SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
__________________________
 
FORM 8-K
__________________________
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) 
OF THE SECURITIES EXCHANGE ACT OF 1934

   Date of Report (Date of earliest event reported): March 16, 2021
 
AEROCENTURY CORP.
(Exact name of Registrant as specified in its charter)

   
                                     Delaware
                               94-3263974
                                             (State of Incorporation)
           (I.R.S. Employer Identification No.)
 
1440 Chapin Avenue, Suite 310
Burlingame, CA 94010
(Address of principal executive offices including Zip Code)
 
650-340-1888
(Registrant's telephone number, including area code)
 
Not applicable
(Former name and former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
 Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)
 
Securities registered pursuant to Section 12(b) of the Act:
 
 
 
Title of each class
Name of each exchange on which registered
Common Stock, par value $0.001 per share
NYSE American Exchange
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company  ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
 
 
 
 
Item 1.01  Entry into a Material Definitive Agreement
Item 2.01  Completion of Acquisition or Disposition of Assets
 
On March 16, 2021, AeroCentury Corp. (the “Company”) sold its 100% percent membership interest (the “LLC Interest”) in its Delaware limited liability company special purpose subsidiary, ACY E-175 LLC, (the “LLC”), which owned three Embraer E-175 Aircraft (the “Leased Aircraft”) on lease to a U.S. regional airline. The LLC was the sole obligor under refinancing debt for the Leased Aircraft owed to Norddeutsche Landesbank Girozentrale, New York Branch (“Nord”). The Nord debt was non-recourse to the Company, but was secured by a pledge of the LLC Interest, as well as a lien on the assets of the LLC, including the Leased Aircraft.  The sale was consummated pursuant to a Membership Interest Purchase Agreement (the “Sale Agreement”), between the Company and Drake Jet Leasing 10 LLC, a Delaware limited liability company (“Buyer”), and the purchase price for the LLC Interest was US$26.5 million, paid in the form of the Buyer’s assumption of the entire debt of approximately $13.3 million owed to Nord by the LLC, and a cash payment by the Buyer to the Company of  approximately $13.1 million. The purchase price was determined by negotiations among the Company and the Buyer following a Request for Proposal bid solicitation for the assets.   The transfer of the LLC Interest was consented to by Nord, as secured lender, and Nord released the Company from any remaining guaranty obligations under Nord’s refinancing debt and interest swap obligations owed by the LLC, pursuant to a Borrower Parent Transfer Agreement between the Company, LLC, Buyer, Nord, Norddeutsche Landesbank Girozentrale, as swap counterparty, and Wilmington Trust Company, as security trustee (the “Nord Agreement”).   
 
The Buyer is an affiliate of Drake Asset Management Jersey Limited (“DAMJ”), which on October 30, 2020, purchased approximately $87.9 million of indebtedness of the Company owing under that certain Fourth Amended and Restated Loan and Security Agreement, dated as of May 1, 2020 (the “Loan Agreement”), which is secured by a first priority lien held by DAMJ covering all of the Company’s aircraft portfolio other than the Leased Aircraft and certain other assets specifically excluded under the Loan Agreement from such lien  (collectively the "Excluded Assets").  Pursuant to a Side Letter No. 1 between the Company, Buyer and UMB Bank, N.A. (the “Security Agent”), the Company applied approximately $11 million of the LLC Interest cash sales proceeds toward repayment of the Company’s indebtedness to DAMJ under the Loan Agreement, and the Company retained the remaining $2.1 million of cash sales proceeds. 
 
Following the indirect disposition of the Leased Aircraft by way of the sale of the LLC Interest, the Company holds in its aircraft portfolio (i) ten aircraft that are collateral for indebtedness owed to DAMJ; and (ii) two aircraft on lease to Kenyan lesses that are Excluded Assets. 
 
The foregoing description of the Sale Agreement, the Nord Agreement, and the Side Letter is intended to be a summary and is qualified in its entirety by the copies of these documents set forth as Exhibits to this Report.
 
 
Item 9.01
Financial Statements and Exhibits
 
(b) Pro Forma Financial Information.
 
The following unaudited pro forma financial information of the Company, which gives effect to the transactions disclosed above, will be filed in a subsequent amendment to this Current Report on Form 8-K:
– Unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2020
– Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended December 31, 2019 and the nine-month period ended September 30, 2020
 
(d) Exhibits
 
10.1                  
Membership Interest Purchase Agreement, dated March 16, 2021 (this “Agreement”), is made by and among AeroCentury Corp., and Drake Jet Leasing 10 LLC

10.2
Side Letter No. 1, dated as of March 16, 2021, by and between AeroCentury Corp., Drake Asset Mangement Jersey Lmited, Drake Jet Leasing 10 LLC and UMB Bank, N.A

10.3
Borrower Parent Transfer Agreement, made as of March 16, 2021 among Aerocentury Corp.; Drake Jet Leasing 10 LLC; ACY E-175 LLC;Norddeutsche Landesbank Girozentrale, New York Branch, Norddeutsche Landesbank Girozentrale, and Wilmington Trust Company, A Delaware Trust Company.  
 
SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereto duly authorized.
 
Date: March 22, 2021
AEROCENTURY CORP.

By: /s/ Harold M. Lyons
Harold M. Lyons
Sr. Vice President & Chief Financial Officer
Execution Version
MEMBERSHIP INTEREST PURCHASE AGREEMENT
 
THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT, dated March 16, 2021 (this “Agreement”), is made by and among AeroCentury Corp., a Delaware corporation (“Seller”) and Drake Jet Leasing 10 LLC, a Delaware limited liability company (“Purchaser”).
 
W I T N E S S E T H:
 
WHEREAS, Seller owns, beneficially and of record, as the “sole member,” 100% of the limited liability company membership interest (the “LLC Interest”) of ACY E-175 LLC, a Delaware limited liability company (the “Company”);
 
WHEREAS, Purchaser submitted an offer on 13 January 2021 to purchase from Seller, and Seller has accepted the offer and has agreed to sell to Purchaser, 100% of the limited liability company membership interest of Company the LLC Interest as evidenced by the Certificate No. 1 dated December 11, 2018 (the “Membership Certificate”) on the terms and subject to the conditions set forth herein;
 
WHEREAS, certain capitalized terms used in this Agreement but not otherwise defined in this Agreement are set out in Schedule A;
 
NOW, THEREFORE, in consideration of the foregoing and of the representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
 
ARTICLE 1
 
PURCHASE AND SALE OF LLC INTEREST
 
1.1. Purchase and Sale of the LLC Interest. Upon the terms and subject to the conditions set forth in this Agreement, at Closing Purchaser shall purchase from Seller and Seller shall sell, convey, transfer, assign and deliver to Purchaser, the LLC Interest free and clear of all Liens, other than transfer restrictions imposed by national, federal or state securities Laws, for an aggregate purchase price of Twenty Six Million Five Hundred Thousand United States Dollars ($26,500,000) (the “Purchase Price”).
 
1.2. Purchase Price and Payment.
 
(a) The Purchase Price shall be payable:
 
(i) as to an amount of thirteen million one hundred and eleven thousand seven hundred and forty five United States Dollars and forty three cents ($13,111,745.43) (the "Specified Amount") in cash by wire transfer of immediately available funds to the Specified Account;
 
(ii) by the Purchaser's assumption of all of the Seller's obligations under the Existing Credit Agreement (the "Assumed Obligations") pursuant to the Credit Agreement Transfer Agreement, constituting an outstanding aggregate amount of principal of thirteen million three hundred and eighty eight thousand two hundred and fifty four United States Dollars and fifty seven cents ($13,388,254.57) (the "Assumed Amount").
 
(b) Each of the Seller and the Purchaser hereby agrees that:
 
(i) the sum of the Specified Amount and the Assumed Amount equals the Purchase Price;
 
(ii) the Assumed Amount shall be netted from the Purchaser's obligation to pay the corresponding amount of the Purchase Price in consideration for the Purchaser's assumption of the Assumed Obligations; and
 
(iii) the Purchaser's (x) payment of the Specified Amount (pursuant to Article 1.2(a)(i)) and (y) assumption of the Assumed Obligations (pursuant to Article 1.2(a)(ii)) shall irrevocably and unconditionally be deemed to constitute payment of the Purchase Price in full.
 
(c) For the avoidance of doubt, payment of the Specified Amount into the Specified Account and the use and application thereof is subject in all respects to the Proceeds Side Letter.
 
1.3. The Closing. Subject to the satisfaction or waiver of all the conditions to closing set forth in Article 5 and the remaining provisions of this Article 1.3, the closing of the purchase and sale of the LLC Interest (the “Closing”) shall take place by conference call and exchange of signature pages by email, (a) effective at 12:00 noon Pacific Time on the Business Day following the satisfaction or waiver of the conditions set forth in Article 5 herein (other than those conditions that by their terms or nature are to be satisfied by actions to be taken at the Closing; provided, that such conditions are satisfied at the Closing or waived by the party having the benefit of such conditions), but in no event later than 12:00 noon Pacific Time on March 5, 2021; or (b) at such other time and place as may be mutually agreed upon by the parties hereto. The date on which the Closing occurs is referred to herein as the “Closing Date".
 
1.4. Deliveries at the Closing. The purchase and sale of the LLC Interest and the payment of the Purchase Price pursuant to the terms of this Agreement shall take place at the Closing and, simultaneously, the other transactions contemplated by this Agreement shall take place by the delivery of all of the closing documents set forth in Article 5.
 
1.5. Tail Insurance. Purchaser shall, or shall cause, Seller Additional Insureds to be named as additional insureds on any aviation liability insurance policy with respect to the Aircraft maintained pursuant to the Lease or any replacement lease until the date that is the earlier to occur of (a) two years after the Closing Date and (b) the next "major check" of the Airframe.
 
ARTICLE 2
 
 
 
REPRESENTATIONS AND WARRANTIES OF
 
SELLER
 
As an inducement to Purchaser to enter into this Agreement, Seller hereby represents and warrants to Purchaser as at the date hereof and on the Closing Date (in each case by reference to facts and circumstances then existing) as follows:
 
2.1. Organization. Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, and has all requisite corporate power, capacity and authority, and the full legal capacity, to own, lease and operate its assets and properties and to conduct its business as currently being conducted. The Company is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Delaware, and the Company is qualified or licensed to do business as a foreign company and is in good standing in all jurisdictions in which the ownership of the Company’s properties or the conduct of the Company’s business requires the Company to be so qualified or licensed, except where the failure to be so qualified or licensed has not been and would not reasonably be expected to be, individually or in the aggregate together with all such other failures, materially adverse to the Company.
 
2.2. Authorization, Validity and Enforceability. Seller has the full corporate power and authority to enter into, deliver and perform its obligations under this Agreement and the other Transaction Documents (defined below). The execution, delivery and performance by Seller of this Agreement and the other Transaction Documents and the consummation by it of the transactions contemplated hereunder and thereunder have been duly authorized by all necessary corporate action on the part of Seller and no other proceedings on the part of Seller are necessary to authorize this Agreement and the other Transaction Documents or the transactions contemplated hereby or thereby. This Agreement and the other Transaction Documents have been or will be duly executed and delivered by Seller, and will, upon the due execution and delivery thereof by Purchaser, constitute the legal, valid and binding obligation of Seller enforceable against it in accordance with the terms hereof or thereof, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditor’s rights and remedies generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or equity). The Company has all requisite power and authority and all permits necessary to own, lease and operate its properties and to carry on its business as it has been and is now being conducted and to enter into this Agreement and the other Transaction Documents to which it is or will be a party and to perform its obligations hereunder and thereunder. True and complete copies of the Constituent Documents of the Company, which have been delivered to Purchaser, reflect all amendments made thereto, and (a) such Constituent Documents are in full force and effect and (b) the Company has not been and is not in material violation of such Constituent Documents.
 
2.3. No Violation. The execution, delivery and performance by Seller of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereunder or thereunder, do not and will not (a) conflict with, result in a violation or breach of, constitute a default (or an event which with the giving of notice or the lapse of time or both would constitute a default) or give rise to any right of termination or acceleration of any right or obligation under, or result in the creation or imposition of any Lien (as defined below) upon any assets or properties of Seller or the Company; (b) conflict with or result in a violation or breach of or default under any provisions of Seller’s or the Company’s Constituent Documents, as applicable; or (c) conflict with or result in a violation of any Law or Order to which Seller or the Company is subject.
 
2.4. Consents and Approvals. Except for the NordLB/Security Trustee Consent, no consent, approval, authorization, license or order of, registration or filing with, or notice to, any Governmental Authority or any other Person (such consents, approvals, authorizations, licenses, orders, registrations, filings or notices being referred to collectively as “Consents”) is necessary to be obtained, made or given by Seller, Company or the Owner Trustee in connection with the execution, delivery and performance by Seller of this Agreement or any of the other Transaction Documents or the consummation by Seller of the transactions contemplated hereby or thereby.
 
2.5. Title to Securities. As at the date hereof and as of immediately prior to the Closing Date, Seller is and will be the sole recorded and beneficial owner of and has and immediately prior to Closing will have good and marketable title to, the LLC Interest, free and clear of any Liens, other than the Existing NordLB Security and/or any applicable restrictions on transfer under any applicable state securities Laws Upon the delivery of the LLC Interest and the other required Transaction Documents as provided herein, Purchaser will acquire good and marketable title to the LLC Interest, free and clear of any Liens other than any generally applicable restrictions on transfer under applicable state securities Laws, and Purchaser will be entitled to all of the rights of a holder of such securities and there are no voting trusts, shareholder agreements, proxies or any other agreements, instruments or understandings with respect to the voting or sale or transfer of the equity interests of the Company. The LLC Interest constitute the only issued or outstanding equity capital of the Company. All of the LLC Interests are duly authorized and validly issued and, to the extent applicable, are fully paid and non-assessable and were issued in compliance in all material respects with all applicable Laws or pursuant to valid exemptions therefrom.
 
2.6. Assets of Company. The sole assets of the Company are the Collateral Accounts and 100% of the beneficial interest (each, a “Beneficial Interest”) in each trust (each, a “Trust”) established pursuant to each Trust Agreement dated as of 25 May 2007 between Metropolitan Life Insurance Company ("MetLife") and Wells Fargo Delaware Trust Company, not in its individual capacity, but solely as Owner Trustee (“Owner Trustee”) relating to the applicable Aircraft (defined below), each as transferred to the Company pursuant to the applicable Assignment and Assumption Agreement, each dated 31 December 2018 (each as amended from time to time and as fully and accurately described in Schedule E with respect to the applicable Aircraft, a “Trust Agreement” and together, the "Trust Agreements"). Seller has heretofore delivered to Purchaser a complete copy of each Trust Agreement, as currently in effect and each such Trust Agreement constitutes the entire agreement between the Seller and the Owner Trustee with respect to the applicable Beneficial Interest immediately prior to the Closing Date and there have been no other amendments, modifications or assignments entered into with respect to such Trust Agreement that will continue after the Closing Date that have not been disclosed. The Company owns full legal and beneficial title to each Beneficial Interest free and clear of all Liens other than Liens created pursuant to the Existing BISA and each Trust owns good and marketable legal title to the applicable Aircraft, respectively, free and clear of all Liens other than (i) Permitted Liens (excluding Lessor Liens) under (and as defined in) each applicable Lease and (ii) the Existing Security Agreement.
 
2.7. Legal Proceedings. There are no pending or threatened actions, suits, claims, proceedings or investigations against or involving Seller, Company, or each Trust (Company and each Trust collectively, hereinafter referred to as the “Acquired Entities” and respectively, as a “Acquired Entity”). Neither Seller nor any Acquired Entity is bound by or subject to any Order.
 
2.8. No Employees. No Acquired Entity has employees.
 
2.9. No Other Business. No Acquired Entity is engaged in any business other than the leasing of each Aircraft pursuant to the applicable Lease.
 
2.10. No Undisclosed Liabilities or Obligations. No Acquired Entity has any liabilities or obligations other than pursuant to (i) the applicable Lease and documents related thereto or (ii) the Trust Agreements, the Existing Loan Agreement and the other Existing Loan Documents.
 
2.11. Lease. To the Seller's knowledge (after having made due and careful enquiry and having received written confirmation from the Owner Trustee that there exists no Specified Default (as defined in each Lease), there exists no Specified Default (as defined in each Lease) by Owner Trustee or Lessee under the applicable Lease. Lessee has not made any prepayment of Basic Rent (as defined in each Lease) payable to Owner Trustee under any Lease. Set forth in Schedule C is a complete and accurate list of documents that relate to each Lease (copies of which have heretofore been delivered to Purchaser) and such Lease Documents constitute the entire agreement between the applicable Owner Trustee (and Company, as applicable) and Lessee with respect to the leasing of the applicable Aircraft immediately prior to the Closing Date and there have been no other amendments, modifications, consents or assignments or waivers granted with respect to such Lease Documents (or any matters pertaining thereto) that will continue after the Closing Date that have not been disclosed. Neither Seller nor any Acquired Entity owns any real property.
 
2.12. Contracts. Except for this Agreement and those agreements set forth in Schedule C (the “Material Agreements”), there are no agreements, understandings, instruments, contracts, proposed transactions, judgments, governmental orders, writs or decrees to which an Acquired Entity is a party or by which such Acquired Entity is bound. No Acquired Entity is in breach of or default under any Material Agreement and there is no current claim or threatened claim that any Acquired Entity is or has been in breach of or default under any Material Agreement. Each Material Agreement is in full force and effect and is enforceable against the applicable Acquired Entity and the other party thereto, in accordance with its respective terms. Seller has provided Purchaser true and complete copies of each Material Agreement.
 
2.13. Existing Financing. No Default (as defined in the Existing Credit Agreement) exists under the terms of the Existing Credit Agreement or the other Existing Loan Documents. The Existing Credit Agreement together with the Existing Loan Documents (Credit Agreement Amendment, the Existing MI Pledge Release and New MI Pledge) constitute the entire agreement among the Seller, the Company and/or the Owner Trustee and NordLB and/or the Security Trustee entered into prior to (or, in the case of the Credit Agreement Amendment, Existing MI Pledge Release and New MI Pledge), at the Closing Date which will remain in effect following the Closing Date with respect to the financing of the Aircraft (other than as contemplated by the Credit Agreement Amendment, the Existing MI Pledge Release and the New MI Pledge) and there have been no other amendments, waivers or modifications entered into or granted with respect to such Existing Credit Agreement or Existing Loan Documents that will continue to have effect following the Closing Date which have not been disclosed.
 
2.14. Tax Matters.                                 The Company has been since the date of its formation, and will be immediately prior to the Closing, classified as an entity “disregarded” as separate from its owner, Seller, for all income Tax purposes (including under Treasury Regulations Section 301.7701-3) and no election has ever been or will be filed prior to the Closing to classify the Company as an association taxable as a corporation for income Tax purposes. Each Trust is properly treated, and will be so immediately prior to the Closing, as a grantor trust for federal income Tax purposes in accordance with Sections 671-678 of the Internal Revenue Code of 1986, as amended, and no election has ever been or will be filed prior to the Closing to classify any Trust as an association taxable as a corporation for income Tax purposes.
 
2.15. Tax Filings. Subject to applicable extensions, each Acquired Entity has filed or caused to be filed, all Tax returns that it was required to file prior to the Closing, and has paid all Taxes shown thereon as owing. All such Tax returns were true, correct and complete in all material respects. Neither Seller nor any Acquired Entity has received any notice of deficiency, assessment, audit, investigation, or proposed deficiency, assessment or audit with respect to any Acquired Entity or the conduct of their respective businesses. No Acquired Entity has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to any Tax assessment or deficiency.
 
2.16. Compliance with Laws. Since January 1, 2019, each Acquired Entity has complied in all material respects with all applicable Laws of Governmental Authorities in effect on or prior to the Closing Date which apply to such Acquired Entity or to which such Acquired Entity may otherwise be subject, including the Customs and International Trade Laws and the FCPA, and neither Seller nor any Acquired Entity has received written notice of, and no claims have been filed against any Acquired Entity alleging, any violation by such Acquired Entity of any such Law, except any immaterial violations that have been corrected.
 
2.17. Absence of Certain Developments. Since January 1, 2020, the Acquired Entities have operated in all material respects in the ordinary course of business and since the date of this Agreement through the Closing Date there has not been any action or event that would have required Purchaser’s consent pursuant to ‎Article 4.1 had such action or event occurred after the date hereof and no events or circumstances exist under the terms of the Existing Credit Agreement that, individually or in combination with any other effect, would reasonably be expected to result in a material adverse change.
 
2.18. Brokerage. No Person is entitled to any brokerage commissions, financial advisors’ fees, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of Seller or any Acquired Entity
 
2.19. Disclosures. None of the information concerning Seller or any Acquired Entity in this Agreement or in the other Transaction Documents or in any schedule or exhibit hereto or thereto, contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements contained herein or therein, in light of the circumstances existing when made, misleading.
 
2.20. Accounts; Cash Balance. As at Closing, there exists a cash balance in the Collateral Accounts as set forth in the definition of “Collateral Accounts” in Schedule A hereto.
 
2.21. Survival. The representations and warranties of Seller contained herein shall survive the Closing Date.
 
2.22. DISCLAIMER. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES AS SET FORTH IN ARTICLE 2 HEREOF, SELLER HAS NOT MADE ANY REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED, RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND SUBJECT TO THE REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE 2 HEREOF, SELLER’S RIGHTS WITH RESPECT TO THE TRANSFERRED RIGHTS ARE BEING ACQUIRED BY PURCHASER ON AN "AS IS, WHERE IS" BASIS.
 
ARTICLE 3
 
 
 
REPRESENTATIONS AND WARRANTIES OF PURCHASER
 
As an inducement to Seller to enter into this Agreement, Purchaser hereby represents and warrants to Seller as at the date hereof and on the Closing Date (in each case by reference to facts and circumstances then existing) as follows:
 
3.1. Organization. Purchaser is a limited liability company duly incorporated, validly existing and in good standing under the laws of Delaware, USA.
 
3.2. Authorization, Validity and Enforceability. Purchaser has the full corporate power and authority to execute, deliver and perform its obligations under this Agreement and the other Transaction Documents to which Purchaser is a party. The execution, delivery and performance by Purchaser of this Agreement and each of the other Transaction Documents and the consummation by Purchaser of the transactions contemplated hereunder and thereunder have been duly authorized by all necessary corporate action on the part of Purchaser, and no other corporate proceedings on the part of Purchaser are necessary to authorize this Agreement and the other Transaction Documents to which Purchaser is a party. This Agreement and the other Transaction Documents have been or will be duly executed and delivered by Purchaser and will, upon the due execution and delivery thereof by Seller, as applicable, constitute the legal, valid and binding obligation of Purchaser enforceable against it in accordance with the terms hereof and thereof, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar laws affecting creditor’s rights and remedies generally, and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or equity).
 
3.3. No Violation or Breach. The execution, delivery and performance by Purchaser of this Agreement and each of the other Transaction Documents to which it is a party, and the consummation of the transactions contemplated hereunder and thereunder, do not and will not conflict with, result in a violation or breach of, constitute a default (or an event which with the giving of notice or the lapse of time or both would constitute a default).
 
3.4. Consents and Approvals. No Consent of any Governmental Authority or any other Person is necessary to be obtained, made or given by Purchaser in connection with the execution, delivery and performance by Purchaser of this Agreement and the other Transaction Documents or the consummation by Purchaser of the transactions contemplated hereunder or thereunder.
 
3.5. Legal Proceedings. There are no pending or threatened actions, suits, claims, proceedings or investigations against or involving Purchaser, except as would not materially and adversely affect, and would not reasonably be expected to prevent or materially delay or impair, Purchaser’s performance under this Agreement and the Transaction Documents to which Purchaser is or will be a party or the consummation of the transactions contemplated hereunder or thereunder.
 
3.6. Brokerage. No Person is entitled to any brokerage commissions, financial advisors’ fees, finders’ fees or similar compensation in connection with the transactions contemplated by this Agreement based on any arrangement or agreement made by or on behalf of Purchaser.
 
3.7. Survival. The representations and warranties of Purchaser contained herein shall survive the Closing Date.
 
ARTICLE 4
 
 
 
PRE-CLOSING COVENANTS
 
4.1. Conduct of Business. From the date hereof until the earlier of the Closing Date or the date of any termination of this Agreement pursuant to Article 6.1 hereof, except as otherwise required or contemplated hereunder or under any other Transaction Document or upon the prior written approval of Purchaser, (a) Seller will cause the Acquired Entities to conduct their operations only in the ordinary course of business consistent with past practice and (b) Seller will not, and will not cause any Acquired Entity to, knowingly take any action that would, or would be reasonably likely to, result in any of the representations and warranties set forth in Article 3 hereof not being true in all material respects or result in any of the conditions set forth in Article 5 hereof not being satisfied. Without limiting the generality of the foregoing, during such period, except as otherwise required or contemplated hereunder or under any other Transaction Document, Seller will not take any action to cause or enable any Acquired Entity to, directly or indirectly (i) amend its Constituent Documents and/or any Lease (ii) authorize for issuance, issue, sell, deliver or agree or commit to issue, sell or deliver (whether through the issuance or granting of options, warrants, commitments, subscriptions, rights to purchase or otherwise) any limited liability company membership interests or any other securities or equity equivalents, (iii) split, combine or reclassify its limited liability company membership interests, or declare, set aside or pay any distribution in respect of its limited liability company membership interests, or redeem, purchase or otherwise acquire (or agree to redeem, purchase or otherwise acquire) its limited liability company membership interests, (iv) adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization or (v) make any change in any financial reporting or accounting practices.
 
4.2. Access to Information; Consultation. From the date hereof until the earlier of the Closing Date or the date of any termination of this Agreement pursuant to Article 6.1 hereof, Seller will assist and will not take any action to prevent Purchaser and its representatives to have access during normal business hours to the books, records and files of the Acquired Entities upon reasonable prior written request by Purchaser.
 
4.3. Commercially Reasonable Efforts. Each of the parties hereto shall use its commercially reasonable efforts to cause the fulfillment as soon as practicable following the date of this Agreement of all of the conditions to its respective obligations to consummate the transactions contemplated hereby and by the other Transaction Documents.
 
ARTICLE 5
 
 
 
CONDITIONS TO THE CLOSING
 
5.1. Mutual Condition to the Closing. The obligations of Seller to sell, and of Purchaser to purchase, the LLC Interest at the Closing shall be subject to no Illegality Event having occurred and being continuing.
 
5.2. Additional Conditions to the Obligations of Seller. The obligation of Seller to sell the LLC Interest at the Closing shall be subject to the satisfaction of the following conditions (in addition to the condition specified in Article 5.1 hereof) at or prior to the Closing:
 
(a) NordLB shall deliver to Seller a release of all obligations of Seller to the Company and to NordLB under the Existing Loan Documents, including, without limitation, the Seller’s obligations under the Indemnity Agreement and the Borrower Parent Pledge Agreement (Republic Borrower) (each as defined in the Existing Loan Documents), in form and substance satisfactory to Seller;
 
(b) Purchaser shall provide to Seller such information regarding Purchaser, its management and ownership necessary for Purchaser to complete its Know-Your-Customer and United States export control and United States Treasury compliance obligations, and any other applicable Customs and International Trade Laws; and
 
Any condition specified in this Article 5.2 may be waived by Seller; provided, that no such waiver shall be effective unless it is set forth in a writing executed by Seller.
 
5.3. Additional Conditions to the Obligations of Purchaser. The obligation of Purchaser to purchase the LLC Interest at the Closing shall be subject to the satisfaction of the following conditions (in addition to the condition specified in Article 5.1 hereof) at or prior to the Closing:
 
(a) the representations and warranties of Seller contained in Article 3 of this Agreement shall be true and correct in all material respects, as of the date of this Agreement and as of the Closing Date;
 
(b) Purchaser shall have received copies of all Transaction Documents duly executed by each of the parties thereto (other than Purchaser);
 
(c) Seller shall have performed and complied in all material respects with all agreements and covenants required to be performed by it hereunder at or prior to the Closing;
 
(d) Seller shall have delivered to Purchaser a certified copy of the resolutions of its board of directors, authorizing this Agreement and the other Transaction Documents and the transactions contemplated hereby and thereby, which resolutions shall not have been amended, modified, superseded or revoked together with an incumbency certificate of Seller as to the persons authorized to execute and deliver this Agreement and each other Transaction Document to which Seller is or will be a party, including the signatures of each such person;
 
(e) Seller shall have delivered to Purchaser the Operating Agreement and the Certificate of Formation of Company;
 
(f) Seller shall have delivered a membership transfer power, in a form reasonably satisfactory to Purchaser evidencing transfer of the Membership Certificate representing the LLC Interest to Purchaser;
 
(g) the Credit Agreement Amendment shall have been duly executed and delivered by NordLB and the Security Trustee;
 
(h) Purchaser shall have completed a satisfactory due diligence review of the Company, each Trust, each Lease and Lease Documents, the Existing Credit Agreement and the other Existing Loan Documents and related documents;
 
(i) Seller shall have tendered, effective as of the Closing, its resignation as manager of the Company;
 
(j) there shall have been no Event of Loss with respect to an Aircraft or material damage to such Aircraft for which the likely cost of repair would exceed [two million United States Dollars ($2,000,000);
 
(k) Purchaser shall be satisfied that no Taxes will arise or be payable by it on the completion of and as a result of the transactions contemplated by this Agreement as at Closing; and
 
(l) Purchaser shall have received evidence that Purchaser and any Purchaser Additional Insureds are named as additional insureds in the liability insurance maintained pursuant to each Lease.
 
Any condition specified in this Article 5.3 may be waived by Purchaser; provided, that no such waiver shall be effective unless it is set forth in a writing executed by Purchaser.
 
ARTICLE 6
 
 
 
TERMINATION
 
6.1. Termination of Agreement. This Agreement may be terminated at any time prior to the Closing:
 
(a) by either Purchaser or Seller, if any Law or Order that would prevent the satisfaction of the condition to the obligations of Purchaser set forth in Article 5.2 or the condition to the obligations of Seller set forth in Article 5.3 shall have become final and non-appealable; or
 
(b) by mutual written consent of Purchaser and Seller.
 
6.2. Effect of Termination. In the event of the termination of this Agreement pursuant to Article 6.1 hereof, this Agreement shall thereafter be terminated and have no effect, and no party hereto shall have any liability or obligation to any other party hereto in respect of this Agreement, except that (a) the obligations of the parties pursuant to Article 7.2, Article 7.7 hereof and this Article 6.2 shall survive any such termination and (b) no party shall be relieved of any liability for any breach of its representations, warranties, covenants or agreements contained herein prior to such termination.
 
ARTICLE 7
 
 
 
MISCELLANEOUS
 
7.1. Disclaimer of Warranties on the Company’s Assets.
 
EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES AS SET FORTH IN ARTICLE 2 HEREOF, SELLER HAS NOT MADE ANY REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED, RELATING TO THE AIRCRAFT OR ANY PART THEREOF AND PURCHASER ACKNOWLEDGES THAT THE AIRCRAFT ACQUIRED BY PURCHASER THROUGH ITS PURCHASE OF THE LLC INTEREST ARE PURCHASED ON AN "AS IS, WHERE IS AND WITH ALL FAULTS" BASIS.
 
NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, SELLER HAS NOT MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE AIRWORTHINESS, CONDITION, VALUE, DESIGN, OPERATION, MERCHANTABILITY, COMPLIANCE WITH SPECIFICATIONS, CONSTRUCTION, PERFORMANCE OR FITNESS FOR USE OR FOR ANY PURPOSE OF THE AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON LIABILITY IN TORT, STRICT OR OTHERWISE, AS TO FREEDOM FROM INTERFERENCE IN POSSESSION OR USE, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT OR ANY PART THEREOF OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF.
 
 
7.2. Notices. Any notices and other communications given pursuant to this Agreement shall be in writing and shall be effective upon delivery (a) by hand or upon receipt if sent by certified or registered mail (postage prepaid and return receipt requested) or by an internationally recognized overnight courier service (appropriately marked for overnight delivery) or (b) when transmitted by electronic mail if sent before 5:00 p.m. on a Business Day (otherwise the next Business Day) or the day following such day (except if not a Business Day then the next Business Day)Notices are to be addressed as follows:
 
if to Purchaser:
 
Drake Jet Leasing 10 LLC
 
c/o Maples Fiduciary Services (Delaware) Inc.
 
Suite 302, 4001 Kennett Pike,
 
Wilmington, DE 19807
 
USA
 
Attn: Fiduciary Services
 
Email: XXXXXXXX
 
with a copy to:
 
Falko Regional Aircraft Limited
 
1 Bishop Square
 
St. Albans Rd. West
 
Hatfield AL10 9NE
 
Attn: Sarah Dichlian
 
Email: XXXXXXXXX
 
if to Seller:
 
AeroCentury Corp.
 
1440 Chapin Avenue, Suite 310
 
Burlingame, CA94010-4011
 
Attn: Harold M. Lyons / Christopher B. Tigno
 
Email: XXXXXXXX
 
or to such other respective addresses as any of the parties hereto shall designate to the others by like notice, provided that notice of a change of address shall be effective only upon receipt thereof.
 
7.3. Fees and Expenses. Except as otherwise expressly provided herein, Seller shall be responsible for and shall pay the costs and expenses incurred by it in connection with the negotiation and drafting of this Agreement and the consummation of the transactions contemplated hereby, including attorneys’ fees and expenses and the Purchaser shall be responsible for and shall pay the costs and expenses incurred by it in connection with the negotiation and drafting of this Agreement and the consummation of the transactions contemplated hereby, including attorneys’ fees and expenses. In addition, the Purchaser shall pay the costs and expenses of Lessee, NordLB, FAA Counsel including all related filing fees and registration fees (including those relating to any related filings in the State of Delaware), in each case in amounts subject to agreement in writing in advance.
 
7.4. Entire Agreement; Waivers and Amendments. This Agreement and the other Transaction Documents (including the exhibits and schedules hereto and thereto and the documents and instruments referred to herein and therein) contain the entire agreement and understanding of the parties with respect to the subject matter hereof and thereof and supersedes all prior written or oral agreements and understandings with respect thereto. This Agreement may only be amended or modified, and the terms hereof may only be waived, by a writing signed by all parties hereto or, in the case of a waiver, by the party entitled to the benefit of the terms being waived.
 
7.5. Taxes.   Seller shall be responsible for paying all capital gains, income, gross receipts, transfer, stock transfer, stamp, recording, registration, documentary, sales, use, value added, excise and any similar taxes, and all conveyance fees and recording charges (including any penalties, additions to tax and interest thereon) assessed by the United States or any taxing subdivision thereof ("Taxes") incurred in connection with the consummation of the purchase and sale of the LLC Interest or any of the other transactions contemplated by this Agreement or the other Transaction Documents.
 
7.6. Assignment; Binding Effect. This Agreement may not be assigned or delegated, in whole or in part, by any party hereto without the prior written consent of the other party hereto. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, legal representatives, successors and assigns.
 
7.7. Severability. In the event that any provision of this Agreement shall be declared invalid or unenforceable by a court of competent jurisdiction in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent declared invalid or unenforceable without affecting the validity or enforceability of the other provisions of this Agreement, and the remainder of this Agreement shall remain binding on the parties hereto. However, in the event that any such provision shall be declared unenforceable due to its scope, breadth or duration, then it shall be modified to the scope, breadth or duration permitted by law or Governmental Authority and shall continue to be fully enforceable as so modified.
 
7.8. No Third Party Beneficiaries. This Agreement is for the benefit of the parties hereto and is not intended to confer upon any other person any rights or remedies hereunder.
 
7.9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
 
7.10. Jurisdiction.   The parties agree that the federal and state courts located in New York, New York (in the Borough of Manhattan) are to have non-exclusive jurisdiction to settle any disputes in connection with this Agreement and the other documents related hereto and submit to the jurisdiction of such courts in connection with this Agreement and the other documents related hereto.
 
(a) Each Party hereto:
 
(i) waives objection to such courts on grounds of inconvenient forum, venue or otherwise as regards proceedings in connection with this Agreement and other documents related hereto; and
 
(ii) agrees that (subject to permitted appeals) a judgment or order of such a court in connection with this Agreement or the other documents related hereto is conclusive and binding on it and may be enforced against them in the courts of any other jurisdiction.
 
(b) Nothing in this Article 7.9 limits the right of either party to bring proceedings in connection with this Agreement or any other document related hereto:
 
(i) in any other court of competent jurisdiction; or
 
(ii) concurrently in more than one jurisdiction.
 
7.11. Specific Performance. Each of the parties hereto acknowledges that the rights of each party to consummate the transactions contemplated hereby are unique and recognize and affirm that in the event of a breach of this Agreement by any party, money damages may be inadequate and the non-breaching party may have no adequate remedy at Law. Accordingly, the parties agree that such non-breaching Party shall have the right, in addition to any other rights and remedies existing in their favor at law or in equity, to enforce their rights and the other Party’s obligations hereunder not only by an action or actions for damages but also by an action or actions for specific performance, injunctive and/or other equitable relief (without posting of bond or other security).
 
7.12. Prevailing Party. In the event any litigation or other court action, arbitration or similar adjudicatory proceeding is commenced or threatened by any party hereto to enforce its rights under this Agreement against any other party, all fees, costs and expenses, including, without limitation, reasonable attorneys’ fees and court costs, incurred by the party prevailing in such proceeding shall be reimbursed by the other party(ies); provided, that if the prevailing party prevails in part, and loses in part, in such proceeding, the court, arbitrator or other adjudicator presiding over such proceeding shall award a reimbursement of the fees, costs and expenses incurred by the prevailing party on an equitable basis.
 
7.13. Captions. The Article headings in this Agreement are inserted for convenience of reference only, and shall not affect the interpretation of this Agreement.
 
7.14. Counterparts. This Agreement may be executed in two or more counterparts (including by electronic means or .PDF), each of which shall be deemed an original and all of which together shall be considered one and the same agreement.
 
 
* * *
 
 

 
IN WITNESS WHEREOF, each of the parties has executed this Agreement as of the date first written above.
 
PURCHASER:
 
 
                                                                                        DRAKE JET LEASING 10 LLC
 
By: _________________________
Name:
Title:
 
 
 
SELLER:
 
AEROCENTURY CORP.
 
By: _________________________
Name:
Title:
 
 
 
 
 
 
 
 

 
 
 
SCHEDULE A
 
CERTAIN DEFINED TERMS
 
(a) Aircraft” means, each of and collectively, the aircraft described in Schedule B.
 
(b) Assets” of any Person means all assets and properties of every kind (whether real, personal or mixed, whether tangible or intangible and wherever situated), including the goodwill related thereto, operated, owned or leased by such Person.
 
(c)  “Business Day” has the meaning given to that term in the Existing Credit Agreement.
 
(d) Collateral Accounts” means the two bank accounts of the Company held with Wilmington Trust Company in the name of the Company and charged in favor of NordLB in connection with the Existing Credit Agreement, which have the following account balances:
 
Account Number
 
Account Balance
 
XXXXXXXXXX
 
$52,900.90
 
XXXXXXXXXX
 
$2,346,266.27
 
 
 
(e) Constituent Documents” means the certificate or articles of incorporation and bylaws of any corporate Person, the certificate of formation, articles of organization and limited liability company agreement of any Person that is a limited liability company and the certificate of limited partnership and partnership agreement of any Person that is a partnership, and any other similar governing or constituent document, as applicable.
 
(f) Customs and International Trade Laws” means any domestic law, statute, Order of a Governmental Authority, regulation, rule, permit, license, directive, ruling, decree, ordinance, award, or other decision or requirement, including any amendments, having the force or effect of law, of any arbitrator, court, government or government agency or instrumentality or other Governmental Authority, concerning the importation, exportation, reexportation, or deemed exportation of products, technical data, technology or services, and the terms and conduct of transactions and making or receiving of payment related to such importation, exportation, reexportation or deemed exportation, including, but not limited to, as applicable, the Tariff Act of 1930, as amended, and other laws, regulations, and programs administered or enforced by the U.S. Department of Commerce (“Commerce”), U.S. International Trade Commission, U.S. Customs and Border Protection, U.S. Immigration and Customs Enforcement, and their predecessor agencies; the Export Administration Act of 1979, as amended; the Export Administration Regulations, including related restrictions with regard to transactions involving persons and entities on the Commerce Denied Persons List or Entity List; the Arms Export Control Act, as amended; the International Traffic in Arms Regulations, including related restrictions with regard to transactions involving Persons on the Debarred List; the International Emergency Economic Powers Act, as amended; the Trading With the Enemy Act, as amended; the embargoes and restrictions administered by the United States Office of Foreign Assets Control (“OFAC”); orders of the President regarding embargoes and restrictions on transactions with designated countries and entities, including persons and entities designated on OFAC’s list of Specially Designated Nationals and Blocked Persons; the anti-boycott regulations administered by Commerce; and the anti-boycott regulations administered by the U.S. Department of the Treasury.
 
(g) Credit Agreement Amendment” means an amendment to the Existing Credit Agreement among the Company, NordLB and the Security Trustee.
 
(h) Credit Transfer Agreement” means any agreement or instrument by which the Purchaser assumes the Seller's obligations under the Existing Credit Agreement.
 
(i) "Existing BISA" means each Beneficial Interest Security Agreement dated as of 8 February 2019 between the Company, as pledgor and the Security Trustee relating to the applicable Beneficial Interest and Trust.
 
(j) Existing Credit Agreement” means the Credit Agreement dated as of February 7, 2019 among the Company, the other borrowers listed therein, the participants party thereto, NordLB and the Security Trustee.
 
(k) Existing Loan Documents” means each Loan Operative Document as such term defined in the Existing Credit Agreement.
 
(l) Existing MI Pledge” means the Membership Interest Pledge Agreement dated as of 8 February 2019 between Seller, as pledgor and Security Trustee.
 
(m) "Existing MI Pledge Release" means a release and termination by the Security Trustee of the Existing MI Pledge.
 
(n) Existing Security Agreement” means the Security Agreement dated as of February 19, 2019 between each of the Borrower’s under the Existing Credit Agreement and the Security Trustee.
 
(o) FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.
 
(p) Governmental Authority” means any foreign, federal, provincial, local or other governmental authority, court, tribunal, bureau, board, commission, office, authority, regulatory body, self-regulatory body or any quasi-governmental entity, any political or other subdivision, department, agency or branch of any of the foregoing, including any supranational body, or any arbitrator, arbitral body or meditator;
 
(q) "FAA Counsel" means McAfee & Taft.
 
(r) "Illegality Event" means an injunction, order, decree or judgment issued by any governmental authority of competent jurisdiction and being in effect which restrains or prohibits the consummation of the purchase and sale of the LLC Interest or any of the other transactions contemplated by this Agreement or the other Transaction Documents.
 
(s) Laws” means any international, national, federal, state or local laws, constitutions, treaties, conventions, statutes, ordinances, codes, rules, regulations or common laws or other similar requirements enacted, adopted, promulgated or applied by any Governmental Authority, each as amended.
 
(t)  “Lease” means, in relation to an Aircraft, each lease agreement described in Schedule C relating to that Aircraft (each as assigned, transferred and/or varied from time to time, including by the other Lease Documents relating to that Aircraft, together, the "Leases").
 
(u) "Lease Amendment Agreement" means, in relation to each Lease, each lease amendment agreement relating to that Lease dated on or before the Closing Date between the Seller and the Lessee.
 
(v) "Lease Documents" means, in relation to an Aircraft, the documents listed in Schedule C relating to that Aircraft.
 
(w) "Lessee" means Republic Airways Inc..
 
(x) Lien” means any charge, claim, adverse interest, community property interest, pledge, hypothecation, condition, lien (statutory or other), option, security interest, mortgage, deed of trust, encumbrance, easement, encroachment, license, sublicense, right of way, right of first refusal, or other restriction on title or transfer or, in the case of equity, voting or receipt of income.
 
(y) "New MI Pledge" means a membership interest pledge agreement in the same form as the Existing MI Pledge, between Purchaser, as pledgor and Security Trustee.
 
(z) "NordLB" means Norddeutsche Landesbank Girozentrale, New York, as Agent and Norddeutsche Landesbank Girozentrale, as swap counterparty acting in any of such capacities under the Existing Credit Agreement.
 
(aa) "NordLB/Security Trustee Consent" means a consent agreement or agreements covering all of the Aircraft executed by NordLB and the Security Trustee dated on or before the Closing Date relating to the Existing Credit Agreement and consenting to the transactions contemplated by this Agreement.
 
(bb) Order” means any judgment, order, injunction (including any preliminary injunction), decision, determination, award, ruling, writ, stipulation, restriction, assessment or decree of, or entered by, with or under the supervision of, any Governmental Authority, each as amended.
 
(cc) Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, any other business entity or a Governmental Authority or governmental entity (or any department, agency or political subdivision thereof).
 
(dd) "Proceeds Side Letter" means a side letter dated on or before the Closing Date relating to, inter alia, the application of the Purchase Price between the Seller, the Purchaser and Drake Asset Management Jersey Limited
 
(ee) “Purchaser Additional Insureds” means Purchaser, Falko Regional Aircraft Limited and their respective officers, directors, employees, agents, servants, successors and permitted assigns.
 
(ff) “Seller Additional Insureds” means “AeroCentury Corp. and JetFleet Management Corp., Wells Fargo Delaware Trust Company National Association, and their respective officers, directors, employees, agents, servants, successors and permitted assigns.
 
(gg) Security Trustee” means Wilmington Trust Company, as security trustee.
 
(hh) "Specified Account" means the following account of the Seller:
 
Zions Bancorporation, N.A.
 
465 California St.
 
San Francisco, CA 94104
 
ABA: 121 002 042
 
SWIFT: ZFNBUS55
 
Account name: AeroCentury Corp.
 
Account number: 1750000381.
 
(ii) "Taxes" has the meaning given to it in Article 7.4.
 
(jj) "Transaction Documents" mean, together, this Agreement, the Existing MI Pledge Release, each Lease Amendment Agreement, the NordLB/Security Trustee Consent, the New MI Pledge, the Proceeds Side Letter and any notice, acknowledgement, instrument or other document required to be entered into in connection with the foregoing.
 
 
 



 
SCHEDULE B
 
AIRCRAFT DESCRIPTION
 
Manufacturer
 
Serial Number
 
Model
 
Engine #1
 
Engine #2
 
Embraer
 
17000168
 
ERJ 170-200LR
 
193478
 
193479
 
Embraer
17000172
 
ERJ 170-200LR
 
193484
 
193489
 
Embraer
17000173
 
ERJ 170-200LR
 
193492
 
193499
 
 
 
 
 
 
 
 

 
SCHEDULE C
 
LEASE DOCUMENTS
 
Republic Airways
 
MSN 17000168
 
Lease Agreement [N109HQ] dated 29 May 2007 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc. (formerly, Republic Airline, Inc.)
Lease Supplement No.1 [N109HQ] dated 29 May 2007 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc.
Return Side Letter [N109HQ] dated 29 May 2007 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee, Republic Airways Inc. and Metropolitan Life Insurance Company.
Participation Agreement [N109HQ] dated 29 May 2007 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee, Republic Airways Inc. and Metropolitan Life Insurance Company.
Engine Warranty Assignment Agreement [N109HQ] dated 29 May 2007 between GE Engines Services, Inc. and Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and consented to by General Electric Company and GE Engine Services Distribution, LLC.
Guaranty dated 29 May 2007 between Republic Airways Holdings Inc., Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Metropolitan Life Insurance Company.
Tax Indemnity Agreement [N109HQ] dated 29 May 2007 between Republic Airways Inc. and Metropolitan Life Insurance Company.
Amendment No.1 to Lease Agreement (N109HQ) dated 10 October 2016 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc.
Lease Agreement No.2 (N109HQ) dated 26 July 2017 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc.
Lease Agreement No.3 (N109HQ) dated 31 December 2018 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc.
Lease Agreement No.4 (N109HQ) dated 8 February 2019 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc.
 
MSN 17000172
 
Lease Agreement [N110HQ] dated 28 June 2007 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc. (formerly, Republic Airline, Inc.)
Lease Supplement No.1 [N110HQ] dated 28 June 2007 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc.
Participation Agreement [N110HQ] dated 28 June 2007 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee, Republic Airways Inc. and Metropolitan Life Insurance Company.
Engine Warranty Assignment Agreement [N110HQ] dated 28 June 2007 between GE Engines Services, Inc. and Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and consented to by General Electric Company and GE Engine Services Distribution, LLC.
Guaranty dated 28 June 2007 between Republic Airways Holdings Inc., Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Metropolitan Life Insurance Company.
Tax Indemnity Agreement [N110HQ] dated 28 June 2007 between Republic Airways Inc. and Metropolitan Life Insurance Company.
Amendment No.1 to Lease Agreement (N110HQ) dated 10 October 2016 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc.
Lease Agreement No.2 (N110HQ) dated 23 June 2017 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc.
Lease Agreement No.3 (N110HQ) dated 31 December 2018 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc.
Lease Agreement No.4 (N110HQ) dated 8 February 2019 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc.
 
MSN 17000173
 
Lease Agreement [N111HQ] dated 28 June 2007 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc. (formerly, Republic Airline, Inc.)
Lease Supplement No.1 [N111HQ] dated 28 June 2007 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc.
Participation Agreement [N111HQ] dated 28 June 2007 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee, Republic Airways Inc. and Metropolitan Life Insurance Company.
Engine Warranty Assignment Agreement [N111HQ] dated 28 June 2007 between GE Engines Services, Inc. and Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and consented to by General Electric Company and GE Engine Services Distribution, LLC.
Guaranty dated 28 June 2007 between Republic Airways Holdings Inc., Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Metropolitan Life Insurance Company.
Tax Indemnity Agreement [N111HQ] dated 28 June 2007 between Republic Airways Inc. and Metropolitan Life Insurance Company.
Amendment No.1 to Lease Agreement (N111HQ) dated 10 October 2016 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc.
Lease Agreement No.2 (N111HQ) dated 23 June 2017 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc.
Lease Agreement No.3 (N111HQ) dated 31 December 2018 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc.
Lease Agreement No.4 (N111HQ) dated 8 February 2019 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc.
 
 
 
 
 
 

 
 
SCHEDULE D
 
FORM OF LIMITED LIABILITY AGREEMENT OF COMPANY
 
 
 
 
 

 
SCHEDULE E
 
TRUST DOCUMENTS
 
Republic Airways
 
MSN 17000168
 
Trust Agreement [N109HQ] dated 25 May 2007 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Metropolitan Life Insurance Company.
Assignment and Assumption Agreement (N109HQ) dated 26 September 2007 between Metropolitan Life Insurance Company and Metlife Capital, Limited Partnership.
Amendment No.1 to Trust Agreement [N109HQ] dated 26 September 2007 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Metlife Capital, Limited Partnership.
Assignment and Assumption Agreement (N109HQ) dated 26 July 2017 between Metlife Capital, Limited Partnership, AeroCentury Corp., Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc.
Assignment and Assumption Agreement (N109HQ) dated 31 December 2018 between ACY E-175 LLC, AeroCentury Corp., Republic Airways Inc. and Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee.
 
MSN 17000172
 
Trust Agreement [N110HQ] dated 26 June 2007 between Metropolitan Life Insurance Company and Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee.
Assignment and Assumption Agreement (N110HQ) dated 26 September 2007 between Metropolitan Life Insurance Company and Metlife Capital, Limited Partnership.
Amendment No.1 to Trust Agreement [N110HQ] dated 26 September 2007 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Metlife Capital, Limited Partnership.
Assignment and Assumption Agreement (N110HQ) dated 23 June 2017 between Metlife Capital, Limited Partnership, AeroCentury Corp., Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc.
Assignment and Assumption Agreement (N110HQ) dated 31 December 2018 between ACY E-175 LLC, AeroCentury Corp., Republic Airways Inc. and Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee.
 
MSN 17000173
 
Trust Agreement [N111HQ] dated 26 June 2007 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Metropolitan Life Insurance Company.
Assignment and Assumption Agreement (N111HQ) dated 26 September 2007 between Metropolitan Life Insurance Company and Metlife Capital, Limited Partnership.
Amendment No.1 to Trust Agreement [N111HQ] dated 26 September 2007 between Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Metlife Capital, Limited Partnership.
Assignment and Assumption Agreement (N111HQ) dated 23 June 2017 between Metlife Capital, Limited Partnership, AeroCentury Corp., Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee and Republic Airways Inc.
Assignment and Assumption Agreement (N111HQ) dated 31 December 2018 between ACY E-175 LLC, AeroCentury Corp., Republic Airways Inc. and Wells Fargo Delaware Trust Company, not in its individual capacity but solely as owner trustee.
 
 
 
 
 
 
 
 

 

 
 
 
 
 
 
BORROWER PARENT TRANSFER AGREEMENT
 
dated as of March 16, 2021 by
 
AEROCENTURY CORP.,
 
as Prior Borrower Parent
 
DRAKE JET LEASING 10 LLC,
 
as New Borrower Parent
 
ACY E-175 LLC,
 
as Republic Borrower
 
NORDDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH,
 
as Participant
 
NORDDEUTSCHE LANDESBANK GIROZENTRALE,
 
as Swap Counterparty
 
NORDDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH,
 
as Agent
 
and
 
WILMINGTON TRUST COMPANY,
 
as Security Trustee
 
Aircraft Credit Facility
______________________________
 
Norddeutsche Landesbank Girozentrale, New York Branch
Mandated Lead Arranger
 
 
 
 
 
VP/#42016062.6
TABLE OF CONTENTS
 
Page
 
 
Section 1. 
Definitions 1
 
 
Section 2. 
Agreements 1
 
2.1 
General 1
2.2 
Consent to Membership Interest Transfer 2
2.3 
Release of the Prior Borrower Parent 2
2.4 
New Borrower Parent Pledge Agreement 2
2.5 
Amendment to Swap Master Agreement 3
2.6 
Amendments to the Credit Agreement and the other Operative Documents 3
2.7 
Acknowledgment Regarding Related Borrowers 3
 
 
Section 3. 
Conditions Precedent; Conditions Subsequent 3
 
 
Section 4. 
Representations and Warranties 5
 
 
Section 5. 
Miscellaneous 7
 
5.1 
Amendments, Etc 7
5.2 
Ratification; Effectiveness 7
5.3 
Further Assurance 8
5.4 
Costs 8
5.5 
Successors and Assigns 8
5.6 
Captions 8
5.7 
Counterparts 8
5.8 
Governing Law; Submission to Jurisdiction 8
5.9 
Waiver of Jury Trial 9
 
SCHEDULE I
-
Form of Borrower Parent Pledge Agreement
 
 
 

 
BORROWER PARENT TRANSFER AGREEMENT
 
THIS BORROWER PARENT TRANSFER AGREEMENT is made as of March 16, 2021 (this “Agreement”) among AEROCENTURY CORP., a corporation incorporated under the laws of the State of Delaware (the “Prior Borrower Parent”), DRAKE JET LEASING 10 LLC, a limited liability company organized under the laws of the State of Delaware (the “New Borrower Parent”), ACY E-175 LLC, a limited liability company organized under the laws of the State of Delaware (the “Republic Borrower”), NORDDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, as a loan participant (in such capacity, and together with its successors, assigns and transferees, each a “Participant” and, together, the “Participants”), NORDDEUTSCHE LANDESBANK GIROZENTRALE, as swap counterparty (in such capacity, the “Swap Counterparty”), NORDDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, as loan facility agent (in such capacity, the “Agent”), and WILMINGTON TRUST COMPANY, a Delaware trust company, as security trustee (the “Security Trustee”).
 
WHEREAS, the Republic Borrower, the Participant, the Agent and the Security Trustee, among others, have previously entered into that certain Credit Agreement dated as of February 6, 2019 (as amended, modified or supplemented from time to time prior to the date hereof, the “Credit Agreement”);
 
WHEREAS, the Prior Borrower Parent and the Security Trustee have previously entered into that certain Membership Interest Pledge Agreement dated as of February 8, 2019 (as amended, modified or supplemented from time to time prior to the date hereof, the “Existing Borrower Parent Pledge Agreement”) with respect to, inter alia, the Prior Borrower Parent’s ownership of 100% of the Membership Interest (as defined in the Existing Borrower Parent Pledge Agreement) in the Republic Borrower; and
 
WHEREAS, the Prior Borrower Parent intends to transfer all of its right, title and interest to and in, inter alia, the Membership Interest to the New Borrower Parent (the “Membership Interest Transfer”).
 
NOW THEREFORE, for good and valuable consideration, the receipt of which has been duly received, the parties hereto agree as follows:
 
Section 1. Definitions
 
1.1 Unless the context otherwise requires, capitalized terms used herein (including the recitals above) and not otherwise defined herein shall have the meanings set forth in the Credit Agreement for all purposes of this Agreement. The term “New Agreements” shall mean this Agreement, the Servicing Agreement, the Servicer Consent and the New Borrower Parent Pledge Agreement.
 
Section 2. Agreements.
 
2.1 General. Pursuant to that certain purchase agreement in respect of the Membership Interest dated  March 16, 2021 (the “Purchase Agreement”) between, inter alios, the Prior Borrower Parent and the New Borrower Parent, the Prior Borrower Parent has agreed to sell, assign and transfer, and the New Borrower Parent has agreed to purchase and assume, the Membership Interest (as defined in the Existing Borrower Pledge Agreement). This Agreement sets forth certain agreements among the parties hereto in respect of the Membership Interest Transfer. For the purposes of this Agreement, the releases, consents and agreements contemplated by this Section 2 shall be effective upon the satisfaction of all of the conditions precedent set forth in Section 3 in accordance with the terms thereof (the “Transfer Date”).
 
2.2 Consent to Membership Interest Transfer. Notwithstanding Section 5.4 of the Credit Agreement, Sections 4(a) and 16 of the Existing Borrower Parent Pledge Agreement or any other provision of the Operative Documents to the contrary, each of the Security Trustee, the Agent the Participant and Swap Counterparty consents to the Membership Interest Transfer and the entry into the New Agreements on the terms and conditions set forth herein.
 
2.3 Release of the Prior Borrower Parent. On the Transfer Date:
 
(a) each of the Participant and Swap Counterparty, the Agent and the Security Trustee hereby (i) releases and discharges the Prior Borrower Parent from all of its present and future liabilities, duties and obligations owing to them under the Existing Borrower Parent Pledge Agreement and the other Operative Documents (other than any liabilities, duties and obligations that expressly survive the termination of such documents) and (ii) agrees that they will have no further rights or claims against the Prior Borrower Parent thereunder (other than any rights or claims arising prior to the Transfer Date and any rights or claims that expressly survive the termination of such documents);
 
(b) the Security Trustee hereby, for and on behalf of the Secured Parties, (i) releases the Lien of the Existing Borrower Parent Pledge Agreement and (ii) releases, discharges and, where applicable, transfers or reassigns to the Prior Borrower Parent all of its rights, titles and interest in and to the Pledged Collateral (as defined in the Existing Borrower Parent Pledge Agreement) assigned unto the Security Trustee under the Existing Borrower Parent Pledge Agreement;
 
(c) each of the Prior Borrower Parent and the Security Trustee is hereby authorized to make such UCC filings as may be necessary to evidence the release of the Pledged Collateral (as defined in the Existing Borrower Parent Pledge Agreement). In connection therewith, the Security Trustee (and the other parties hereto, if so requested) will, at the New Borrower Parent’s reasonable cost and expense, execute and deliver, or cause to be executed and delivered, such documents as may be reasonably requested by the Prior Borrower Parent or the New Borrower Parent to evidence such release (which documents shall be provided to the Security Trustee by the Prior Borrower Parent in execution form); and
 
(d) the Security Trustee hereby consents to the revocation of all powers of attorney granted to it by the Prior Borrower Parent under the Existing Borrower Parent Pledge Agreement and such powers of attorney are hereby revoked by the Prior Borrower Parent with immediate effect from the Transfer Date.
 
2.4 New Borrower Parent Pledge Agreement. The New Borrower Parent and the Security Trustee hereby agree to enter into a membership interest pledge agreement on the Transfer Date substantially in the form of Schedule I hereto (the “New Borrower Parent Pledge Agreement”).
 
2.5 Amendment to Swap Master Agreement. On or promptly following the Transfer Date (but in any case, within five Business Days following the Transfer Date), the Swap Counterparty and the Republic Borrower shall enter into an amendment to the Swap Master Agreement of form and substance satisfactory to the Swap Counterparty.
 
2.6 Amendments to the Credit Agreement and the other Operative Documents.
 
(a) As of the Transfer Date, all references to the “Borrower Parent” or, with respect to the Borrower Parent Pledge Agreement, the “Pledgor”, in the Credit Agreement or the other Operative Documents shall be construed wherever it appears therein as if it referred to the New Borrower Parent in place of the Prior Borrower Parent, except where such reference relates to an obligation to be satisfied, or a representation or warranty that is not continuing and was made, prior to the Transfer Date.
 
(b) As of the Transfer Date, all references to the “Remarketing Agent” in the Credit Agreement or any other Operative Document shall be construed wherever it appears therein as if it referred to Falko Regional Aircraft Limited in place of the Prior Borrower Parent, except where such reference relates to an obligation to be satisfied or a representation or warranty that is not continuing and was made prior to the Transfer Date.
 
(c) As of the Transfer Date, all references to the Loan Operative Documents shall be deemed to include (i) the Servicing Agreement and (ii) the Servicer Consent, in each case as defined below.
 
2.7 Acknowledgment Regarding Related Borrowers. Each of the parties hereto hereby acknowledges that each of the 19002 Borrower, the 19003 Borrower and the Adria Borrower is no longer party to the Credit Agreement, the Security Agreement and the other Operative Documents and has previously been released and discharged from all liabilities, duties, obligations, rights and claims under such Operative Documents (other than any liabilities, duties and obligations that expressly survived the release of such Borrower from such documents), and the Liens created under the Loan Operative Documents relating to Mortgaged Property and Pledged Property relating to or granted by each such Borrower have been previously released or will be released prior to the Transfer Date and each of the parties hereto hereby acknowledge that neither the New Borrower Parent nor Republic Borrower shall have any liabilities, duties obligations, in relation thereto; provided that, for the avoidance of doubt, the Cash Collateral Account remains open and subject to the Liens created under the Loan Operating Documents.
 
Section 3. Conditions Precedent; Conditions Subsequent.
 
3.1 Conditions Precedent. The releases, consents and agreements contemplated by Section 2 of this Agreement shall become effective upon receipt by the Participant, the Swap Counterparty, the Agent and the Security Trustee of each of the following conditions precedent, each of which shall be in form and substance reasonably satisfactory to the Agent (or such condition shall be waived by the Agent with the consent of the Participant):
 
(a) a copy of this Agreement, duly executed and delivered by each of the parties hereto;
 
(b) a copy of the Membership Interest Purchase Agreement (redacted as necessary to remove commercially sensitive information) and each Transaction Document (as defined in the Membership Interest Purchase Agreement (redacted as necessary to remove commercially sensitive information)), in each case duly executed by each of the parties thereto;
 
(c) a copy of a membership transfer power evidencing that the Membership Interest has been transferred (or will upon the Transfer Date be transferred) from the Prior Borrower Parent to the New Borrower Parent;
 
(d) a copy of the New Borrower Parent Pledge Agreement, duly executed and delivered by the parties thereto, together with copies of the limited liability company interest transfer form and any other certificates, instruments or documents to be delivered in connection with the New Borrower Parent Pledge Agreement, in each case duly executed and delivered by the parties thereto;
 
(e) a copy of the Servicing Agreement dated on or about the Transfer Date, among, inter alios, Falko Regional Aircraft Limited (the “Servicer”), the Republic Borrower and the New Borrower Parent (the “Servicing Agreement”), duly executed and delivered by the parties thereto;
 
(f) a copy of the Servicer Notice and Acknowledgment dated on or about the Transfer Date, from the Republic Borrower and the Security Trustee to the Servicer, and acknowledged and agreed by, inter alios, the New Borrower Parent, the Participant and the Agent (the “Servicer Consent”), duly executed and delivered by the parties thereto;
 
(g) a copy of the Security Agreement Supplement with respect to the Servicing Agreement, duly executed and delivered by the Republic Borrower;
 
(h) evidence that any applicable filings and/or registrations in relation to the New Borrower Parent Pledge Agreement have been made (or will be made immediately following the Transfer Date) in all relevant jurisdictions, and the New Borrower Parent hereby authorizes such filings (including, without limitation, the filing of UCC-1 financing statements);
 
(i) each of the Participant, the Swap Counterparty, the Agent and the Security Trustee shall have received a legal opinion, in form and substance satisfactory to it, from:
 
(i) Vedder Price P.C., as special New York counsel to the New Borrower Parent; and
 
(ii) Morris James LLP, as special Delaware counsel to the Republic Borrower and the New Borrower Parent;
 
(j) a copy, duly certified as a true copy by the Republic Borrower’s authorized signatory, of (i) the constitutional documents, (ii) the specimen signature of each authorized signatory for the Republic Borrower, and (iii) other evidence authorizing execution, delivery and performance by the Republic Borrower of each New Agreement to which it is a party and each Transaction Document (as defined in the Membership Interest Purchase Agreement) to which it is a party;
 
(k) a copy, duly certified as a true copy by the New Borrower Parent’s authorized signatory, of (i) the constitutional documents, (ii) resolutions of the board of directors approving the terms of each New Agreement to which it is a party and naming the person or persons authorized to sign each New Agreement to which it is a party on behalf of the New Borrower Parent and any documents to be delivered by it pursuant hereto contemporaneously herewith, and (iii) the specimen signature of each person or persons authorized by the resolution referred to above;
 
(l) a copy, duly certified as a true copy by the Servicer’s authorized signatory, of an authorization naming the person or persons authorized to sign the Servicing Agreement and the Servicer Consent on behalf of the Servicer and any documents to be delivered by it pursuant hereto contemporaneously herewith, and the specimen signature of each person or persons authorized by the authorization referred to above;
 
(m) any documentation and other information with respect to the Servicer, the Republic Borrower and the New Borrower Parent required by the Participant, the Swap Counterparty, the Agent and/or the Security Trustee under any applicable “know your customer”, “customer due diligence”, Anti-Corruption Laws, Anti-Money Laundering Laws or other similar laws;
 
(n) each of the representations and warranties contained in Section 4 shall be true and accurate;
 
(o) no event shall have occurred and be continuing which constitutes a Default or an Event of Default;
 
(p) the Security Trustee shall have received a duly executed letter of undertaking from the insurance broker of Republic Airways Inc., in form and substance reasonably satisfactory to the Security Trustee, the Participant and the Swap Counterparty, together with a certificate of insurance and/or reinsurance from such broker; and
 
(q) the Agent, the Participant and the Security Trustee shall have received such other documents and evidence with respect to the Servicer, the Republic Borrower, the Prior Borrower Parent and the New Borrower Parent as any of them or their counsel may reasonably request in order to establish the consummation of the transactions contemplated by the Membership Interest Transfer and the New Agreements, the taking of all corporate proceedings in connection therewith, compliance with the conditions herein set forth and compliance with any money laundering informational requirements the Participant may have.
 
3.2 Conditions Subsequent. Promptly following the Transfer Date, the Servicer, the Republic Borrower and/or the New Borrower Parent, as the case may be, shall provide each of the Participant, the Swap Counterparty, the Agent and the Security Trustee any additional documentation and other information with respect to the Servicer, the Republic Borrower and the New Borrower Parent required by the Participant, the Swap Counterparty, the Agent and/or the Security Trustee under any applicable “know your customer”, “customer due diligence”, Anti-Corruption Laws, Anti-Money Laundering Laws or other similar laws, to the extent such documentation or information was not so provided prior to the Transfer Date.
 
Section 4. Representations and Warranties.
 
4.1 Each of the Republic Borrower and the New Borrower Parent hereby represents and warrants in respect of itself only that the following statements are, on the date hereof, true and accurate:
 
(a) it is duly organized under the laws of the State of Delaware and is validly existing, and has full power and authority to conduct its business as presently conducted, to own or hold under lease its assets, to enter into and perform its obligations under each New Agreement to which it is a party and to consummate the transactions contemplated by the New Agreements;
 
(b) its organizational documents permit it to sign and deliver, and perform its obligations pursuant to the transactions contemplated by each New Agreement to which it is a party and all necessary authorizations, approvals, consents, licenses, permits and orders of and registrations with any Governmental Authority have been obtained;
 
(c) each New Agreement to which it is a party constitutes legal, valid and binding obligations of it, enforceable in accordance with the terms of such New Agreement;
 
(d) the execution and entry into each New Agreement to which it is a party and performance of its obligations thereunder do not contravene any applicable law or any agreement or other instrument to which it is a party;
 
(e) to the best of its knowledge, no event has occurred that constitutes a contravention of, or default under, any agreement by which it or any of its assets is bound or affected, and that could reasonably be expected to have a material adverse effect on its operations or its ability to observe or perform its obligations under each New Agreement to which it is a party;
 
(f) no litigation, arbitration or administrative proceeding that could reasonably be expected to have a material adverse effect on its operations or its ability to observe or perform its obligations under each New Agreement to which it is a party is presently in progress or, pending or threatened against it or any of its assets;
 
(g) all information furnished to Participant by and on behalf of it in connection with the Membership Interest Transfer and the transaction contemplated by the New Agreements is complete, true and correct in all material respects;
 
(h) it, under applicable law, is subject to private commercial law and suit, and neither it nor its properties or assets have any right of immunity from suit or execution on the grounds of sovereignty in Delaware or any other jurisdiction or on any other grounds;
 
(i) each of it and its Affiliates, and to the best of their knowledge its manager, directors, officers, employees, associated parties and persons, as applicable, acting on behalf of it are in compliance in all respects with (i) all applicable laws and regulations to which it or any of its assets may be subject relating to corruption and bribery, and (ii) other laws to which it or any of its assets may be subject if failure so to comply would result in a material adverse effect on its operations or its ability to observe or perform its obligations under each New Agreement to which it is a party;
 
(j) neither it nor any of its Affiliates nor, to the best of its knowledge, any director, officer, employee, associated party or person acting on behalf of it or any Affiliate has engaged in any activity which would breach Anti-Corruption Laws or any similar applicable laws;
 
(k) to the best of the its knowledge and belief, no actions or investigations by any Governmental Authority are ongoing or threatened against it, or any of its manager, directors, officers, employee, associated party or person, as applicable, acting on their behalf in relation to a breach of Anti-Corruption Laws or any similar applicable laws;
 
(l) it and its Affiliates have not engaged and will not have engaged, as the case may be, in any transaction, investment, undertaking or activity in violation of the Anti-Money Laundering Laws of any jurisdiction in each case as they may be applicable to it or any of its Affiliates, and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving it or any of its Affiliates is with respect to the Anti-Money Laundering Laws, pending or, to its knowledge, threatened; and
 
(m) neither it nor, to its knowledge, any of its directors, employees or officers:
 
(i) is a Sanctioned Person;
 
(ii) is owned or controlled by, or acting directly or indirectly on behalf of or for the benefit of, a Sanctioned Person;
 
(iii) owns or controls a Sanctioned Person; or
 
(iv) has violated or is in violation of any Sanctions (including, but without limitation, the U.S. sanctions administered by OFAC, any other U.S. government sanctions, export or procurement laws or any other sanctions or other such restrictions on business dealing imposed by the European Union, the United Kingdom or the United Nations) or is or has engaged in any conduct that would provide a basis for it to be designated as a subject of Sanctions.
 
4.2 The Prior Borrower Parent hereby represents and warrants that the following statements are, on the date hereof, true and accurate:
 
(a) it is duly incorporated under the laws of the State of Delaware and is validly existing, and has full corporate power and authority to conduct its business as presently conducted, to own or hold under lease its assets, to enter into and perform its obligations under this Agreement and to consummate the transactions contemplated by this Agreement;
 
(b) its organizational documents permit it to sign and deliver, and perform its obligations pursuant to the transactions contemplated by this Agreement and all necessary authorizations, approvals, consents, licenses, permits and orders of and registrations with any Governmental Authority have been obtained;
 
(c) this Agreement constitutes legal, valid and binding obligations of it, enforceable in accordance with the terms of this Agreement;
 
(d) the execution and entry into this Agreement and performance of its obligations hereunder do not contravene any applicable law or any agreement or other instrument to which it is a party;
 
(e) to the best of its knowledge, no event has occurred that constitutes a contravention of, or default under, any agreement by which it or any of its assets is bound or affected, and that could reasonably be expected to have a material adverse effect on its operations or its ability to observe or perform its obligations under this Agreement;
 
(f) no litigation, arbitration or administrative proceeding that could reasonably be expected to have a material adverse effect on its operations or its ability to observe or perform its obligations under this Agreement is presently in progress or, pending or threatened against it or any of its assets;
 
(g) all information furnished by and on behalf of it in connection with the Membership Interest Transfer and the transaction contemplated by this Agreement is complete, true and correct in all material respects; and
 
(h) it, under applicable law, is subject to private commercial law and suit, and neither it nor its properties or assets have any right of immunity from suit or execution on the grounds of sovereignty in Delaware or any other jurisdiction or on any other grounds.
 
Section 5. Miscellaneous.
 
5.1 Amendments, Etc. No term or provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party or other Person against whom enforcement of the change, waiver, discharge or termination is sought; and any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given.
 
5.2 Ratification; Effectiveness. Except as expressly amended hereby, all provisions of the Credit Agreement and the other Operative Documents are hereby ratified and affirmed and shall continue in full force and effect in accordance with their terms. This Agreement shall take effect as of the Transfer Date.
 
5.3 Further Assurance. Each of the parties hereto shall, at the cost of the New Borrower Parent, do and perform such other and further acts and sign, seal, execute, acknowledge, deliver, file, and register and de-register and release any additional documents, instruments, deeds, certificates, consents and assurances and any and all such other instruments as may be required by law or reasonably requested by the other in order to establish, maintain, protect or preserve the rights and remedies of the other hereunder and to carry out and effect the intent and purpose of this Agreement.
 
5.4 Costs. The New Borrower Parent will pay or reimburse the Participant, the Swap Counterparty, the Agent and the Security Trustee for all documented out-of-pocket costs and expenses of the Participant, the Agent, the Swap Counterparty and the Security Trustee reasonably incurred by them (including, without limitation, the reasonable fees and out-of-pocket expenses of Vedder Price P.C., special New York counsel to the Participants, the Swap Counterparty and the Agent and of Morris James LLP, special counsel to the Security Trustee), in connection with the negotiation, preparation, execution and delivery of this Agreement and the other New Agreements and the consummation of the transactions contemplated hereunder and thereunder. The New Borrower Parent shall pay or reimburse for such costs and expenses promptly following receipt of invoices with respect thereto.
 
5.5 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns.
 
5.6 Captions. The headings of the various Sections herein and in the table of contents hereto are for convenience of reference only and shall not define or limit any of the terms or provisions hereof.
 
5.7 Counterparts. This Agreement may be executed by the parties in separate counterparts and any single counterpart or set of counterparts executed and delivered by the parties shall constitute one and the same Agreement and a full original Agreement for all purposes. The words “execution,” “signed,” “signature,” and words of like import in this Agreement shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable law, including the Federal Electronic Signatures in Global and National Commerce Act, the New York State Electronic Signatures and Records Act, or any other similar state laws based on the Uniform Electronic Transactions Act.
 
5.8 Governing Law; Submission to Jurisdiction. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK. Each party hereto hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for the purpose of all legal proceedings arising out of or relating to this Agreement, the other Operative Documents or the transactions contemplated hereby and thereby. Each party hereto irrevocably waives, to the fullest extent permitted by applicable law, any objection which it may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum.
 
5.9 Waiver of Jury Trial. THE REPUBLIC BORROWER, THE PRIOR BORROWER PARENT, THE NEW BORROWER PARENT, THE PARTICIPANT, THE SWAP COUNTERPARTY, THE AGENT AND THE SECURITY TRUSTEE HEREBY WAIVE TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO WHICH THEY ARE PARTIES INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH THIS AGREEMENT OR THE OTHER OPERATIVE DOCUMENTS OR THE RELATIONSHIP ESTABLISHED HEREUNDER OR THEREUNDER.
 
[Signature pages follow]
 
 
 
 

[Borrower Parent Transfer Agreement]
IN WITNESS WHEREOF, the parties hereto have caused this Borrower Parent Transfer Agreement to be executed by their duly authorized officers or attorneys in fact all as of the day and year first written above.
 
 
 
AEROCENTURY CORP., as Prior Borrower Parent
 
By:  
Name: 
Title:
 
 
 
 
 

[Borrower Parent Transfer Agreement]
 
 
DRAKE JET LEASING 10 LLC, as New Borrower Parent
 
By: 
Name: 
Title:
 
 



[Borrower Parent Transfer Agreement]
 
 
ACY E-175 LLC, as Republic Borrower
By: Drake Jet Leasing 10 LLC, its Manager
        By:                                                                   
        Name:
        Title:
 
 
 
 
 

[Borrower Parent Transfer Agreement]
 
 
NORDDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, as Participant
By: 
Name:
Title:
 
By:  
Name:
Title:
 
 
NORDDEUTSCHE LANDESBANK GIROZENTRALE, NEW YORK BRANCH, as Agent
By: 
Name:
Title:
 
By:  
Name:
Title:
 
 
NORDDEUTSCHE LANDESBANK GIROZENTRALE, as Swap Counterparty
By: 
Name:
Title:
 
By:  
Name:
Title:
 
 



[Borrower Parent Transfer Agreement]
 
 
WILMINGTON TRUST COMPANY, as Security Trustee
By:  
Name:
Title:
 
 
 
 
 

 
Schedule I
to the Borrower Parent Transfer Agreement
 
FORM OF BORROWER PARENT PLEDGE AGREEMENT
 
MEMBERSHIP INTEREST PLEDGE AGREEMENT
 
dated as of March __, 2021
 
between
 
DRAKE JET LEASING 10 LLC
 
as Pledgor
 
and
 
WILMINGTON TRUST COMPANY
as Security Trustee
_______________________________________
 
Borrower Parent Pledge Agreement
________________________________________
 
 
 
 
 
 
 
VP/#42021205.3
TABLE OF CONTENTS
 
Page
 
 
 
Section 1. 
Definitions 1
 
 
Section 2. 
Pledge 1
 
 
Section 3. 
Representations and Warranties of the Pledgor 2
 
 
Section 4. 
Covenants of the Pledgor 3
 
 
Section 5. 
Voting Rights, Distributions etc 5
 
 
Section 6. 
Delivery of Pledged Collateral 6
 
 
Section 7. 
Remedies upon Default 6
 
 
Section 8. 
Cooperation 8
 
 
Section 9. 
Private Sales 8
 
 
Section 10. Application of Proceeds of Sale and Cash and Securities  9
 
 
Section 11.Limitation on Duties Regarding Preservation of Pledged Collateral  9
 
 
Section 12. Further Assurances  9
 
 
Section 13. Notices  9
 
 
Section 14. No Waiver  9
 
 
Section 15. GOVERNING LAW  9
 
 
Section 16. Successors and Assigns  10
 
 
Section 17. Waivers; Amendments  10
 
 
Section 18. Termination  10
 
 
Section 19. Severability  10
 
 
Section 20. Headings  10
 
 
Section 21. Counterparts  10
 
 
Section 22. Entire Agreement  10
 
 
Section 23. WAIVER OF JURY TRIAL  11
 
 
Section 24. Non-Recourse Obligations  11
 
 
 
 
EXHIBIT A
 
-
 
Form of Equity Power
 
 
 
 
 
 
 
VP/#42021205.3
 
THIS MEMBERSHIP INTEREST PLEDGE AGREEMENT dated as of March __, 2021 (this “Agreement”) is between DRAKE JET LEASING 10 LLC, a Delaware limited liability company, as pledgor (the “Pledgor”) and WILMINGTON TRUST COMPANY, as security trustee (the “Security Trustee”).
 
W I T N E S S E T H:
 
WHEREAS, the Pledgor is the sole member and manager of ACY E-175 LLC, a Delaware limited liability company (the “Company”) pursuant to that certain Amended and Restated Operating Agreement, dated as of March __, 2021 (as it may be modified, supplemented or amended from time to time, theLLC Agreement”) and owns 100% of the Membership Interest (as defined below) in the Company, as evidenced by Certificate No. 2 dated March __, 2021 (the “Certificate”) issued by the Company to the Pledgor;
 
WHEREAS, the Company has entered into a Credit Agreement, dated as of February 7, 2019, among, inter alios, the Company, as a borrower, the participants party thereto (the “Participants”), Norddeutsche Landesbank Girozentrale, New York Branch, as agent, Norddeutsche Landesbank Girozentrale, as swap counterparty, and the Security Trustee (as it may be modified, supplemented or amended from time to time, the “Credit Agreement”) pursuant to which the Participants agreed to make certain loans available to refinance the Aircraft;
 
WHEREAS, the Company has entered into a Security Agreement, dated as of February 8, 2019, among, inter alios, the Company, as a mortgagor, and the Security Trustee (as it may be modified, supplemented or amended from time to time, the “Mortgage”);
 
WHEREAS, the Company and the Pledgor have entered into the Borrower Parent Transfer Agreement, dated as of March __, 2021, among, inter alios, the Company, the Pledgor and the Security Trustee (as it may be modified, supplemented or amended from time to time, the “Borrower Parent Transfer Agreement”); and
 
WHEREAS, it is a condition precedent to the occurrence of the Transfer Date (as defined in the Borrower Parent Transfer Agreement), that the Pledgor grant to the Security Trustee a security interest in the Membership Interest (as defined below).
 
NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Pledgor hereby covenants and agrees with the Security Trustee as follows:
 
Section 1. Definitions. Unless the context otherwise requires, capitalized terms used herein and not otherwise defined herein shall have the meanings set forth in the Credit Agreement.
 
Section 2. Pledge. As security for the payment and performance in full of all of the Secured Obligations (as defined in the Security Agreement), the Pledgor hereby pledges, hypothecates, assigns, transfers, sets over, delivers and grants to the Security Trustee a first priority Lien in all right, title and interest of the Pledgor which presently exist or hereafter arise in, to and under the following:
 
(i) the limited liability company interest in the Company held by the Pledgor and the rights of the Pledgor as the sole member of the Company (the “Membership Interest”),
 
(ii) all dividends, interest, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of or in exchange for any of or all the Membership Interest and all other options or rights of any nature whatsoever which may be issued or granted by the Company to the Pledgor in respect of the Membership Interest and the books and records of the Company evidencing record ownership and registration of the interests pledged hereunder,
 
(iii) all certificates or other instruments or documents representing any of the foregoing, including the Certificate,
 
(iv) all rights and privileges of the Pledgor with respect to the Membership Interest and the other property referred to in clauses (i) through (iii) above, and
 
(v) all proceeds of any of the foregoing and any property of any character whatsoever into which any of the foregoing may be converted (all items referred to in clauses (i) through (v) being hereinafter collectively referred to as the “Pledged Collateral”).
 
(a) For the avoidance of doubt, Excluded Payments (as defined in the Security Agreement) and any supplemental rent, maintenance reserves and security deposits payable to the Company under the relevant Lease (received as distributions or otherwise) shall not be Pledged Collateral.
 
TO HAVE AND TO HOLD the Pledged Collateral, together with all rights, title, interests, powers, privileges and preferences pertaining or incidental thereto, unto the Security Trustee, its successors and assigns permitted by the terms of the Credit Agreement; subject, however, to the terms, covenants and conditions hereinafter set forth.
 
Section 3. Representations and Warranties of the Pledgor. The Pledgor hereby represents and warrants as of the date hereof:
 
(a) it is a Delaware limited liability company duly organized and validly existing under the laws of the jurisdiction of its formation and has the requisite power and authority to enter into this Agreement and to carry out the transactions contemplated hereby;
 
(b) (i) it has duly authorized, executed and delivered this Agreement and (ii) this Agreement constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, receivership, reorganization, moratorium or other similar laws affecting creditors’ rights generally and by application of general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law);
 
(c) the execution, delivery and performance by the Pledgor of this Agreement is not in violation of the LLC Agreement or any indenture, mortgage, deed of trust or other instrument or agreement to which it is a party or by which it is bound or to which any of its property or assets may be subject;
 
(d) neither the execution and delivery by the Pledgor of this Agreement nor the consummation by it of any of the transactions contemplated hereby requires the consent or approval of, the giving of notice to, or the registration or filing with, or the taking of any other action in respect of, any agency or authority, except for the filing of Uniform Commercial Code financing statements (and continuations thereof) in respect of the security interests created hereby in the State of Delaware;
 
(e) the Pledgor is the record owner of the Pledged Collateral, free and clear of any and all Liens or claims of any other Person, except for the Lien granted hereunder (and the rights and remedies of the Security Trustee related to such Lien);
 
(f) the Membership Interest has been duly authorized and validly issued;
 
(g) the Certificate is accurate and the Membership Interest described therein constitutes the entire Membership Interest of the Pledgor at the date hereof;
 
(h) it has legal authority to pledge the Pledged Collateral in the manner hereby done or contemplated;
 
(i) the Pledgor, as manager and sole member of the Company, has not taken any action or commenced any legal proceedings nor (to the best of its knowledge and belief) has the Company taken any or have any been threatened against the Company for its winding up, dissolution, administration or reorganization or for the appointment of a receiver, administrator, administrative receiver, trustee or similar officer of it or any of all of its assets;
 
(j) other than the delivery of the Certificate to the Security Trustee evidencing the Pledged Collateral and the filing of a UCC-1 financing statement in respect of this Agreement, it is not necessary in order to ensure the validity, enforceability or admissibility in evidence in proceedings of this Pledge Agreement in New York or Delaware or any other relevant jurisdiction that it or any other document be filed or registered with any authority in such jurisdiction or elsewhere or that any tax be paid in respect thereof, and the Lien granted pursuant to this Agreement will constitute a valid, perfected first priority Lien on the Pledged Collateral.
 
Section 4. Covenants of the Pledgor. The Pledgor covenants as follows for so long as any Secured Obligations remain outstanding and/or unperformed (other than any contingent liabilities that continue past the termination of the Security Agreement and the other Loan Operative Documents):
 
(a) except as contemplated hereby and by the Security Agreement, the Pledgor will not make any sale, assignment, pledge, mortgage, hypothecation or transfer of the Pledged Collateral or the ownership interests of the Company and, except for the Lien granted hereby, the Pledgor will be the sole legal owner of the Pledged Collateral, free and clear of any and all Liens other than the Liens granted in favor of the Security Trustee;
 
(b) as manager and sole member of the Company, it will not cause the Company to issue any further limited liability company interests of any class or description or other securities in addition to or in substitution for the Membership Interest in existence on the Closing Date; it will hold in trust and will pledge hereunder, immediately upon its acquisition (direct or indirect) thereof, all property (other than Excluded Payments, any supplemental rent, maintenance reserves or security deposits payable under the relevant Lease and other property explicitly permitted to be received and retained by the Company under the Credit Agreement and the other Loan Operative Documents) or additional limited liability company interest of any class or description or other securities of the Company;
 
(c) at any time and from time to time, at no expense to the Security Trustee, it will promptly execute and deliver all further instruments and documents, and take all further action, that may be necessary, or that the Security Trustee may reasonably request, in order to perfect and protect any Lien granted or purported to be granted hereby or to enable the Security Trustee to exercise and enforce its rights and remedies hereunder;
 
(d) as manager and sole member of the Company, it shall not authorize or, to the extent within its power or control, consent to the appointment of a receiver, trustee or liquidator of the Company or of a substantial part of the Company’s property, or admit in writing submitted in connection with judicial or other similar procedures the Company’s inability to pay its debts generally as they come due, or make a general assignment for the benefit of creditors or permit any creditor to exercise a contractual right to assume the operations or financial management of the Company;
 
(e) as manager and sole member of the Company, it shall not authorize the Company to file a voluntary petition in bankruptcy or a voluntary petition or an answer seeking reorganization in a proceeding under any bankruptcy laws (as now or hereafter in effect) or an answer admitting the material allegations of a petition filed against the Company in any such proceedings, or authorize the Company by voluntary petition, answer or consent to or seek relief under the provisions of any other now existing or future bankruptcy, insolvency or other similar law providing for the reorganization or winding-up of corporations, or providing for an agreement, composition, extension or adjustment with the Company’s creditors or otherwise for the relief of distressed debtors;
 
(f) it shall not commence or join with any other Person in commencing any case, proceeding or action described in the preceding paragraph or seek an order, judgment or decree appointing a receiver, trustee or liquidator of the Company of all or substantial part of its property, or sequestrating of all or any substantial part of the property of the Company or otherwise file a petition against the Company in a proceeding under any bankruptcy, insolvency or other similar laws as now or hereafter in effect;
 
(g) as manager and sole member of the Company, it shall not authorize the Company to incur any indebtedness other than as provided in the Operative Documents;
 
(h) as manager and sole member of the Company, it shall not authorize the Company to engage in any business other than as contemplated by the Operative Documents;
 
(i) it shall not, unless (i) it has given at least 20 days’ prior written notice to such effect to the Security Trustee and (ii) all action reasonably necessary to protect and perfect the Lien granted or purported to be granted hereby with respect to the Pledged Collateral, shall have been taken, either (A) change its name, identity or structure or reorganize or (B) reincorporate under the laws of another jurisdiction;
 
(j) if it receives distributions from the Company that were made with funds that the Company was not entitled to receive under the Security Agreement and the other Loan Operative Documents, it shall hold such funds in trust for the Security Trustee and promptly deposit such funds in the applicable Collateral Account on behalf of the Company;
 
(k) it shall defend the Security Trustee’s right, title and Lien in and to the Pledged Collateral against the claims and demands of all Persons; and
 
(l) it will not amend, repeal or modify the LLC Agreement of the Company without the prior written consent of the Security Trustee (not to be unreasonably withheld, delayed or conditioned).
 
Section 5. Voting Rights, Distributions etc. So long as no Event of Default has occurred and is continuing, the Pledgor shall be entitled to exercise any and all voting and other consensual rights pertaining to the Membership Interest, or any part thereof, for any purpose not inconsistent with the terms of this Agreement or the other Loan Operative Documents; provided however, that the Pledgor shall not be entitled to exercise any voting and/or consensual rights and powers with respect to the following without the prior written consent of the Security Trustee:
 
(i) the winding up, dissolution, liquidation or reorganization of the Company or the composition or readjustment of its debts;
 
(ii) the merger or consolidation of the Company with any other Person;
 
(iii) the sale of all or substantially all the assets of the Company;
 
(iv) any amendment to or modification of the LLC Agreement;
 
(v) except as otherwise provided in the Operative Documents, the incurrence of any indebtedness or the creation of any Lien by the Company;
 
(vi) except as otherwise provided in the Operative Documents, the making by the Company of a general assignment for the benefit of creditors;
 
(vii) the commencement by the Company of a voluntary case or other proceeding seeking liquidation, reorganization, winding up or other relief with respect to the Company or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect or seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of the Company or of all or any substantial part of its property;
 
(viii) failing to controvert in a timely and appropriate manner, or acquiescence in writing to, any petition filed against the Company in an involuntary case under applicable bankruptcy or similar law or in any other action or proceeding against it under any law relating to bankruptcy, insolvency, reorganization, winding up or composition or readjustment of its debts;
 
(ix) other than with respect to payments permitted or required by the Operative Documents or to be made by the Security Trustee, the payment of dividends or other distributions other than in cash in respect of the Membership Interest or the repurchase or redemption of the Membership Interest; and
 
(x) the taking of any action necessary for the purpose of effecting any actions specified in the foregoing clauses (i) through (ix);
 
(m) The Pledgor shall execute and deliver, or cause to be executed and delivered, to the Security Trustee, as appropriate, all such proxies and other instruments as the Security Trustee may request for the purpose of enabling the Security Trustee to exercise all rights and privileges in respect of the Membership Interest and/or the voting and/or consensual rights and powers which the Security Trustee is entitled to exercise pursuant to this Section 5.
 
(n) At any time when an Event of Default has occurred and is continuing, all rights of the Pledgor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to Section 5(a) shall cease and all such rights shall thereupon become vested in the Security Trustee, without further act who shall thereupon have the sole right to exercise such voting and other consensual rights and remedies
 
(o) Upon any sale or other disposition of any part of the Pledged Collateral by the Security Trustee pursuant to Section 7 hereof, all of the voting and consensual rights, privileges and powers referred to in the preceding sentence pertaining to such part shall in any event become vested in the Person to whom such sale or disposition is made, which Person shall thereafter have the sole and exclusive right to exercise such voting and consensual rights, privileges and powers.
 
Section 6. Delivery of Pledged Collateral. The Pledgor agrees to deliver or cause to be delivered promptly to the Security Trustee any and all other Pledged Collateral, and any and all certificates or other instruments or documents representing any of the Pledged Collateral, including the Certificate, which shall be in or come into the Pledgor’s possession during the term of this Agreement. The Pledgor agrees to deliver to the Security Trustee on or prior to the Closing Date a duly executed limited liability company equity power form in blank in the form of Exhibit A hereto.
 
Section 7. Remedies upon Default. If an Event of Default shall have occurred and be continuing, the Security Trustee may exercise all rights of a secured party under the Uniform Commercial Code, as enacted in any applicable jurisdiction, with respect to the Pledged Collateral and, in addition, the Security Trustee may, without being required to give any notice except as herein provided or as may be required by applicable law, sell, assign, transfer, endorse and deliver the whole or, from time to time, any part of the Pledged Collateral at a public or private sale or at any broker’s board or on any securities exchange, for cash, upon credit or for other property, for immediate or future delivery, and for such price or prices and on such terms as the Security Trustee in its reasonable discretion shall deem appropriate. The Security Trustee shall be authorized at any sale to restrict the prospective bidders or purchasers to Persons who will represent and agree that they are purchasing the Pledged Collateral for their own account in compliance with the Securities Act of 1933, as amended (the “Securities Act”). Upon consummation of any sale, the Security Trustee shall have the right to assign, transfer, endorse and deliver to the purchaser or purchasers thereof the Pledged Collateral sold and all of the voting and consensual rights and powers granted and reserved to the Security Trustee pursuant hereto shall thereupon become vested in such purchaser or purchasers, subject to any reservations or qualifications imposed by the Security Trustee. Each purchaser at any sale shall hold the property sold absolutely free from any claim or right on the part of the Pledgor, and the Pledgor hereby waives and releases (to the extent permitted by law) all rights of redemption, stay, appraisal, reclamation and turnover which the Pledgor now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. The Security Trustee shall give the Pledgor (with a copy to the Company) ten days’ written notice (which the Pledgor agrees is reasonable notification within the meaning of Section 9-612 of the Uniform Commercial Code, as enacted in any applicable jurisdiction) of the Security Trustee’s intention to attempt to sell any of the Pledged Collateral. Such notice, in the case of a public sale, shall state the time and place for such sale, and, in the case of a sale at a broker’s board or on a securities exchange, shall identify the board or exchange at which such sale is to be made and the day on which the Pledged Collateral, or a portion thereof, will first be offered for sale. Any public sale of any of the Pledged Collateral shall be held at such time or times within ordinary business hours and at such place or places as the Security Trustee may state in the notice or publication (if any) of such sale. At any sale, the Pledged Collateral, or any portion thereof to be sold, may be sold as an entirety or in separate parcels, as the Security Trustee may (in its sole and absolute discretion) determine. The Security Trustee shall not be obligated to sell any of the Pledged Collateral if it shall determine not to do so, regardless of the fact that notice of a sale of such Pledged Collateral may have been given. The Security Trustee may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for sale, and such sale may, without further notice, occur at the time and place identified in such announcement. In case all or any part of the Pledged Collateral is sold on credit or for future delivery, the Pledged Collateral so sold may be retained by the Security Trustee until the sale price is paid by the purchaser or purchasers thereof, but the Security Trustee shall not incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the Pledged Collateral so sold and, in case of any such failure, such Pledged Collateral may be sold again upon ten days’ notice (which the Pledgor agrees is reasonable notification within the meaning of Section 9-612 of the Uniform Commercial Code, as enacted in any applicable jurisdiction). At any sale made pursuant to this Agreement, to the extent permitted by applicable law, the Security Trustee may bid for or purchase, free from any right of redemption, stay, appraisal, reclamation or turnover on the part of the Pledgor (all said rights being also hereby waived and released to the extent permitted by law), any Pledged Collateral offered for sale and may make payment on account thereof by using the amount of Secured Obligations outstanding to it from the Pledgor as a credit against the purchase price, and the Security Trustee may, upon compliance with the terms of sale, hold, retain and dispose of the Pledged Collateral sold without further accountability to the Pledgor therefor. For purposes hereof, a written agreement to purchase all or any part of the Pledged Collateral shall be treated as a sale thereof and the Security Trustee shall be free to carry out such sale pursuant to such agreement, and the Pledgor shall not be entitled to the return of any Pledged Collateral subject thereto, notwithstanding the fact that after the Security Trustee shall have entered into such agreement all Events of Default shall have been remedied. As an alternative to exercising the power of sale herein conferred upon it, the Security Trustee may proceed by suit or suits at law or in equity to foreclose this Agreement and sell the Pledged Collateral or any portion thereof pursuant to a judgment or decree of a court having competent jurisdiction and/or pursuant to a proceeding of a court-appointed receiver.
 
The Pledgor hereby constitutes and appoints the Security Trustee the attorney-in-fact of the Pledgor for the purpose of carrying out after the occurrence and during the continuance of an Event of Default, the provisions of this Agreement and taking any action and executing any instrument which the Security Trustee may deem necessary or reasonably advisable to accomplish the purposes hereof, which appointment is granted as security for the performance of the Pledgor’s obligations hereunder and for valuable consideration, and is irrevocable and coupled with an interest. Without limiting the generality of the foregoing, the Security Trustee shall have the right, after the occurrence and during the continuance of an Event of Default, with full power of substitution either in the Security Trustee’s name or in the name of the Pledgor, to settle, compromise, prosecute or defend any action, claim or proceeding with respect to the Pledged Collateral and shall have the right to sell, assign, endorse, pledge, transfer and make any agreement respecting, or otherwise deal with, the same.
 
Section 8. Cooperation. The Pledgor agrees that, upon the occurrence and during the continuance of an Event of Default, if for any reason the Security Trustee desires to sell any of the Pledged Collateral at a sale, it will, at any time and from time to time, upon the written request of the Security Trustee, use commercially reasonable efforts to cause the Company to take such action and prepare, distribute and/or file such documents as are required for the Security Trustee to permit the sale of such Pledged Collateral.
 
Section 9. Private Sales. The Pledgor recognizes that the Security Trustee may be unable to effect a public sale of any or all the Pledged Collateral, by reason of certain prohibitions contained in the Securities Act and applicable state securities laws or otherwise, and may be compelled to resort to one or more private sales thereof to a restricted group of purchasers which will be obliged to agree, among other things, to acquire such securities for their own account for investment and not with a view to the distribution or resale thereof. The Pledgor acknowledges and agrees that any such private sale may result in prices and other terms less favorable than if such sale were a public sale. The Security Trustee shall be under no obligation to delay a sale of any of the Pledged Collateral for the period of time necessary to permit the Company to register such securities for public sale under the Securities Act, or under applicable state securities laws, even if the Company would agree to do so; nor shall the Company be at any time obligated to register the Membership Interest for a public sale.
 
(a) The Pledgor further agrees to use commercially reasonable efforts to do or cause to be done all such other acts as may be necessary to make such sale or sales of all or any portion of the Pledged Collateral pursuant to this Section 8 valid and binding and in compliance with applicable laws. The Pledgor further agrees that a breach of any of the covenants contained in this Section 8 will cause irreparable injury to the Security Trustee, that the Security Trustee has no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained in this Section 8 shall be specifically enforceable against the Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants except for a defense that no Event of Default has occurred and is continuing.
 
Section 10. Application of Proceeds of Sale and Cash and Securities. The proceeds of any sale of or realization upon the whole or any part of the Pledged Collateral and cash retained by the Security Trustee pursuant to this Agreement shall be applied by the Security Trustee in accordance with Section 3.03 of the Mortgage.
 
Section 11. Limitation on Duties Regarding Preservation of Pledged Collateral. Neither the Security Trustee nor any director, officer, employee or counsel of the Security Trustee shall be liable for any action taken or omitted to be taken by it or them relative to any of the Pledged Collateral except for its or their own gross negligence or willful misconduct.
 
Section 12. Further Assurances. The Pledgor agrees that at no expense to the Security Trustee, (a) it will duly execute and deliver (to the Security Trustee or otherwise) or cause to be duly executed and delivered (to the Security Trustee or otherwise) and will file or record such notices, financing statements or other documents as may be necessary to enable the perfection of the Lien of the Security Trustee hereunder, or as the Security Trustee may reasonably request, such instruments to be in form and substance reasonably satisfactory to the Security Trustee, and (b) it will do or cause to be done such further acts and things and execute and deliver (to the Security Trustee or otherwise) such additional conveyances, assignments, agreements and instruments, as the Security Trustee may at any time reasonably request in connection with the administration and enforcement of this Agreement or relative to the Pledged Collateral or any part thereof or in order to assure and confirm unto the Security Trustee its rights, powers and remedies hereunder, including, without limitation, the protection and perfection of the Security Trustee’s Lien in the Pledged Collateral or any part thereof.
 
Section 13. Notices. All notices and other communications shall be in writing and shall be given or made by fax, mail or personal delivery and faxed, mailed or delivered to the intended recipient at the address specified in Schedule 1 to the Credit Agreement or at such other address as shall be designated by the Pledgor or the Security Trustee in a notice to the other party hereto. All such communications shall be deemed to have been duly given when transmitted by fax (provided such transmission by fax is in legible form and is accompanied by or generates a substantially simultaneous confirmation of transmission), or personally delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as aforesaid. For the purposes of the Pledgor, notices shall be delivered in accordance with this Section 13 to:
 
Drake Jet Leasing 10 LLC
 
c/o Maples Fiduciary Services (Delaware) Inc.
 
Suite 302, 4001 Kennett Pike
 
Wilmington, DE 19807
 
USA
 
Attn: Fiduciary Services
 
Email: XXXXXXXXXXx
 
 
 
with a copy to:
 
Falko Regional Aircraft Limited
 
1 Bishop Square
 
St. Albans Rd. West
 
Hatfield AL10 9NE
 
Attn: Sarah Dichlian
 
Email:XXXXXXX / xxxxxxxxxxx
 
Section 14. No Waiver. No failure on the part of the Security Trustee or any of its agents to exercise, and no course of dealing with respect to, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof; nor shall any single or partial exercise by the Security Trustee or any of its agents of any right, power or remedy hereunder preclude any other or further exercise thereof or the exercise of any other right, power or remedy.
 
Section 15. GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
 
Section 16. Successors and Assigns. This Agreement and the terms, covenants and conditions hereof shall be binding upon and inure to the benefit of the parties hereto and all holders of the Secured Obligations secured hereby and their respective successors and permitted assigns, except that the Pledgor shall not be permitted to assign or otherwise transfer this Agreement or any rights or interests herein or in the Pledged Collateral or any part thereof, or otherwise to pledge, encumber or grant any option with respect to the Pledged Collateral or any part thereof. The Pledgor shall not be permitted to delegate any of its duties or obligations hereunder. The Security Trustee may assign this Agreement or any or all of its rights hereunder in accordance with the provisions of the Operative Documents.
 
Section 17. Waivers; Amendments. No term or provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the parties hereto; and any waiver of the terms hereof shall be effective only in the specific instance and for the specific purpose given.
 
Section 18. Termination.
 
(a) Upon payment in full of the Secured Obligations, this Agreement shall terminate and the Security Trustee, at the request of the Pledgor, will execute and deliver to the Pledgor, at no cost to the Security Trustee, a proper instrument or instruments acknowledging the satisfaction and termination of this Agreement and will duly assign, transfer and deliver to the Pledgor all of the rights and moneys at the time held by the Security Trustee under this Agreement and will execute any other instrument reasonably requested by the Pledgor in connection with the foregoing.
 
(b) Upon (or at any time after) payment in full of the principal amount of and interest on and all other amounts due under all Loan Certificates related to all of the Republic Aircraft and provided that no Default or Event of Default shall have occurred and be continuing, the Pledgor may direct the Security Trustee to execute and deliver to or as directed in writing by the Pledgor an appropriate instrument releasing the Pledged Collateral from the Lien of this Agreement and the Security Trustee shall execute and deliver such instrument as aforesaid.
 
Section 19. Severability. If any provision hereof is invalid and unenforceable in any jurisdiction, then, to the fullest extent permitted by law, (i) the other provisions hereof shall remain in full force and effect in such jurisdiction and (ii) the invalidity or unenforceability of any provision hereof in any jurisdiction shall not affect the validity or enforceability of such provision in any other jurisdiction. To the extent permitted by applicable law, the Pledgor hereby waives any provision of law that renders any provision hereof prohibited or unenforceable in any respect.
 
Section 20. Headings. Section headings used herein are for convenience only and are not to affect the construction of or be taken into consideration in interpreting this Agreement.
 
Section 21. Counterparts. This Agreement may be executed in separate counterparts each of which when so executed and delivered shall be an exchangeable original, but all such counterparts shall together constitute but one and the same agreement.
 
Section 22. Entire Agreement. This Agreement together with the Operative Documents constitutes, on and as of the date hereof, the entire agreement of the Pledgor and the Security Trustee with respect to the subject matter hereof, and all prior or contemporaneous understandings or agreements, whether written or oral, between the Security Trustee and the Pledgor with respect to such subject matter are hereby superseded in their entirety.
 
Section 23. WAIVER OF JURY TRIAL. EACH PARTY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL IN RESPECT OF ANY CIVIL ACTION ARISING UNDER THIS AGREEMENT OR ANY OTHER OPERATIVE DOCUMENTS.
 
Section 24. Non-Recourse Obligations.
 
(a) In recognition of the Pledgor granting the security referred to in Section 2, the Security Trustee hereby agrees that, notwithstanding the provisions of this Agreement or any Loan Operative Document to the contrary, any and all liability of the Pledgor that is created hereunder shall, in the absence of fraud, gross negligence or willful misconduct in performing its obligations under this Agreement, be limited to the Pledged Collateral. Except as specified above, the Pledgor shall not be personally liable for any shortfall that may arise as a result thereof. The provisions of this Section 24(a) shall only limit the personal liability of the Pledgor for the discharge of its obligations as specified above and shall not (i) limit or restrict in any way the accrual of interest on any such unpaid amount, or (ii) derogate from or otherwise limit the right of recovery, realization or application by the Security Trustee, the Agent, the Swap Counterparty and each Participant under or pursuant to any of the Loan Operative Documents on anything assigned, mortgaged, charged, pledged or secured (by way of security) to or for the benefit of the Security Trustee, the Agent, the Swap Counterparty and each Participant under or pursuant to any of the Loan Operative Documents.
 
(b) The Security Trustee hereby acknowledges and agrees that the Pledgor’s obligations under this Agreement and the other Loan Operative Documents are solely the corporate obligations of the Pledgor and that none of the Security Trustee, the Agent, the Swap Counterparty or the Participants shall have any recourse against any of the directors, shareholders, officers or employees of the Pledgor for any claims, losses, damages, liabilities, indemnities or other obligations of the Pledgor under this Agreement and the other Loan Operative Documents.
 
 
 
* * *
 
 
 


[Borrower Parent Pledge Agreement]
 
IN WITNESS WHEREOF, each of the parties hereto has caused this Membership Interest Pledge Agreement to be duly executed and delivered by its proper and duly authorized officers as of the day and year first above written.
 
 
DRAKE JET LEASING 10 LLC, as Pledgor
 
By:  Name:  Title:
 
 
 
 
 

[Borrower Parent Pledge Agreement]
 
 
 
WILMINGTON TRUST COMPANY, as Security Trustee
By:  
Name: 
Title:
 
 
 
 
 

[Borrower Parent Pledge Agreement]
 
 
Acknowledged and Agreed:
ACY E-175 LLC
By: Drake Jet Leasing 10 LLC, its manager
By:  
Name: 
Title:
 
 
 
 
 

 
EXHIBIT A
 
FORM OF EQUITY POWER
 
FOR VALUE RECEIVED, the undersigned, Drake Jet Leasing 10 LLC, a Delaware limited liability company (“Pledgor”), does hereby sell, assign and transfer to __________________________________* all of its Equity Interests (as hereinafter defined) represented by Certificate No. 2 in ACY E-175, a Delaware limited liability company (“Issuer”), standing in the name of Pledgor on the books of said Issuer. Pledgor does hereby irrevocably constitute and appoint ________________________________*, as attorney, to transfer the Equity Interests in said Issuer with full power of substitution in the premises. The term “Equity Interest” means the membership interest of or in a limited liability company of whatever nature, type, series or class, whether voting or nonvoting, certificated or uncertificated, common or preferred, and all rights and privileges incident thereto.
 
Dated: _________________*
 
 
DRAKE JET LEASING 10 LLC
By:                                                                  
Name:
Title:
 
 
*To Remain Blank - Not Completed at Closing
 
 
 
 
 

Execution Version
SIDE LETTER NO. 1
 
THIS SIDE LETTER NO. 1, dated as of March 16, 2021 (this “Side Letter”), is by and between AEROCENTURY CORP., (the "Seller"), DRAKE ASSET MANAGEMENT JERSEY LIMITED (the “Lender”) and DRAKE JET LEASING 10 LLC (the "Buyer ") and UMB Bank, N.A. (not in its individual capacity but as Agent under the Loan Agreement, the "Agent", and together with the Seller, the Lender and the Buyer, the "Parties").
 
BACKGROUND
 
A.           MUFG Union Bank, N.A., Umpqua Bank, Zions Bancorporation, N.A. (fka ZB, N.A.) dba California Bank & Trust, and Columbia State Bank, each a Lender (collectively, the “Original Lenders”), MUFG Union Bank, N.A., as original agent (the “Original Agent”) and Seller, as borrower, were parties to the Fourth Amended and Restated Loan and Security Agreement dated as of May 1, 2020 (as amended, modified or supplemented from time to time and as assigned by the Original Lenders to Buyer as new lender and Agent, the “Loan Agreement”) pursuant to which the Original Lenders made a loan (the “Loan”) to Seller.
 
B.           Pursuant to a Loan Purchase and Sale Agreement dated as of October 2, 2020, (the “Loan Purchase Agreement”) among the Lender, the Agent, the Original Lenders, the Original Agent and MUFG Bank, Ltd., the Loan was sold by the Original Lenders to the Lender and the Original Agent was replaced with the Agent.
 
C.           Seller and Buyer are party to that certain membership interest purchase agreement relating to the sale and purchase of the entire membership interest in ACY E-175 LLC (the "Republic LLC") dated ______________ 2021 (as novated, assigned, amended, supplemented or otherwise modified from time to time, the “MIPA”).
 
D.           The Parties have agreed to enter into this Side Letter to formalize their agreement on the application of the Republic LLC Purchase Price.
 
For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, IT IS AGREED AS FOLLOWS.
 
Section 1. Definitions.
 
The following terms, when capitalized as below, shall have the following meanings when used in this Side Letter:
 
(a) "Business Day" has the meaning given to it in the Loan Agreement.
 
(b) "Debt Portion" means an amount equal to the sum of:
 
(i) the Republic LLC Purchase Price; less
 
(ii) (A) the Retained Portion, and (B) wire transfer fees incurred for transfers of the Republic LLC Purchase Price into the Specified Account and for the transfer of such Debt Portion to Agent pursuant to the terms hereof.
 
(c) "Deposit Account Control Agreement" has the meaning given to it in the Loan Agreement.
 
(d) Repayment Account” means the following Dollar denominated Account of the Lender:
 
Account name: Drake Asset Management Jersey Limited
 
Account number: XXXXXXXX
 
SWIFT: XXXXXXXX
 
IBAN: XXXXXXXXX
 
Bank: Bank of America N.A., London Branch, 2 King Edward Street, London EC1A 1HQ.
 
(e) "Republic LLC Purchase Price" has the meaning given to the term "Specified Amount" in the MIPA, being an amount of thirteen million one hundred and eleven thousand seven hundred and forty five United States Dollars and forty three cents ($13,111,745.43).
 
(f) "Retained Portion" means an amount equal to two million one hundred thousand Dollars (US$2,100,000).
 
(g) "Secured Obligations" has the meaning given to it in the Loan Agreement.
 
(h) "Specified Account" means following Dollar denominated account of the Seller:
 
Zions Bancorporation, N.A.
 
465 California St.
 
San Francisco, CA 94104
 
ABA: XXXXXXX
 
SWIFT: XXXXXXX
 
Account name: AeroCentury Corp.
 
Account number: XXXXXXXXX
 
Section 2. Proceeds Application. Each Party hereby agrees that:
 
(a) an amount equal to the Republic LLC Purchase Price shall be paid by Buyer to the Specified Account, pursuant to and in accordance with the terms of article 1.2 of the MIPA;
 
(b) an amount of the Republic LLC Purchase Price:
 
(i) that is equal to the Debt Portion shall be applied by the Agent in and towards the Seller's obligation to prepay a corresponding portion of the Secured Obligations pursuant to Section 3; and
 
(ii) that is equal to the Retained Portion shall be retained in the Specified Account (and which, for the avoidance of doubt, shall remain subject to the terms of the applicable Deposit Account Control Agreement).
 
Section 3. Secured Obligations; Prepayment.
 
(a) Each of the Seller, the Lender and the Agent hereby agrees that the Debt Portion is agreed and deemed to constitute "Excess Proceeds" for the purposes of section 6.25(b) of the Loan Agreement.
 
(b) The Seller irrevocably and unconditionally undertakes that immediately upon the occurrence of Closing (as defined in the MIPA), it shall transfer to the Repayment Account, in full and cleared funds, an amount equal to the Debt Portion, which upon receipt into the Repayment Account shall be applied by the Agent to satisfy an equivalent amount of the Seller’s corresponding prepayment obligation and paid for value on such Business Day for the account of the Lender.
 
(c) Each of the Agent and the Lender hereby waives any requirement for notice of prepayment that is set out in the Loan Agreement.
 
(d) The Seller (in its own capacity and in its capacity as "Borrower" under the Loan Agreement hereby instructs each of the Agent and the Lender to apply all amounts pursuant Section 2(b) and in this Section 3 in the manner contemplated thereby and hereby, and each of the Agent and the Lender hereby accepts such instruction.
 
Section 4. Miscellaneous.
 
(a) Each of the parties hereby represents and warrants that (i) this Side Letter has been duly authorized and executed by it and (ii) this Side Letter constitutes its legal, valid and binding obligations, enforceable against it in accordance with its terms (except to the extent that enforcement may be limited by applicable insolvency and similar laws affecting the rights of creditors generally).
 
(b) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW.
 
(c) The provisions of Section 7.9 of the MIPA are incorporated herein as if the same were set out in full herein, mutatis mutandis.
 
[SIGNATURE PAGE FOLLOWS]

[Side Letter No. 1]
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized officers to execute and deliver this Side Letter as of the date first above written.
 
 
AEROCENTURY CORP. as Seller
By:                                                                
Name:  
Title:
 
 
DRAKE ASSET MANAGEMENT JERSEY LIMITED as Lender
By:                                                                
Name:  
Title:
 
 
DRAKE JET LEASING 10 LLC as Buyer
By:                                                                
Name:  
Title:
 
 
UMB BANK, N.A., not in its individual capacity but solely as Agent
By:                                                                
Name: 
 Title:
 
 
 
Signature Page