Document:

formofnote.htm

    ANNEX D TO THE SECOND
AMENDMENT

     

    TO THE SECURITIES PURCHASE
AGREEMENT

     

    [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 “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 $14,000,000 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.

     

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remainder of this page is intentionally left blank.]

     

    
      
        
          
            	
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    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:

     

    
      
        
          
            	
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    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

            

    

     

    

     

    
      
        
          	
                  [New
      York #1923626 v2]

                	
                  Annex
      D-formofwarrant.htm

    ANNEX
E TO THE SECOND AMENDMENT TO

    THE
SECURITIES PURCHASE AGREEMENT

    

    AMENDED AND
RESTATED

    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. A&R WR-[_] As of April 17, 2007

    

    Warrant to Purchase [________] Shares
of Common Stock of AeroCentury
Corp.

    

    AeroCentury
Corp., a Delaware corporation (the “Company”), hereby acknowledges
that [_______________], a [_______ ______________] (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, as amended by the First Amendment to the Securities Purchase Agreement
and the Second Amendment to the Securities Purchase Agreement.

    

    (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
outstanding 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:  Simon
Raykher

    Tel:  (212)
209-2000

    Fax: (212) 209-2001

    

    with a copy
to:                                     c/o
Satellite Asset Management, L.P.

    623 Fifth Avenue, 19th
Floor

    New York,
NY  10022

    Attn:  Chris
Provost

    Tel:  (212)
209-2000

    Fax: (212) 209-2001

    

    with a
copy
to:                                      Cleary
Gottlieb Steen & Hamilton LLP

    One Liberty Plaza

    New York, NY 10006

    Attention: James L.
Bromley

    Tel:  (212)
225-2000

    Fax: (212) 225-3999

    

    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.  This Amended and Restated Warrant supersedes and replaces
in its entirety that certain Warrant to Purchase [__________] Shares of Common
Stock of Aerocentury dated April 17, 2007 issued in the name of the Initial
Holder as WR-[__].

    

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

    
      
        
           

          la-985894 

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    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:

            

    

    

    

    

    [__________________]

    

    By:           Satellite
Asset Management, L.P.

    [Satellite Advisors,
L.L.C.]

    Its Manager

    [Its General Partner]

    

    By:_________________________

    Name:                      Simon
Raykher

    Title:                      General
Counsel

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    

    [signature
page to Amended and Restated Warrant]

    
      
        
          la-985894 

        

         

      

      
         

        
          

        

      

      
         

      

    

    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 Amended and
Restated Warrant)

    

    FOR
VALUED RECEIVED, the undersigned holder of the attached Amended and Restated
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 Amended and Restated Warrant, and does hereby irrevocably
constitute and appoint  attorney to transfer the said Amended and
Restated 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 Amended and Restated Warrant in every particular,
without any alteration whatsoever.

    

    la-985894

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