is replaced within
      sixty
      (60) days with an individual acceptable to the Required Holders or (B) JMC
      shall
      cease to be the management company for the Issuer as contemplated by the JMC
      Management Agreement.

     

    (c)  For
      purposes of this Section 9.3,
      beneficial ownership shall be determined in the manner set forth in Rule 13d-3
      of the Commission under the Exchange Act.

     

    (d)  For
      purposes of this Section 9.3,
      the
      term “Make-Whole
      Amount”
means,
      with respect to any Note, an amount equal to the excess, if any, of the
      Discounted Value of the Remaining Scheduled Payments with respect to the Called
      Principal of such Note over the amount of such Called Principal, provided that
      the Make-Whole Amount may in no event be less than zero. For the purposes of
      determining the Make-Whole Amount, the following terms have the following
      meanings:

     

    “Called
      Principal”
means,
      with respect to any Note, the principal of such Note that is to be prepaid
      pursuant to Section 9.3.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    “Discounted
      Value”
means,
      with respect to the Called Principal of any Note, the amount obtained by
      discounting all Remaining Scheduled Payments with respect to such Called
      Principal from their respective scheduled due dates to the Settlement Date
      with
      respect to such Called Principal, in accordance with accepted financial practice
      and at a discount factor (applied on the same periodic basis as that on which
      interest on the Notes is payable) equal to the Reinvestment Yield with respect
      to such Called Principal.

     

    “Reinvestment
      Yield”
means,
      with respect to the Called Principal of any Note, 1.0% over the yield to
      maturity implied by (i) the yields reported as of 10:00 a.m. (New York City
      time) on the fifth Business Day preceding the Settlement Date with respect
      to
      such Called Principal, on the display designated as “Page PX1” (or such other
      display as may replace Page PX1) on Bloomberg Financial Markets for the most
      recently issued actively traded on the run U.S. Treasury securities having
      a
      maturity equal to the Remaining Life of such Called Principal as of such
      Settlement Date, or (ii) if
      such yields are not reported as of such time or the yields reported as of such
      time are not ascertainable (including by way of interpolation), the Treasury
      Constant Maturity Series Yields reported, for the latest day for which such
      yields have been so reported as of the second Business Day preceding the
      Settlement Date with respect to such Called Principal, in Federal Reserve
      Statistical Release H.15 (or any comparable successor publication) for U.S.
      Treasury securities having a constant maturity equal to the Remaining Life
      of
      such Called Principal as of such Settlement Date.

     

    In
      the
      case of each determination under clause (i) or clause (ii), as the
      case may be, of the preceding paragraph, such implied yield will be determined,
      if necessary, by (a) converting U.S. Treasury bill quotations to bond
      equivalent yields in accordance with accepted financial practice and
      (b) interpolating linearly between (1) the applicable U.S. Treasury
      security with the maturity closest to and greater than such Remaining Life
      and
      (2) the applicable U.S. Treasury security with the maturity closest to and
      less than such Remaining Life. The Reinvestment Yield shall be rounded to the
      number of decimal places as appears in the interest rate of the applicable
      Note.

     

    “Remaining
      Life”
means,
      with respect to any Called Principal, the number of years (calculated to the
      nearest one-twelfth year) that will elapse between the Settlement Date with
      respect to such Called Principal and the Final Maturity Date of such
      Note.

     

    “Remaining
      Scheduled Payments”
means,
      with respect to the Called Principal of any Note, all payments of such Called
      Principal and interest thereon that would be due after the Settlement Date
      with
      respect to such Called Principal, subject to Section 9.1
      hereof,
      if no payment of such Called Principal were made prior to the Final Maturity
      Date, provided that if such Settlement Date is not a date on which interest
      payments are due to be made under the terms of the Notes, then the amount of
      the
      next succeeding scheduled interest payment will be reduced by the amount of
      interest accrued to such Settlement Date and required to be paid on such
      Settlement Date pursuant to Section 9.3.

     

    “Settlement
      Date”
means,
      with respect to the Called Principal of any Note, the date on which such Called
      Principal is to be prepaid pursuant to Section 9.3.

     

    9.4.  Allocation
      of Partial Prepayments of Notes.

     

    In
      the
      case of each partial prepayment of the Notes under this Section 9,
      the
      principal amount of the Notes to be prepaid shall be allocated among all of
      the
      Notes at the time outstanding (excluding any Notes at the time owned by the
      Issuer or any Affiliate of the Issuer) in proportion, as nearly as practicable,
      to the respective unpaid principal amounts thereof, with adjustments, to the
      extent practicable, to compensate for any prior prepayments not made exactly
      in
      such proportion.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    9.5.  Notice
      of Certain Prepayments of Notes.

     

    In
      the
      case of each prepayment under Section 9.2
      and
9.3,
      the
      Issuer shall give written notice thereof to each holder of Notes not less than
      5
      nor more than 30 days prior to the date fixed for such prepayment. Each such
      notice shall set forth: (a) the date fixed for prepayment; (b) the aggregate
      principal amount of Notes to be prepaid on such date; and (c) the aggregate
      principal amount of Notes held by such holder to be prepaid on such date and
      the
      amount of accrued interest and the Applicable Premium, if any, or Make-Whole
      Amount, if any, to be paid to such holder on such date (together with the
      calculation of such Applicable
      Premium or Make-Whole Amount which calculation shall be satisfactory to each
      holder of the Notes).

     

    9.6.  Maturity;
      Accrued Interest; Surrender, etc. of Notes.

     

    In
      the
      case of each prepayment of all or any part of any Note, the principal amount
      to
      be prepaid shall mature and become due and payable on the date fixed for such
      prepayment, together with interest on such principal amount accrued to such
      date
      and the premium, if any, due thereon. Any Note prepaid in full shall be
      surrendered to the Issuer at its principal place of business promptly following
      prepayment and cancelled and shall not be reissued, and no Note shall be issued
      in lieu of any prepaid principal amount of any Note.

     

    9.7.  Purchase
      of Notes.

     

    The
      Issuer will not, and will not permit any of their Affiliates to, directly or
      indirectly, purchase or otherwise acquire, or offer to purchase or otherwise
      acquire, any outstanding Notes except by way of payment or prepayment in
      accordance with the provisions of the Notes and this Agreement or in a
      transaction pursuant to which each holder of Notes is given the opportunity
      to
      sell or otherwise transfer a proportionate amount of such holder’s Notes on the
      same terms and conditions.

     

    9.8.  Payment
      on Non-Business Days.

     

    If
      any
      amount hereunder or under the Notes shall become due on a day which is not
      a
      Business Day, then such payment shall be made on the first Business Day
      following the day on which such payment shall have so fallen due, without
      including the additional days elapsed in the computation of the interest payable
      on such succeeding Business Day.

     

    
      	10.  	
              BOARD
                VISITATION RIGHTS.

            

    

     

    So
      long
      as the Notes are outstanding the Required Holders shall have the right to
      appoint one representative who shall: (a) receive written notice of all meetings
      (both regular and special) of the boards of directors (or similar body) of
      the
      Issuer and the Subsidiaries (other than an Unrestricted Subsidiary) and each
      committee of any such board (such notice to be delivered or mailed as specified
      in Section 21
      at the
      same time as notice is given to the members of any such board and/or committee
      but in no event later than seven days prior to the date of such meeting); (b)
      be
      entitled to attend (or, in the case of telephone meetings, monitor) all such
      meetings; (c) receive all notices, information and reports which are furnished
      by the Issuer or any such Subsidiary to the members of any such board and/or
      committee (in their capacity as a member of such board or committee) at the
      same
      time and in the same manner as the same is furnished to such members; (d) be
      entitled to participate in all discussions conducted at such meetings and (e)
      receive as soon as available (but in any event prior to the next succeeding
      board meeting) copies of the minutes of all such meetings. If any action is
      proposed to be taken by any such board and/or committee by written consent
      in
      lieu of a meeting, the Issuer will give written notice thereof to such
      representative, which notice shall describe in reasonable detail the nature
      and
      substance of such proposed action and shall be delivered at the same time as
      notice is given to the members of any such board and/or committee but in no
      event later than five days prior to the date such written consent becomes
      effective. The Issuer will furnish such representative with a copy of each
      such
      written consent not later than five days after it has been signed by its last
      signatory. Such representative shall not constitute a member of any such board
      and/or committee and shall not be entitled to vote on any matters presented
      at
      meetings of any such board and/or committee or to consent to any matter as
      to
      which the consent of any such board and/or committee shall have been requested.
      The board of directors (or similar body) of the Issuer shall meet not less
      frequently than four times during each Fiscal Year (at least one of which must
      be in person). Each designated representative electing not to attend any meeting
      in person may in any event be permitted to participate in such meeting by
      telephone as if such designated representative were present. Such representative
      shall agree in writing to hold in confidence and trust and to act in a fiduciary
      manner with respect to all information so provided; and, provided further,
      that
      the Issuer reserves the right to withhold any information and to exclude such
      representative from any meeting or portion thereof in order to (i) preserve
      or
      avoid any adverse effect to the attorney-client privilege between the Issuer
      and
      its counsel, (ii) prevent the disclosure of trade secrets to such
      representative, (iii) fulfill the Issuer’s obligations with respect to
      confidential or proprietary information of third parties or (iv) review or
      discuss any information that could reasonably be expected to involve a conflict
      of interest between the holders of Notes and the Issuer. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	11.  	
              AFFIRMATIVE
                COVENANTS.

            

    

     

    So
      long
      as any of the Notes shall remain outstanding, the Issuer will duly perform
      and
      observe each and all of the covenants and agreements applicable to it as
      hereinafter set forth:

     

    11.1.  Payment
      of Debt; Taxes.

     

    The
      Issuer will, and will cause each Subsidiary to, 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 the Issuer 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 a Default or Event of 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.

     

    11.2.  Maintenance
      of Books and Records.

     

    The
      Issuer will, and will cause each Subsidiary to, maintain books and records
      sufficient to permit the preparation of financial statements in accordance
      with
      GAAP and in which true, correct and complete entries in conformity with GAAP
      shall be made of all dealings and transactions in relation to its
      business.

     

    11.3.  Existence.

     

    The
      Issuer will, and will cause each Subsidiary to, do all things necessary to
      (a)
      preserve and keep in full force and effect at all times its corporate existence
      and all permits, licenses, franchises and other rights material to its business
      and (b) be duly qualified to do business and be in good standing in all
      jurisdictions where the nature of its business or its ownership of Property
      requires such qualification except for those jurisdictions in which the failure
      to qualify or be in good standing could not reasonably be expected to have
      a
      Material Adverse Effect.

     

    11.4.  Maintenance
      of Property.

     

    The
      Issuer will, and will cause each Subsidiary to, at all times, preserve and
      maintain all of the Property used or useful in the conduct of its business
      in
      good condition, working order and repair, ordinary wear and tear
      excepted.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    11.5.  Insurance.

     

    The
      Issuer will, and will cause each Subsidiary or each Person that leases Property
      to, insure all of its Property of the character usually insured by Persons
      engaged in the same or similar businesses similarly situated, against loss
      or
      damage of the kind customarily insured against by such Persons, and carry
      liability insurance and other insurance of a kind and in an amount generally
      carried by Persons engaged in the same or similar businesses similarly situated.
      All such insurance may be subject to reasonable deductible amounts. The Issuer
      will take all commercially reasonable steps to ensure that the Issuer and the
      Senior Agent are identified by name as "additional insured" or “contract party”
and “loss payee” on any certificates of insurance issued in respect of aircraft
      owned and acquired by the Issuers or any Subsidiary.  The Issuers will also
      take all commercially reasonable steps to ensure that references to AVN67B
      are
      updated to AVN67C where appropriate. 

     

    11.6.  Compliance
      with Laws, Regulations, Etc.

     

    The
      Issuer will, and will cause each Subsidiary to, (a) comply with any and all
      laws, ordinances and
      governmental and regulatory rules and regulations to which the Issuer or such
      Subsidiary,
      as the
      case may be, is subject (including, without limitation, all Occupational Safety
      and Health Laws and all Environmental Laws), the violation of which or failure
      to comply with which could reasonably be expected to have a Material Adverse
      Effect and (b) obtain any and all licenses, permits, franchises and other
      governmental and regulatory authorizations necessary to the ownership of its
      Properties or to the conduct of its business, the failure to obtain which
      license, permit, franchise and/or other governmental or regulatory authorization
      could reasonably be expected to have a Material Adverse Effect.

     

    11.7.  ERISA
      Compliance.

     

    If
      the
      Issuer, any Subsidiary or any ERISA Affiliate shall have any Pension Plan,
      the
      Issuer, such Subsidiary or such ERISA Affiliate, as the case may be, shall
      comply in all material respects with all requirements of ERISA relating to
      such
      Pension Plan. Without limiting the generality of the foregoing, the Issuer
      will
      not, and will not cause or permit any Subsidiary or any ERISA Affiliate
      to:

     

    (a)  permit
      any Pension Plan maintained by the Issuer, any Subsidiary or any ERISA Affiliate
      to engage in any nonexempt “prohibited transaction,” as such term is defined in
      Section 4975 of the Code;

     

    (b)  permit
      any Pension Plan maintained by the Issuer, any Subsidiary or any ERISA Affiliate
      to incur any “accumulated funding deficiency”, as such term is defined in
      Section 302 of ERISA, 29 U.S.C. § 1082, whether or not waived;

     

    (c)  terminate
      any Pension Plan in a manner which could result in the imposition of a Lien
      on
      any Property of the Issuer, any Subsidiary or any ERISA Affiliate pursuant
      to
      Section 4068 of ERISA, 29 U.S.C. § 1368; or

     

    (d)  take
      any
      action which would constitute a complete or partial withdrawal from a
      Multi-Employer Plan within the meaning of Sections 4203 or 4205 of Title IV
      of
      ERISA.

     

    Notwithstanding
      any provision contained in this Section 11.7
      to the
      contrary, an act by the Issuer or any Subsidiary shall not be deemed to
      constitute a violation of this Section 11.7
      unless
      said action, individually or cumulatively with other acts of the Issuer and
      the
      Subsidiaries, has or could reasonably be expected to have a Material Adverse
      Effect.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    11.8.  Line
      of Business

     

    The
      Issuer will, and will cause each Subsidiary to, continue to engage in the same
      business as conducted by it on the Initial Closing Date and businesses
      reasonably related thereto.

     

    11.9.  Further
      Assurances.

     

    The
      Issuer will execute and deliver to the holders of the Notes, at any time and
      from time to time, any and all further agreements, documents and instruments
      with reasonable promptness after the Required Holders’ of Notes request
      therefor, and take any and all further actions which may be required under
      applicable law, or which the Required Holders of Notes may from time to time
      reasonably request with reasonable promptness after any such request, in order
      to effectuate the transactions contemplated by this Agreement and the other
      Operative Documents

     

    11.10.  Guarantee
      Agreements.

     

    In
      the
      event that any Subsidiary of the Issuer shall Guarantee any Debt of the Issuer,
      including without limitation, the Debt outstanding under the Senior Bank
      Agreement (or any Permitted Refinancing thereof), then and in each such case
      the
      Issuer will notify each holder of the Notes as promptly as practicable after
      (but in any event within 30 days of) the date such Subsidiary enters into such
      Guarantee and the Issuer shall cause such Subsidiary to execute and deliver
      to
      the holders of the Notes a Guarantee Agreement (the “Guarantee
      Agreement”),
      in
      form and substance reasonably satisfactory to the Required Holders of Notes,
      together with all documents and opinions which the Required Holders of Notes
      may
      reasonably request relating to the existence of such Subsidiary, the corporate
      or other authority for and the validity of the Guarantee Agreement, and any
      other matters reasonably determined by the Required Holders of Notes to be
      relevant thereto, all in form and substance reasonably satisfactory to the
      Required Holders of Notes. 

     

    11.11.  Use
      of Proceeds of Notes and Senior Bank Agreement.

     

    The
      Issuer shall use the proceeds of the Notes and of any Loans (as defined in
      the
      Senior Bank Agreement) for (a) the purchase or financing of aircraft and related
      equipment to be leased to unaffiliated Persons and (b) for general working
      capital purposes of the Issuer.

     

    11.12.  Aircraft
      Leases.

     

    The
      Issuer shall update Schedule
      6.24
      promptly
      upon the Issuer acquiring any new aircraft or entering into any aircraft lease
      (including any renewal, extension or modification of any aircraft
      lease).

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	12.  	
              NEGATIVE
                COVENANTS.

            

    

     

    So
      long
      as any of the Notes shall remain outstanding, the Issuer will duly perform
      and
      observe each and all of the covenants and agreements applicable to it as
      hereinafter set forth:

     

    12.1.  Limitation
      on Debt.

     

    The
      Issuer will not, and will not cause or permit any Subsidiary or Unrestricted
      Subsidiary to, incur or be obligated on any Debt, either directly or indirectly,
      by way of Guarantee, suretyship or otherwise, other than:

     

    (a)  Debt
      of
      the Issuer in respect of the Senior Bank Agreement;

     

    (b)  Debt
      of
      the Issuer existing as of the Initial Closing Date and listed on Schedule
      12.1
      attached
      hereto;

     

    (c)  Debt
      in
      respect of the Notes;

     

    (d) Debt
      of
      an Unrestricted Subsidiary (i) for which the Issuer or a Subsidiary is not
      a
      guarantor in whole or in part or otherwise liable or (ii) 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; and

     

    (e) Debt
      of
      Unrestricted Subsidiaries permitted by Section 12.8(d) and (e).

     

    12.2.  Limitation
      on Liens.

     

    The
      Issuer will not, and will not cause or permit any Subsidiary to, create, incur
      or assume, or suffer to be incurred or to exist, any Lien on any of its
      Property, whether now owned or hereafter acquired, or upon any income or profits
      therefrom, except for Permitted Liens.

     

    12.3.  Consolidation,
      Merger, Sale of Property, Etc.

     

    The
      Issuer will not, and will not cause or permit any Subsidiary to, directly or
      indirectly merge or consolidate with or into any other Person or permit any
      other Person to merge into or with or consolidate with it; provided, however,
      that so long as no Default or Event of Default exists immediately before or
      immediately after giving effect to such merger or such consolidation, any Person
      may merge or consolidate with or into the Issuer provided that the Issuer shall
      be the continuing or surviving corporation.

     

    12.4.  Sale
      of Property, Etc.

     

    Except
      for sales or dispositions entered into in the ordinary course of business of
      the
      Issuer or a Subsidiary consistent with past practices for value received, or
      transfer in respect of Permitted Liens the Issuer will not, and will not cause
      or permit any Subsidiary to, (i) sell, assign, lease, transfer, abandon or
      otherwise dispose of any of its Property (including, without limitation, any
      shares of Capital Stock or other equity interests of a Subsidiary or
      Unrestricted Subsidiary owned by the Issuer or another Subsidiary) or (ii)
      discontinue, liquidate or change in any material respect any substantial part
      of
      its operations or business.

     

    12.5.  Transactions
      with Affiliates.

     

    The
      Issuer will not, and will not cause or permit any Subsidiary or Unrestricted
      Subsidiary to, enter into or be a party to any transaction or arrangement with
      any Affiliate (including, without limitation, the purchase from, sale to, lease
      from or exchange of Property with, or the rendering of any service by or for,
      any Affiliate and the payment of Management Fees), except in the ordinary course
      of business and pursuant to the reasonable requirements of the Issuer’s or such
      Subsidiary’s or Unrestricted Subsidiary’s business and upon fair and reasonable
      terms no less favorable to the Issuer or such Subsidiary or such Unrestricted
      Subsidiary than would be obtained in a comparable arm’s-length transaction with
      a Person not an Affiliate. Payment of the JMC Management Fees in accordance
      with
      the JMC Management Agreement as in effect on the date hereof and Re-Sale Fees
      and Aircraft Acquisition Fees shall be permitted under this Section 12.5
      but
      shall be subject to Section 12.12.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    12.6.  Restricted
      Payments.

     

    The
      Issuer will not, and will not cause or permit any Subsidiary to, declare or
      incur any liability to make any Restricted Payment on or in respect of the
      Capital Stock of or in the Issuer or the Capital Stock of or in any such
      Subsidiary, as the case may be; provided, however, that (a) each Wholly-Owned
      Subsidiary of the Issuer shall be permitted to declare and pay cash
      distributions on its Capital Stock to the Issuer and (b) the Issuer may make
      Restricted Payments in any Fiscal Year so long as (i) the aggregate amount
      of
      all Restricted Payments (including such Restricted Payment) in such Fiscal
      Year
      does not exceed the Restricted Payment Amount for such Fiscal Year and (ii)
      immediately prior to and immediately following such Restricted Payment no
      Default or Event of Default exists or would exist.

     

    12.7.  Pension
      Plans.

     

    The
      Issuer will not, and will not cause or permit any Subsidiary to, (a) permit
      any
      condition to exist in connection with any Pension Plan which might constitute
      grounds for the PBGC to institute proceedings to have such Pension Plan
      terminated or a trustee appointed to administer such Pension Plan or (b) engage
      in, or permit to exist or occur, any other condition, event or transaction
      with
      respect to any Pension Plan which could result in the incurrence by the Issuer,
      any Subsidiary or any ERISA Affiliate of any material liability, fine or
      penalty.

     

    12.8.  Acquisitions
      and Investments.

     

    The
      Issuer will not, and will not permit any Subsidiary, to 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 the Issuer
      may
      (a)  acquire and hold stock, obligations or securities received in
      settlement of debts (created in the ordinary course of business) owing to it,
      (b)  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 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)  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 “JMC
      Management Agreement”)
      between
      the Issuer and JMC entered into as of April 23, 1998, (d) Investments in
      Unrestricted Subsidiaries existing on the Initial Closing Date of the type
      described in clause (c) of the definition of Restricted Payments but solely
      to
      the extent such Investments are permitted under Section 12.6 and (e) make
      Investments in Unrestricted Subsidiaries after the Initial Closing other than
      Investments permitted by the foregoing clause (d) (“Unrestricted
      Subsidiary Investments”)
      so long
      as (i) all Unrestricted Subsidiary Investments 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 all Unrestricted Subsidiary
      Investments in respect of such Unrestricted Subsidiary for the period commencing
      on the Initial Closing Date through the date of such Unrestricted Subsidiary
      Investment shall not exceed the Unrestricted Subsidiary Investment Amount for
      such Unrestricted Subsidiary at such time 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 the Issuer 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. For the avoidance of doubt with respect to
      clause (e) above, the aggregate amount of Unrestricted Subsidiary Investments
      with respect to any Unrestricted Subsidiary is determined for each Unrestricted
      Subsidiary Investment for the period commencing on the Initial Closing Date
      through the date of such Unrestricted Subsidiary Investment and is compared
      to
      the net book value of the assets of such Unrestricted Subsidiary as of such
      date
      of determination.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    12.9.  Limitations
      on Restrictive Agreements.

     

    The
      Issuer will not, and will not cause or permit any Subsidiary to, enter into,
      or
      permit to exist, any agreement with any Person which prohibits or limits the
      ability of the Issuer or such Subsidiary, as the case may be, to (a) pay
      dividends or make other distributions or prepay any Debt owed to the Issuer
      and/or any Subsidiary, (b) make loans or advances to the Issuer and/or any
      Subsidiary, (c) transfer any of its Properties to the Issuer and/or any
      Subsidiary or (d) create, incur, assume or suffer to exist any Lien upon any
      of
      its 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 Initial Closing Date contained in this Agreement, the Senior Bank Documents
      and agreements governing Debt outstanding on the Initial Closing Date and listed
      on Schedule
      12.1
      attached
      hereto and, if such Debt is renewed, extended or refinanced, restrictions in
      the
      agreements governing the renewed, extended or refinanced Debt (and successive
      renewals, extensions and refinancings thereof) if such restrictions are no
      more
      restrictive in any material respect than those contained in the agreements
      governing the Debt being renewed, extended or refinanced.

     

    12.10.  Accounting
      Change.

     

    The
      Issuer will not make or permit any change in financial accounting policies
      or
      financial reporting practices, except as required by GAAP or regulations of
      the
      Commission, if applicable

     

    12.11.  Modification
      of Senior Bank Agreement and Management Agreement.

     

    The
      Issuer will not, and will not permit any of the Subsidiaries to
      amend,
      supplement, modify or waive any term of (a) the Senior Bank Documents (or the
      documents relating to any Permitted Refinancing thereof) unless such amendment,
      supplement, modification or waiver thereof is permitted by Section 3 of the
      Subordination Agreement
      or (b)
      the Management Agreement without the prior written consent of the Required
      Holders.

     

    12.12.  Management
      Fees, Management Company Expenses and Aircraft Acquisition
      Fees.

     

    The
      Issuer will not, and will not permit any Subsidiary to pay any Management Fees,
      Issuer Administrative Expenses or aircraft acquisition fees; provided however
      that so long as both (a) payment of the Notes is not blocked pursuant to the
      terms of the Subordination Agreement and (b) the Issuer is in compliance with
      the financial covenants set forth in Section 13
      the
      Issuer may pay (i) the JMC Management Fee, (ii) Re-Sale Fees, (iii) Aircraft
      Acquisition Fees and (iv) Issuer Administrative Expenses; provided however
      that
      notwithstanding the fact payment of such fees and expenses may not be permitted
      by clause (a) or (b) above, the Issuer may pay (A) the JMC Management Fee,
      Aircraft Acquisition Fees and Re-Sale Fees to the extent that the aggregate
      amount of all such fees paid during any Fiscal Quarter does not exceed $750,000
      and (B) Issuer Administrative Expenses to the extent that the aggregate amount
      of such expenses does not exceed $500,000 for any two consecutive Fiscal
      Quarters.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	13.  	
              FINANCIAL
                COVENANTS.

            

    

     

    So
      long
      as any of the Notes shall remain outstanding, the Issuer will duly perform
      and
      observe each and all of the covenants and agreements applicable to it as
      hereinafter set forth:

     

    13.1.  Minimum
      Tangible Net Worth.

     

    The
      Issuer will not permit Tangible Net Worth at any time to be less than the sum
      of
      (i) $15,000,000, plus
      (ii)
      50%
      of Net Income for each Fiscal Quarter ending on March 31, 2007 and thereafter,
      without deduction for net losses, plus
      (iii)
      50% of the net proceeds from any sale of equity securities after the date of
      this Agreement to the extent such net proceeds are not used to prepay the Notes
      as permitted by Section 9.2,
      plus
      (iv) 50%
      of the fair value of any equity securities issued by the Issuer after the
      Initial Closing Date in connection with any acquisition permitted hereunder
      or
      by waiver hereto plus
      (v) 100%
      of any Subordinated Debt.

     

    13.2.  EBITDA
      to Interest Ratio. 

     

    The
      Issuer will not permit the ratio of EBITDA to Interest as at the end of any
      Fiscal Quarter and for the period of such Fiscal Quarter to be less than
      1.5:1.0.

     

    13.3.  Recourse
      Funded Debt to Tangible Net Worth. 

     

    The
      Issuer will not permit
      the
      ratio
      of Recourse Funded Debt to Tangible Net Worth at each Fiscal Quarter end to
      exceed 4.25:1.0.

     

    13.4.  Absence
      of Net Loss. 

     

    The
      Issuer will not suffer a consolidated net loss, as measured for the four
      consecutive Fiscal Quarters then ended.

     

    13.5.  Debt
      to Value Ratio. 

     

    The
      Issuer will not permit the
      ratio
      of Maximum Debt to Value as at the last day of each calendar month end to exceed
      the amount set forth opposite such month for “Maximum Debt to Value” on
Schedule
      13.5
      hereto.

     

    13.6.  Effect
      of FASB Staff Position AUG AIR-1, Accounting for Planned Major Maintenance
      Activities. 

     

    All
      calculations made in Sections 13.1,
      13.2,
      13.3,
      13.4
      and
13.5
      and
      referenced definitions used herein shall be adjusted to (i) deduct the amount
      of
      non-refundable maintenance reserves received by the Issuer and recorded as
      income and (ii) add back the payments made from non-refundable maintenance
      reserves and recorded as expense, both such deductions adjusted by the tax
      rate
      applicable to the subject reporting period.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	14.  	
              REMEDIES

            

    

     

    14.1.  Events
      of Default Defined; Acceleration of Maturity.

     

    If
      any
      one or more of the following events (“Events
      of Default”)
      shall
      occur and is continuing (whatever the reason for such Event of Default and
      whether it shall be voluntary or involuntary or be effected by operation of
      law
      or pursuant to any judgment, decree or order of any court or any order, rule
      or
      regulation of any administrative or governmental body), that is to
      say:

     

    (a)  if
      default shall be made in the due and punctual payment of all or any part of
      the
      principal of, or Applicable Premium (if any) or Make-Whole Amount (if any)
      on,
      any Note when and as the same shall become due and payable, whether at the
      stated maturity thereof, by notice of or demand for prepayment, or
      otherwise;

     

    (b)  if
      default shall be made in the due and punctual payment of any interest on any
      Note when and as such interest shall become due and payable and such default
      shall have continued for a period of three Business Days;

     

    (c)  if
      default shall be made in the performance or observance of any covenant,
      agreement or condition contained in Sections 7(a),
      7(b),
      7(c),
      7(i),
      7(j),
      11.3,
      11.5,
      11.8,
      12
      (in its
      entirety) and 13
      (in its
      entirety);

     

    (d)  if
      default shall be made in the performance, satisfaction or observance of any
      other of the covenants, agreements or conditions contained in this Agreement
      or
      any of the other Operative Documents and such default shall have continued
      for a
      period of 10 days after the earlier to occur of (i) a Responsible Officer of
      the
      Issuer obtaining actual knowledge of such default or (ii) the Issuer’s receipt
      of written notice of such default from any holder of Notes;

     

    (e)  if
      the
      Issuer or any of the Subsidiaries (i) voluntarily ceases to conduct its business
      in the ordinary course; (ii) commences any Insolvency Proceeding with respect
      to
      itself; or (iii) takes any action to effectuate or authorize any of the
      foregoing; or;

     

    (f)  (i)
      if
      any involuntary Insolvency Proceeding is commenced or filed against the Issuer
      or any Subsidiary, or any writ, judgment, warrant of attachment, execution
      or
      similar process, is issued or levied against a substantial part of the Issuer’s
      or any of the Subsidiaries’ Properties, and any such proceeding or petition
      shall not be dismissed, or such writ, judgment, warrant of attachment, execution
      or similar process shall not be released, vacated or fully bonded within sixty
      (60) days after commencement, filing or levy; (ii) the Issuer or any of the
      Subsidiaries admits the material allegations of a petition against it in any
      Insolvency Proceeding, or an order for relief (or similar order under non-U.S.
      law) is ordered in any Insolvency Proceeding; or (iii) the Issuer or any of
      the
      Subsidiaries acquiesces in the appointment of a receiver, trustee, custodian,
      conservator, liquidator, mortgagee in possession (or the agent therefor), or
      other similar Person for itself or a substantial portion of its Property or
      business; or

     

    (g)  if
      the
      Issuer or any Subsidiary shall fail beyond any applicable grace period to (i)
      make any payment due on any Debt (other than the Notes) having an aggregate
      principal amount of more than $250,000, or (ii) perform, observe or discharge
      any covenant, condition or obligation in any agreement, document or instrument
      evidencing, securing or relating to such Debt, if the effect of any such failure
      of the character described in this clause (g)
      is to
      cause, or permit any other Person to cause, Debt having an individual principal
      amount in excess of $250,000 or having an aggregate principal amount of $250,000
      or more to become due and payable, or if any such Debt or other obligation
      shall
      become due and payable by its terms and shall not be paid or
      extended;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (h)  if
      a
      final judgment or judgments for the payment of money (exclusive of judgment
      amounts to the extent adequately covered by insurance where the insurer’s
      liability in respect of such judgment has been acknowledged in writing) shall
      be
      rendered against the Issuer or any Subsidiary which judgments are not, within
      30
      days after entry thereof, discharged or stayed pending appeal or otherwise,
      or
      are not discharged within 30 days after the expiration of such
      stay;

     

    (i)  if
      any
      representation or warranty made by or on behalf of the Issuer or any Subsidiary
      in this Agreement or in any of the other Operative Documents or in any
      agreement, document or instrument delivered under or pursuant to any provision
      hereof or thereof shall prove to have been false or incorrect in any material
      respect when made;

     

    (j)  the
      occurrence of a Reportable Event with respect to any Pension Plan; the filing
      of
      a notice of intent to terminate a Pension Plan by the Issuer, any ERISA
      Affiliate or any Subsidiary; the institution of proceedings to terminate a
      Pension Plan by the PBGC or any other Person; the withdrawal in a “complete
      withdrawal” or a “partial withdrawal” as defined in Sections 4203 and 4205,
      respectively, of ERISA by the Issuer, any ERISA Affiliate or any Subsidiary
      from
      any Multi-Employer Plan; or the incurrence of any material increase in the
      contingent liability of the Issuer or any Subsidiary with respect to any
“employee welfare benefit plan” as defined in Section 3(1) of ERISA which covers
      retired employees and their beneficiaries;

     

    (k)  the
      institution by the Issuer, any ERISA Affiliate or any Subsidiary of steps to
      terminate any Pension Plan if, in order to effectuate such termination, the
      Issuer, such ERISA Affiliate or such Subsidiary, as the case may be, would
      be
      required to make a contribution to such Pension Plan, or would incur a liability
      or obligation to such Pension Plan, in excess of $50,000.00; or the institution
      by the PBGC of steps to terminate any Pension Plan; 

     

    (l)  if,
      at
      any time, this Agreement or any of the other Operative Documents shall for
      any
      reason (other than the scheduled termination thereof in accordance with its
      terms) expire, fail to be in full force and effect or be disaffirmed,
      repudiated, cancelled, terminated or declared to be unenforceable, null and
      void; or

     

    (m) loss
      of
      any license, certificate or authorization from any Aircraft Regulatory Authority
      which has resulted in or could reasonably be expected to result in, a Material
      Adverse Effect.

     

    then,
      in
      the case of any Event of Default (other than one of the character described
      in
      subsections (e)
      or
(f)
      of this
      Section 14.1)
      and at
      the option of the Required Holders, exercised by written notice to the Issuer,
      the principal of all Notes shall forthwith become due and payable, together
      with
      interest accrued thereon, without presentment, demand, protest or other notice
      of any kind, all of which are hereby expressly waived, and the Issuer shall
      forthwith upon any such acceleration pay to the holder or holders of all the
      Notes then outstanding (i) the entire principal of and interest accrued on
      the
      Notes and (ii) in addition, to the extent permitted by applicable law, an amount
      equal to the Applicable Premium (determined as of the date of such
      acceleration), as liquidated damages and not as a penalty; provided that, in
      the
      case of an Event of Default of the character described in subsections
(a)
      or
(b)
      of this
      Section 14.1
      and
      irrespective of whether all of the Notes have been declared due and payable
      by
      the Required Holders at the time outstanding, any holder of Notes who or which
      has not consented to any waiver with respect to such Event of Default may,
      at
      the option of such holder, by written notice to the Issuer, declare all Notes
      then held by such holder to be, and such Notes shall thereupon become, forthwith
      due and payable, together with interest accrued thereon, without presentment,
      demand, protest or other notice of any kind, all of which are hereby expressly
      waived, and the Issuer shall forthwith upon any such acceleration to pay to
      such
      holder (i) the entire principal of and interest accrued on such Notes, and
      (ii)
      in addition, to the extent permitted by applicable law, an amount equal to
      the
      Applicable Premium (determined as of the date of such acceleration), as
      liquidated damages and not as a penalty; provided, further, that, in the case
      of
      an Event of Default of the character described in subsections (e)
      or
(f)
      of this
      Section 14.1,
      the
      principal all Notes shall forthwith become due and payable, together with
      interest accrued thereon (including any interest accruing after the commencement
      of any action or proceeding under the federal bankruptcy laws, as now or
      hereafter constituted, or any other applicable domestic or foreign federal
      or
      state bankruptcy, insolvency or other similar law, and any other interest that
      would have accrued but for the commencement of such proceeding, whether or
      not
      any such interest is allowed as an enforceable claim in such proceeding),
      without presentment, demand, protest or other notice of any kind, all of which
      are hereby expressly waived, and the Issuer shall forthwith upon any such
      acceleration pay to the holder or holders of all the Notes then outstanding
      (i)
      the entire principal of and interest accrued on the Notes, and (ii) in addition,
      to the extent permitted by applicable law, an amount equal to the Applicable
      Premium (determined as of the date of such acceleration), as liquidated damages
      and not as a penalty.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Notwithstanding
      the foregoing provisions, at any time after the occurrence of any Event of
      Default and of notice thereof, if any, by any holder or holders of Notes and
      before any judgment, decree or order for payment of the money due has been
      obtained by or on behalf of any holder or holders of the Notes, the Required
      Holders by written notice to the Issuer, may rescind and annul such Event of
      Default and/or notice of such Event of Default and the consequences thereof
      with
      respect to all of the Notes (including any Notes which were accelerated pursuant
      to the first provision in the preceding paragraph by any holder or holders
      on
      account of an Event of Default of the character described in subsection
(a)
      or
(b)
      of this
      Section 14.1)
      if:

     

    (i)  the
      Issuer has paid a sum sufficient to pay

     

    (1)  all
      overdue interest on all Notes at the rate specified in the Notes;

     

    (2)  the
      principal of (and premium, if any, on) any Notes which have become due otherwise
      than by such Event of Default or notice thereof and interest thereon at the
      rate
      specified in such Notes; and

     

    (3)  interest
      on such overdue principal (and premium, if any) and, to the extent that payment
      of such interest is lawful, interest upon overdue interest, all at the rate
      for
      overdue amounts specified in the Notes; and

     

    (ii)  all
      Defaults and Events of Default, other than the non-payment of the principal
      of
      Notes which have become due solely by such acceleration, have been cured or
      waived as provided in Section 17.

     

    No
      such
      rescission shall affect any subsequent default or impair any right consequent
      thereon.

     

    14.2.  Suits
      for Enforcement, etc.

     

    In
      case
      any one or more of the Events of Default specified in Section 14.1
      shall
      have occurred, and irrespective of whether any Notes have become or have been
      declared immediately due and payable under Section 14.1,
      the
      holder of any Note may proceed to protect and enforce its rights either by
      suit
      in equity or by action at law, or both.

     

    14.3.  No
      Election of Remedies.

     

    No
      remedy
      conferred in this Agreement or in any of the other Operative Documents upon
      the
      holder of any Note is intended to be exclusive of an other remedy, and each
      and
      every such remedy shall be cumulative and shall be in addition to every other
      remedy given hereunder or thereunder or now or hereafter existing at law or
      in
      equity or by statute or otherwise.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    14.4.  Remedies
      Not Waived.

     

    No
      course
      of dealing between the Issuer and any of their respective Subsidiaries, on
      the
      one hand, and any holder of any Note, on the other hand, no delay by any such
      holder in exercising any rights hereunder or under any of the other Operative
      Documents shall operate as a waiver of any rights of any such
      holder.

     

    14.5.  Application
      of Payments.

     

    In
      case
      any one or more of the Events of Default specified in Section 14.1
      shall
      have occurred, all amounts to be applied to the prepayment or payment of any
      Notes, shall be applied, after the payment of all related costs and expenses
      incurred by the holders of the Notes (including, without limitation,
      compensation to any and all trustees, liquidators, receivers or similar
      officials and
      reasonable fees, expenses and disbursements of counsel) in such order of
      priority as is determined by the Required Holders of the Notes.

     

    
      	15.  	
              REGISTRATION,
                TRANSFER AND EXCHANGE OF
                SECURITIES.

            

    

     

    The
      Securities issued hereunder shall be issued in registered form. The Issuer
      shall
      keep at its principal executive office (which is now located at the address
      set
      forth at the beginning of this Agreement), registers in which the Issuer shall
      provide for the recordation or registration, as applicable, and transfer of
      each
      Security issued hereunder. The name and address of each holder of the Securities
      shall be recorded in such records. The Issuer shall give to any institutional
      holder of any Security promptly (but in any event within 10 days) following
      request therefor, a complete and correct list of the names and addresses of
      all
      recorded holders of the Securities and the amount and kind of Securities held
      by
      each. Whenever any Security or Securities shall be surrendered for transfer,
      the
      Issuer, at its expense will execute and deliver in exchange therefor a new
      Security or Securities (in such denominations and registered or recorded, as
      applicable, in such name or names as may be requested by the holder of the
      surrendered Security or Securities), in the same aggregate unpaid principal
      amount (in the case of the Notes) or the number of shares of Common Stock (in
      the case of the Warrants), as applicable, as that of the Security or Securities
      so surrendered. The Issuer may treat the Person in whose name any Security
      is
      registered or recorded as the owner of such Security for all purposes. Notes
      shall not be transferred in denominations of less than $5,000,000, provided
      that
      if necessary to enable the registration of transfer by a holder of its entire
      holding of Notes, one Note may be in a denomination of less than $5,000,000.
      The
      Warrants may be transferred in accordance with the terms thereof. In connection
      with the foregoing, the Issuer shall take such other actions reasonably
      requested by a holder of a Security in order to effect such any applicable
      transfer, registration or exchange. Notwithstanding anything herein to the
      contrary, if the original Purchasers shall transfer Notes to any Person or
      Persons (other than an affiliate of such original Purchaser) such that after
      such transfer the original Purchasers own less that 51% of the aggregate
      principal amount of the Notes then outstanding, such transfer shall require
      the
      Issuer’s written consent which consent not to be unreasonably
      withheld.

     

    
      	16.  	
              REPLACEMENT
                OF SECURITIES.

            

    

     

    Upon
      receipt by the Issuer of reasonably satisfactory evidence of the loss, theft,
      destruction or mutilation of any Security and (in the case of loss, theft or
      destruction) of reasonably satisfactory indemnity, and (in the case of
      mutilation) upon surrender of such Security, the Issuer, at its expense, will
      execute and deliver in lieu of such Security a new Security of like tenor and,
      in the case of any new Note, dated so as not to result in any loss of interest.
      A Purchaser’s unsecured agreement to indemnify and/or affidavit and that of any
      other institutional holder shall constitute satisfactory indemnity and/or
      satisfactory evidence of loss, theft or destruction for the purpose of this
      Section 16.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	17.  	
              AMENDMENT
                AND WAIVER.

            

    

     

    (a)  Any
      term
      of this Agreement and, unless explicitly provided otherwise therein, of any
      of
      the other Operative Documents may, with the consent of the Issuer, be amended,
      or compliance therewith may be waived, in writing only, by the Required Holders,
      provided that (i) without the consent of the holders of all of the Notes at
      the
      time outstanding, no such amendment or waiver shall (A) change the amount of
      the
      principal of or any rate of interest on or premium payable with respect to
      any
      of the Notes or change the payment terms of any of the Notes, or, except as
      provided in the Subordination Agreement, subordinate the obligation of the
      Issuer to pay any amount due on the Notes to any other obligation, or (B) change
      the percentage of holders of Notes required to approve any such amendment,
      effectuate any such waiver or accelerate payment of the Notes; and (ii) no
      such
      amendment or waiver shall extend to or affect any obligation not expressly
      amended or waived or impair any right consequent thereon. Executed or true
      and
      correct copies of any amendment, waiver or consent effected pursuant to this
      Section 17
      shall be
      delivered by the Issuer to each holder of Notes forthwith (but in any event
      not
      later than five days) following the effective date thereof.

     

    (b)  The
      Issuer will not, directly or indirectly, request or negotiate for, or offer
      or
      pay any remuneration or grant any security as an inducement for, any proposed
      amendment or waiver of any of the provisions of this Agreement or any of the
      other Operative Documents unless each holder of the Notes (irrespective of
      the
      kind and amount of Notes then owned by it) shall be informed thereof by the
      Issuer and, if such holder is entitled to the benefit of any such provision
      proposed to be amended or waived, shall be afforded the opportunity of
      considering the same, shall be supplied by the Issuer with sufficient
      information to enable it to make an informed decision with respect thereto
      and
      shall be offered and paid such remuneration and granted such security on the
      same terms.

     

    (c)  In
      determining whether the requisite holders of Notes have given any authorization,
      consent or waiver under this Section 17,
      any
      Notes owned by the Issuer or any of its Affiliates shall be disregarded and
      deemed not to be outstanding.

     

    
      	18.  	
              METHOD
                OF PAYMENT OF SECURITIES.

            

    

     

    Irrespective
      of any provision hereof or of the other Operative Documents to the contrary,
      so
      long as any Purchaser (or its nominee) or any other institutional holder shall
      hold any Security, the Issuer will make all payments thereon to such Purchaser
      or such other institutional holder by the method and at the address for such
      purpose specified in Schedule
      I
      attached
      hereto or by such other method or at such other address as such Purchaser or
      such institutional holder may designate in writing, without requiring any
      presentation or surrender of such Security, except that if any Security shall
      be
      paid, prepaid and/or repurchased in full, such Security shall be surrendered
      to
      the Issuer, promptly following such payment, prepayment or repurchase and
      cancelled and, in the case of a Note, if transferred all prior payments of
      principal and interest will be noted thereon. All such payments shall be made
      by
      the Issuer, without any right of setoff or counterclaim in respect
      thereof.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	19.  	
              EXPENSES;
                INDEMNITY.

            

    

     

    Whether
      or not the transactions contemplated by this Agreement or any of the other
      Operative Documents shall be consummated, the Issuer will pay or cause to be
      paid (or reimbursed, as the case may be) and will defend, indemnify and hold
      each Purchaser (and each other holder of any of the Securities) and each of
      such
      Purchaser’s (and such other holder’s) directors, officers, employees, agents,
      advisors and Affiliates (each, an “Indemnitee”)
      harmless in respect of all costs, losses, expenses (including, without
      limitation, the reasonable fees, costs, expenses and disbursements of counsel)
      and damages (collectively, “Indemnified
      Costs”)
      incurred by or asserted against any Indemnitee in connection with the
      negotiation, execution, delivery, performance and/or enforcement of this
      Agreement or any of the other Operative Documents (including, without
      limitation, so-called work-outs and/or restructurings and all amendments,
      waivers and consents hereunder and thereunder, whether or not effected) and/or
      the consummation of the transactions contemplated hereby and thereby or which
      may otherwise be related in any way to this Agreement or any other Operative
      Documents or such transactions or such Indemnitee’s relationship to the Issuer
      or any of its Affiliates or any of their respective properties and assets,
      including, without limitation, any and all Indemnified Costs related in any
      way
      to the requirements of any Environmental Laws (as the same may be amended,
      modified or supplemented from time to time) or to any environmental
      investigation, assessment, site monitoring, containment, clean up, remediation,
      removal, restoration, reporting and sampling, whether or not consented to,
      or
      requested or approved by, Indemnitee, and whether or not such Indemnified Cost
      is attributable to an event or condition originating from any properties or
      assets of the Issuer or any of the Subsidiaries or any other properties
      previously or hereafter owned, leased, occupied or operated by the Issuer or
      any
      of its Subsidiaries. Notwithstanding the foregoing, the Issuer shall not have
      any obligation to an Indemnitee under this Section 19
      with
      respect to any Indemnified Cost which is finally determined by a court of
      competent jurisdiction to have arisen directly as a result of the gross
      negligence, willful misconduct or bad faith of such Indemnitee.

     

    
      	20.  	
              TAXES.

            

    

     

    The
      Issuer will pay all taxes and fees (including interest and penalties),
      including, without limitation, all recording and filing fees, issuance and
      documentary stamp and similar taxes, which may be payable in respect of the
      execution and delivery of this Agreement and each of the other Operative
      Documents.

     

    
      	21.  	
              COMMUNICATIONS.

            

    

     

    All
      communications provided for herein and, unless explicitly provided otherwise
      therein, in any of the other Operative Documents shall be in writing and sent
      (a) by telecopy if the sender on the same day sends a confirming copy of such
      communication by messenger or a recognized overnight delivery service (charges
      prepaid), (b) or by email, if available, (c) by a recognized overnight delivery
      service (charges prepaid), or (d) by messenger. Any such communication must
      be
      sent (i) if to the Issuer at:

     

    1440
      Chapin Avenue

    Suite
      310

    Burlingame,
      CA 94010

    Attention:
      Toni Perazzo

    Telecopy:
      (650) 696-3929

    

    or
      at
      such other address (or telecopy number) as may be furnished in writing by the
      Issuer to each holder of any Security and (ii) if to a Purchaser, at its address
      for such purpose set forth in Schedule
      I
      attached
      hereto and if to any other holder of any Security, at the address of such holder
      (with a copy to the Persons so designated) as it appears on the applicable
      register maintained pursuant to Section 15,
      or at
      such other address as may be furnished in writing by a Purchaser or by any
      other
      holder to the Issuer. Communications under this Section 21
      shall be
      deemed given only when actually received.

     

    
      	22.  	
              SURVIVAL
                OF AGREEMENTS,
                REPRESENTATIONS AND WARRANTIES,
                ETC.

            

    

     

    All
      agreements, representations and warranties contained herein and in the other
      Operative Documents shall be deemed to have been relied upon by the Purchasers
      and shall survive the execution and delivery of this Agreement and each of
      the
      other Operative Documents, the issue, sale and delivery of the Securities and
      payment therefor and any disposition of the Securities by any Purchaser, whether
      or not any investigation at any time is made by such Purchaser or on its behalf.
      All indemnification provisions, including, without limitation, those contained
      in Sections 19
      and
20
      shall
      survive the date upon which none of the Securities shall be outstanding and
      the
      termination of this Agreement and each of the other Operative
      Documents.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	23.  	
              SUCCESSORS
                AND ASSIGNS; RIGHTS OF OTHER
                HOLDERS.

            

    

     

    This
      Agreement and, unless explicitly provided otherwise therein, each of the other
      Operative Documents shall bind and inure to the benefit of and be enforceable
      by
      the Issuer and each Purchaser, successors to the Issuer and each Purchaser’s
      successors and assigns, and, in addition, shall inure to the benefit of and
      be
      enforceable by each holder from time to time of any Security who, upon
      acceptance thereof, shall, without further action, be entitled to enforce the
      applicable provisions and enjoy the applicable benefits hereof and thereof.
      The
      Issuer may not assign any of their respective rights or obligations hereunder
      or
      under and of the other Operative Documents without the written consent of all
      of
      the holders of the Securities then outstanding.

     

    
      	24.  	
              PURCHASE
                FOR INVESTMENT.

            

    

     

    Each
      Purchaser represents and warrants (i) that it has been furnished with all
      information that it has requested for the purpose of evaluating such Purchaser’s
      proposed acquisition of the Securities to be issued to such Purchaser pursuant
      hereto and (ii) that such Purchaser will acquire such Securities for its own
      account for investment and not for distribution in any manner that would violate
      applicable securities laws, but without prejudice to such Purchaser’s rights to
      dispose of such Securities or a portion thereof to a transferee or transferees,
      in accordance with such laws if at some future time such Purchaser deems it
      advisable to do so. The acquisition of such Securities by each Purchaser at
      the
      Closing shall constitute such Purchaser’s confirmation of the foregoing
      representations and warranties. Each Purchaser understands that such Securities
      are being sold to such Purchaser in a transaction which is exempt from the
      registration requirements of the Securities Act, and that, in making the
      representations and warranties contained in Section 6.20,
      the
      Issuer are relying, to the extent applicable, upon such Purchaser’s
      representations and warranties contained herein.

     

    
      	25.  	
              GOVERNING
                LAW; JURISDICTION; WAIVER OF JURY
                TRIAL.

            

    

     

    This
      Agreement and, unless explicitly provided otherwise therein, each of the other
      Operative Documents, including the validity hereof and thereof and the rights
      and obligations of the parties hereunder and thereunder, and all amendments
      and
      supplements hereof and thereof and all waivers and consents hereunder and
      thereunder, shall be construed in accordance with and governed by the domestic
      substantive laws of the State of New York without giving effect to any choice
      of
      law or conflicts of law provision or rule that would cause the application
      of
      the domestic substantive laws of any other jurisdiction. The Issuer, to the
      extent that it may lawfully do so, hereby consents to service of process, and
      to
      be sued, in the State of New York and consents to the jurisdiction of the courts
      of the State of New York and the United States District Court for the Southern
      District of New York, as well as to the jurisdiction of all courts to which
      an
      appeal may be taken from such courts, for the purpose of any suit, action or
      other proceeding arising out of any of its obligations hereunder or thereunder
      or with respect to the transactions contemplated hereby or thereby, and
      expressly waives any and all objections it may have as to venue in any such
      courts. The Issuer further agrees that a summons and complaint commencing an
      action or proceeding in any of such courts shall be properly served and shall
      confer personal jurisdiction if served personally or by certified mail to it
      at
      its address referred to in Section 21
      or as
      otherwise provided under the laws of the State of New York. Notwithstanding
      the
      foregoing, the Issuer agrees that nothing contained in this Section 25
      shall
      preclude the institution of any such suit, action or other proceeding in any
      jurisdiction other than the State of New York. THE ISSUER IRREVOCABLY WAIVES
      ALL
      RIGHT TO A TRIAL BY JURY IN ANY SUIT, ACTION OR OTHER PROCEEDING INSTITUTED
      BY
      OR AGAINST IT IN RESPECT OF ITS OBLIGATIONS HEREUNDER OR UNDER ANY OTHER
      OPERATIVE DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
      THEREBY.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	26.  	
              CONFIDENTIAL
                INFORMATION.

            

    

     

    For
      the
      purposes of this Section 26,
      “Confidential Information” means information delivered to any Purchaser by or on
      behalf of the Issuer or any Subsidiary in connection with the transactions
      contemplated by or otherwise pursuant to this Agreement that is proprietary
      in
      nature, provided
      that
      such term does not include information that (a) was publicly known or otherwise
      known to such Purchaser prior to the time of such disclosure, (b) subsequently
      becomes publicly known through no act or omission by such Purchaser or any
      person acting on such Purchaser’s behalf, (c) otherwise becomes known to such
      Purchaser other than through disclosure by the Issuer or any Subsidiary or
      (d)
      constitutes financial statements delivered to such Purchaser under Section
      7
      that are
      otherwise publicly available. Each Purchaser will, and will cause any
      representative appointed pursuant to Section 10
      to,
      maintain the confidentiality of such Confidential Information in accordance
      with
      procedures adopted by such Purchaser in good faith to protect confidential
      information of third parties delivered to such Purchaser, provided
      that
      such Purchaser may deliver or disclose Confidential Information on a need to
      know basis to (i) its directors, officers, trustees, partners, employees,
      agents, attorneys, professional consultants, portfolio management services,
      funding sources investors, pledges, rating agencies and affiliates, (ii) its
      financial advisors and other professional advisors who agree to hold
      confidential the Confidential Information substantially in accordance with
      the
      terms of this Section 26,
      (iii)
      any other holder of any Note, (iv) any institutional investor to which it sells
      or offers to sell such Note or any part thereof or any participation therein,
      subject to a reasonable confidentiality arrangement regarding any non-public
      confidential information thereby disclosed, (vi) any federal or state regulatory
      authority having jurisdiction over such Purchaser, or (vii) any other Person
      to
      which such delivery or disclosure may be necessary or appropriate (w) to effect
      compliance with any law, rule, regulation or order applicable to such Purchaser,
      (x) in response to any subpoena or other legal process, (y) in connection with
      any litigation to which such Purchaser is a party or (z) if an Event of Default
      has occurred and is continuing, to the extent such Purchaser may reasonably
      determine such delivery and disclosure to be necessary or appropriate in the
      enforcement or for the protection of the rights and remedies under such
      Purchaser’s Notes and this Agreement. In the event that a holder of a Note or
      Warrant receives non-public information regarding the Issuer pursuant to the
      provisions of this Agreement, including, without limitation Sections 8 or 11
      hereunder, such holder acknowledges that federal and applicable state securities
      laws may require it to abstain from public sales or purchases in the Issuer’s
      securities, including the Notes and Warrants, until such time as such
      information is disclosed to the public by the Issuer. Each holder of a Note,
      by
      its acceptance of a Note, will be deemed to have agreed to be bound by and
      to be
      entitled to the benefits of this Section 26
      as
      though it were a party to this Agreement.

     

    
      	27.  	
              MISCELLANEOUS.

            

    

     

    The
      headings in this Agreement and in each of the other Operative Documents are
      for
      purposes of reference only and shall not limit or otherwise affect the meaning
      hereof or thereof. This Agreement (together with the other Operative Documents)
      embodies the entire agreement and understanding between each of the Purchasers
      and the Issuer and supersedes all prior agreements and understandings relating
      to the subject matter hereof. Each covenant contained herein and in each of
      the
      other Operative Documents shall be construed (absent an express provision to
      the
      contrary) as being independent of each other covenant contained herein and
      therein, so that compliance with any one covenant shall not (absent such an
      express contrary provision) be deemed to excuse compliance with any other
      covenant. If any provision in this Agreement or in any
      of
      the other Operative Documents refers to any action taken or to be taken by
      any
      Person, or which such Person is prohibited from taking, such provision shall
      be
      applicable, whether such action is taken directly or indirectly by such Person.
      In case any provision in this Agreement or any of the other Operative Documents
      shall be invalid, illegal or unenforceable, the validity, legality and
      enforceability of the remaining provisions shall not in any way be affected
      or
      impaired thereby. This Agreement and, unless explicitly provided otherwise
      therein, each of the other Operative Documents, may be executed in any
      number of counterparts and by the parties hereto or thereto, as the case may
      be,
      on separate counterparts but all such counterparts shall together constitute
      but
      one and the same instrument.

     

    

     

    [Remainder
      of page intentionally left blank. Next page is a signature
      page.]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    If
      you
      are in agreement with the foregoing,
      please
      sign the form of agreement on the accompanying counterparts of this Agreement,
      whereupon it shall become a binding agreement under seal between each Purchaser
      and the Issuer. Please then return one of such counterparts to the
      Issuer.

     

    Very
      truly yours,

    

    AEROCENTURY
      CORP.

    

    

    By:       

    Name:

    Title:

    

    

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    The
      foregoing Agreement is hereby

    agreed
      to
      as of the date thereof.

    

    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

    

    

     

    
      
        
          CTDOCS/1687364.5 

           

        

        
        

      

      
        
        

        
          

        

      

      
        
        

        
        

      

    

    SCHEDULE
      I

     

     

    INFORMATION
      AS TO PURCHASERS

     

    

    
      	
              Purchaser
                Name

            	
              SATELLITE
                FUND II, L.P.

            
	
              Name
                in which to register Securities

            	
              SATELLITE
                FUND II, L.P.

            
	
              Commitment
                Percentage for Purchases

            	
              55.60105%

            
	
              Note
                registration number; Initial Closing Date Note Face Amount; purchase
                price

            	
              R-1;
                $5,560,105; $5,226,498.70

            
	
              Warrant
                registration number; number of warrants

            	
              WR-1;
                95,341 Warrants

            
	
              Payment
                on account of Note

               

              Method

               

              Account
                information

            	
               

               

              Federal
                Funds Wire Transfer

               

              [omitted
                from filing]

            
	
              Accompanying
                information

            	
              Name
                of Issuer:  AEROCENTURY
                CORP.

               

              Description
                of Security: 16%
                Senior Subordinated Notes due    December
                30, 2011

               

              Description
                of Securities: Warrants
                to purchase Common Stock

               

              If
                applicable, due date and application (as among principal, premium
                and
                interest) of the payment being
                made.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    
      	
              Purchaser
                Name

            	
              SATELLITE
                FUND II, L.P.

            
	
              Address
                / Fax # for all notices

            	
              Satellite
                Fund II, L.P.

              c/o
                Satellite Asset Management, L.P.

              623
                Fifth Avenue, 19th Floor

              New
                York, New York 10022

              Attention:
                Beau Lescott

              Phone:
                212-xxx-xxxx

              Fax:
                212-xxx-xxxx

              Email:
                xxx

               

              And

               

              Satellite
                Fund II, L.P.

              c/o
                Satellite Asset Management, L.P.

              623
                Fifth Avenue, 19th Floor

              New
                York, New York 10022

              Attention:
                Heather Campbell

              Phone:
                212-xxx-xxxx

              Email:
                xxx

              And

               

              Satellite
                Fund II, L.P.

              c/o
                Satellite Asset Management, L.P.

              623
                Fifth Avenue, 19th Floor

              New
                York, New York 10022

              Attention:
                Beth Weiner

              Phone:
                212-xxx-xxxx

              Email:
                xxx

               

              with
                a copy (which shall not constitute notice) to:

               

              Bingham
                McCutchen LLP

              One
                State Street

              Hartford,
                CT 06103

              Attention:
                F. Mark Fucci, Esq.

              Fax:
                (860) 240-2800

            
	
              Tax
                identification number

            	
              13-4065355

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              Purchaser
                Name

            	
              SATELLITE
                FUND IV, L.P.

            
	
              Name
                in which to register Securities

            	
              SATELLITE
                FUND IV, L.P.

            
	
              Commitment
                Percentage for Purchases

            	
              9.49989%

            
	
              Note
                registration number; Initial Closing Date Note Face Amount; purchase
                price

            	
              R-2;
                $949,989; $892,989.66

            
	
              Warrant
                registration number; number of warrants

            	
              WR-2;
                16,290 Warrants

            
	
              Payment
                on account of Note

               

              Method

               

              Account
                information

            	
               

               

              Federal
                Funds Wire Transfer

               

              [omitted
                from filing]

            
	
              Accompanying
                information

            	
              Name
                of Issuer:  AEROCENTURY
                CORP.

               

              Description
                of Security: 16%
                Senior Subordinated Notes due    December
                30, 2011

               

              Description
                of Securities: Warrants
                to purchase Common Stock

               

              If
                applicable, due date and application (as among principal, premium
                and
                interest) of the payment being
                made.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              Purchaser
                Name

            	
              SATELLITE
                FUND IV, L.P.

            
	
              Address
                / Fax # for all notices

            	
              Satellite
                Fund II, L.P.

              c/o
                Satellite Asset Management, L.P.

              623
                Fifth Avenue, 19th Floor

              New
                York, New York 10022

              Attention:
                Beau Lescott

              Phone:
                xxx-xxx-xxxx

              Fax:
                xxx-xxx-xxxx

              Email:
                xxxxxxxxxx

               

              And

               

              Satellite
                Fund II, L.P.

              c/o
                Satellite Asset Management, L.P.

              623
                Fifth Avenue, 19th Floor

              New
                York, New York 10022

              Attention:
                Heather Campbell

              Phone:
                212-xxx-xxxx

              Email:
                xxxxxxxxxxxxxxx

              And

               

              Satellite
                Fund II, L.P.

              c/o
                Satellite Asset Management, L.P.

              623
                Fifth Avenue, 19th Floor

              New
                York, New York 10022

              Attention:
                Beth Weiner

              Phone:
                212-xxx-xxxx

              Email:
                xxxxxxxxxxxxxxxxxx

               

              with
                a copy (which shall not constitute notice) to:

               

              Bingham
                McCutchen LLP

              One
                State Street

              Hartford,
                CT 06103

              Attention:
                F. Mark Fucci, Esq.

              Fax:
                (xxx)-xxx-xxxx

            
	
              Tax
                identification number

            	
              13-4120118

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              Purchaser
                Name

            	
              THE
                APOGEE GROUP, LLC

            
	
              Name
                in which to register Securities

            	
              THE
                APOGEE GROUP, LLC

            
	
              Commitment
                Percentage for Purchases

            	
              24.38515%

            
	
              Note
                registration number; Initial Closing Date Note Face Amount; purchase
                price

            	
              R-3;
                $2,438,515; $2,292,204.10

            
	
              Warrant
                registration number; number of warrants

            	
              WR-3;
                41,814 Warrants

            
	
              Payment
                on account of Note

               

              Method

               

              Account
                information

            	
               

               

              Federal
                Funds Wire Transfer

               

              [Omitted
                from Filing]

            
	
              Accompanying
                information

            	
              Name
                of Issuer:  AEROCENTURY
                CORP.

               

              Description
                of Security: 16%
                Senior Subordinated Notes due    December
                30, 2011

               

              Description
                of Securities: Warrants
                to purchase Common Stock

               

              If
                applicable, due date and application (as among principal, premium
                and
                interest) of the payment being
                made.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              Purchaser
                Name

            	
              THE
                APOGEE GROUP, LLC

            
	
              Address
                / Fax # for all notices

            	
              The
                Apogee Group, LLC

              c/o
                Satellite Asset Management, L.P.

              623
                Fifth Avenue, 19th Floor

              New
                York, New York 10022

              Attention:
                Beau Lescott

              Phone:
                212-xxx-xxxx

              Fax:
                212-xxx-xxxx

              Email:
                xxxxxxxxxxxxxxxxxx

               

              And

               

              The
                Apogee Group, LLC

              c/o
                Satellite Asset Management, L.P.

              623
                Fifth Avenue, 19th Floor

              New
                York, New York 10022

              Attention:
                Heather Campbell

              Phone:
                212-xxx-xxxx

              Email:
                xxxxxxxxxxxxxxxxxxxxxxxx

               

              And

               

              The
                Apogee Group, LLC

              c/o
                Satellite Asset Management, L.P.

              623
                Fifth Avenue, 19th Floor

              New
                York, New York 10022

              Attention:
                Beth Weiner

              Phone:
                212-xxx-xxxx

              Email:
                xxxxxxxxxxxxxxxxxxxxxxxx

               

              with
                a copy (which shall not constitute notice) to:

               

              Bingham
                McCutchen LLP

              One
                State Street

              Hartford,
                CT 06103

              Attention:
                F. Mark Fucci, Esq.

              Fax:
                (860) 240-2800

            
	
              Tax
                identification number

            	
              02-0794448

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              Purchaser
                Name

            	
              SATELLITE
                FUND V, LLC 

            
	
              Name
                in which to register Securities

            	
              SATELLITE
                FUND V, LLC 

            
	
              Commitment
                Percentage for Purchases

            	
              10.51391%

            
	
              Note
                registration number; Initial Closing Date Note Face Amount; purchase
                price
                

            	
              R-4;
                $1,051,391; $988,307.54

            
	
              Warrant
                registration number; number of warrants

            	
              WR-4;
                18,028 Warrants

            
	
              Payment
                on account of Note

               

              Method

               

              Account
                information

            	
               

               

              Federal
                Funds Wire Transfer

               

              [omitted
                from filing]

            
	
              Accompanying
                information

            	
              Name
                of Issuer:  AEROCENTURY
                CORP.

               

              Description
                of Security: 16%
                Senior Subordinated Notes due    December
                30, 2011

               

              Description
                of Securities: Warrants
                to purchase Common Stock

               

              If
                applicable, due date and application (as among principal, premium
                and
                interest) of the payment being
                made.

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              Purchaser
                Name

            	
              SATELLITE
                FUND V, LLC 

            
	
              Address
                / Fax # for all notices

            	
              Satellite
                Fund V, LLC

              c/o
                Satellite Asset Management, L.P.

              623
                Fifth Avenue, 19th Floor

              New
                York, New York 10022

              Attention:
                Beau Lescott

              Phone:
                212-xxx-xxxx

              Fax:
                212-xxx-xxxxx

              Email:
                xxxxxxxxxxxxxxxxxxxxxxxx

               

              And

               

              Satellite
                Fund V, LLC

              c/o
                Satellite Asset Management, L.P.

              623
                Fifth Avenue, 19th Floor

              New
                York, New York 10022

              Attention:
                Heather Campbell

              Phone:
                212-xxx-xxxx

              mail:
                xxxxxxxxxxxxxxxxxxxxxxxxxxxx

               

              And

               

              Satellite
                Fund V, LLC

              c/o
                Satellite Asset Management, L.P.

              623
                Fifth Avenue, 19th Floor

              New
                York, New York 10022

              Attention:
                Beth Weiner

              Phone:
                212-XXX-XXXX

              Email:
                XXXXXXXXXXXXXXXXXXX

               

              with
                a copy (which shall not constitute notice) to:

               

              Bingham
                McCutchen LLP

              One
                State Street

              Hartford,
                CT 06103

              Attention:
                F. Mark Fucci, Esq.

              Fax:
                (860) 240-2800

            
	
              Tax
                identification number

            	
              02-0794445

            

    

    

     

    [DISCLOSURE
      SCHEDULES OMITTED FROM
      FILING]

     

    SCHEDULE
      13.5

     

    Maximum
      Debt to Value Ratios and Maximum Balances

     

    

     

    
      	
               

               

              Quarter
                End

            	
              Maximum
                Outstanding Balance

            	
              Maximum
                Debt

              to
                Value Ratio

            
	
              3/30/2007

            	
              28,000,000

            	
              80.00%

            
	
              4/30/2007

            	
              28,000,000

            	
              80.00%

            
	
              5/30/2007

            	
              28,000,000

            	
              80.00%

            
	
              6/30/2007

            	
              28,000,000

            	
              80.00%

            
	
              7/30/2007

            	
              28,000,000

            	
              80.00%

            
	
              8/30/2007

            	
              28,000,000

            	
              80.00%

            
	
              9/30/2007

            	
              28,000,000

            	
              80.00%

            
	
              10/30/2007

            	
              28,000,000

            	
              80.00%

            
	
              11/30/2007

            	
              28,000,000

            	
              80.00%

            
	
              12/30/2007

            	
              28,000,000

            	
              80.00%

            
	
              1/30/2008

            	
              28,000,000

            	
              80.00%

            
	
              2/29/2008

            	
              28,000,000

            	
              80.00%

            
	
              3/30/2008

            	
              28,000,000

            	
              80.00%

            
	
              4/30/2008

            	
              28,000,000

            	
              80.00%

            
	
              5/30/2008

            	
              28,000,000

            	
              80.00%

            
	
              6/30/2008

            	
              28,000,000

            	
              80.00%

            
	
              7/30/2008

            	
              28,000,000

            	
              80.00%

            
	
              8/30/2008

            	
              28,000,000

            	
              80.00%

            
	
              9/30/2008

            	
              28,000,000

            	
              80.00%

            
	
              10/30/2008

            	
              28,000,000

            	
              80.00%

            
	
              11/30/2008

            	
              28,000,000

            	
              80.00%

            
	
              12/30/2008

            	
              28,000,000

            	
              80.00%

            
	
              1/30/2009

            	
              28,000,000

            	
              80.00%

            
	
              2/28/2009

            	
              28,000,000

            	
              80.00%

            
	
              3/30/2009

            	
              28,000,000

            	
              80.00%

            
	
              4/30/2009

            	
              27,555,000

            	
              79.59%

            
	
              5/30/2009

            	
              26,433,000

            	
              79.65%

            
	
              6/30/2009

            	
              25,480,000

            	
              79.22%

            
	
              7/30/2009

            	
              24,422,000

            	
              78.95%

            
	
              8/30/2009

            	
              23,396,000

            	
              78.60%

            
	
              9/30/2009

            	
              22,334,000

            	
              78.29%

            
	
              10/30/2009

            	
              20,985,000

            	
              78.13%

            
	
              11/30/2009

            	
              20,006,000

            	
              77.58%

            
	
              12/30/2009

            	
              18,924,000

            	
              77.31%

            
	
              1/30/2010

            	
              17,974,000

            	
              76.90%

            
	
              2/28/2010

            	
              17,005,000

            	
              76.58%

            
	
              3/30/2010

            	
              16,017,000

            	
              76.26%

            
	
              4/30/2010

            	
              14,944,000

            	
              75.98%

            
	
              5/30/2010

            	
              13,887,000

            	
              75.64%

            
	
              6/30/2010

            	
              12,829,000

            	
              75.31%

            
	
              7/30/2010

            	
              11,786,000

            	
              74.97%

            
	
              8/30/2010

            	
              10,742,000

            	
              74.64%

            
	
              9/30/2010

            	
              9,713,000

            	
              74.30%

            
	
              10/30/2010

            	
              7,649,000

            	
              74.62%

            
	
              11/30/2010

            	
              4,818,000

            	
              74.80%

            
	
              12/30/2010

            	
              4,687,000

            	
              72.75%

            
	
              1/30/2011

            	
              4,687,000

            	
              72.26%

            
	
              2/28/2011

            	
              4,123,000

            	
              72.37%

            
	
              3/30/2011

            	
              3,087,000

            	
              72.35%

            
	
              4/30/2011

            	
              3,087,000

            	
              69.88%

            
	
              5/30/2011

            	
              3,087,000

            	
              69.77%

            
	
              6/30/2011

            	
              3,037,000

            	
              70.70%

            
	
              7/30/2011

            	
              1,896,000

            	
              71.11%

            
	
              8/30/2011

            	
              1,896,000

            	
              69.89%

            
	
              9/30/2011

            	
              1,791,000

            	
              67.74%

            
	
              10/30/2011

            	
              1,254,000

            	
              59.71%

            
	
              11/30/2011

            	
              1,254,000

            	
              66.77%

            
	
              12/30/2011

            	
              0

            	
              66.97%

            

    

    

     

    

     

    

     

    EXHIBIT
      2(a)

     

    [FORM
      OF WARRANT]

     

    

     

    

     

    EXHIBIT
      2(b)

     

     

    [FORM
      OF NOTE]

     

    THIS
      INSTRUMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE
      IN
      THE MANNER AND TO THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND
      INTERCREDITOR AGREEMENT (THE “SUBORDINATION AGREEMENT”) DATED AS OF APRIL 17,
      2007 AMONG SATELLITE FUND II, L.P., SATELLITE FUND IV, L.P., SATELLITE FUND
      V,
      LLC AND THE APOGEE GROUP, LLC AND NATIONAL CITY BANK (TOGETHER WITH ITS
      SUCCESSORS AND ASSIGNS, THE “SENIOR AGENT”), TO THE INDEBTEDNESS (INCLUDING
      INTEREST) OWED BY AEROCENTURY CORP. (THE “COMPANY”) PURSUANT TO THAT CERTAIN
      SECOND AMENDED AND RESTATED CREDIT AGREEMENT (THE “CREDIT AGREEMENT”) DATED AS
      OF APRIL 17, 2007 AMONG THE COMPANY, THE SENIOR AGENT AND THE LENDERS FROM
      TIME
      TO TIME PARTY THERETO, AND THE OTHER FINANCING DOCUMENTS (AS DEFINED IN THE
      CREDIT AGREEMENT) AS SUCH CREDIT
      AGREEMENT AND OTHER FINANCING DOCUMENTS MAY BE AMENDED, RESTATED, SUPPLEMENTED
      OR OTHERWISE MODIFIED FROM TIME TO TIME AND TO INDEBTEDNESS REFINANCING THE
      INDEBTEDNESS THEREUNDER AS CONTEMPLATED BY THE SUBORDINATION AGREEMENT; AND
      EACH
      HOLDER OF THIS INSTRUMENT, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO
      BE
      BOUND BY THE PROVISIONS OF THE SUBORDINATION AGREEMENT.

     

    AEROCENTURY
      CORP.

    

     

    16%
      Senior Subordinated Note due December 30, 2011

     

    No.
      R-[Date]

     

    $____________

     

    AEROCENTURY
      CORP. (together
      with its respective successors, the “Issuer”),
      a
      Delaware corporation, for value received, hereby promises to pay to ________________,
      or
      registered assigns, the principal amount of ___________
      DOLLARS ($________)
      on
      December 30, 2011, with interest (computed on the basis of the actual number
      of
      days elapsed over a 360-day year) on the unpaid balance of such principal amount
      at the rate of 16% per annum, from the date hereof, payable monthly on the
      last
      day of each month, commencing on May 31, 2007 (each such date, an “Interest
      Payment Date”)
      until
      the principal hereof shall have become due and payable (whether at maturity
      or
      at a date fixed for prepayment or by declaration or otherwise), and with
      interest on any overdue principal (including any overdue prepayment of
      principal) and (to the extent permitted by applicable law) premium, if any,
      and
      (to the extent permitted by applicable law) on any overdue installment of
      interest, at the rate of 18.00% per annum (the “Default
      Rate’)
      until
      paid, payable monthly as aforesaid or, at the option of the holder hereof,
      on
      demand and, upon acceleration of this Note, together with the Applicable Premium
      of Make-Whole Amount specified in the Securities Purchase Agreement hereinafter
      referred to, as liquidated damages and not as a penalty; provided that in no
      event shall the amount payable as interest on this Note exceed the highest
      lawful rate permissible under any law applicable hereto. Payment of principal,
      premium, if any, and interest hereon shall be made in lawful money of the United
      States of America by the method and at the address for such purpose specified
      in
      the Securities Purchase Agreement hereinafter referred to, and such payments
      shall be overdue for purposes hereof if not made on the originally scheduled
      date of payment therefor, without giving effect to any applicable grace period.
      In case an Event of Default (as defined in the Securities Purchase Agreement)
      shall occur and be continuing, the unpaid balance of the principal of this
      Note
      shall bear interest at the Default Rate and may be declared and become due
      and
      payable in the manner and with the effect provided in the Securities Purchase
      Agreement.

     

    This
      Note
      is one of the Issuer’s 16% Senior Subordinated Notes due December 30, 2011,
      limited to $28,000,000 aggregate principal amount, issued pursuant to that
      certain Securities Purchase Agreement dated April 17, 2007 (as amended from
      time
      to time, the “Securities
      Purchase Agreement”),
      and
      the holder thereof is entitled to the benefits of the Securities Purchase
      Agreement and the other Operative Documents referred to in the Securities
      Purchase Agreement and may enforce the agreements contained therein and exercise
      the remedies provided for thereby or otherwise available in respect thereof,
      all
      in accordance with the terms thereof. 

     

    This
      Note
      is subject to prepayment only as specified in the Securities Purchase
      Agreement.

     

    This
      Note
      is in registered form and is transferable only by surrender hereof at the
      principal executive office of the Issuer as provided in the Securities Purchase
      Agreement. The Issuer may treat the person in whose name this Note is registered
      on the Note register maintained at such office pursuant to the Securities
      Purchase Agreement as the owner hereof for all purposes, and the Issuer shall
      not be affected by any notice to the contrary.

     

    The
      parties hereto, including the maker and all guarantors and endorsers of this
      Note, hereby waive presentment, demand, notice, protest and all other demands
      and notices in connection with the delivery, acceptance, performance or
      enforcement of this Note.

     

    [The
      remainder of this page is intentionally left blank.]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    THIS
      NOTE AND THE SECURITIES PURCHASE AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
      WITH
      AND GOVERNED BY THE DOMESTIC SUBSTANTIVE LAWS OF THE STATE OF NEW YORK WITHOUT
      GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTS OF LAW PROVISION OR RULE THAT
      WOULD CAUSE THE APPLICATION OF DOMESTIC SUBSTANTIVE LAWS OF ANY OTHER
      JURISDICTION.

     

    

     

    AEROCENTURY
      CORP.

    

    

    By:       

    Name:

     

    Title:

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    FORM
      OF
      ASSIGNMENT

     

    [To
      be
      signed only upon transfer of Note]

     

    For
      value
      received, the undersigned hereby sells, assigns and transfers unto _____________
      the within Note, and appoints ________________ Attorney to transfer such Note
      on
      the books of AEROCENTURY CORP. (together with its successors), with full power
      of substitution in the premises.

     

    Date:

     

    ___________________________________

    (Signature
      must conform in all respects to name of Holder as specified on the face of
      the
      Note)

     

    Signed
      in
      presence of

     

    

     

    

     

    __________________________________

     

    

     

    EXHIBIT
      4

     

    INSTRUCTIONS
      FOR WIRE TRANSFER OF FUNDS AT CLOSING

     

    [omitted
      from filing]

     

     

    

     

    

     

    EXHIBIT
      5.4

     

    FORM
      OF SUBORDINATION AGREEMENT

     

    

     

    

     

    See
      attached

     

    

     

    EXHIBIT
      5.5

     

    FORM
      OF MANAGEMENT SUBORDINATION AGREEMENT

     

    

     

    

     

    See
      attached

     

    EXHIBIT
      7(c)

     

    COVENANT
      COMPLIANCE CERTIFICATE

     

    

     

    The
      undersigned, the [chief financial officer or treasurer] Officer of AeroCentury
      Corp. (“AeroCentury”),
      does
      hereby certify to each holder of Notes (as defined in the Agreement referred
      to
      below), as required by that certain Securities Purchase Agreement dated April
      17, 2007, by and between AeroCentury and the Purchasers (as defined therein)
      (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 Officer’s
      Certificate (this “Certificate”)
      on
      behalf of AeroCentury and does further certify that:

     

    1. AeroCentury
      has complied and is in compliance with all covenants, agreements and conditions
      in the Agreement on the date hereof.

     

    2. Each
      representation and warranty contained in the Agreement is true and correct
      on
      the date hereof.

     

    3. No
      Change
      of Control or Default or Event of Default has occurred and is continuing as
      of
      the date of this Certificate.

     

    4. There
      has
      been no Material Adverse Change since [insert the date of the most recent
      financial statements delivered to the Purchaser pursuant to the terms of Section
      7
      of the
      Agreement], except as disclosed on the attached schedules.

     

    5. The
      officer’s calculations of the financial covenants in Section 13
      of the
      Agreement 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:Form of Warrant

    WARRANT

    

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
      AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD, TRANSFERRED OR
      OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS
      TO
      THE SECURITIES UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
      LAWS
      OR AN APPLICABLE EXEMPTION FROM SUCH REGISTRATION
      REQUIREMENTS.

    

    THESE
      SECURITIES HAVE THE BENEFIT OF AN INVESTORS’ RIGHTS AGREEMENT DATED AS OF
      APRIL 17, 2007 (THE “INVESTORS’ RIGHTS AGREEMENT”), 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.
      

    

    Warrant
      No. WR-[__]         April 17,
      2007

    

    Warrant
      to Purchase _____________________ Shares of Common Stock of

    AeroCentury
      Corp.

    

    AeroCentury
      Corp., a Delaware corporation (the “Company”),
      hereby acknowledges that [______________], a Delaware [___________] (the
“Initial
      Warrant Holder”),
      and
      any other Warrant Holder, are entitled on the terms and conditions set forth
      below to purchase from the Company, upon and at any time after the Exercise
      Date
      and for four (4) years thereafter, the above number of fully paid and
      nonassessable shares of the Common Stock, par value $0.01 per share, of the
      Company (the “Common
      Stock”),
      at the
      Purchase Price per share of Common Stock. The above number of shares of Common
      Stock and the Purchase Price may from time to time hereafter be adjusted
      pursuant to and in accordance with Section 6 hereof.

    

    1.
      Definitions.
      All
      terms
      not otherwise defined herein shall have the meanings given such terms in the
      Agreement.

    

    (a) “Agreement”
      shall
      mean the Securities Purchase Agreement dated as of April 17, 2007, between
      the Company, the Initial Warrant Holder, and each of the other Purchasers party
      thereto.

    

    (b) “Exercise
      Date”
      shall
      mean the first to occur of (i) a Change of Control, (ii) Final
      Maturity, and (iii) so long as the Rights Agreement is in effect, the
      earlier of (x) the Stock Acquisition Date, as defined in the Rights
      Agreement, and (y) the date that a tender or exchange offer by any Person
      (other than an Exempt Person, as defined in the Rights Agreement) is first
      published or sent or given within the meaning of Rule 14d-4(a) promulgated
      under the Exchange Act or any successor rule, if upon consummation of such
      tender or exchange offer such Person would be an Acquiring Person under and
      as
      defined in the Rights Agreement.

    

    (c) “Fair
      Market Value”
      shall
      mean, as of any date of determination, the closing bid price per share of the
      Common Stock of Nasdaq National Market or Small-Cap Market, the American Stock
      Exchange or the New York Stock Exchange, whichever is the principal trading
      exchange or market for the Common Stock (the “Principal
      Market”)
      on such
      date, or, if the Common Stock is not then listed or admitted to trading on
      any
      national securities exchange or quoted on the Nasdaq National Market or
      Small-Cap Market, the closing bid price per share on such date on the
      over-the-counter market as furnished by any New York Stock Exchange member
      firm
      that makes a market in the Common Stock, as reasonably selected from time to
      time by the Company for that purpose, or, if the Common Stock is not then traded
      over-the-counter and the average price cannot then be determined as contemplated
      above, the Fair Market Value shall be as reasonably determined in good faith
      by
      the Company's Board of Directors.

    

    (d) “Purchase
      Price”
      shall be
      $8.75 per share of Common Stock, subject to adjustments pursuant to
      Section 6 hereof.

    

    (e) “Rights
      Agreement”
      shall
      mean 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.
      

    

    (f) “Warrant
      Holder”
      shall
      mean the Initial Warrant Holder or any registered successor to or permitted
      assignee of all or any portion of this Warrant.

    

    (g) “Warrant
      Shares”
      shall
      mean the shares of Common Stock or other securities issuable upon exercise
      of
      this Warrant.

    

    2.
      Exercise
      or Exchange of Warrant.

    

    (a) This
      Warrant may be exercised by the Warrant Holder, in whole or in part, at any
      time
      upon and after the Exercise Date and from time to time thereafter by surrender
      of this Warrant, together with the form of exercise attached hereto as
Exhibit A
      (the
“Exercise
      Form”)
      duly
      executed by the Warrant Holder, together with the full Purchase Price (as
      defined in Section 1) for each share of Common Stock as to which this
      Warrant is then exercised, to the Company at the address set forth in
      Section 15 hereof. At the option of the Warrant Holder, payment of the
      Purchase Price may be made either by (i) certified check payable to the order
      of
      the Company, (ii) surrender of certificates then held representing, or deduction
      from the number of shares issuable upon exercise of this Warrant of, that number
      of shares which has an aggregate Fair Market Value on the date of exercise
      equal
      to the aggregate Purchase Price for all shares to be purchased pursuant to
      this
      Warrant on such date, or (iii) by any combination of the foregoing
      methods.

    

    (b) In
      the
      event that this Warrant is not exercised in full, the number of Warrant Shares
      shall be reduced by the number of such Warrant Shares for which this Warrant
      is
      exercised, and the Company, at its expense, shall forthwith issue and deliver
      to
      or upon the order of the Warrant Holder a new Warrant of like tenor in the
      name
      of the Warrant Holder or as the Warrant Holder may request, reflecting such
      adjusted number of Warrant Shares.

    

    (c) The
      “date
      of exercise”
      of this
      Warrant shall be the date that the completed Exercise Form is delivered to
      the
      Company, together with the original Warrant and payment in full of the Purchase
      Price.

    

    3.
      Delivery
      of Stock Certificates.

    

    (a) Subject
      to the terms and conditions of this Warrant, as soon as practicable after the
      exercise of this Warrant in full or in part, and in any event within five (5)
      Business Days thereafter, the Company at its expense (including, without
      limitation, the payment by it of any applicable issue taxes) will cause to
      be
      issued in the name of and delivered to the Warrant Holder, or as the Warrant
      Holder may lawfully direct, a certificate or certificates for the number of
      fully paid and non-assessable shares of Common Stock to which the Warrant Holder
      shall be entitled on such exercise, together with any other stock or other
      securities or property (including, where applicable, cash or any Rights
      Certificates issuable under the Rights Agreement) to which the Warrant Holder
      is
      entitled upon such exercise in accordance with the provisions
      hereof.

    

    (b) This
      Warrant may not be exercised as to fractional shares of Common Stock. In the
      event that the exercise of this Warrant, in full or in part, would result in
      the
      issuance of any fractional share of Common Stock, then in such event the Warrant
      Holder shall be entitled to cash equal to the Fair Market Value of such
      fractional share. 

    

    4.
      Representations
      and Warranties by the Initial Warrant Holder.
      The
      Initial Warrant Holder represents and warrants to the Company, as of the date
      of
      this Warrant, as follows:

     

    (a)  This
      Warrant and the Warrant Shares issuable upon exercise thereof are being acquired
      for its own account, for investment and not with a view to, or for resale in
      connection with, any distribution or public offering thereof within the meaning
      of the Securities Act. Upon exercise of this Warrant, the Warrant Holder shall,
      if so requested by the Company, confirm in writing, in a form reasonably
      satisfactory to the Company, that the securities issuable upon exercise of
      this
      Warrant are being acquired for investment and not with a view toward
      distribution or resale.

     

    (b)  The
      Warrant Holder understands that the Warrant and the Warrant Shares have not
      been
      registered under the Securities Act by reason of their issuance in a transaction
      exempt from the registration and prospectus delivery requirements of the
      Securities Act pursuant to Section 4(2) thereof, and that they must be held
      by the Warrant Holder indefinitely, and that the Warrant Holder must therefore
      bear the economic risk of such investment indefinitely, unless and until there
      is a subsequent disposition thereof which is registered under the Securities
      Act
      or is exempt from such registration. The Warrant Holder further understands
      that
      the Warrant Shares have not been qualified under the California Securities
      Law
      of 1968 (the “California
      Law”)
      by
      reason of their issuance in a transaction exempt from the qualification
      requirements of the California Law pursuant to Section 25102(f) thereof,
      which exemption depends upon, among other things, the bona fide nature of the
      Warrant Holder’s investment intent expressed above.

     

    (c)  The
      Warrant Holder has such knowledge and experience in financial and business
      matters that it is capable of evaluating the merits and risks of the purchase
      of
      this Warrant and the Warrant Shares purchasable pursuant to the terms of this
      Warrant. 

     

    (d)  The
      Warrant Holder is able to bear the economic risk of the purchase of the Warrant
      Shares pursuant to the terms of this Warrant.

     

    (e)  The
      Warrant Holder is an “accredited investor” as such term is defined in Rule 501
      of Regulation D promulgated under the Securities Act.

    

    5.
      Covenants
      of the Company.

    

    (a) The
      Company shall take all reasonable and necessary action and proceedings as may
      be
      required and permitted by applicable law, rule and regulation, including,
      without limitation, the notification of the Principal Market, for the legal
      and
      valid issuance of this Warrant and the Warrant Shares to the Warrant
      Holder.

    

    (b) From
      the
      date hereof through the last date on which this Warrant is exercisable, the
      Company shall take all steps necessary and within its control to ensure that
      the
      Common Stock remains listed or quoted on the Principal Market and shall not
      amend its Certificate of Incorporation, its By-Laws or the Rights Agreement
      so
      as to adversely affect any rights of the Warrant Holder under this Warrant
      differently than the rights of other holders of the Company’s Common Stock;
provided,
      however,
      that
      increasing the number of authorized shares shall not be deemed such an adverse
      effect.

    

    (c) The
      Company shall at all times reserve and keep available, solely for issuance
      and
      delivery as Warrant Shares hereunder, such number of shares of Common Stock
      as
      shall from time to time be issuable as Warrant Shares.

    

    (d) The
      Warrant Shares, when issued in accordance with the terms hereof, will be duly
      authorized and, when paid for or issued in accordance with the terms hereof,
      shall be validly issued, fully paid and non-assessable. The Company has
      authorized and reserved for issuance the requisite number of shares of Common
      Stock to be issued pursuant to this Warrant.

    

    (e) With
      a
      view to making available to the Warrant Holder the benefits of Rule 144
      promulgated under the Securities Act (“Rule
      144”),
      and
      any other rule or regulation of the Commission that may at any time permit
      Warrant Holder to sell securities of the Company to the public without
      registration, the Company agrees to use its best efforts to: (i) make and keep
      public information available, as those terms are understood and defined in
      Rule
      144, at all times; and (ii) file with the Commission in a timely manner all
      reports and other documents required of the Company under the Securities Act
      and
      the Exchange Act.

    

    (f) So
      long
      as the Rights Agreement is in effect, the Company shall ensure that the holder
      of any Warrant Shares issuable upon exercise of this Warrant shall hold the
      same
      rights to receive Rights or shares of the Company’s Series A Preferred
      Stock, as the case may be, as each other holder of shares of Common Stock who
      is
      not an Acquiring Person (as defined in the Rights Agreement).

    

    6.
      Adjustment
      of Purchase Price and Number of Shares.
      The
      number of and kind of securities purchasable upon exercise of this Warrant
      and
      the Purchase Price shall be subject to adjustment from time to time as
      follows:

    

    (a) Subdivisions,
      Combinations and Other Issuances.
      If the
      Company shall at any time after the date hereof but prior to the expiration
      of
      this Warrant subdivide its outstanding securities as to which purchase rights
      under this Warrant exist, by stock split, spin-off, or otherwise, or combine
      its
      outstanding securities as to which purchase rights under this Warrant exist,
      the
      number of Warrant Shares as to which this Warrant is exercisable as of the
      date
      of such subdivision or combination shall forthwith be proportionately increased
      in the case of a subdivision, or proportionately decreased in the case of a
      combination. Appropriate adjustments shall also be made to the Purchase Price,
      but the aggregate purchase price payable for the total number of Warrant Shares
      purchasable under this Warrant as of such date shall remain the
      same.

    

    (b) Stock
      Dividend.
      If at
      any time after the date hereof the Company declares a dividend or other
      distribution on Common Stock payable in Common Stock or other securities or
      rights convertible into or exchangeable for Common Stock (“Common
      Stock Equivalents”), without
      payment of any consideration by holders of Common Stock for the additional
      shares of Common Stock or the Common Stock Equivalents (including the additional
      shares of Common Stock issuable upon exercise or conversion thereof), then
      the
      number of shares of Common Stock for which this Warrant may be exercised shall
      be increased as of the record date (or the date of such dividend distribution
      if
      no record date is set) for determining which holders of Common Stock shall
      be
      entitled to receive such dividends, in proportion to the increase in the number
      of outstanding shares (and shares of Common Stock issuable upon conversion
      of
      all such securities convertible into Common Stock) of Common Stock as a result
      of such dividend, and the Purchase Price shall be adjusted so that the aggregate
      amount payable for the purchase of all the Warrant Shares issuable hereunder
      immediately after the record date (or on the date of such distribution, if
      applicable), for such dividend shall equal the aggregate amount so
      payable.

    

    (c) Other
      Distributions.
      If at
      any time after the date hereof the Company distributes to holders of its Common
      Stock, other than as part of a dissolution or liquidation or the winding up
      of
      its affairs, any shares of its capital stock, any evidence of indebtedness
      or
      any of its assets without payment of any consideration by holders of Common
      Stock (other than cash, Common Stock or securities convertible into or
      exchangeable for Common Stock), then, in any such case, the Warrant Holder
      shall
      be entitled to receive, upon exercise of this Warrant, with respect to each
      share of Common Stock issuable upon such exercise, the amount of cash or
      evidences of indebtedness or other securities or assets which such Warrant
      Holder would have been entitled to receive with respect to each such share
      of
      Common Stock as a result of the happening of such event had this Warrant been
      exercised immediately prior to the record date or other date determining the
      shareholders entitled to participate in such distribution. 

    

    (d) Merger,
      Consolidation, etc.
      If at
      any time after the date hereof there shall be a merger or consolidation of
      the
      Company with or into, or a transfer of all or substantially all of the assets
      of
      the Company to, another entity (a “Consolidation
      Event”),
      then
      the Warrant Holder shall be entitled to receive upon such transfer, merger
      or
      consolidation becoming effective, and upon payment of the aggregate Purchase
      Price then in effect, the number of shares and/or other securities and/or
      property of the Company or of the successor entity resulting from such merger
      or
      consolidation which would have been received by the Warrant Holder for the
      shares of stock subject to this Warrant had this Warrant been exercised
      immediately prior to such transfer, merger or consolidation becoming effective
      or to the applicable record date thereof, as the case may be. The Company shall
      not effect any Consolidation Event unless the resulting successor entity (if
      not
      the Company) either (i) is obligated by operation of law and without further
      action on the part of the Company or the Warrant Holder, or (ii) assumes by
      written instrument the obligation, to deliver to the Warrant Holder upon
      exercise of this Warrant such shares of stock and/or other securities and/or
      property as the Warrant Holder would have been entitled to receive had this
      Warrant been exercised in accordance with the preceding sentence.

    

    (e) Reclassification,
      Etc. If
      at any
      time after the date hereof there shall be a reclassification of any securities
      as to which purchase rights under this Warrant exist, into the same or a
      different number of securities of any other class or classes, then the Warrant
      Holder shall thereafter be entitled to receive upon exercise of this Warrant,
      during the period specified herein and upon payment of the Purchase Price then
      in effect, the number of shares or other securities or property resulting from
      such reorganization or reclassification, which would have been received by
      the
      Warrant Holder for the shares of stock subject to this Warrant had this Warrant
      at such time been exercised.

    

    (f) Purchase
      Price Adjustment. In
      the
      event that the Company issues or sells any Common Stock or securities which
      are
      convertible into or exchangeable for its Common Stock or any convertible
      securities, or any warrants or other rights to subscribe for or to purchase
      or
      any options for the purchase of its Common Stock or any such convertible
      securities (other than issuance of shares of Common Stock upon conversion
      thereof, shares or options issued or which may be issued to employees, directors
      or consultants of or to the Company pursuant to the Company's stock option
      or
      stock purchase plans as in effect on the date of execution and delivery of
      this
      Warrant, or shares issued upon exercise of options, warrants or rights
      outstanding on such date) at an effective purchase price per share which is
      less
      than the Fair Market Value on the trading day next preceding such issue or
      sale
      (or if the Common Stock is not then traded, the next preceding Business Day),
      then and in each such case, the Purchase Price in effect immediately prior
      to
      such issue or sale shall be reduced effective concurrently with such issue
      or
      sale to an amount determined by multiplying the Purchase Price in effect
      immediately prior to such issue or sale by a fraction, (x) the numerator of
      which shall be the sum of (i) the number of shares of Common Stock
      outstanding on a fully-diluted basis immediately prior to such issue or sale,
      assuming the issuance of all shares of Common Stock then issuable upon exercise
      of all outstanding options, warrants or other rights to subscribe for or
      purchase Common Stock, including, without duplication, all outstanding Warrants,
      plus (ii) the number of shares of Common Stock which the aggregate
      consideration received by the Company for such additional shares would purchase
      at the Fair Market Value then in effect, and (y) the denominator of which shall
      be the number of shares of Common Stock outstanding on a fully-diluted basis
      immediately after such issue or sale, assuming the issuance of all shares of
      Common Stock then issuable upon exercise of all outstanding options, warrants
      or
      other rights to subscribe for or purchase Common Stock, including, without
      duplication, all outstanding Warrants. 

    

    The
      foregoing price adjustment shall not apply to the issuance of shares of Common
      Stock which may be issued upon exercise of options under the Company's employee
      or director stock option plans, upon the conversion or exchange of convertible
      or exchangeable securities or upon the exercise of warrants or other rights,
      which options, convertible or exchangeable securities, warrants or other rights
      are outstanding on the date of execution and delivery of this
      Warrant.

    

    The
      number of shares which may be purchased shall be increased proportionately
      to
      any reduction in Purchase Price pursuant to this Section 6(f), so that
      after such adjustments the aggregate Purchase Price payable hereunder for the
      increased number of shares of Common Stock shall be the same as the aggregate
      Purchase Price in effect immediately prior to such adjustments.

    

    (g) Additional
      Shares, Securities or Assets. In
      the
      event that at any time, as a result of an adjustment made pursuant to this
      Section 6, the Warrant Holder shall, upon exercise of this Warrant, become
      entitled to receive shares and/or other securities or assets (other than Common
      Stock) then, wherever appropriate, all references herein to shares of Common
      Stock shall be deemed to refer to and include such shares and/or other
      securities or assets, and thereafter the number of such shares and/or other
      securities or assets shall be subject to adjustment from time to time in a
      manner and upon terms as nearly equivalent as practicable to the provisions
      of
      this Section 6. 

    

    (h) Other
      Adjustments. If
      any
      event occurs of the type contemplated by the provisions of this Section 6
      but not expressly provided for by such provisions (including, without
      limitation, the granting of stock appreciation rights, phantom stock rights
      or
      other rights with equity features), then the Company's Board of Directors,
      acting in good faith and consistent with their fiduciary duties, shall make
      an
      appropriate adjustment in the Purchase Price and the number of shares of Warrant
      Shares obtainable upon exercise of this Warrant so as to protect the rights
      of
      the holders of the Warrants; provided,
      that no
      such adjustment shall increase the Purchase Price or decrease the number of
      shares of Warrant Shares obtainable as otherwise determined pursuant to this
      Section 6.

    

    (i) Maximum
      Number of Warrant Shares.
      Notwithstanding anything to the contrary herein, in no event shall the Company
      take any action which would result in the number of shares of Common Stock
      for
      which this Warrant, together with all other Warrants issued pursuant to the
      Agreement, is exercisable exceeding 307,108, such number being subject to
      subsequent adjustment pursuant to and in accordance with Section 6(a) above,
      without the Company’s first having received such approval from its shareholders
      or other Persons as may be required by the regulations of the Principal Market
      or any other applicable law or regulation.

    

    7.
      No
      Impairment.
      The
      Company will not, by amendment of its Articles of Incorporation or through
      any
      reorganization, transfer of assets, consolidation, merger, dissolution, issue
      or
      sale of securities or any other voluntary action, avoid or seek to avoid the
      observance or performance of any of the terms of this Warrant, but will at
      all
      times in good faith assist in the carrying out of all such terms and in the
      taking of all such action as may be necessary or appropriate in order to protect
      the rights of the Warrant Holder against impairment. Without limiting the
      generality of the foregoing, the Company (a) will not increase the par value
      of
      any Warrant Shares above the amount payable therefor on such exercise, and
      (b)
      will take all such action as may be reasonably necessary or appropriate in
      order
      that the Company may validly and legally issue fully paid and nonassessable
      Warrant Shares on the exercise of this Warrant.

    

    8.
      Notice
      of Adjustments; Notices.
      Whenever
      the Purchase Price or number of Warrant Shares purchasable hereunder shall
      be
      adjusted pursuant to Section 6 hereof, the Company shall execute and
      deliver (by first class mail, postage prepaid) to the Warrant Holder a
      certificate setting forth, in reasonable detail, the event requiring the
      adjustment, the amount of the adjustment, the method by which such adjustment
      was calculated, and the Purchase Price and number of shares of Common Stock
      or
      other securities purchasable hereunder after giving effect to such
      adjustment.

    

    9.
      Rights
      as Shareholder.
      Prior
      to
      exercise of this Warrant, the Warrant Holder shall not be entitled to any rights
      as a shareholder of the Company with respect to the Warrant Shares, including
      (without limitation) the right to vote such shares, receive dividends or other
      distributions thereon (other than pursuant to Sections 6(b) and 6(c)) or be
      notified of stockholder meetings. However, in the event of any taking by the
      Company of a record of the holders of any class of securities for the purpose
      of
      determining the holders thereof who are entitled to receive any dividend (other
      than a cash dividend) or other distribution, any right to subscribe for,
      purchase or otherwise acquire any shares of stock of any class or any other
      securities or property, or to receive any other right, the Company shall mail
      to
      the Warrant Holder, at least 10 days prior to the date specified therein, a
      notice specifying the date on which any such record is to be taken for the
      purpose of such dividend, distribution or right, and the amount and character
      of
      such dividend, distribution or right.

    

    10.
      Replacement
      of Warrant.
      Upon
      receipt of evidence reasonably satisfactory to the Company of the loss, theft,
      destruction or mutilation of the Warrant and, in the case of any such loss,
      theft or destruction of the Warrant, upon delivery of an indemnity agreement
      or
      security reasonably satisfactory in form and amount to the Company or, in the
      case of any such mutilation of the Warrant, upon surrender and cancellation
      of
      such Warrant, the Company at its expense will execute and deliver, in lieu
      thereof, a new Warrant of like tenor.

    

    11.
      Consent
      to Jurisdiction.
      THE
      COMPANY (A) HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF
      THE
      UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, OR ANY
      STATE
      COURT LOCATED IN NEW YORK CITY, NEW YORK FOR THE PURPOSES OF ANY SUIT, ACTION
      OR
      PROCEEDING ARISING OUT OF OR RELATING TO THIS WARRANT AND (B) HEREBY WAIVES,
      AND
      AGREES NOT TO ASSERT IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT
      IT
      IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT THE SUIT,
      ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE
      OF
      THE SUIT, ACTION OR PROCEEDING IS IMPROPER. THE COMPANY CONSENTS TO PROCESS
      BEING SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF
      TO
      SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES TO IT UNDER THIS WARRANT AND
      AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS
      AND NOTICE THEREOF. NOTHING IN THIS PARAGRAPH SHALL AFFECT OR LIMIT ANY RIGHT
      TO
      SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.

    

    12.  Entire
      Agreement; Amendments.
      This
      Warrant and the Agreement contain the entire understanding of the parties with
      respect to the matters covered hereby and thereby. No provision of this Warrant
      may be waived or amended other than by a written instrument signed by the party
      against whom enforcement of any such amendment or waiver is sought.

    

    13.
      Restricted
      Securities.

    

    (a) Registration
      or Exemption Required. This
      Warrant has been issued in a transaction exempt from the registration
      requirements of the Securities Act in reliance upon the provisions of
      Section 4(2) of the Securities Act. This Warrant and the Warrant Shares
      issuable upon exercise hereof may not be resold except pursuant to an effective
      registration statement or an exemption to the registration requirements of the
      Securities Act and applicable state laws.

    

    (b) Legend.
      This
      Warrant and any Warrant Shares issued upon exercise hereof shall bear the
      following legend:

    

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
      (THE “SECURITIES ACT), OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR
      OFFERED FOR SALE EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AS
      TO
      THE SECURITIES UNDER THE SECURITIES ACT AND ANY APPLICABLE EXEMPTION FROM SUCH
      REGISTRATION REQUIREMENTS.

    

    (c) Assignment.
      Assuming
      the conditions of clause (a) above regarding registration or exemption have
      been satisfied, the Warrant Holder may sell, transfer, assign, pledge or
      otherwise dispose of this Warrant, in whole or in part. The Warrant Holder
      shall
      deliver a written notice to Company, substantially in the form of the Assignment
      attached hereto as Exhibit
      B,
      indicating the person or persons to whom the Warrant shall be assigned and
      the
      respective number of warrants to be assigned to each assignee. The Company
      shall
      deliver to the assignee(s) designated by the Warrant Holder, within 10 days
      after delivery to the Company of the original Warrant or Warrants for
      cancellation, a Warrant or Warrants of like tenor for the appropriate number
      of
      shares.

    

    14.
      Lock-up
      Agreements.
      

    

    (a) Restrictions
      on Public Sale by Holders of Investor Securities.
      The
      Warrant Holder, 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
      (as
      defined in the Rights Agreement) 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
      affect. 

     

    (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 (as defined in the Investors’ Rights Agreement) or Piggyback
      Registration (as defined in the Investors’ Rights Agreement) , except
      (i) in connection with any such underwritten registration and (ii) for
      Excluded Registrations (as defined in the Investors’ Rights Agreement)
      .

     

    15.
      Notices.
      Any
      notice or other communication required or permitted to be given hereunder shall
      be in writing and shall be effective (a) upon hand delivery or delivery by
      facsimile at the address or number designated below (if delivered on a Business
      Day during normal business hours where such notice is to be received), or the
      first Business Day following such delivery (if delivered other than on a
      business day during normal business hours where such notice is to be received)
      or (b) on the second Business Day following the date of mailing by express
      courier service, fully prepaid, addressed to such address, or upon actual
      receipt of such mailing, whichever shall first occur. The addresses for such
      communications shall be:

    

    to
      the
      Company:  AeroCentury
      Corp.

    1440
      Chapin Avenue

    Suite
      310

    Burlingame,
      CA 94010 

    Attention:
      Toni M. Perazzo

    Tel:
      (650) 340-1888

    Fax:
      

    

    with
      a
      copy to:   Morrison
      & Foerster LLP

    755
      Page
      Mill Road

    Palo
      Alto, CA 94304

    Attention:
      Justin Bastian, Esq.

    Tel:
      (650) 813-5641

    Fax:
      (650) 494-0792

    

    to
      the
      Initial Warrant Holder: c/o
      Satellite Asset Management, L.P.

    623
      Fifth
      Avenue, 19th Floor

    New
      York,
      NY 10022

    Attn:
      

    Tel:
      (212) 209-2000

    Fax:
      (212) 209-2001

    

    with
      a
      copy to:   Bingham
      McCutchen LLP

    One
      State
      Street

    Hartford,
      CT 06103-3178

    Attention:
      F. Mark Fucci, Esq.

    Tel:
      (860) 240-2700

    Fax:
      (860) 240-2800

    

    If
      to any
      subsequent Warrant Holder, to his, her or its address as set forth in the
      Assignment pursuant to which such Warrant Holder received this Warrant.

    

    Either
      party hereto may from time to time change its address or facsimile number for
      notices under this Section 15 by giving at least 10 days prior written
      notice of such changed address or facsimile number to the other party
      hereto.

    

    16.
      Miscellaneous.
      This
      Warrant and any term hereof may be changed, waived, discharged or terminated
      only by an instrument in writing signed by the party against which enforcement
      of such change, waiver, discharge or termination is sought. This Warrant shall
      be construed and enforced in accordance with and governed by the laws of the
      State of New York. The headings in this Warrant are for purposes of reference
      only, and shall not limit or otherwise affect any of the terms hereof. The
      invalidity or unenforceability of any provision hereof shall in no way affect
      the validity or enforceability of any other provision.

    

    [Remainder
      of page intentionally left blank. Next page is a signature
      page.]

     

    

     

    IN
      WITNESS WHEREOF,
      each of
      the Company and the Initial Warrant Holder has caused this Warrant to be
      executed in its corporate name by one of its officers thereunto duly authorized,
      all as of the day and year first above written.

    

    AEROCENTURY
      CORP.

    

    

    

    By:     

    
      	 	
              Name:

            	 

    

    
      	 	
              Title:

            	 

    

    

    

    

    [NAME
      OF INITIAL WARRANT HOLDER]

    

    By:
      _____________________________, its         [__________]

     

    

    

    By:
      __________________________ 

    Name:
      

    Title

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    [signature
      page to Warrant]

    

    EXHIBIT
      A

    

    Exercise
      Form

    

    I/we
      hereby exercise AeroCentury Corp. (the “Company”) Common Stock Purchase Warrant
      #___, as follows:

    

    (a) Number
      of
      shares of Common Stock to be purchased ____________________________

    

    (b) Total
      Purchase Price ($_____ per
      share)           $___________________________

     

    (c) Payment (i) in
      cash
      of $___________;

    

    (ii)
      in
      _______ surrendered shares of outstanding Common Stock with an aggregate Fair
      Market Value of $___________; and/or

    

    (iii)
      in
      surrendered rights to receive _______Warrant Shares with an aggregate Fair
      Market Value of $___________.

    

    

    I/we
      wish
      to register the shares of the Company’s Common Stock acquired upon this exercise
      as follows:

    

    
      	
              a.

            	
              (
                )

            	
              Individual
                Ownership

            

    

    
      	
              b.

            	
              (
                )

            	
              Husband
                and Wife as Community Property

            

    

    
      	
              c.

            	
              (
                )

            	
              Joint
                Tenants w/Right to Survivorship
                (JTRS)

            

    

    
      	
              d.

            	
              (
                )

            	
              Tenants
                in Common

            

    

    e. (
      ) Other
           

    

    Dated:
           ,
      20 .

    

    

    ______________________________

    Signature
      

    

    

    Name
      (please print):

    

    

    Address
      (including zip code):

    

    

    

    Social
      Security/Employer Identification Number:

    

    

    Telephone
      Number:

    

    EXHIBIT
      B

    

    Form
      of Assignment

    

    (To
      be
      executed by the registered Warrant Holder desiring to transfer the
      Warrant)

    

    FOR
      VALUED RECEIVED, the undersigned holder of the attached Warrant hereby sells,
      assigns and transfers unto the person(s) below named the right to purchase
        
      shares
      of the Common Stock of AEROCENTURY CORP. evidenced by the attached Warrant,
      and
      does hereby irrevocably constitute and appoint    
      attorney
      to transfer the said Warrant on the books of the Company, with full power of
      substitution in the premises.

    

    Dated:
           ,
      20 .

    

    

    ______________________________

    Signature
      

    

    

    Fill
      in
      for registration of new Warrant Holder:

    

    

    Name
      (please print):

    

    

    Address
      (including zip code):

    

    

    

    Social
      Security/Employer Identification Number:

    

    

    Telephone
      Number:

    

    

    

    

    

    

    

    

    NOTICE:
      The signature to the foregoing Assignment must correspond to the name as written
      upon the face of the attached Warrant in every particular, without any
      alteration whatsoever.

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