10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to ____________

Commission File Number:  001-13387

AeroCentury Corp.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	94-3263974
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

1440 Chapin Avenue, Suite 310

Burlingame, California 94010

(Address of Principal Executive Offices)

(650) 340-1888

(Registrant's Telephone Number Including Area Code)

None

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required submit and post such files). 

Yes  ☐No  ☒

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer  ☐Accelerated filer                    ☐

Non-accelerated filer    ☐Smaller reporting company  ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐No  ☒

The number of shares of the Registrant's Common Stock outstanding as of August 11, 2016 was 1,566,699.

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PART I

FINANCIAL INFORMATION

Forward-Looking Statements

This Quarterly Report on Form 10-Q includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended ("the Exchange Act"). All statements in this Report other than statements of historical fact are "forward-looking statements" for purposes of these provisions, including any statements of plans and objectives for future operations and any statements of assumptions underlying any of the foregoing. Statements that include the use of terminology such as "may," "will," "expects," "plans," "anticipates," "estimates," "potential," or "continue," or the negative thereof, or other comparable terminology are forward-looking statements. Forward-looking statements include these statements:  (i) in Item 1, "Notes to Financial Statements," that the outcome of any existing or known threatened proceedings, even if determined adversely, should not have a material adverse effect on the Company's business, financial condition, liquidity or results of operations; (ii) in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources," that the Company believes that it will be in compliance with all of its Credit Facility covenants at future calculation dates;  that the Company will have adequate cash flow to meet its ongoing operational needs, including any required repayments under the Credit Facility due to borrowing base limitations;  (iii) in Item 2, Management's Discussion and Analysis of Financial Condition and Results of Operations – Outlook," that the Company continues to expect to observe slow growth in the number of regional aircraft and aircraft engines needed for operation by carriers in nearly all geographic areas; that the Company expects that the customers for an aircraft lease and three engine leases that expire in 2016 will choose to return the assets rather than renew the leases; that the Company believes that it will be in compliance with all of its Credit Facility covenants at future calculation dates; and that available borrowings under the Credit Facility will be sufficient to meet the Company's continuing obligations and, if the Credit Facility is expanded from its current amount of $150 million to the maximum of $180 million, to fund anticipated acquisitions;  (iv) in Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations – Factors that May Affect Future Results," that the Company believes it will continue to be in compliance with all of the covenants under the Credit Facility agreement; that as competition increases, it has and will likely continue to create upward pressure on acquisition prices for many of the aircraft types that the Company has targeted to buy and, at the same time, create downward pressure on lease rates, resulting in lower margins for the Company and, therefore, fewer acceptable acquisition opportunities for the Company; that the Company will have sufficient cash funds to make any required principal repayment that arises due to any borrowing limitations; that most of the Company's expected growth is outside of North America; that the overall industry experience of JMC's personnel and its technical resources should permit the Company to effectively manage new aircraft types; that management will be able to keep the Company's operational activities unchanged and the Company on track with its current business plan while a successor CEO search is ongoing; that effective mitigating factors exist against undue compensation-incented risk-taking by JMC;  that the burden and cost of complying with environmental regulatory requirements will fall primarily upon lessees of equipment or the Company as owner of the equipment;  that the costs of complying with environmental regulations will not have a material adverse effect on the Company;  that the Company has sufficient cyber-security measures in place; that the Company's main vulnerability would be interruption to email communication, internally and with third parties, loss of customer and lease archives, and loss of document sharing between the Company's offices and remote workers;  and that sufficient replacement mechanisms exist such that there would not be a material adverse financial impact on the Company's business. These forward-looking statements involve risks and uncertainties, and it is important to note that the Company's actual results could differ materially from those projected or assumed in such forward-looking statements.  Among the factors that could cause actual results to differ materially are the factors detailed under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations –– Factors That May Affect Future Results," including the lack of any unexpected lessee defaults or insolvency; the continued availability of financing for acquisitions under the Credit Facility; the Company's success in finding appropriate assets to acquire with such financing; a deterioration of the market values of aircraft types owned by the Company; an unanticipated surge in interest rates; compliance by the Company's lessees with obligations under their respective leases; no sudden current economic downturn or unanticipated future financial crises; deviations from the assumption that future major maintenance expenses will be relatively evenly spaced over the entire portfolio; large unanticipated maintenance expenses; and future trends and results that cannot be predicted with certainty. The cautionary statements made in this Report should be read as being applicable to all related forward-looking statements wherever they appear herein. All forward-looking statements and risk factors included in this document are made as of the date hereof, based on information available to the Company as of the date hereof, and the Company assumes no obligation to update any forward-looking statement or risk factor. You should consult the risk factors listed from time to time in the Company's filings with the Securities and Exchange Commission.

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Item 1.Financial Statements.

AeroCentury Corp.

Balance Sheets

(Unaudited)

ASSETS
	June 30,			December 31,
	2016			2015
Assets:
Cash and cash equivalents	$	2,219,900		$	2,721,000
Accounts receivable, including deferred rent of $537,300 and $359,200 at      June 30, 2016 and December 31, 2015, respectively		3,221,500			5,693,500
Finance leases receivable		11,753,500			11,895,600
Aircraft and aircraft engines held for lease, net of accumulated    depreciation of $30,324,800 and $31,074,600 at     June 30, 2016 and December 31, 2015, respectively		133,444,300			155,258,100
Assets held for sale		2,388,500			5,228,400
Prepaid expenses and other		1,298,600			228,400
Total assets	$	154,326,300		$	181,025,000
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses	$	1,094,700		$	1,138,400
Notes payable and accrued interest, net of unamortized debt issuance    costs of $2,440,500 and $2,814,000 at June 30, 2016 and    December 31, 2015, respectively		76,368,800			107,621,600
Maintenance reserves		14,237,200			13,230,000
Accrued maintenance costs		1,734,600			382,300
Security deposits		2,859,600			3,212,600
Unearned revenues		3,400,100			1,957,400
Deferred income taxes		12,620,500			12,204,200
Total liabilities		112,315,500			139,746,500
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value, 2,000,000 shares    authorized, no shares issued or outstanding		-			-
Common stock, $0.001 par value, 10,000,000 shares authorized,    1,629,999 shares issued and outstanding		1,600			1,600
Paid-in capital		14,780,100			14,780,100
Retained earnings		27,733,200			27,000,900
		42,514,900			41,782,600
Treasury stock at cost, 63,300 shares		(504,100	)		(504,100	)
Total stockholders' equity		42,010,800			41,278,500
Total liabilities and stockholders' equity	$	154,326,300		$	181,025,000

The accompanying notes are an integral part of these statements.

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AeroCentury Corp.

Statements of Operations

(Unaudited)

	For the Six Months Ended June 30,				For the Three Months Ended June 30,
	2016		2015		2016		2015
Revenues and other income:
Operating lease revenue, net	$	10,979,500	$	12,770,200	$	4,935,200	$	6,332,400
Finance lease revenue		372,100		91,400		187,000		91,400
Net gain on disposal of assets		2,146,500		460,000		2,146,500		-
Net gain on sales-type finance leases		47,400		4,083,800		42,000		2,681,900
Maintenance reserves revenue, net		-		589,000		-		261,700
Other income		1,700		900		300		500
		13,547,200		17,995,300		7,311,000		9,367,900
Expenses:
Depreciation		3,950,600		4,649,900		1,871,100		2,322,100
Interest		2,427,900		3,346,400		1,138,800		1,468,100
Management fees		2,436,500		2,849,700		1,172,500		1,416,400
Maintenance		1,821,000		2,840,200		1,501,100		1,458,200
Professional fees, general and    administrative and other		982,400		720,000		557,800		309,400
Provision for impairment in value of aircraft		321,200		147,500		246,200		147,500
Bad debt expense		262,900		-		262,900		-
Insurance		150,000		88,700		73,400		103,200
Other taxes		45,300		115,200		22,500		57,500
		12,397,800		14,757,600		6,846,300		7,282,400
Income before income tax provision		1,149,400		3,237,700		464,700		2,085,500
Income tax provision		417,100		1,130,200		166,100		730,200
Net income	$	732,300	$	2,107,500	$	298,600	$	1,355,300
Earnings per share:
Basic	$	0.47	$	1.37	$	0.19	$	0.88
Diluted	$	0.47	$	1.36	$	0.19	$	0.87
Weighted average shares used in   earnings per share computations:
Basic		1,566,699		1,543,257		1,566,699		1,543,257
Diluted		1,566,699		1,553,904		1,566,699		1,555,008

The accompanying notes are an integral part of these statements.

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AeroCentury Corp.

Statements of Cash Flows

(Unaudited)

	For the Six Months Ended June 30,
	2016			2015
Net cash provided by operating activities	$	8,125,800		$	5,577,500
Investing activities:
Proceeds from sale of aircraft and aircraft engines held for lease,    net of re-sale fees		2,062,600			1,400,000
Proceeds from sale of assets held for sale, net of re-sale fees		3,059,900			1,816,300
Proceeds from insurance		18,886,700			-
Acquisition costs related to aircraft purchases		(971,100	)		(1,333,700	)
Net cash provided by investing activities		23,038,100			1,882,600
Financing activities:
Repayments of Credit Facility		(31,600,000	)		(6,000,000	)
Debt issuance costs		(65,000	)		(59,600	)
Net cash used in financing activities		(31,665,000	)		(6,059,600	)
Net (decrease)/increase in cash and cash equivalents		(501,100	)		1,400,500
Cash and cash equivalents, beginning of period		2,721,000			1,840,500
Cash and cash equivalents, end of period	$	2,219,900		$	3,241,000

During the six months ended June 30, 2016 and 2015, the Company paid interest totaling $2,058,200 and $2,586,400 respectively.  The Company paid income taxes of $800 during each of the six months ended June 30, 2016 and 2015.

The accompanying notes are an integral part of these statements.

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AeroCentury Corp.

Notes to Financial Statements (Unaudited)

June 30, 2016

1.Organization and Summary of Significant Accounting Policies

(a)The Company and Basis of Presentation

AeroCentury Corp. ("the Company"), a Delaware corporation incorporated in 1997, typically acquires used regional aircraft and engines for lease to foreign and domestic regional carriers.

The condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the three-month and six-month periods ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2015.

(b)Use of Estimates

The Company's financial statements have been prepared in accordance with GAAP.  The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable for making judgments that are not readily apparent from other sources.

The most significant estimates with regard to these financial statements are the residual values and useful lives of the assets, the amount and timing of cash flows associated with each asset that are used to evaluate whether assets are impaired, accrued maintenance costs, accounting for income taxes, and the amounts recorded as allowances for doubtful accounts.

(c)Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs, to the extent possible. The fair value hierarchy under GAAP is based on three levels of inputs.

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

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Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis

The carrying amount of the Company's money market funds included in cash and cash equivalents was $947,400 and $1,946,600 at June 30, 2016 and December 31, 2015, respectively.  The fair value of the Company's money market funds would be categorized as Level 1 under the GAAP fair value hierarchy.

As of June 30, 2016 and December 31, 2015, there were no liabilities that were required to be measured and recorded at fair value on a recurring basis.

Assets Measured and Recorded at Fair Value on a Nonrecurring Basis

The Company determines fair value of long-lived assets held and used, such as aircraft and aircraft engines held for lease and assets held for sale, by reference to independent appraisals, quoted market prices (e.g., offers to purchase) and other factors. An impairment charge is recorded when the Company believes that the carrying value of an asset will not be recovered through future net cash flows and that the asset's carrying value exceeds its fair value. 

Assets held for lease

The Company recorded impairment charges of $0 and $147,500 on its aircraft held for lease during the three months and six months ended June 30, 2016 and 2015, respectively. 

Assets held for sale

The Company recorded a $246,200 impairment charge on an engine held for sale during the three months ended June 30, 2016, resulting in a carrying value of $295,000. The fair value of this asset would be categorized as Level 3 under the GAAP fair value hierarchy.  No such impairment charges were recorded during the three months ended June 30, 2015.  During the six months ended June 30, 2016, the Company also recorded a $75,000 impairment charge on two of its aircraft held for sale.  The aircraft were sold during the second quarter. 

Fair Value of Other Financial Instruments

The Company's financial instruments, other than cash and cash equivalents, consist principally of finance leases receivable and amounts borrowed under its credit facility (the "Credit Facility").  The fair value of accounts receivable, finance leases receivable, accounts payable and the Company's maintenance reserves and accrued maintenance costs approximates the carrying value of these financial instruments.

Borrowings under the Company's Credit Facility bear floating rates of interest that reset periodically to a market benchmark rate plus a credit margin.  The Company believes the effective interest rate under the Credit Facility approximates current market rates for such indebtedness at the balance sheet date, and therefore that the outstanding principal and accrued interest of $78,809,300 and $110,435,600 at June 30, 2016 and December 31, 2015, respectively, approximate its fair values on such dates.  The fair value of the Company's outstanding balance of its Credit Facility would be categorized as Level 3 under the GAAP fair value hierarchy.

(d)Finance Leases

The Company has five aircraft finance leases that contain lessee purchase options at prices substantially below the assets' estimated residual values at the exercise date for the option.  Consequently, the Company considers the purchase options to be bargain purchase options and has classified the leases as sales-type finance leases for financial accounting purposes.  The Company reports the discounted present value of (i) future minimum lease payments (including the bargain purchase option) and (ii) any residual value not subject to a bargain purchase option as a finance lease receivable on its balance sheet and accrues interest on the balance of the finance lease receivable based on the interest rate inherent in the applicable lease over the term of the lease.  For sales-type finance leases, the Company recognizes the difference between the net book value of the aircraft and the net investment in sales-type finance leases, less any initial direct costs and lease incentives, as a gain or loss. 

The Company recognized interest earned on finance leases in the amount of $187,000 and $91,400 in the quarters ended June 30, 2016 and 2015, respectively and $372,100 and $91,400 in the six months ended June 30, 2016 and 2015, respectively.

(e)Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments -- Credit Losses (Topic 326) ("ASU 2016-13"), which will modify accounting for credit losses on most financial assets measured at amortized cost, including net investment in leases.  Unlike current accounting, which delays credit loss recognition until a probable loss is incurred, the new model will use a current expected credit loss ("CECL") model that will estimate future credit losses over the entire term of the financial instrument.  As such, it is generally expected that adoption of the CECL model will result in earlier recognition of credit losses than current GAAP.  The Company will be required to adopt ASU 2016-13 for its yearly and interim periods beginning after December 15, 2019, although adoption in the preceding year and periods is permitted.  The Company has not yet estimated the impact of adoption of this standard on its financial statements.

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2.Finance Leases Receivable

During the second quarter of 2016, the Company leased a turboprop aircraft pursuant to a finance lease and recorded a gain of $42,000. 

During the second quarter of 2015, the Company leased a turboprop aircraft pursuant to a finance lease and recorded a gain of $2,535,100.  The Company also recorded an additional gain of $146,800 on a turboprop aircraft that was leased pursuant to a finance lease during the first quarter of 2015 in connection with the renegotiation of the terms of that finance lease during the second quarter of 2015.

At June 30, 2016 and December 31, 2015, the net investment included in sales-type finance leases receivable were as follows:

	June 30, 2016			December 31, 2015
Gross minimum lease payments receivable	$	13,808,500		$	14,074,500
Less unearned interest		(2,055,000	)		(2,178,900	)
Finance leases receivable	$	11,753,500		$	11,895,600

As of June 30, 2016, future minimum lease payments receivable under sales-type finance leases were as follows:

Years ending
Remainder of 2016	$	1,547,800
2017		2,564,100
2018		2,331,600
2019		3,607,600
2020		1,395,600
Thereafter		2,361,800
	$	13,808,500

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3.Aircraft and Aircraft Engines Held for Lease or Sale

(a)Assets Held for Lease

At June 30, 2016 and December 31, 2015, the Company's aircraft and aircraft engines held for lease consisted of the following:

	June 30, 2016					December 31, 2015
Type	Number owned		% of net book value			Number owned		% of net book value
Turboprop aircraft		14		39	%		16		45	%
Regional jet aircraft		8		55	%		8		49	%
Engines		4		6	%		5		6	%

During the second quarter of 2016, the Company used cash of $963,600 primarily for deposits associated with anticipated future acquisitions.  During the second quarter of 2015, the Company paid $23,900 for costs related to assets acquired in late 2014.

In April 2016, one of the Company's turboprop aircraft was involved in an accident and was declared a total loss by the lessee's insurer.  The Company received insurance proceeds of $17,640,000 in May 2016 and recorded a gain of $2,146,500.  The Company also received insurance proceeds of $1,246,700 related to damage sustained on another aircraft in 2015.

During the second quarter of 2016, the Company extended the lease for one of its assets and leased two engines that were off lease at March 31, 2016.

Six of the Company's assets held for lease, comprised of five turboprop aircraft and one engine, were off lease at June 30, 2016, representing 8% of the net book value of the Company's aircraft and engines held for lease.  As discussed in Note 8, the Company entered into sales-type finance leases for two of its off-lease turboprop aircraft and expects to deliver the aircraft during the third quarter..

As of June 30, 2016, minimum future lease revenue payments receivable under noncancelable operating leases were as follows:

Years ending
Remainder of 2016	$	9,504,400
2017		16,259,000
2018		12,218,900
2019		11,528,100
2020		10,407,100
Thereafter		17,211,700
	$	77,129,200

(b)Assets Held for Sale

During the second quarter of 2016, the Company sold two regional jet aircraft that had been written down to their net sales values and were held for sale at December 31, 2015. 

Assets held for sale at June 30, 2016 included a turboprop aircraft and three turboprop airframes being sold in parts. During the three months ended June 30, 2016 and 2015, the Company received $41,100 and $129,400 respectively, from the sale of parts belonging to two of the airframes, which proceeds reduced their carrying values.

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4.Notes Payable and Accrued Interest

At June 30, 2016 and December 31, 2015, the Company's notes payable and accrued interest consisted of the following:

	June 30, 2016			December 31, 2015
Credit Facility principal	$	78,800,000		$	110,400,000
Unamortized debt issuance costs		(2,440,500	)		(2,814,000	)
Credit Facility accrued interest		9,300			35,600
	$	76,368,800		$	107,621,600

The Company's $150 million Credit Facility is provided by a syndicate of banks and is secured by all of the Company's assets, including its aircraft and engine portfolio.  The Credit Facility, which expires on May 31, 2019, can be expanded to a maximum of $180 million.  The Company was in compliance with all covenants under the Credit Facility at June 30, 2016 and December 31, 2015.

The unused amount of the Credit Facility was $71,200,000 and $39,600,000 as of June 30, 2016 and December 31, 2015, respectively.

The weighted average interest rate on the Credit Facility was 3.81% and 3.80% at June 30, 2016 and December 31, 2015, respectively.

5.Contingencies

In the ordinary conduct of the Company's business, the Company is subject to lawsuits, arbitrations and administrative proceedings from time to time. The Company believes that the outcome of any existing or known threatened proceedings, even if determined adversely, should not have a material adverse effect on the Company's business, financial condition, liquidity or results of operations.

6.Computation of Earnings Per Share

Basic and diluted earnings per share are calculated as follows:

	For the Six Months Ended June 30,				For the Three Months Ended June 30,
	2016		2015		2016		2015
Net income	$	732,300	$	2,107,500	$	298,600	$	1,355,300
Weighted average shares outstanding for the period		1,566,699		1,543,257		1,566,699		1,543,257
Dilutive effect of warrants		-		10,647		-		11,751
Weighted average diluted shares used in calculation    of diluted earnings per share		1,566,699		1,553,904		1,566,699		1,555,008
Basic earnings per share	$	0.47	$	1.37	$	0.19	$	0.88
Diluted earnings per share	$	0.47	$	1.36	$	0.19	$	0.87

Basic earnings per common share is computed using net income and the weighted average number of common shares outstanding during the period.  Diluted earnings per common share are computed using net income and the weighted average number of common shares outstanding, assuming dilution.  Weighted average common shares outstanding, assuming dilution, include potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include the assumed exercise of warrants using the treasury stock method.  The warrants were exercised in December 2015 and there is, therefore, no dilutive effect for the quarter or six months ended June 30, 2016.

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7.Related Party Transactions

The Company's portfolio of leased aircraft assets is managed and administered under the terms of a management agreement with JetFleet Management Corp. ("JMC"), which is an integrated aircraft management, marketing and financing business and a subsidiary of JetFleet Holding Corp. ("JHC").  Certain officers of the Company are also officers of JHC and JMC and one such officer also holds a significant ownership position in both JHC and the Company.

Under the management agreement, JMC receives a monthly management fee based on the net asset value of the assets under management.  JMC also receives an acquisition fee for locating assets for the Company.  Acquisition fees are included in the cost basis of the asset purchased.  JMC may receive a remarketing fee in connection with the re-lease or sale of the Company's assets. Remarketing fees are amortized over the applicable lease term or included in the gain or loss on sale.

Fees incurred during the three months and six months ended June 30, 2016 and 2015 were as follows:

	For the Six Months Ended June 30,				For the Three Months Ended June 30,
	2016		2015		2016		2015
Management fees	$	2,436,500	$	2,849,700	$	1,172,500	$	1,416,400
Acquisition fees		-		-		-		-
Remarketing fees		58,800		424,200		58,800		225,200

8.Subsequent Events

In July 2016, the Company sold a spare engine that had been written down to its net sales price at June 30, 2016 and classified as held for sale. 

During July 2016, the Company entered into sales-type finance leases for two turboprop aircraft that were off lease at June 30, 2016 and expects to deliver the aircraft during the third quarter.

In August 2016, the Company purchased two Bombardier CRJ-1000 aircraft on lease to a regional carrier in Europe and assumed the debt related to these aircraft.  The aircraft will be held in two special-purpose subsidiaries, which were funded by the Company.

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Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the Company's Form 10-K for the year ended December 31, 2015 and the unaudited financial statements and related notes that appear elsewhere in this report.

Critical Accounting Policies, Judgments and Estimates

The Company's discussion and analysis of its financial condition and results of operations are based upon the financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America.  The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and the related disclosure of contingent assets and liabilities at the date of the financial statements.  In the event that actual results differ from these estimates or the Company adjusts these estimates in future periods, the Company's operating results and financial position could be materially affected.  For a discussion of Critical Accounting Policies, Judgments and Estimates, refer to Note 1 to the Company's financial statements in Item 1 of this Quarterly Report on Form 10-Q.

Results of Operations

Quarter ended June 30, 2016 compared to the quarter ended June 30, 2015

The Company recorded net income of $0.3 million in the quarter ended June 30, 2016 compared to net income of $1.4 million in the same period of 2015.

Operating lease revenue decreased 22% to $4.9 million in the second quarter of 2016 from $6.3 million in the second quarter of 2015, primarily due to: (i) the loss of revenue from an aircraft that was involved in an accident in April 2016 and was declared a total loss, (ii) the loss of revenue from assets that were sold for cash and sold pursuant to sales-type finance leases in 2015, and (iii) the loss of revenue from an asset that is in the process of being early returned, for which the Company ceased recording revenue during the second quarter of 2016 and for which the Company recorded a bad debt allowance of $0.3 million during the 2016 period.

During the second quarters of 2016 and 2015, the Company recorded gains of $42,000 and $2.7 million on the sale of aircraft pursuant to sales-type finances.  During the 2016 period, the Company also recorded a $2.1 million gain on insurance proceeds related to an aircraft that was involved in an accident in April 2016 and was declared a total loss.  As a result of these and other sales during 2015, as well as changes in residual value assumptions from year-to-year, depreciation decreased by 19% in the second quarter of 2016, as compared to the second quarter of 2015.

Maintenance reserves that are retained by the Company at lease end are recorded as revenue at that time.  The Company did not record any maintenance reserves revenue in the second quarter of 2016.  During the second quarter of 2015, the Company recorded maintenance reserves revenue of $0.3 million when an aircraft was returned.

The average net book value of assets held for lease during the second quarters of 2016 and 2015 was approximately $140.2 million and $176.6 million, respectively.  Management fees, which are based on the net book value of the Company's aircraft and engines held for lease and sale as well as finance lease receivable balances, decreased by 17% in the second quarter of 2016 as compared to the same period in 2015. 

Average portfolio utilization increased to approximately 91% during the second quarter of 2016 from approximately 90% during the same period in 2015.

The Company's interest expense decreased by 22% to $1.1 million in the second quarter of 2016 from $1.5 million in the second quarter of 2015, primarily as a result of a lower average Credit Facility balance during the 2016 period.

The Company's general and administrative expense increased by 80% to $0.6 million from $0.3 million in the second quarter of 2015, primarily as a result of expenses incurred in connection with the return of three aircraft by one of the Company's customers.

During the second quarter of 2016, the Company recorded an impairment provision of $0.2 million for one of its spare engines, based on the net sales value agreed with a buyer during the period.  The engine was sold in July 2016.

During the second quarter of 2016, the Company recorded bad debt expense of $0.3 million related to an aircraft that is in the process of being returned and for which the Company does not expect to receive all of the operating lease revenue accrued in prior periods.

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Six months ended June 30, 2016 compared to the six months ended June 30, 2015

The Company recorded net income of $0.7 million in the six months ended June 30, 2016 compared to net income of $2.1 million in the same period of 2015.

Operating lease revenue decreased 14% to $11.0 million in the six months ended June 30, 2016 from $12.8 million in the same period of 2015, primarily due to  (i) the loss of revenue from an aircraft that was involved in an accident during the 2016 period and was declared a total loss, (ii) the loss of revenue from assets that were sold for cash and pursuant to sales-type finance leases in 2015 and (iii) the loss of revenue from an asset that is in the process of being returned, for which the Company ceased recording revenue during the second quarter of 2016 and for which the Company recorded a bad debt allowance of $0.3 million during the 2016 period.  The effect of such decreases was partially offset by revenue from assets that were off lease in the 2015 period, but on lease in the 2016 period. 

During the six months ended June 30, 2016 the Company recorded gains totaling $47,000 on the sale of two aircraft pursuant to sales-type finance leases.  The Company also recorded a $2.1 million gain on insurance proceeds related to an aircraft that was involved in an accident in April 2016 and was declared a total loss.  During the six months ended June 30, 2015, the Company recorded $4.5 million of net gains on sales and sales-type finance leases.  As a result of these and other sales during 2015, as well as changes in residual value assumptions from year-to-year, depreciation decreased by 15% in the first half of 2016, as compared to the first half of 2015.

The Company did not record any maintenance reserves revenue in the first six months of 2016.  During the six months ended June 30, 2015, the Company recorded maintenance reserves revenue of $0.6 million when two aircraft were returned.

The average net book value of assets held for lease during the six months ended June 30, 2016 and 2015 was approximately $147.0 million and $180.3 million, respectively.  Management fees, which are based on the net book value of the Company's aircraft and engines held for lease and sale as well as finance lease receivable balances, decreased by 14% in the six months ended June 30, 2016 as compared to the same period in 2015. 

Average portfolio utilization increased to approximately 93% during the first half of 2016 from approximately 90% during the same period in 2015.

The Company's interest expense decreased by 27% to $2.4 million in the six months ended June 30, 2016 from $3.3 million in the six months ended June 30, 2015, primarily as a result of a lower average Credit Facility balance and decreased amortization of debt issuance costs during the 2016 period.

The Company's maintenance expense decreased by 36% to $1.8 million in the first half of 2016 from $2.8 million in the same period of 2015, primarily as a result of a decrease in maintenance performed by the Company on off-lease aircraft to prepare them for sale or re-lease.

The Company's general and administrative expense increased by 36% to $1.0 million from $0.7 million in the second half of 2015, primarily as a result of one-time expenses incurred in connection with the return of three aircraft by one of the Company's customers.

During the first half of 2016, the Company recorded an impairment provision of $0.2 million for one of its spare engines, based on the net sales value agreed with a buyer during the period.  The engine was sold in July 2016. The Company also recorded $75,000 of impairment charges on two aircraft that had been held for sale and were sold during the second quarter of 2016.

During the first half of 2016, the Company recorded bad debt expense of $0.3 million related to an aircraft that is in the process of being returned and for which the Company does not expect to receive all of the operating lease revenue accrued in prior periods.

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Liquidity and Capital Resources

The Company is currently financing its assets primarily through debt financing and excess cash flows. 

(a)Credit Facility

The Company has a $150 million Credit Facility, as described in Note 4 to the Company's financial statements in Item 1 of this Quarterly Report on Form 10-Q.  The Company was in compliance with all covenants at June 30, 2016 and December 31, 2015.

Based on its current projections, the Company believes that it will be in compliance with all of its Credit Facility covenants at future calculation dates.  Although the Company believes that the assumptions it has made in forecasting its compliance with the Credit Facility covenants are reasonable in light of experience, actual results could deviate from such assumptions and there can be no assurance that the Company's beliefs will prove to be correct.  Among the more significant factors that could have an impact on the accuracy of the Company's covenant compliance forecasts are (i) unanticipated decreases in the market value of the Company's assets, or in the rental rates deemed achievable for such assets that cause the Company to record an impairment charge against earnings; (ii) lessee non-compliance with lease obligations, (iii) inability to locate new lessees for returned equipment within a reasonable remarketing period, or at a rent level consistent with projected rates, (iv) inability to locate and acquire a sufficient volume of additional assets at prices that will produce acceptable net returns, (v) increases in interest rates, or (vi) inability to timely dispose of off-lease assets at prices commensurate with their market value.

Although the Company believes it will continue to be in compliance with all of the Credit Facility covenants, there can be no assurance of such compliance and, in the event of any non-compliance, the Company would need to seek waivers or amendment of applicable covenants from its lenders if such compliance failure is not timely cured.  Any default under the Credit Facility, if not cured in the time permitted under the facility or waived by the lenders, could result in the Company's inability to borrow any further amounts under the Credit Facility, the acceleration of the Company's obligation to repay amounts borrowed under the Credit Facility, or foreclosure upon any or all of the assets of the Company.

(b)Cash flow

The Company's primary sources of cash are rent payments due under the Company's operating and finance leases, maintenance reserves, which are billed monthly to lessees based on asset usage, and proceeds from the sale of aircraft and engines.

The Company's primary uses of cash are for (i) purchase of assets, (ii) maintenance expense and reimbursement to lessees from collected maintenance reserves, (iii) Credit Facility fees, interest and principal payments, (iv), management fees, (v) professional fees, including legal, accounting and directors fees costs, and (vi) insurance for off-lease aircraft.

The timing and amount of the Company's payments for maintenance vary, depending on the timing of lessee-performed maintenance that is eligible for reimbursement, the aggregate amount of such claims and the timing and amount of maintenance incurred in connection with preparation of off-lease assets for re-lease to new customers.  The Company's maintenance payments typically constitute a large portion of its cash needs, and the Company may from time to time borrow additional funds under the Credit Facility to provide funding for such payments.

Management fees paid by the Company are relatively predictable because they are based on the net asset value of the Company's portfolio and finance lease receivable balances.  As such, they also place the risk of increased costs for employee salaries and benefits, worldwide travel related to the management of the Company's aircraft portfolio, office rent, outside technical experts and other overhead expenses on JMC. 

The amount of interest paid by the Company depends on the outstanding balance of its Credit Facility, which carries a floating interest rate as well as an interest rate margin, and is therefore also dependent on changes in prevailing interest rates.

Management believes that the Company will have adequate cash flow to meet its ongoing operational needs, including any required repayments under the Credit Facility, based upon its estimates of future revenues and expenditures, which include assumptions regarding (i) revenues for assets to be re-leased, (ii) cost and anticipated timing of maintenance to be performed, (iii) required debt payments, (iv) timely use of proceeds of unused debt capacity for additional acquisitions of income producing assets and (v) interest rates.  Although the Company believes that the assumptions it has made in forecasting its cash flow are reasonable in light of experience, actual results could deviate from such assumptions.  As discussed above, in "Liquidity and Capital Resources – (a) Credit Facility," there are a number of factors that may cause actual results to deviate from such forecasts.

(i)Operating activities

The Company's cash flow from operations increased by $2.5 million in the first six months of 2016 compared to the same period in 2015.  As discussed below, the increase in cash flow was primarily a result of decreases in payments for maintenance, interest and aircraft insurance.   The effect of these decreases was partially offset by decreases in payments received for operating lease revenue and maintenance reserves.

Payment for maintenance

Payments for maintenance decreased by $3.2 million in the first six months of 2016 compared to the same period in 2015 as a result of less maintenance performed to ready aircraft for re-lease or sale in the 2016 period.

Payments for interest

Payments for interest decreased by $0.5 million in the first six months of 2016 compared to the same period in 2015 as a result of a lower average Credit Facility balance during the 2016 period.

Payment for aircraft insurance

Although aircraft insurance expense was higher in the first half of 2016 compared to the same period in 2015, payments for aircraft insurance decreased by $0.4 million in the first half of 2016 compared to the same period in 2015, primarily as a result of a difference in the timing of premium payments that are made on a semi-annual basis.

Payments for operating lease revenue and maintenance reserves

Receipts for operating lease revenue and maintenance reserves from lessees decreased by $0.7 million and $0.9 million, respectively, in the first half of 2016 compared to the same period in 2015, primarily as a result of sales of assets for cash or pursuant to certain sales-type finance leases for which the Company does not collect maintenance reserves in 2015.

(ii)Investing activities

During the first six months of 2016 and 2015, the Company received net cash of $5.1 million and $3.2 million, respectively, from the sale of assets.  During the 2016 period, the Company also received $18.9 million of insurance proceeds related to the total loss of an aircraft during the period and for damage to an aircraft in 2015.

During the first half of 2016, the Company used cash of $1.0 million for deposits on aircraft that the Company expects to acquire during the third quarter.  During the first half of 2015, the Company used cash of $1.3 million for acquisition costs related to aircraft acquired during the second half of 2014. 

(iii)Financing activities

The Company made no borrowings under the Credit Facility during the first six months of 2016 and 2015.  In these same periods, the Company repaid $31.6 million and $6.0 million, respectively, of its total outstanding debt under the Credit Facility.  Such repayments were funded by insurance proceeds, excess cash flow and the sale of assets. 

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Outlook

(a)General

While in certain areas of the world the air carrier industry is now beginning to experience growth after a period of contraction following the global downturn of recent years, other areas continue to experience slow recovery and failures of weaker air carrier competitors that are unable to survive the aftermath of the global downturn.  The slowdown in the Chinese economy appears to be affecting certain regions and a prolonged downturn could have global financial ramifications and further exacerbate the economies of certain areas in which the Company does business that rely heavily on trade with China.  Overall, the Company continues to expect to observe slow growth in the number of regional aircraft and aircraft engines needed for operation by carriers in nearly all geographic areas, especially in Europe, as compared to periods before the global downturn.

The Company has identified three areas that could challenge the Company's growth and operating results:

•As a result of the current low-interest rate environment, competition in the Company's market niche has increased significantly as a result of new acquisition and leasing market entrants, some of which are funded by investment banks and private equity firms seeking higher yields than those available on assets in which these funds had traditionally invested.  The increased competition has resulted in higher acquisition prices for many of the aircraft types that the Company has targeted to buy and, at the same time, has put downward pressure on lease rates, resulting in lower margins and, therefore, fewer acceptable acquisition opportunities for the Company.  In this context, the recent casualty loss of one of the Company's turboprop aircraft and its significant amount of operating lease revenue will create increased pressure on the Company to find additional assets that meet its acquisition criteria.

•The Company could experience (i) a delay in remarketing its assets, as well as (ii) lower rental rates for assets that are remarketed.  The Company expects that the customers for an aircraft lease and three engine leases that expire in 2016 will choose to return the assets rather than renew the leases.

•Lessees that are located in low- or no-growth areas of the world carry heightened risk of an unanticipated lessee default.  A lessee's default and the unscheduled return of an asset to the Company for remarketing could result not only in reduced operating lease revenue but also in unanticipated, unrecoverable expenses arising from the lessee's default on its maintenance and return condition obligations.  The Company monitors the performance of all of its customers and has noted that several of the Company's customers continue to experience weakened operating results and have not yet achieved financial stability.

(b)Operating Segments

The Company operates in one business segment, the leasing of regional aircraft and engines to foreign and domestic regional airlines, and therefore does not present separate segment information for lines of business.  Because engine leasing is typically characterized by short-term, non-triple net leases, which result in high overall transaction costs, unpredictable off-lease periods and extensive human resource allocation to remarketing, the Company has chosen to own only a few engines that are compatible with its aircraft types.

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In addition to five turboprop aircraft that are subject to finance leases, at July 31, 2016, the Company's aircraft and aircraft engines that were on lease or held for lease consisted of the following. 

Type	Number owned		% of net book value
Turboprop aircraft		14		39	%
Regional jet aircraft		8		55	%
Engines		4		6	%

During July 2016, the Company entered into sales-type finance leases for two of the turboprop aircraft and expects to deliver the aircraft during the third quarter.

For the month ended July 31, 2016, approximately 21%, 21%, 19% and 12%of the Company's operating lease revenue was derived from customers in the United States, Mozambique, Slovenia and Canada, respectively.  Operating lease revenue does not include interest income from finance leases.  The table below sets forth geographic information about the Company's operating lease revenue for leased aircraft and aircraft equipment, grouped by domicile of the lessee:

Region	Number of lessees		% of operating lease revenue
Europe		4		32	%
North America		3		35	%
Africa		1		21	%
Asia		1		6	%
Australia		1		6	%

(c)Remarketing Efforts

The Company is seeking remarketing opportunities for three turboprop aircraft and an engine that are held for lease.  However, the Company is considering selling some or all of these assets.  The Company is analyzing the amount and timing of maintenance required to remarket the assets, the amount of which may differ significantly if the assets are sold rather than re-leased.

The Company also owns a turboprop aircraft that is held for sale, for which the Company is seeking sales opportunities.

(d)Credit Facility

The unused amount of the Credit Facility was $57.9 million as of the date of this filing.  Based on its current projections, the Company believes that it will be in compliance with all of its Credit Facility covenants at future calculation dates. The Company also believes that available borrowings under the Credit Facility will be sufficient to meet its continuing obligations and, if the Credit Facility is expanded from its current amount of $150 million to the maximum of $180 million, to fund anticipated acquisitions.  However, there can be no assurance the Company's beliefs will prove to be correct. 

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Factors that May Affect Future Results

Noncompliance with Credit Facility Financial Covenants.  The Company's use of debt as the primary form of acquisition financing subjects the Company to increased risks associated with leverage.  In addition to payment obligations, the Credit Facility agreement includes financial covenants, including some requiring the Company to have positive earnings, meet minimum net worth standards and be in compliance with certain other financial ratios. 

Although the Company believes it will continue to be in compliance with all of the covenants under the Credit Facility agreement, there can be no assurance of such compliance, and in the event of any non-compliance, the Company would need to seek further waivers or amendment of applicable covenants from its lenders if such compliance failure is not timely cured.  Any default under the Credit Facility, if not cured in the time permitted under the facility or waived by the lenders, could result in the Company's inability to borrow any further amounts under the Credit Facility, the acceleration of the Company's obligation to repay amounts previously borrowed under the Credit Facility, or the foreclosure upon any or all of the assets of the Company.

Ownership Risks.  The Company's leases typically are for a period shorter than the entire, anticipated, remaining useful life of the leased assets.  The Company's recovery of its investment in an asset subject to such a lease is dependent upon the Company's ability to profitably re-lease or sell the asset after the expiration of the lease term.  This ability is affected by worldwide economic conditions, general aircraft market conditions, regulatory changes, changes in the supply or cost of aircraft equipment and technological developments that may cause the asset to become obsolete. If the Company is unable to remarket its assets on favorable terms when the leases for such assets expire, the Company's financial condition, cash flow, ability to service debt and results of operations could be adversely affected.

The Company typically acquires used aircraft equipment.  The market for used aircraft equipment has been cyclical, and generally reflects economic conditions and the strength of the travel and transportation industry.  The demand for and value of many types of used aircraft in the recent past has been depressed by such factors as airline financial difficulties, airline consolidations, the number of new aircraft on order and the number of aircraft coming off lease, as well as introduction of new aircraft models and types that may be more technologically advanced, more fuel efficient and/or less costly to maintain and operate.  Values may also increase or decrease for certain aircraft types that become more or less desirable based on market conditions and changing airline capacity.

In addition, a successful investment in an asset subject to a lease depends in part upon having the asset returned by the lessee in the condition as required under the lease, which the Company strives to achieve through onsite management during the return process.  Each lease typically obligates a customer to return an asset to the Company in a specified condition, generally in equal or better condition than at delivery to the lessee.  If the lessee were to become insolvent during the term of its lease and the Company had to repossess the asset, it is unlikely that the lessee would have the financial ability to meet these return obligations.  Alternatively, if the lessee filed for bankruptcy and rejected the aircraft lease, the lessee would be required to return the aircraft but would be relieved from further lease obligations, including return conditions specified in the lease.  In either case, it is likely that the Company would be required to expend funds in excess of any maintenance reserves collected to return the asset to a remarketable condition.

Several of the Company's leases do not require payment of monthly maintenance reserves, which serve as the lessee's advance payment for its future repair and maintenance obligations.  If repossession due to lessee default or bankruptcy occurred under such a lease, the Company would be left with the costs of unperformed repair and maintenance under the applicable lease and the Company would likely incur an unanticipated expense in order to re-lease or sell the asset.

Furthermore, the occurrence of unexpected adverse changes that impact the Company's estimates of expected cash flows generated from an asset could result in an asset impairment charge against the Company's earnings. The Company periodically reviews long-term assets for impairment, in particular, when events or changes in circumstances indicate the carrying value of an asset may not be recoverable. An impairment charge is recorded when the carrying amount of an asset is estimated to be not recoverable and exceeds its fair value. The Company recorded impairment charges for some of its aircraft in 2015 and 2016, and may be required to record asset impairment charges in the future as a result of a prolonged weak economic environment, challenging market conditions in the airline industry, events related to particular lessees, assets or asset types or other factors affecting the value of aircraft or engines.

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Lessee Credit Risk. The Company carefully evaluates the credit risk of each customer and attempts to obtain a third party guaranty, letters of credit or other credit enhancements, if it deems them necessary in addition to customary security deposits.  There can be no assurance, however, that such enhancements will be available, or that, if obtained, will fully protect the Company from losses resulting from a lessee default or bankruptcy.

If a lessee that is a certified U.S. airline were in default under a lease and sought protection under Chapter 11 of the United States Bankruptcy Code, Section 1110 of the Bankruptcy Code would automatically prevent the Company from exercising any remedies against such lessee for a period of 60 days.  After the 60-day period had passed, the lessee would have to agree to perform the lease obligations and cure any defaults, or the Company would have the right to repossess the equipment.  However, this procedure under the Bankruptcy Code has been subject to significant litigation, and it is possible that the Company's enforcement rights would be further adversely affected by a bankruptcy filing by a defaulting lessee.

Several of the Company's customers have experienced significant financial difficulties, become insolvent, or have been declared or have filed for bankruptcy.  An insolvency or bankruptcy of a customer usually results in a total loss of the receivables from that customer, as well as the Company incurring additional costs in order to repossess and, in some cases, repair the aircraft leased to the customer.  The Company closely monitors the performance of all of its lessees and its risk exposure to any lessee that may be facing financial difficulties, in order to guide decisions with respect to such lessee that would mitigate losses in the event the lessee is unable to meet or rejects its lease obligations.  There can be no assurance that additional customers will not become insolvent or file for bankruptcy or that the Company will be able to mitigate any of the resultant losses.

It is possible that the Company may enter into deferral agreements for overdue lessee obligations. When a customer requests a deferral of lease obligations, the Company evaluates the lessee's financial plan, the likelihood that the lessee can remain a viable carrier, and whether the deferral will be repaid according to the agreed schedule.  The Company may elect to record the deferred rent and reserve payments from the lessee on a cash basis, which could have a material effect on the Company's financial results in the applicable periods.  Deferral agreements with lessees also reduce the Company's borrowing capacity under its Credit Facility.

Competition.  The aircraft leasing industry is highly competitive.  The Company competes with aircraft manufacturers, distributors, airlines and aircraft operators, equipment managers, leasing companies, equipment leasing programs, financial institutions and other parties engaged in leasing, managing or remarketing aircraft, many of which have significantly greater financial resources.  The Company believes that it is competitive because of JMC's expertise and operational efficiency in identifying and obtaining financing for the transaction types desired by regional air carriers.  This market segment, which in many cases involves customers that are private companies without well-established third party credit ratings, is not well served by large financial institutions.  JMC has developed a reputation as a competent global participant in this segment of the market, and the Company believes that JMC's reputation benefits the Company.  Competition in the Company's market niche, however, has increased significantly recently as a result of new entrants to the acquisition and leasing market.  As competition increases, it has and will likely continue to create upward pressure on acquisition prices for many of the aircraft types that the Company has targeted to buy and, at the same time, create downward pressure on lease rates, resulting in lower margins for the Company and, therefore, fewer acceptable acquisition opportunities for the Company.

Risks Related to Regional Air Carriers.  The Company's continued focus on its customer base of regional air carriers subjects the Company to additional risks. Many regional airlines rely heavily or even exclusively on a code-share or other contractual relationship with a major carrier for revenue, and can face financial difficulty or failure if the major carrier terminates the relationship or if the major carrier files for bankruptcy or becomes insolvent.   Some regional carriers may depend on contractual arrangements with industrial customers such as mining or oil companies, or franchises from governmental agencies that provide subsidies for operating essential air routes, which may be subject to termination or cancellation on short notice.  Furthermore, many lessees in the regional air carrier market are start-up, low-capital, and/or low-margin operators.

Credit Facility Debt Limitations. The amount available to be borrowed under the Credit Facility is limited by asset-specific advance rates.  Lease arrearages or off-lease periods for a particular asset that is collateral under the Credit Facility may reduce the loan advance rate permitted with respect to that asset and, therefore, reduce the permitted borrowing under the facility.  Amounts subject to payment deferral agreements also reduce the amount of permitted borrowing.  The Company believes it will have sufficient cash funds to make any required principal repayment that arises due to any such borrowing limitations.

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Availability of Financing. The Company's continued growth will depend on its ability to continue to obtain capital, either through debt or equity financings. There can be no assurance that the Company will succeed in obtaining capital in the future at terms favorable to the Company.

General Economic Conditions and Lowered Demand for Travel. The Company's business is dependent upon general economic conditions and the strength of the travel and transportation industry.  In certain geographic regions, the industry is continuing to experience financial difficulty due to the slow recovery in the global economy.  The spread of a disease epidemic, the threat or execution of a terrorist attack against aviation, a worsening financial/bank crisis in Europe, a natural event that interrupts air traffic, military conflict, political crises or other events that cause a prolonged spike in fuel prices, or other like events could exacerbate an already weakened condition and lead to widespread failures in the air carrier industry.  Any ripple effects from the slowdown in China could further exacerbate the economies of certain areas in which the Company does business.  If lessees experience financial difficulties and are unable to meet lease obligations, this will, in turn, negatively affect the Company's financial performance. 

Airline reductions in capacity in response to lower passenger loads have resulted in reduced demand for aircraft and aircraft engines and a corresponding decrease in market lease rental rates and aircraft values for many aircraft types.  This reduced market value could affect the Company's results if the market value of an asset or assets in the Company's portfolio falls below carrying value, and the Company determines that a write-down of the value on its balance sheet is appropriate. Furthermore, if older, expiring leases are replaced with leases at decreased lease rates, the lease revenue from the Company's existing portfolio is likely to decline, with the magnitude of the decline dependent on the length of the downturn and the depth of the decline in market rents. 

Economic downturns can affect certain regions of the world more than others.  As the Company's portfolio is not entirely globally diversified, a localized downturn in one of the key regions in which the Company leases assets could have a significant adverse impact on the Company.  The Company's significant sources of operating lease revenue by region are summarized in "Outlook - Operating Segments," above.

International Risks.  The Company leases assets in overseas markets.  Leases with foreign lessees, however, may present different risks than those with domestic lessees.  Most of the Company's expected growth is outside of North America.

A lease with a foreign lessee is subject to risks related to the economy of the country or region in which such lessee is located, which may be weaker than the U.S. economy.  An economic downturn in a particular country or region may impact a foreign lessee's ability to make lease payments, even if the U.S. and other foreign economies remain stable.

Foreign lessees are subject to risks related to currency conversion fluctuations.  Although the Company's current leases are all payable in U.S. dollars, the Company may agree in the future to leases that permit payment in foreign currency, which would subject such lease revenue to monetary risk due to currency fluctuations.  In addition, if the Company undertakes certain obligations under a lease to contribute to a repair or improvement and if the work is performed in a foreign jurisdiction and paid for in foreign currency, currency fluctuations resulting in a weaker dollar between the time such agreement is made and the time payment for the work is made may result in an unanticipated increase in U.S. dollar-denominated cost for the Company.

Even with U.S. dollar-denominated lease payment provisions, the Company could still be affected by a devaluation of the lessee's local currency and a stronger U.S. dollar that would make it more difficult for a lessee to meet its U.S. dollar-denominated payments, increasing the risk of default of that lessee, particularly if its revenue is primarily derived in the local currency.

Foreign lessees that operate internationally may also face restrictions on repatriating foreign revenue to their home country.  This could create a cash flow crisis for an otherwise profitable carrier, affecting its ability to meet its lease obligations.  Foreign lessees may also face restrictions on payment of obligations to foreign vendors, including the Company, which may affect their ability to timely meet lease obligations to the Company.

Foreign lessees are not subject to U.S. bankruptcy laws, although there may be debtor protection similar to U.S. bankruptcy laws available in some jurisdictions.  Certain countries do not have a central registration or recording system with which to locally establish the Company's interest in equipment and related leases.  This could make it more difficult for the Company to recover an aircraft in the event of a default by a foreign lessee.  In any event, collection and enforcement may be more difficult and complicated in foreign countries.

Finally, ownership of a leased asset operating in a foreign country and/or by a foreign carrier may subject the Company to additional tax liabilities that are not present with aircraft operated in the United States.  Depending on the jurisdiction, laws governing such tax liabilities may be complex, not well formed or not uniformly enforced. In such jurisdictions, the Company may decide to take an uncertain tax position based on the best advice of the local tax experts it engages, which position may be challenged by the taxing authority.  If the taxing authority later assesses a liability, the Company may be required to pay penalties and interest on the assessed amount, which penalties and interest would not give rise to a corresponding foreign tax credit on the Company's U.S. tax return.

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Interest Rate Risk.  The Credit Facility carries a floating interest rate based upon short-term interest rate indices. Lease rates typically, but not always, move over time with interest rates, but market demand and numerous other asset-specific factors also affect lease rates. Because the Company's typical lease rates are fixed at lease origination, interest rate changes during the lease term have no effect on existing lease rental payments.  Therefore, if interest rates rise significantly and there is relatively little lease origination by the Company following such rate increases, the Company could experience decreased net income as additional interest expense outpaces revenue growth.  Further, even if significant lease origination occurs following such rate increases, other contemporaneous aircraft market forces may result in lower or flat rental rates, thereby decreasing net income.

Concentration of Lessees and Aircraft Type. For the month ended July 31, 2016, the Company's four largest customers accounted for a total of approximately 73% of the Company's monthly lease revenue.  A lease default by or collection problem with one or a combination of any of these significantcustomers could have a disproportionate negative impact on the Company's financial results and borrowing base under the Credit Facility, and, therefore, the Company's operating results are especially sensitive to any negative developments with respect to these customers in terms of lease compliance or collection.  In addition, if the Company's revenues become overly concentrated in a small number of lessees, the Company could fail to comply with certain financial covenants in its Credit Facility related to customer concentration.  In the event of any non-compliance that is not cured in the time permitted under the Credit Facility, the Company would need to seek waivers or amendment of the applicable covenants from its lenders if such compliance failure is not timely cured.  Any default under the Credit Facility, if not cured in the time permitted under the Credit Facility or waived by the lenders, could result in foreclosure upon any or all of the assets of the Company.

The Company's aircraft portfolio is currently focused on a small number of aircraft types and models compared to the variety of aircraft used in the commercial air carrier market.  A change in the desirability and availability of any of the particular types and models of aircraft owned by the Company could affect valuations of such aircraft, and would have a disproportionately significant impact on the Company's portfolio value. Such aircraft type concentration would diminish if the Company acquires assets of other types. Conversely, acquisition of these types of aircraft will increase the Company's risks related to its concentration of those aircraft types.

Investment in New Aircraft Types.  The Company intends to continue to focus solely on regional aircraft. Although the Company has traditionally invested in a limited number of types of turboprop aircraft, the Company has also acquired several types of regional jet aircraft, and may continue to seek acquisition opportunities for new types and models of aircraft used in the Company's targeted customer base of regional air carriers. Acquisition of aircraft types not previously acquired by the Company entails greater ownership risk due to the Company's lack of experience managing those assets. The Company believes, however, that the overall industry expertise of JMC's personnel and its technical resources should permit the Company to effectively manage such new aircraft types.  Further, the broadening of the asset types in the aircraft portfolio may have a benefit of diversifying the Company's portfolio (see "Factors That May Affect Future Results – Concentration of Lessees and Aircraft Type," above).

Engine Leasing Risk.  Because engine leasing, absent a long-term triple net lease, is viewed as inherently riskier than aircraft leasing, the Company does not focus on this segment. The Company, however, currently has four engines in its portfolio, making up 6% of the Company's total net book value of aircraft and aircraft engines held for lease. The Company may from time to time lease one or more of these engines to lessees under industry standard short-term engine leases that place the risk of an engine failure not caused by lessee negligence or foreign object damage upon the lessor.  It is not economically practicable for an engine lessor to insure against that risk.  If an engine failure occurs and is not covered by a manufacturer's warranty or is not otherwise caused by circumstances that the lessee is required to cover, the Company's investment in the engine could be a significant loss or the Company might incur a significant maintenance expense.

Reliance on JMC.  All management of the Company is performed by JMC under a Management Agreement between the Company and JMC that expires in August of 2025 and provides for an asset-based management fee.  JMC is not a fiduciary of the Company or its stockholders. The Company's Board of Directors (the "Board") has ultimate control and supervisory responsibility over all aspects of the Company and owes fiduciary duties to the Company and its stockholders. The Board has no control over the internal operations of JMC, but the Board does have the ability and responsibility to manage the Company's relationship with JMC and the performance of JMC's obligations to the Company under the Management Agreement, as it would have for any third party service provider to the Company.  While JMC may not owe any fiduciary duties to the Company by virtue of the Management Agreement, all of the officers of JMC are also officers of the Company, and in that capacity owe fiduciary duties to the Company and its stockholders.  In addition, an officer of the Company holds significant ownership positions in the Company and JHC, the parent company of JMC, and JHC is the Company's largest shareholder.Therefore, the economic interests of the Company should be aligned with the interests of JHC and JMC, and JMC should have substantial incentive to make financial decisions as the management company for the Company that are in the best interests of the Company.

The Management Agreement may be terminated if JMC defaults on its obligations to the Company.  However, the agreement provides for liquidated damages in the event of its wrongful termination by the Company.  A director of the Company is also a director of JMC and, as discussed above, the officers of the Company are also officers of JMC, and one such officer holds significant ownership positions in both the Company and JHC, the holding company for JMC.  Consequently, the director and officers of JMC may have a conflict of interest in the event of a dispute between the Company and JMC.  Although the Company has taken steps to prevent conflicts of interest arising from such dual roles, such conflicts may still occur.

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Leadership Succession.  The death of Neal Crispin, the Company's founder, Chief Executive Officer and Chairman of the Board of the Company and JMC has presented challenges for the Company.  JMC and the Company miss the vision and experienced leadership of Mr. Crispin in his roles at both companies.  The search for a successor may require a significant devotion of time and resources by senior management and the Board of Directors and could divert attention from the conduct of the Company's business, as it requires a joint effort by JMC, in its capacity as the Management Company, and the Company, including its independent directors.  Management believes, however, that because Ms. Toni M. Perazzo, who has assumed the role of interim President, and other members of senior management have each had a long tenure with the Company while under Mr. Crispin's direction, management will be able to keep the Company's operational activities unchanged and the Company on track with its current business plan while a successor search is ongoing.  There can be no assurance that the death of Mr. Crispin will not have a negative effect on the Company's operational activities or that a suitable successor to Mr. Crispin will be hired in the near term.  As Ms. Perazzo has assumed on an interim basis the role of Chief Executive Officer in addition to the role of Chief Financial Officer, while she is serving both roles, there will not be a division of responsibility for the executive and financial oversight of the Company until a successor Chief Executive Officer is appointed.

Management Fee Structure. All decisions regarding acquisitions and disposal of aircraft from the Company's portfolio are made by JMC.  JMC is paid a management fee based on the net asset value of the Company's portfolio.  It may also receive a one-time asset acquisition fee upon purchase of an asset by the Company, and a one-time remarketing fee in connection with the sale or re-lease of an asset.  Optimization of the results of the Company depends on timing of the acquisition, lease yield on the acquired assets, and re-lease or sale of its portfolio assets.  Under the current management fee structure, a larger volume of acquisitions generates acquisition fees and also increases the periodic management fee by increasing the size of the aircraft portfolio.  Since the Company's current business strategy involves continued growth of its portfolio, with the intention to buy and hold assets until the appropriate time to sell them, a compensation structure that results in greater compensation with an increased portfolio size is consistent with that strategy.  The compensation structure does, nonetheless, create a situation where a decision by JMC for the Company to forego an asset transaction deemed to be an unacceptable business risk due to the lessee or the aircraft type is in conflict with JMC's own short-term pecuniary interest.  As a result, the compensation structure could act to incent greater risk-taking by JMC in asset acquisition decision-making.  However, because JMC's sole business and source of revenue arises from and is expected to continue arising from acting as the management company for the Company, the long-term financial health and viability of the Company are important to JMC's own long-term health and viability.  Therefore, in assessing risk-taking in the Company's acquisition transactions, JMC's and the Company's motivations are closely aligned, as JMC is incented to make asset acquisitions that are expected to contribute to the long-term viability of the Company.  In addition, the Company has established objective target guidelines for yields on acquired assets and the Company's Board, including a majority of the outside independent directors, must approve any acquisition that involves a new asset type.  While the Company currently believes the foregoing are effective mitigating factors against undue compensation-incented risk-taking by JMC, there is no assurance that such mechanisms can entirely and effectively eliminate such risk.

Government Regulation.  There are a number of areas in which government regulation may result in costs to the Company.  These include aircraft registration safety requirements, required equipment modifications, maximum aircraft age, and aircraft noise requirements.  Although it is contemplated that the burden and cost of complying with such requirements will fall primarily upon lessees of equipment, there can be no assurance that the cost will not fall on the Company.  Furthermore, future government regulations could cause the value of any non-complying equipment owned by the Company to decline substantially.

Casualties, Insurance Coverage.  The Company, as owner of transportation equipment, may be named in a suit claiming damages for injuries or damage to property caused by its assets.  As a triple-net lessor, the Company is generally protected against such claims, since the lessee would be responsible for, insure against and indemnify the Company for such claims.  A "triple net lease" is a lease under which, in addition to monthly rental payments, the lessee is generally responsible for the taxes, insurance and maintenance and repair of the aircraft arising from the use and operation of the aircraft during the term of the lease.  Although the United States Aviation Act may provide some protection with respect to the Company's aircraft assets, it is unclear to what extent such statutory protection would be available to the Company with respect to its assets that are operated in foreign countries where such provisions of the United States Aviation Act may not apply.  

The Company's leases generally require a lessee to insure against likely risks of loss or damage to the leased asset, and liability to passengers and third parties pursuant to industry standard insurance policies and require lessees to provide insurance certificates documenting the policy periods and coverage amounts.  The Company tracks receipt of the certificates and calendars their expiration dates.  Prior to the expiration of an insurance certificate, if a replacement certificate has not been received, the Company reminds the lessee of its obligation to provide current insurance certificates to avoid a default under the lease.

Despite these requirements and procedures, there may be certain cases where the loss is not entirely covered by the lessee or its insurance.  The possibility of such an event is remote, but any such uninsured loss with respect to the equipment or insured loss for which insurance proceeds are inadequate might result in a loss of invested capital in and any profits anticipated from, such equipment, as well as a potential claim directly against the Company.

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Compliance with Future Environmental Regulations.  Compliance with future environmental regulationsmay harm the Company's business. Many aspects of aircraft operations are subject to increasingly stringent environmental regulations, and growing concerns about climate change may result in the imposition by the U.S and foreign governments of additional regulation of carbon emissions, aimed at either requiring adoption of technology to reduce the amount of carbon emissions or putting in place a fee or tax system on carbon emitters. It is likely that any such regulation will be directed at the Company's customers, as operators of aircraft, or at the Company, as owners of aircraft.  Under the Company's triple-net lease arrangements, the Company would likely shift responsibility for compliance to its lessees, but there might be some costs of regulation that the Company could not shift and would itself have to bear. Although it is not expected that the costs of complying with current environmental regulations will have a material adverse effect on the Company's financial position, results of operations, or cash flows, no assurance can be given that the costs of complying with environmental regulations adopted in the future will not have such an effect.

Cyber-Security Risks.  The Company believes that it has sufficient cyber-security measures in place commensurate with the risks to the Company of a successful cyber-attack or breach of security.  The Company believes that its main vulnerability to a cyber-attack would be interruption of the Company's email communications internally and with third parties, loss of customer and lease archives, and loss of document sharing between the Company's offices and remote workers.  Such an attack could temporarily impede the efficiency of the Company's operations; however, the Company believes that sufficient replacement mechanisms exist in the event of such an interruption that there would not be a material adverse financial impact on the Company's business. 

Possible Volatility of Stock Price.  The market price of the Company's common stock is subject to fluctuations following developments relating to the Company's operating results, changes in general conditions in the economy, the financial markets, the airline industry, changes in accounting principles or tax laws applicable to the Company or its lessees, or other developments affecting the Company, its customers or its competitors, or arising from other investor sentiment unknown to the Company.  Because the Company has a relatively small capitalization of approximately 1.6 million shares outstanding, there is a correspondingly limited amount of trading and float of the Company's shares.  Consequently, the Company's stock price is more sensitive to a single large trade or a small number of simultaneous trades along the same trend than a company with larger capitalization and higher trading volume and float.

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Item 3.Quantitative and Qualitative Disclosures About Market Risk.

This report does not include information described under Item 305 of Regulation S-K pursuant to the rules of the Securities and Exchange Commission that permit "smaller reporting companies" to omit such information.

Item 4.Controls and Procedures.

CEO and CFO Certifications. Attached as exhibits to this Quarterly Report on Form 10-Q (the "Report") are certifications of the Company's Chief Executive Officer (the "CEO") and the Company's Chief Financial Officer (the "CFO"), which are required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the "Section 302 Certifications"). This section of the Report includes information concerning the evaluation of disclosure controls and procedures referred to in the Section 302 Certifications and this should be read in conjunction with the Section 302 Certifications for a more complete understanding of the topics presented.

Evaluation of the Company's Disclosure Controls and Procedures. Disclosure controls and procedures ("Disclosure Controls") are controls and other procedures that are designed to ensure that information required to be disclosed in the Company's reports filed under the Securities Exchange Act of 1934, such as this Report, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and that such information is accumulated and communicated to the Company's management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

The Company's management, with the participation of the CEO and CFO, evaluated the effectiveness of the design and operation of the Company's Disclosure Controls and concluded that the Company's Disclosure Controls were effective as of June 30, 2016.

Changes in Internal Control Over Financial Reporting.  No change in the Company's internal control over financial reporting occurred during the fiscal quarter ended June 30, 2016 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

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PART II

OTHER INFORMATION

Item 6.Exhibits

Exhibit Number	Description
10.25	Form of Policy of Sale Agreement between ACY SN 19002 Limited ("ACY 19002") and Aviacion RCII LLC, A.I.E ("Aviacion"), dated August 4, 2016
10.26	Form of Policy of Sale Agreement between ACY SN 19003 Limited ("ACY 19003") and Aviacion dated August 4, 2016
10.27	Form of Senior Loan Agreement between ACY 19002 and Export Development Canada ("EDC"), dated August 4, 2016
10.28	Form of Senior Loan Agreement between ACY 19003 and EDC, dated August 4, 2016
10.29	Form of Deed of Guarantee between the Company and EDC, dated August 4, 2016, with respect to ACY 19002
10.30	Form of Deed of Guarantee between the Company and EDC, dated August 4, 2016, with respect to ACY 19003
31.1	Certification of Toni M. Perazzo, Interim Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Toni M. Perazzo, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Toni M. Perazzo, Interim Chief Executive Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification of Toni M. Perazzo, Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.LAB	XBRL Label Linkbase Document
101.PRE	XBRL Presentation Linkbase Document
101.DEF	XBRL Definition Linkbase Document

* These certificates are furnished to, but shall not be deemed to be filed with, the Securities and Exchange Commission.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AEROCENTURY CORP.
Date: August 11, 2016	By:	/s/ Toni M. Perazzo
		Name: Toni M. Perazzo
		Title: Senior Vice President-Finance and
		Chief Financial Officer

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EX-31.1

EXHIBIT 31.1

I, Toni M. Perazzo, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of AeroCentury Corp.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2016	/s/ Toni M. Perazzo
	Toni M. Perazzo
	Interim President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

I, Toni M. Perazzo, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of AeroCentury Corp.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2016	/s/ Toni M. Perazzo
	Toni M. Perazzo
	Sr. V.P. Finance and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

AEROCENTURY CORP.

CERTIFICATION

In connection with this quarterly report of AeroCentury Corp. (the "Company") on Form 10-Q for the period ended June 30, 2016, as filed with the Securities and Exchange Commission (the "Report"), I, Toni M. Perazzo,Interim Chief Executive Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

This Certification has not been, and shall not be deemed, "filed" with the Securities and Exchange Commission.

Date: August 11, 2016	/s/ Toni M. Perazzo
	Toni M. Perazzo
	Interim President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

AEROCENTURY CORP.

CERTIFICATION

In connection with this quarterly report of AeroCentury Corp. (the "Company") on Form 10-Q for the period ended June 30, 2016, as filed with the Securities and Exchange Commission (the "Report"), I, Toni M. Perazzo, Chief Financial Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to the best of my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934, and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

This Certification has not been, and shall not be deemed, "filed" with the Securities and Exchange Commission.

Date: August 11, 2016	/s/ Toni M. Perazzo
	Toni M. Perazzo
	Chief Financial Officer

EX-10.25

POLICY OF SALE AND PURCHASE OF AN AIRCRAFT

In Madrid, on August 4, 2016, before Mr. ANDRÉS DE LA FUENTE O´CONNOR, Notary of Madrid and its Notarial Association

APPEAR

On one part: Mr. Antonio Pérez Ramírez, with Spanish I.D. number __________________, of legal age, of Spanish nationality, in the name and on behalf of AVIACIÓN RC II, A.I.E., with registered address at Avenida de Cantabria s/n, Edificio Amazonia, Second Floor, Boadilla del Monte 28660, Madrid, Spain. Incorporated by virtue of a Public deed granted before the Notary of Madrid, Mr. Gonzalo Sauca Polanco, on November 5, 2010, with number 5.884 of his public records, registered in the Commercial Registry of Madrid, at volume 28288, page 40, Sheet number M-509490, registration 1^st. With Taxpayee´s Identification Code __________________ (the "Seller").

Mr. Pérez acts as joint and several Director on behalf of the Seller by virtue of his appointment in the shareholders´ meeting on 4 February 2013, by means of which he was designated for an indefinite term to hold the company's representation in or out of trial.

He declares that the corporate purpose is, among others, the exploitation of all type of aircrafts by renting and leasing them, with or without option to purchase, for their subsequent lease to the clients of the partners of the AIE or of their group.

He further states that with respect to Law 10/2010, of 28 April, 2010, on Money Laundering and Terrorist Financing Prevention, there is no need to identify the ultimate ownership of the AIE, as the parent Company of the AIE is a credit institution, in accordance with article 9 of said Law.

And on the other hand: Mr. Álvaro Sainz Ruiz, withSpanish I.D. number ___________________, of legal age, of Spanish nationality, in the name and on behalf of ACY SN 19002 Limited, a company incorporated under the Laws of England, with address for these purposes in 16 Old Bailey, London EC4M 7EG. With Company's Tax Code to operate in Spain _____________(the "Buyer").

Mr. Álvaro Sainz Ruiz acts as attorney of the Buyer by virtue of the special power granted by Mr. Barry Norman Fredirick Mills, on 27 July 2016, before the Notary of London, Martin Anthony Charlton, duly apostilled, a photocopy of which is attached hereto as Annex A.

He declares that the corporate purpose is, among others, general commercial purposes.

With respect to article 4 of the Law 10/2010, of 28 April, 2010, on Money Laundering and Terrorist Financing Prevention, he refers to the special power referred above and attached as Annex A.

(Hereinafter, the "Parties")

WHEREAS

I. The Seller is the owner of an aircraft as more particularly described below (the "Aircraft"), which title, registration details, encumbrances and main characteristics are (to the extent registered in the Registry of Moveable Assets) also described in the simple information note issued by the Registry of Moveable Assets of Madrid, copy of which (together with a copy of the certificate of registration in the Civil Aircraft Registry (registro de matrícula de aeronaves civiles) is attached as Annex I:

Aircraft CRJ-1000 manufactured by Bombardier Inc, with manufacturer's serial number 19002, with two engines model GE CF34-8C5 with serial numbers 194897 and 194896, and an auxiliary power unit P-724. The Aircraft is registered in Spain with registration mark EC-LJR.

Title: It is property of the Seller by virtue of a policy of agreement of transfer of title of an aircraft entered into by the Seller and Lico Leasing S.A.U. E.F.C. ("Lico") on 20 December 2012 and a bill of sale entered into by Lico dated 19  December 2012.

Encumbrances: the Aircraft has no registered liens or encumbrances other than the Operating Lease referred below. Additionally, the Aircraft is also encumbered by a mortgage granted under English law by the Seller in favour of Export Development Canada ("EDC") on 17 December 2010, which content the Buyer acknowledges.

II. That the Aircraft is currently on lease to Air Nostrum Líneas Aéreas del Mediterráneo S.A. (the "Lessee") pursuant to an operating lease agreement entered into by the Seller and the Lessee dated 16 December 2010, as amended prior to the date hereof (the "Operating Lease"), which lease is duly registered in the Registry of Movable Assets of Madrid. Simultaneously with the acquisition of the Aircraft by the Buyer, the rights and obligations under the Operating Lease shall be novated to the Buyer pursuant to a deed of novation and restatement entered into by the Seller, the Lessee and the Buyer on or about the date hereof, by virtue of which the Operating Lease shall also be amended and restated (the "Deed of Novation").

III. That the Buyer is willing to purchase, and the Seller is willing to sell, the Aircraft and therefore agree to enter into this sale and purchase agreement (the "Agreement" or the "Policy"), pursuant to the terms and conditions contained in the following

CLAUSES

1.DEFINITIONS AND INTERPRETATION

i) Save as expressly defined herein, words, expressions and capitalised terms defined in the Operating Lease shall apply to this Policy.

ii) The headings in this Policy are for the purpose of reference only, have no legal or other significance, and shall be ignored in the interpretation of this Policy.

iii) The following terms shall have the following meanings:

a. "Business Days" shall mean a day, other than Saturdays or Sundays, on which the banks are generally open for business in Madrid, Spain;

b. "Condition Precedent" shall mean each of the conditions mentioned in Clause Seven;

c. "Closing Date" shall have the meaning ascribed to such term in Clause Seven;

d. "Damage Notification Threshold" shall have the meaning ascribed to such term in the Operating Lease.

e. "Drop Dead Date" shall be 17 September 2016, at 18:00 CET or such other later date as the Parties may agree.

f. "Major Damage" shall mean a damage to the Aircraft in respect of which the cost of repair would, in the reasonable opinion of the Buyer and agreed by the Seller, and in the absence of such agreement, in the reasonable opinion of a specialist aircraft value appraiser selected by the Buyer and approved by the Seller, exceed the Damage Notification Threshold.

g. "Permitted Lien" shall mean: (a) the lease created under the Operating Lease; (b) any Security Interest created or permitted to subsist by or through the Lessee or any sublessee of the Lessee; and (c) any Security Interest arising as a result of the operations of the Aircraft by the Lessee or any sublessee of the Lessee.

h. "Relevant Documents" shall mean this Agreement, the Deed of Novation, the Payment Deed referred to in Clause 3(a), the Facility Agreement referred to in the Deed of Novation, the Bill of Sale and any other agreement that the Parties agree to consider a Relevant Document for the purposes of this Agreement.

i. "Security Interest" means any security including any mortgage, charge (whether fixed or floating), pledge, lien, in rem security, right of detention, or any encumbrance or security interest of any kind securing any obligation of any person or any other type of preferential arrangement (including, without limitation, any trust arrangement, title transfer and/or retention arrangement having a similar effect) in each case howsoever created or arising.

2. SALE AND PURCHASE

Pursuant to the terms and conditions of this Policy and, in particular, subject to the fulfilment of each of the Conditions Precedent on or before the Drop Dead Date, the Seller agrees to sell and transfer to the Buyer, who agrees to buy and acquire, the Aircraft (together with its landing gear, avionics, systems, appliances, accessories, components, parts, furnishings and other equipment belonging to the Seller in respect of the Aircraft (whether or not installed in the Aircraft)) and the Aircraft Documents.

3.PRICE

The Parties have agreed that the price payable by the Buyer for the Aircraft is the amount of USD 16,005,627.25 (the "Purchase Price"). The Purchase Price shall be paid and applied, free from any withholdings or retentions, as follows:

(a) An amount equal to USD 9,805,627.25, shall be paid by means of an agreement entered into, on the date hereof, by, inter alios, the Buyer and the Seller with EDC named as "Payment Deed in respect of the financing arrangements relating to one (1) Bombardier CRJ 1000 Aircraft bearing Manufacturer's Serial number 19002" (the "Payment Deed");

(b) An amount equal to USD 6,200,000 shall be paid by transfer, on the Closing Date, of that amount in freely transferable funds to the account of the Seller in Banco Santander, S.A. with number IBAN XXXXXXXX. The Seller shall appear, as soon as possible and in any case within three (3) Business Days from the Closing Date, before the Notary who intervenes this Policy to attach copy of the transfer as evidence of the payment (together with a copy of the Bill of Sale referred to below, for attestation of the signatures and to be attached to this Policy), and the notary shall attest such attachment by means of a notarial diligence to this Policy.

The Parties hereby instruct the Notary not to deliver this Policy to the Parties until the notarial diligence mentioned in (b) above is included. Should the Seller not appear before the Notary within three (3) Business Days from the Drop Dead Date in order to provide the aforementioned evidence, the Parties hereby instruct the Notary to provide attestation of that and to produce copy of the Policy to the Parties with such attestation.

4.TRANSFER OF TITLE TO THE AIRCRAFT

On the Closing Date, the Seller and the Buyer shall produce a bill of sale in the form of Annex II (the "Bill of Sale")attesting transfer of title to the Aircraft. Pursuant to Article 1463 of the Spanish Civil Code, not being the Aircraft in the possession of the Seller (but of the Lessee pursuant to the Operating Lease) on the Closing Date, the Parties agree that delivery of the Aircraft and transfer of title shall occur by the sole execution of the Bill of Sale by the Seller and its acknowledgement by the Buyer.

On the Closing Date the Aircraft shall be located in Spain.

5.AIRCRAFT´S CONDITION

The Aircraft and each Part thereof is being sold and delivered "as is" and "where is", and without any representation, warranty or guarantee of the Seller (other than any representation or warranty expressly made by the Seller in the Bill of Sale) express or implied of any kind, arising by law or otherwise. The Buyer expressly acknowledges that, before the date of this Agreement, it has inspected the Aircraft (to the extent that it has considered necessary or appropriate) and that it has found it acceptable in all respects and that, provided that each of the Conditions Precedent has been satisfied or waived, nothing occurring on the Aircraft from the date hereof to the Closing Date shall impede or modify the obligations of the Parties under this Agreement or affect the transfer of title as set forth herein and in the Bill of Sale.

Accordingly the Buyer agrees that the Aircraft and each Part thereof is to be sold and purchased in an as is, where is condition as at the effective time on the Closing Date and no term, condition, warranty, representation or covenant of any kind has been accepted, made or is given by the Seller (other than any representation or warranty expressly made by the Seller in accordance with the Bill of Sale or any other Relevant Document to which the Seller is a party) or its servants or agents in respect of the airworthiness, value, quality, durability, condition, design, appearance, operation, description, safety, merchantability or fitness for use or purpose of the Aircraft or any Part thereof, as to the absence of latent, inherent or other defects (whether or not discoverable), as to the completeness or condition of any Aircraft Documents or the Operative Documents, or as to the absence of any infringement of any patent, copyright, design, or other proprietary rights. Pursuant to Article 1475 and 1485 of the Spanish Civil Code the Parties agree that all terms, conditions, warranties and representations (or obligation or liability arising in relation thereof) in relation to any of those matters, expressed or implied, statutory or otherwise, are expressly excluded (other than any representation or warranty expressly made by the Seller in accordance with the Bill of Sale or any other Relevant Document to which the Seller is a party).

6.ENCUMBRANCES. LEASES

6.1. At the time of the transfer of title to the Aircraft in accordance with Clause 4, the Aircraft shall be free from any Security Interest other than any Permitted Liens and the mortgage created in favour of EDC and referred in Recital I above that shall be discharged immediately thereafter. The Buyer expressly waives any right or action against the Seller due to the existence of any Permitted Lien.

6.2. The Buyer hereby acknowledges that it has been given the opportunity to review the content of all of the Operative Documents and that is has done so satisfactorily to the extent that it has considered relevant. For that reason, the Buyer hereby expressly waives its right to bring any action or claim against the Seller for anything agreed in any of the Operative Documents.

6.3. In particular, the Buyer hereby acknowledges the existence and content of the Operating Lease. The Buyer hereby declares that it intends to amend and restate the Operating Lease and hereby renounces to any declaration, representation or warranty to be made by the Seller in respect of the Operating Lease, save to the extent expressly reflected in the Deed of Novation.

7. CONDITIONS FOR TRANSFER.

Transfer of title to the Aircraft is subject to the following conditions having occurred on or before the Drop Dead Date, save if waived by both parties on or before the Drop Dead Date:

(a) Payment and application in accordance with the Payment Deed (and, in the case of the part mentioned in paragraph (b) of Clause 3, receipt thereof) of the Purchase Price, and receipt by the Seller of the amounts payable by or on behalf of the Buyer (or another entity on behalf of the Buyer) pursuant to the side letter referred to in Clause 8.3;

(b) Execution, in terms acceptable to the Parties, of the Relevant Documents by all parties thereto, and each of those documents continuing to be valid and enforceable on the Closing Date;

(c) Receipt by the Seller and the Buyer, on or before the Closing Date, of a legal opinion (including tax issues) in relation to this Agreement and the transactions contemplated herein, in terms satisfactory to each of the Parties;

(d) No Total Loss or Major Damage having occurred from the date hereof to the Closing Date;

(e) No insolvency event (including, in respect of the Seller and/or the Lessee, the insolvency judiciary request "concurso de acreedores" or the notice pursuant to Article 5bis of the Spanish Insolvency Act and, in respect of the Buyer, any similar provisions in accordance with its jurisdiction of incorporation) having occurred in respect of the Buyer, the Seller or the Lessee on or before the Closing Date;

(f) No Event of Default and none of the events mentioned in Clause 18 of the Operating Lease having occurred and not having been remedied on or before the Closing Date;

(g) The Insurances entered into in respect of the Aircraft are amended to reflect that the Buyer is the owner and lessor of the Aircraft from the Closing Date and the Seller receives evidence satisfactory to it that run-off insurances are entered into in its favour in accordance with Clause 14.11.2 of the Operating Lease (in its form as of the date hereof); and

(h) The Effective Time Notice mentioned in the Deed of Novation has been issued by all relevant parties thereto.

Subject to below, on the same date when the last of the conditions mentioned above (other than those which depends on the non-occurrence of a situation on the Closing Date, which shall be considered fulfilled if the relevant situation has not occurred on the date when the rest of the conditions are also fulfilled) the Parties shall execute the Bill of Sale. The date when the Bill of Sale is executed (and, accordingly, title transfer occurs) shall be the "Closing Date".

The Parties hereby commit to collaborate in order that the Conditions Precedent are met, and therefore the Closing Date occurs, within the shortest reasonable term from the date hereof.

8.EXPENSES AND TAXES. WITHOLDINGS. VAT

8.1. All amounts payable by the Buyer to the Seller under this Agreement shall be paid without any deductions or withholdings on account of tax of any nature unless such deduction or withholding is required by law. If the Buyer is legally obliged to make any deduction or withhold any amount on account of any tax in relation to any payment to be made under this Agreement, the amount payable shall be grossed up to the extent necessary to ensure that, after such deduction or withholding the amount received and retained by the Seller will equal the full amount that the Seller would have received had no the deduction or withholding being required. The Buyer shall pay to the relevant authorities the amount thus deducted or withheld within the period prescribed by applicable law, and shall provide evidence to the Seller of such payment in the manner customarily applicable for those purposes.

If the Seller receives (including without limitation by means of compensation) any amount from the tax authorities on account of the amount deducted, it shall return to the Buyer (in an amount which maintains the Seller in a no worse position as if the deduction or withholding tax would have not been made and, in any case, up to the amount deducted or withheld) the amount thus received.

8.2. The Buyer shall pay to the Seller the Purchase Price together with, if applicable, any corresponding value added tax or any other similar tax accrued thereon, if any. Should the Buyer become liable for the payment of any taxes vis a vis any tax or administrative authorities on occasion of the sale, the Buyer undertakes to fulfil the relevant obligations before the corresponding authorities.

8.3. Any notarial fees or any other registration taxes (including stamp duty) arising out of the execution of this Policy or the registration of the Bill of Sale in the relevant Spanish registries (including its translation into Spanish to the extent required) shall be borne by the Buyer. Any other costs or expenses (including legal fees) shall be borne by the Party for whose benefit or under whose order the services, in respect of which such costs are incurred, are provided. Any other costs or expenses (including legal fees of advisors of EDC or the Lessee in accordance with the approved budget) in relation to the transactions contemplated in this Agreement shall be borne by the Buyer, (or another entity as agreed in a side letter of even date herewith).

9.NOTICES

Any notice or communication under this Policy shall be sent to the following addresses:

To the Seller:     Aviación RCII AIE.

Gran Vía de Hortaleza, 3

28033 Madrid SPAIN

Attention: Mr. Antonio Torres / Ms. Mayte Mañas Ariza

E-mail: antoniotorres@gruposantander.com; tmanas@gruposantander.com

With copy to:

KPMG Abogados, S.L.

Paseo de la Castellana 95 (28046) Madrid

Attention: Carmen Mozún / Luis Fernández

Fax: +34 91 555 01 32

e-mail: cmozun@kpmg.es; luisfernandez@kpmg.es

To the Buyer: ACY SN 19002 Limited

c/o Templeco Corporate Services

Withers LLP

16 Old Bailey

London EC4M 7EG

England

Attention: Christine Blackman

Fax: +44(0)202 7597 6543

with a copy to:

AeroCentury Corp.

1440 Chapin Avenue, Suite 310

Burlingame, CA 94010

Attention: President

Fax: +1 650-696-3929

10.COOPERATION AND REGISTRATION

The Parties agree to register the transfer of title occurring under the Policy and the Bill of Sale in the Registry of Movable Assets and in the Civil Aircraft Registry, upon the fulfilment of the Conditions Precedent and the execution of the Bill of Sale.

The Parties undertake to cooperate as necessary in order to obtain the registration of title transfer in both registries and to grant and execute any documents which may be necessary to achieve such title transfer.

11.LEGISLATION AND JURISDICTION

11.1This Policy shall be governed by Spanish Law.

11.2 The Parties, expressly waiving any other forum to which they may be entitled, hereby agree to submit any disputes arising in relation to this Policy (including without limitation any non-contractual claims in relation thereto) to the Courts of the city of Madrid.

La presente Póliza de Compraventa de Aeronave se formaliza con la intervención del Notario que figura en el encabezamiento, a los efectos de lo previsto en el Artículo 1.216 del Código Civil, el Artículo 517 de la Ley de Enjuiciamiento Civil, y demás legislación concordante.	This Policy of Sale and Purchase of an Aircraft is executed before the Notary Public who appears at its beginning, to the effects of the provisions of Section 1,216 of the Civil Spanish Code, Section 517 of the Civil Procedural Spanish Act, and other legislation according to this matter.
Y yo el Notario hago constar que:	I, the Notary public, declare that:
Los otorgantes, en la representación que ostentan reseñada en la intervención de la presente, tienen facultades representativas que son a mi juicio suficientes para la compraventa de aeronave que se documenta en la presente póliza.	The appearing Parties, by means of the respective representations held by them and referred in the granting of this Policy, have, in my judgement, the legal capacity to execute the sale and purchase agreement that is documented herewith this Policy.
Acepto el requerimiento contenido en la cláusula 3, de cuyo cumplimiento dejaré constancia mediante diligencia a la presente.	I accept the request made in clause 3, and its compliance will be reflected in a record to this document.
Protección de datos de carácter personal.- Los intervinientes aceptan la incorporación de sus datos y la copia del documento de identidad a los ficheros de la Notaría con la finalidad de realizar las funciones propias de la actividad notarial y efectuar las comunicaciones de datos previstas en la Ley a las Administraciones Públicas y, en su caso, al Notario que suceda al actual en la plaza. Pueden ejercer sus derechos de acceso, rectificación, cancelación y oposición en la Notaría. En caso de que se incluyan datos de personas distintas de los intervinientes, estos deberán haberles informado, con carácter previo, del contenido de este párrafo	Personal data protection.- The appearing Parties accept the incorporation of their personal data and a copy of their identity card to the Notary files for the purposes of the Notary´s inherent functions, and proceed to communicate this data in accordance with the Law of the Public Administration, or to the Notary who can be the successor of this place. They can exercise their right to access, rectification, cancellation and opposition in the Notary. In the event the data of people different to the appearing Parties is included, the appearing Parties should have informed them before this paragraph has been included.
Formuladas por mí las reservas legales relativas al artículo 5 de la LO 15/1999, de Protección de Datos de Carácter Personal.	Made by me the legal reservations with respect to article 5 of the organic law 15/1999 on the protection of personal data.
Los comparecientes, según intervienen en la presente Póliza, manifiestan su conformidad y aprobación al contenido de la misma tal y como aparece redactado, en lengua inglesa idioma que yo el Notario conozco en lo suficiente, al amparo de lo previsto en el artículo  51 del Código de Comercio; extendida en             hojas incluidos sus anexos y la portada, la otorgan y firman, con mi intervención. Advierto a los firmantes del derecho a la traducción a la lengua española del presente documento, derecho al que renuncian, manifestando conocer la lengua  inglesa, y en consecuencia, el alcance y significado de todo su contenido.	The Parties of this Policy state their consent and approval to the content of the same as per it appears drawn up herewith, which is drafted in English, language that I know well enough in accordance with article 51 of the commerce code; issued in [  ] pages including its annexes and the cover page, they execute and sign this Policy, before me in one sole document. I inform the appearing Parties their right to translate this document into Spanish, a right that they renounce stating that they know English and consequentially, the meaning, and scope of this document.
Y yo el Notario, habiendo hecho las oportunas advertencias legales, DOY FE de la identidad de los comparecientes, de la legitimidad de sus firmas, de que a mi juicio tienen la capacidad y legitimación necesarias para el otorgamiento de la presente Póliza, de que el consentimiento ha sido libremente prestado, y de que el otorgamiento se adecua a la legalidad y a la voluntad debidamente informada de los otorgantes e intervinientes.	I, the Notary, having made the appropriate legal warnings, I BEAR WITNESS AND CERTIFY the identity of the Parties, the legitimacy of their respective signatures, and that, in my judgement, they have the legal capacity, to the execution of this Policy, and that their corresponding consents have been given freely, and that the execution is according to law and to the good and duly informed will of the Parties.

Madrid, 4 August 2016

____________________

AVIACIÓN RCII, A.I.E.

______________________

ACY SN 19002 LIMITED

ANNEX I

COPY OF THE CERTIFICATE OF REGISTRATION IN THE CIVIL AIRCRAFT REGISTRY (REGISTRO DE MATRÍCULA DE AERONAVES CIVILES) AND IN THE REGISTRY OF MOVABLE ASSETS

ANNEX II

BILL OF SALE

By this Bill of Sale, Aviación RCII AIE (the "Seller") confirms that the Seller has received payment in full of the purchase price for the aircraft, engines, equipment and documents more particularly specified below and the Seller hereby transfers and hereby conveys to ACY SN 19002 Limited (the "Buyer") in Spain on _____________________ at ________ a.m./p.m. (Madrid time) full legal and beneficial title to:

(1) one (1) Bombardier CRJ-1000 aircraft bearing manufacturer's serial number 19002 and Spanish registration mark EC – LJR;

(2) two (2) General Electric Company (Model: CF34-8C5) engines bearing manufacturer's serial numbers 194897 and 194896;

(3) all equipment, accessories and parts belonging to, installed in or appurtenant to such aircraft or engines; and

(4)the Aircraft Documents,

(hereinafter collectively the "Aircraft"),

free and clear of any Security Interests other than Permitted Liens (each such term as defined in a policy for sale and transfer of the Aircraft entered into by the Seller and the Buyer on the date hereof before the Notary of Madrid Mr. Andrés de la Fuente O'Connor), and hereby warrants to the Buyer and its successors, transferees and assignees that it has transferred to the Buyer such title to the Aircraft free of any Security Interests (other than Permitted Liens).

This Bill of Sale and any non-contractual obligations arising from or in connection with it shall be governed by and construed in accordance with the laws of Spain.

IN WITNESS whereof, the Seller has caused this Bill of Sale to be duly executed this ______ day of ______ 2016.

[●]

On behalf of AVIACIÓN RCII AIE

[●]

On behalf of ACY SN 19002 LIMITED

EX-10.26

POLICY OF SALE AND PURCHASE OF AN AIRCRAFT

In Madrid, on August 4, 2016, before Mr. ANDRÉS DE LA FUENTE O´CONNOR, Notary of Madrid and its Notarial Association

APPEAR

On one part: Mr. Antonio Pérez Ramírez, with Spanish I.D. number ______________________, of legal age, of Spanish nationality, in the name and on behalf of AVIACIÓN RC II, A.I.E., with registered address at Avenida de Cantabria s/n, Edificio Amazonia, Second Floor, Boadilla del Monte 28660, Madrid, Spain. Incorporated by virtue of a Public deed granted before the Notary of Madrid, Mr. Gonzalo Sauca Polanco, on November 5, 2010, with number 5.884 of his public records, registered in the Commercial Registry of Madrid, at volume 28288, page 40, Sheet number M-509490, registration 1^st. With Taxpayee´s Identification Code ______________(the "Seller").

Mr. Pérez acts as joint and several Director on behalf of the Seller by virtue of his appointment in the shareholders´ meeting on 4 February 2013, by means of which he was designated for an indefinite term to hold the company's representation in or out of trial.

He declares that the corporate purpose is, among others, the exploitation of all type of aircrafts by renting and leasing them, with or without option to purchase, for their subsequent lease to the clients of the partners of the AIE or of their group.

He further states that with respect to Law 10/2010, of 28 April, 2010, on Money Laundering and Terrorist Financing Prevention, there is no need to identify the ultimate ownership of the AIE, as the parent Company of the AIE is a credit institution, in accordance with article 9 of said Law.

And on the other hand: Mr. Álvaro Sainz Ruiz, withSpanish I.D. number 51.113.498-T, of legal age, of Spanish nationality, in the name and on behalf of ACY SN 19003 Limited, a company incorporated under the Laws of England, with address for these purposes in 16 Old Bailey, London EC4M 7EG. With Company's Tax Code to operate in Spain ______________(the "Buyer").

Mr. Álvaro Sainz Ruiz acts as attorney of the Buyer by virtue of the special power granted by Mr. Barry Norman Fredirick Mills, on 27 July 2016, before the Notary of London, Martin Anthony Charlton, duly apostilled, a photocopy of which is attached hereto as Annex A.

He declares that the corporate purpose is, among others, general commercial purposes.

With respect to article 4 of the Law 10/2010, of 28 April, 2010, on Money Laundering and Terrorist Financing Prevention, he refers to the special power referred above and attached as Annex A.

(Hereinafter, the "Parties")

WHEREAS

I. The Seller is the owner of an aircraft as more particularly described below (the "Aircraft"), which title, registration details, encumbrances and main characteristics are (to the extent registered in the Registry of Moveable Assets) also described in the simple information note issued by the Registry of Moveable Assets of Madrid, copy of which (together with a copy of the certificate of registration in the Civil Aircraft Registry (registro de matrícula de aeronaves civiles) is attached as Annex I:

Aircraft CRJ-1000 manufactured by Bombardier Inc, with manufacturer's serial number 19003, with two engines model GE CF34-8C5 with serial numbers 194975 and 194976, and an auxiliary power unit P-724. The Aircraft is registered in Spain with registration mark EC-LJS.

Title: It is property of the Seller by virtue of a policy of agreement of transfer of title of an aircraft entered into by the Seller and Lico Leasing S.A.U. E.F.C. ("Lico") on 20 December 2012 and a bill of sale entered into by Lico dated 19 December 2012.

Encumbrances: the Aircraft has no registered liens or encumbrances other than the Operating Lease referred below. Additionally, the Aircraft is also encumbered by a mortgage granted under English law by the Seller in favour of Export Development Canada ("EDC") on 17 December 2010, which content the Buyer acknowledges.

II. That the Aircraft is currently on lease to Air Nostrum Líneas Aéreas del Mediterráneo S.A. (the "Lessee") pursuant to an operating lease agreement entered into by the Seller and the Lessee dated 16 December 2010, as amended prior to the date hereof (the "Operating Lease"), which lease is duly registered in the Registry of Movable Assets of Madrid. Simultaneously with the acquisition of the Aircraft by the Buyer, the rights and obligations under the Operating Lease shall be novated to the Buyer pursuant to a deed of novation and restatement entered into by the Seller, the Lessee and the Buyer on or about the date hereof, by virtue of which the Operating Lease shall also be amended and restated (the "Deed of Novation").

III. That the Buyer is willing to purchase, and the Seller is willing to sell, the Aircraft and therefore agree to enter into this sale and purchase agreement (the "Agreement" or the "Policy"), pursuant to the terms and conditions contained in the following

CLAUSES

1.DEFINITIONS AND INTERPRETATION

i) Save as expressly defined herein, words, expressions and capitalised terms defined in the Operating Lease shall apply to this Policy.

ii) The headings in this Policy are for the purpose of reference only, have no legal or other significance, and shall be ignored in the interpretation of this Policy.

iii) The following terms shall have the following meanings:

a. "Business Days" shall mean a day, other than Saturdays or Sundays, on which the banks are generally open for business in Madrid, Spain;

b. "Condition Precedent" shall mean each of the conditions mentioned in Clause Seven;

c. "Closing Date" shall have the meaning ascribed to such term in Clause Seven;

d. "Damage Notification Threshold" shall have the meaning ascribed to such term in the Operating Lease.

e. "Drop Dead Date" shall be 17 September 2016, at 18:00 CET or such other later date as the Parties may agree.

f. "Major Damage" shall mean a damage to the Aircraft in respect of which the cost of repair would, in the reasonable opinion of the Buyer and agreed by the Seller, and in the absence of such agreement, in the reasonable opinion of a specialist aircraft value appraiser selected by the Buyer and approved by the Seller, exceed the Damage Notification Threshold.

g. "Permitted Lien" shall mean: (a) the lease created under the Operating Lease; (b) any Security Interest created or permitted to subsist by or through the Lessee or any sublessee of the Lessee; and (c) any Security Interest arising as a result of the operations of the Aircraft by the Lessee or any sublessee of the Lessee.

h. "Relevant Documents" shall mean this Agreement, the Deed of Novation, the Payment Deed referred to in Clause 3(a), the Facility Agreement referred to in the Deed of Novation, the Bill of Sale and any other agreement that the Parties agree to consider a Relevant Document for the purposes of this Agreement.

i. "Security Interest" means any security including any mortgage, charge (whether fixed or floating), pledge, lien, in rem security, right of detention, or any encumbrance or security interest of any kind securing any obligation of any person or any other type of preferential arrangement (including, without limitation, any trust arrangement, title transfer and/or retention arrangement having a similar effect) in each case howsoever created or arising.

2. SALE AND PURCHASE

Pursuant to the terms and conditions of this Policy and, in particular, subject to the fulfilment of each of the Conditions Precedent on or before the Drop Dead Date, the Seller agrees to sell and transfer to the Buyer, who agrees to buy and acquire, the Aircraft (together with its landing gear, avionics, systems, appliances, accessories, components, parts, furnishings and other equipment belonging to the Seller in respect of the Aircraft (whether or not installed in the Aircraft)) and the Aircraft Documents.

3.PRICE

The Parties have agreed that the price payable by the Buyer for the Aircraft is the amount of USD 15,954,329.09 (the "Purchase Price"). The Purchase Price shall be paid and applied, free from any withholdings or retentions, as follows:

(a) An amount equal to USD 9,804,329.09, shall be paid by means of an agreement entered into, on the date hereof, by, inter alios, the Buyer and the Seller with EDC named as "Payment Deed in respect of the financing arrangements relating to one (1) Bombardier CRJ 1000 Aircraft bearing Manufacturer's Serial number 19003" (the "Payment Deed");

(b) An amount equal to USD 6,150,000 shall be paid by transfer, on the Closing Date, of that amount in freely transferable funds to the account of the Seller in Banco Santander, S.A. with number IBAN XXXXXXXXX. The Seller shall appear, as soon as possible and in any case within three (3) Business Days from the Closing Date, before the Notary who intervenes this Policy to attach copy of the transfer as evidence of the payment (together with a copy of the Bill of Sale referred to below, for attestation of the signatures and to be attached to this Policy), and the notary shall attest such attachment by means of a notarial diligence to this Policy.

The Parties hereby instruct the Notary not to deliver this Policy to the Parties until the notarial diligence mentioned in (b) above is included. Should the Seller not appear before the Notary within three (3) Business Days from the Drop Dead Date in order to provide the aforementioned evidence, the Parties hereby instruct the Notary to provide attestation of that and to produce copy of the Policy to the Parties with such attestation.

4.TRANSFER OF TITLE TO THE AIRCRAFT

On the Closing Date, the Seller and the Buyer shall produce a bill of sale in the form of Annex II (the "Bill of Sale")attesting transfer of title to the Aircraft. Pursuant to Article 1463 of the Spanish Civil Code, not being the Aircraft in the possession of the Seller (but of the Lessee pursuant to the Operating Lease) on the Closing Date, the Parties agree that delivery of the Aircraft and transfer of title shall occur by the sole execution of the Bill of Sale by the Seller and its acknowledgement by the Buyer.

On the Closing Date the Aircraft shall be located in Spain.

5.AIRCRAFT´S CONDITION

The Aircraft and each Part thereof is being sold and delivered "as is" and "where is", and without any representation, warranty or guarantee of the Seller (other than any representation or warranty expressly made by the Seller in the Bill of Sale) express or implied of any kind, arising by law or otherwise. The Buyer expressly acknowledges that, before the date of this Agreement, it has inspected the Aircraft (to the extent that it has considered necessary or appropriate) and that it has found it acceptable in all respects and that, provided that each of the Conditions Precedent has been satisfied or waived, nothing occurring on the Aircraft from the date hereof to the Closing Date shall impede or modify the obligations of the Parties under this Agreement or affect the transfer of title as set forth herein and in the Bill of Sale.

Accordingly the Buyer agrees that the Aircraft and each Part thereof is to be sold and purchased in an as is, where is condition as at the effective time on the Closing Date and no term, condition, warranty, representation or covenant of any kind has been accepted, made or is given by the Seller (other than any representation or warranty expressly made by the Seller in accordance with the Bill of Sale or any other Relevant Document to which the Seller is a party) or its servants or agents in respect of the airworthiness, value, quality, durability, condition, design, appearance, operation, description, safety, merchantability or fitness for use or purpose of the Aircraft or any Part thereof, as to the absence of latent, inherent or other defects (whether or not discoverable), as to the completeness or condition of any Aircraft Documents or the Operative Documents, or as to the absence of any infringement of any patent, copyright, design, or other proprietary rights. Pursuant to Article 1475 and 1485 of the Spanish Civil Code the Parties agree that all terms, conditions, warranties and representations (or obligation or liability arising in relation thereof) in relation to any of those matters, expressed or implied, statutory or otherwise, are expressly excluded (other than any representation or warranty expressly made by the Seller in accordance with the Bill of Sale or any other Relevant Document to which the Seller is a party).

6.ENCUMBRANCES. LEASES

6.1. At the time of the transfer of title to the Aircraft in accordance with Clause 4, the Aircraft shall be free from any Security Interest other than any Permitted Liens and the mortgage created in favour of EDC and referred in Recital I above that shall be discharged immediately thereafter. The Buyer expressly waives any right or action against the Seller due to the existence of any Permitted Lien.

6.2. The Buyer hereby acknowledges that it has been given the opportunity to review the content of all of the Operative Documents and that is has done so satisfactorily to the extent that it has considered relevant. For that reason, the Buyer hereby expressly waives its right to bring any action or claim against the Seller for anything agreed in any of the Operative Documents.

6.3. In particular, the Buyer hereby acknowledges the existence and content of the Operating Lease. The Buyer hereby declares that it intends to amend and restate the Operating Lease and hereby renounces to any declaration, representation or warranty to be made by the Seller in respect of the Operating Lease, save to the extent expressly reflected in the Deed of Novation.

7. CONDITIONS FOR TRANSFER.

Transfer of title to the Aircraft is subject to the following conditions having occurred on or before the Drop Dead Date, save if waived by both parties on or before the Drop Dead Date:

(a) Payment and application in accordance with the Payment Deed (and, in the case of the part mentioned in paragraph (b) of Clause 3, receipt thereof) of the Purchase Price, and receipt by the Seller of the amounts payable by or on behalf of the Buyer (or another entity on behalf of the Buyer) pursuant to the side letter referred to in Clause 8.3;

(b) Execution, in terms acceptable to the Parties, of the Relevant Documents by all parties thereto, and each of those documents continuing to be valid and enforceable on the Closing Date;

(c) Receipt by the Seller and the Buyer, on or before the Closing Date, of a legal opinion (including tax issues) in relation to this Agreement and the transactions contemplated herein, in terms satisfactory to each of the Parties;

(d) No Total Loss or Major Damage having occurred from the date hereof to the Closing Date;

(e) No insolvency event (including, in respect of the Seller and/or the Lessee, the insolvency judiciary request "concurso de acreedores" or the notice pursuant to Article 5bis of the Spanish Insolvency Act and, in respect of the Buyer, any similar provisions in accordance with its jurisdiction of incorporation) having occurred in respect of the Buyer, the Seller or the Lessee on or before the Closing Date;

(f) No Event of Default and none of the events mentioned in Clause 18 of the Operating Lease having occurred and not having been remedied on or before the Closing Date;

(g) The Insurances entered into in respect of the Aircraft are amended to reflect that the Buyer is the owner and lessor of the Aircraft from the Closing Date and the Seller receives evidence satisfactory to it that run-off insurances are entered into in its favour in accordance with Clause 14.11.2 of the Operating Lease (in its form as of the date hereof); and

(h) The Effective Time Notice mentioned in the Deed of Novation has been issued by all relevant parties thereto.

Subject to below, on the same date when the last of the conditions mentioned above (other than those which depends on the non-occurrence of a situation on the Closing Date, which shall be considered fulfilled if the relevant situation has not occurred on the date when the rest of the conditions are also fulfilled) the Parties shall execute the Bill of Sale. The date when the Bill of Sale is executed (and, accordingly, title transfer occurs) shall be the "Closing Date".

The Parties hereby commit to collaborate in order that the Conditions Precedent are met, and therefore the Closing Date occurs, within the shortest reasonable term from the date hereof.

8.EXPENSES AND TAXES. WITHOLDINGS. VAT

8.1. All amounts payable by the Buyer to the Seller under this Agreement shall be paid without any deductions or withholdings on account of tax of any nature unless such deduction or withholding is required by law. If the Buyer is legally obliged to make any deduction or withhold any amount on account of any tax in relation to any payment to be made under this Agreement, the amount payable shall be grossed up to the extent necessary to ensure that, after such deduction or withholding the amount received and retained by the Seller will equal the full amount that the Seller would have received had no the deduction or withholding being required. The Buyer shall pay to the relevant authorities the amount thus deducted or withheld within the period prescribed by applicable law, and shall provide evidence to the Seller of such payment in the manner customarily applicable for those purposes.

If the Seller receives (including without limitation by means of compensation) any amount from the tax authorities on account of the amount deducted, it shall return to the Buyer (in an amount which maintains the Seller in a no worse position as if the deduction or withholding tax would have not been made and, in any case, up to the amount deducted or withheld) the amount thus received.

8.2. The Buyer shall pay to the Seller the Purchase Price together with, if applicable, any corresponding value added tax or any other similar tax accrued thereon, if any. Should the Buyer become liable for the payment of any taxes vis a vis any tax or administrative authorities on occasion of the sale, the Buyer undertakes to fulfil the relevant obligations before the corresponding authorities.

8.3. Any notarial fees or any other registration taxes (including stamp duty) arising out of the execution of this Policy or the registration of the Bill of Sale in the relevant Spanish registries (including its translation into Spanish to the extent required) shall be borne by the Buyer. Any other costs or expenses (including legal fees) shall be borne by the Party for whose benefit or under whose order the services, in respect of which such costs are incurred, are provided. Any other costs or expenses (including legal fees of advisors of EDC or the Lessee in accordance with the approved budget) in relation to the transactions contemplated in this Agreement shall be borne by the Buyer, (or another entity as agreed in a side letter of even date herewith).

9.NOTICES

Any notice or communication under this Policy shall be sent to the following addresses:

To the Seller:     Aviación RCII AIE.

Gran Vía de Hortaleza, 3

28033 Madrid SPAIN

Attention: Mr. Antonio Torres / Ms. Mayte Mañas Ariza

E-mail: antoniotorres@gruposantander.com; tmanas@gruposantander.com

With copy to:

KPMG Abogados, S.L.

Paseo de la Castellana 95 (28046) Madrid

Attention: Carmen Mozún / Luis Fernández

Fax: +34 91 555 01 32

e-mail: cmozun@kpmg.es; luisfernandez@kpmg.es

To the Buyer: ACY SN 19003 Limited

c/o Templeco Corporate Services

Withers LLP

16 Old Bailey

London EC4M 7EG

England

Attention: Christine Blackman

Fax: +44(0)202 7597 6543

with a copy to:

AeroCentury Corp.

1440 Chapin Avenue, Suite 310

Burlingame, CA 94010

Attention: President

Fax: +1 650-696-3929

10.COOPERATION AND REGISTRATION

The Parties agree to register the transfer of title occurring under the Policy and the Bill of Sale in the Registry of Movable Assets and in the Civil Aircraft Registry, upon the fulfilment of the Conditions Precedent and the execution of the Bill of Sale.

The Parties undertake to cooperate as necessary in order to obtain the registration of title transfer in both registries and to grant and execute any documents which may be necessary to achieve such title transfer.

11.LEGISLATION AND JURISDICTION

11.1This Policy shall be governed by Spanish Law.

11.2 The Parties, expressly waiving any other forum to which they may be entitled, hereby agree to submit any disputes arising in relation to this Policy (including without limitation any non-contractual claims in relation thereto) to the Courts of the city of Madrid.

La presente Póliza de Compraventa de Aeronave se formaliza con la intervención del Notario que figura en el encabezamiento, a los efectos de lo previsto en el Artículo 1.216 del Código Civil, el Artículo 517 de la Ley de Enjuiciamiento Civil, y demás legislación concordante.	This Policy of Sale and Purchase of an Aircraft is executed before the Notary Public who appears at its beginning, to the effects of the provisions of Section 1,216 of the Civil Spanish Code, Section 517 of the Civil Procedural Spanish Act, and other legislation according to this matter.
Y yo el Notario hago constar que:	I, the Notary public, declare that:
Los otorgantes, en la representación que ostentan reseñada en la intervención de la presente, tienen facultades representativas que son a mi juicio suficientes para la compraventa de aeronave que se documenta en la presente póliza.	The appearing Parties, by means of the respective representations held by them and referred in the granting of this Policy, have, in my judgement, the legal capacity to execute the sale and purchase agreement that is documented herewith this Policy.
Acepto el requerimiento contenido en la cláusula 3, de cuyo cumplimiento dejaré constancia mediante diligencia a la presente.	I accept the request made in clause 3, and its compliance will be reflected in a record to this document.
Protección de datos de carácter personal.- Los intervinientes aceptan la incorporación de sus datos y la copia del documento de identidad a los ficheros de la Notaría con la finalidad de realizar las funciones propias de la actividad notarial y efectuar las comunicaciones de datos previstas en la Ley a las Administraciones Públicas y, en su caso, al Notario que suceda al actual en la plaza. Pueden ejercer sus derechos de acceso, rectificación, cancelación y oposición en la Notaría. En caso de que se incluyan datos de personas distintas de los intervinientes, estos deberán haberles informado, con carácter previo, del contenido de este párrafo	Personal data protection.- The appearing Parties accept the incorporation of their personal data and a copy of their identity card to the Notary files for the purposes of the Notary´s inherent functions, and proceed to communicate this data in accordance with the Law of the Public Administration, or to the Notary who can be the successor of this place. They can exercise their right to access, rectification, cancellation and opposition in the Notary. In the event the data of people different to the appearing Parties is included, the appearing Parties should have informed them before this paragraph has been included.
Formuladas por mí las reservas legales relativas al artículo 5 de la LO 15/1999, de Protección de Datos de Carácter Personal.	Made by me the legal reservations with respect to article 5 of the organic law 15/1999 on the protection of personal data.
Los comparecientes, según intervienen en la presente Póliza, manifiestan su conformidad y aprobación al contenido de la misma tal y como aparece redactado, en lengua inglesa idioma que yo el Notario conozco en lo suficiente, al amparo de lo previsto en el artículo  51 del Código de Comercio; extendida en             hojas incluidos sus anexos y la portada, la otorgan y firman, con mi intervención. Advierto a los firmantes del derecho a la traducción a la lengua española del presente documento, derecho al que renuncian, manifestando conocer la lengua  inglesa, y en consecuencia, el alcance y significado de todo su contenido.	The Parties of this Policy state their consent and approval to the content of the same as per it appears drawn up herewith, which is drafted in English, language that I know well enough in accordance with article 51 of the commerce code; issued in [  ] pages including its annexes and the cover page, they execute and sign this Policy, before me in one sole document. I inform the appearing Parties their right to translate this document into Spanish, a right that they renounce stating that they know English and consequentially, the meaning, and scope of this document.
Y yo el Notario, habiendo hecho las oportunas advertencias legales, DOY FE de la identidad de los comparecientes, de la legitimidad de sus firmas, de que a mi juicio tienen la capacidad y legitimación necesarias para el otorgamiento de la presente Póliza, de que el consentimiento ha sido libremente prestado, y de que el otorgamiento se adecua a la legalidad y a la voluntad debidamente informada de los otorgantes e intervinientes.	I, the Notary, having made the appropriate legal warnings, I BEAR WITNESS AND CERTIFY the identity of the Parties, the legitimacy of their respective signatures, and that, in my judgement, they have the legal capacity, to the execution of this Policy, and that their corresponding consents have been given freely, and that the execution is according to law and to the good and duly informed will of the Parties.

Madrid, 4 August  2016

____________________

AVIACIÓN RCII, A.I.E.

______________________

ACY SN 19003 LIMITED

ANNEX I

COPY OF THE CERTIFICATE OF REGISTRATION IN THE CIVIL AIRCRAFT REGISTRY (REGISTRO DE MATRÍCULA DE AERONAVES CIVILES) AND IN THE REGISTRY OF MOVABLE ASSETS

ANNEX II

BILL OF SALE

By this Bill of Sale, Aviación RCII AIE (the "Seller") confirms that the Seller has received payment in full of the purchase price for the aircraft, engines, equipment and documents more particularly specified below and the Seller hereby transfers and hereby conveys to ACY SN 19003 Limited (the "Buyer") in Spain on _____________________ at ________ a.m./p.m. (Madrid time) full legal and beneficial title to:

(1) one (1) Bombardier CRJ-1000 aircraft bearing manufacturer's serial number  19003 and Spanish registration mark EC – LJS;

(2) two (2) General Electric Company (Model: CF34-8C5) engines bearing manufacturer's serial numbers 194975 and 194976;

(3) all equipment, accessories and parts belonging to, installed in or appurtenant to such aircraft or engines; and

(4)the Aircraft Documents,

(hereinafter collectively the "Aircraft"),

free and clear of any Security Interests other than Permitted Liens (each such term as defined in a policy for sale and transfer of the Aircraft entered into by the Seller and the Buyer on the date hereof before the Notary of Madrid Mr. Andrés de la Fuente O'Connor), and hereby warrants to the Buyer and its successors, transferees and assignees that it has transferred to the Buyer such title to the Aircraft free of any Security Interests (other than Permitted Liens).

This Bill of Sale and any non-contractual obligations arising from or in connection with it shall be governed by and construed in accordance with the laws of Spain.

IN WITNESS whereof, the Seller has caused this Bill of Sale to be duly executed this ______ day of ______ 2016.

[●]

On behalf of AVIACIÓN RCII AIE

[●]

On behalf of ACY SN 19003 LIMITED

EX-10.27

			EXECUTION VERSION
Dated ___________________ 2016
	ACY SN 19002 LIMITED as Borrower EXPORT DEVELOPMENT CANADA as Security Agent and Facility Agent CERTAIN BANKS AND FINANCIAL INSTITUTIONS as Lenders			(1) (2) (3)
		SENIOR LOAN AGREEMENT in respect of financing arrangements relating to one (1) BOMBARDIER CRJ 1000 AIRCRAFT WITH MANUFACTURER'S SERIAL NUMBER 19002

CONTENTS
Clause	Page

1 Definitions and interpretation

2 The Facility

3 Conditions

4 Drawdown

5 Loan

6 Interest

7 [Intentionally Omitted]

8 Costs and Expenses

9 Tax gross-up and indemnities

10 Representations and warranties

11 Undertakings

12 Events of default and Total Loss Prepayment Event

13 Indemnities

14 Changes in circumstances; mitigation

15 Limitation on recourse

16 Assignment, transfers and lending offices

17 Role of the Facility Agent

18 Conduct of business by the Finance Parties

19 Sharing among the Finance Parties

20 Payment mechanics

21 Set-off

22 Notices

23 Calculations and certificates

24 Confidentiality

25 Partial invalidity; remedies and waivers

26 Amendments and waivers

27 Counterparts

28 Governing law

29 Enforcement

Schedule 1 Lenders and their Commitments

Schedule 2 Form of Utilisation Request

Schedule 3 Conditions Precedent and Conditions Subsequent

Schedule 4 Payments

Schedule 5 Aircraft

Schedule 6 Form of Transfer Certificate

Schedule 7 Form of Lessor Deregistration Power of Attorney

Schedule 8 Covenants during Post-Lease Responsibility Period

THIS AGREEMENT is dated ________________ 2016 and made BETWEEN:

(1) ACY SN 19002 LIMITED, a company established under the laws of England and Wales having company number 10290248 with its registered office at 16 Old Bailey, London EC4M 7EG, England (the Borrower);

(2) EXPORT DEVELOPMENT CANADA,of 150 Slater Street, Ottawa, Canada K1A 1K3, as Security Agent (as defined below);

(3) EXPORT DEVELOPMENT CANADA,as above, as Facility Agent (as defined below); and

(4) THE BANKS AND FINANCIAL INSTITUTIONS being the Original Lenders (as defined below).

WHEREAS:

(A) Pursuant to the Sale Agreement, the Borrower has agreed or will agree to purchase the Aircraft from Aviacion.

(B) Pursuant to the Lease, the Borrower has agreed or will agree to lease the Aircraft to the Lessee. This Agreement is the "Loan Agreement" referred to in the Lease and the "Senior Loan Agreement" referred to in the Proceeds Deed.

(C) The Lenders agree to advance the Loan to the Borrower to finance in part its acquisition of the Aircraft.

NOW IT IS AGREED as follows:

1 Definitions and interpretation

1.1 Definitions

In this Agreement, except as otherwise defined herein and except where the context otherwise requires, capitalised words and expressions shall have the respective meanings given to them in the Lease and the following expressions shall have the following meanings:

Accrued Interest Amount means $___________________.

Aerocentury Related Party means the Borrower, the Guarantor and the Lease Manager;

Affiliate means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company;

Aircraft means the (1) Bombardier CRJ 1000 aircraft described in Schedule 5 (Aircraft) (as more particularly described in the Lease);

Aircraft Mortgage means (a) each first priority mortgage over the Aircraft executed or to be executed by the Borrower in favour of the Security Agent, (b) the Cape Town Security Agreement and (c) any replacement thereof from time to time or any additional mortgage or equivalent security over the Aircraft granted in favour of the Finance Parties (or the Security Agent on their behalf) from time to time;

Aircraft Security Period means the period from the Utilisation Date for the Loan to the date on which (a) the Security Agent or the Facility Agent notifies the Borrower and the Finance Parties that the Loan has been repaid in full (together with interest thereon and all other amounts due to any Finance Party under the Relevant Documents) and (b) the Security Agent or the Facility Agent is satisfied that (i) no Default is continuing and (ii) no payment previously made under any Relevant Document to any Finance Party, or by the Lessee to the Borrower, will be ordered to be refunded pursuant to any Applicable Law relating to bankruptcy, liquidation, winding-up, administration, insolvency, examinership, reorganisation or dissolution or for any other reason whatsoever; and the Security Agent or the Facility Agent shall issue such notice promptly upon making the relevant determination;

AMR means the Spanish Aircraft Matriculation Registry (Registro de Aeronaves) and any replacement or successor registry from time to time maintained by the Aviation Authority;

Applicable Law means in relation to any jurisdiction or the European Union, any law, regulation, treaty, directive, decision, rule, regulatory requirement, judgment, order, ordinance, request, guideline or direction or any other act of any Government Entity of such jurisdiction or of any EU Institution whether or not having the force of law and with which any Transaction Party is required to comply, or with which it would, in the normal course of its business, comply;

Assigned Property means any and all property and assets and the rights, title and interest of the Borrower now or at any time expressed to be mortgaged, charged, assigned and/or pledged by the Borrower to the Finance Parties (or the Security Agent on their behalf) pursuant to the Security Documents;

Authorisation means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration;

Aviacion means Aviacion RCII, A.I.E.;

Basel 2 Accord means the "International Convergence of Capital Measurement and Capital Standards, a Revised Framework" published by the Basel Committee on Banking Supervision in June 2004 as updated prior to, and in the form existing on, the date of this Agreement, excluding any amendment thereto arising out of the Basel 3 Accord;

Basel 2 Approach means, in relation to any Finance Party, either the Standardised Approach or the relevant Internal Ratings Based Approach (each as defined in the Basel 2 Accord) adopted by that Finance Party (or any of its Affiliates) for the purposes of implementing or complying with the Basel 2 Accord;

Basel 2 Increased Cost means an Increased Cost which is attributable to the implementation or application of or compliance with any Basel 2 Regulation in force as at the date hereof (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates);

Basel 2 Regulation means (a) any Applicable Law implementing the Basel 2 Accord or (b) any Basel 2 Approach adopted by a Finance Party or any of its Affiliates;

Basel 3 Accord means:

(a) "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December, 2010, each as amended, supplemented or restated;

(b) the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and

(c) any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III".

Basel 3 Increased Cost means an Increased Cost which is attributable to the implementation or application of or compliance with any Basel 3 Regulation (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates);

Basel 3 Regulation means any Applicable Law implementing the Basel 3 Accord save and to the extent that it re-enacts a Basel 2 Regulation;

Bill of Sale means, in respect of the Aircraft, the bill of sale relating thereto from Aviacion in favour of the Borrower;

Borrower's Lien means any Security which is created by or is attributable to the debts or liabilities of the Borrower, save to the extent that such Security either:

(a) is constituted by the Security Documents; or

(b) arises as a consequence of the failure by any party (other than the Borrower or any Aerocentury Related Party) to comply with its obligations under the Relevant Documents;

Break Costs means, with respect to an Unpaid Sum, the amount (if any) by which:

(a) the interest which a Lender should have received for the period from the date of receipt of all or any part of its participation in the Unpaid Sum to the last day of the current Calculation Period in respect of the Unpaid Sum, had the Unpaid Sum received been paid on the last day of that Calculation Period,

exceeds:

(b) the amount which that Lender would be able to obtain by placing that Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Calculation Period;

Business Day means a day (other than a Saturday or Sunday) on which banks are open for general business in Ottawa, New York (solely in respect of any obligations which are payable in USD), London and Valencia;

Calculation Period means each period determined in accordance with clause 6.5 or, in relation to an Unpaid Sum, each period determined in accordance with clause 6.3;

Cape Town Convention means, together, the Convention and the Protocol;

Cape Town Security Agreement means the security agreement governed by the laws of England entered into, or to be entered into, as the context shall require, between the Borrower and the Security Trustee, in respect of the Aircraft.

Cape Town UK Regulations means the International Interests in Aircraft Equipment (Cape Town Convention) Regulations 2015 by which the Cape Town Convention has been implemented in the United Kingdom;

Centre of Main Interests has the meaning given to that term in the Insolvency Regulation;

Collateral means all the Security, property, assets, powers, rights, title, benefits and interests (both present and future) constituted by, and conferred on the Security Agent under, the Security Documents and all moneys, property or other assets paid or transferred to or vested in the Security Agent (or any Finance Party) or received or recovered by the Security Agent (or any Finance Party) pursuant to, or in connection with, the Security Documents;

Commitment means:

(a) in relation to an Original Lender, the amount in Dollars set opposite its name in column 3 of Schedule 1 and the amount of any other Commitment transferred to it under this Agreement; and

(b) in relation to any other Lender, the amount in Dollars of any Commitment transferred to it under this Agreement,

to the extent not cancelled, reduced or transferred by it under this Agreement;

Companion Aircraft means the Bombardier CRJ 1000 aircraft with manufacturer's serial number 19003 (as more particularly described in the Companion Aircraft Lease Agreement);

Companion Aircraft Borrower means ACY SN 19003 Limited;

Companion Aircraft Event of Default means an "Event of Default" as defined in the Companion Aircraft Senior Loan Agreement;

Companion Aircraft Lease Agreement means the aircraft lease agreement dated 16 November 2010 (as amended from time to time) in respect of the Companion Aircraft originally between Aviacion as lessor and the Lessee as lessee as novated from Aviacion to the Borrower and amended and restated pursuant to the deed of novation and restatement dated on or about the date hereof between the Companion Aircraft Borrower as new lessor, Aviacion as existing Lessor and the Lessee;

Companion Aircraft Relevant Documents means the "Relevant Documents", as defined in the Companion Aircraft Senior Loan Agreement;

Companion Aircraft Senior Loan Agreement means the senior loan agreement entered into, or to be entered into, as the context may require, in respect of the Companion Aircraft between, amongst others, the Companion Aircraft Borrower as borrower, the Security Agent, the Lenders and the Facility Agent;

Companion Aircraft Termination Event means the occurrence of a "Termination Event" as defined in the Companion Aircraft Lease Agreement;

Consolidated Text means the Consolidated Text of the Convention and the Protocol referred to in, and as set out in the Attachment to, Resolution No.1 adopted by the Diplomatic Conference held at Cape Town, South Africa, at which the Convention and the Protocol were opened for signature;

Contribution means, in relation to any Lender and the Loan at any time, the principal amount of the Loan owing to such Lender at such time;

Controlling Security Agent has the meaning given to it in the Deed of Cross-Collateralisation;

Convention means the Convention on International Interests in Mobile Equipment opened for signature on 16 November 2001 at Cape Town, South Africa;

CRD IV means:

(a) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms; and

(b) Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC;

CTA means the Corporation Tax Act 2009;

Deed of Cross-Collateralisation means the deed of cross-collateralisation entered into, or to be entered into, between, inter alia, the Borrower, the Companion Aircraft Borrower, the Controlling Security Agent, the Security Agent and the Companion Aircraft Security Agent in respect of, inter alia, the Collateral;

Deed of Novation and Restatement means the deed of novation and restatement dated on or about the date hereof between the Borrower as new lessor, Aviacion as existing lessor and the Lessee;

Default means an Event of Default or any event or circumstance which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Relevant Documents or any combination of any of the foregoing) be an Event of Default;

Default Rate means the rate of interest determined pursuant to clause 6.3;

Dollar Account means the following bank account of the Facility Agent:

Account Bank: XXXXXXX

ABA:XXXXXX

Swift:XXXXX

Account Number:XXXXX

Account Name:Export Development Canada;

Dollars, USD and $ mean the lawful currency of the United States of America and, in respect of all payments to be made under this Agreement in Dollars, mean funds which are for same day settlement in the New York Clearing House InterBank Payments System (or such other U.S. dollar funds as may at the relevant time be customary for the settlement of international banking transactions denominated in United States dollars);

EDC means Export Development Canada;

Effective Time Notice has the meaning ascribed to that term in the Deed of Novation and Restatement;

Engine Manufacturer means General Electric Company, a New York corporation of 1 Neumann Way, MD F-104, Cincinnati, Ohio 45215-1988, USA;

EU Institution means (whether having a distinct legal personality or not) the organs of the European Union having power to issue binding laws, regulations, directives, decisions, regulatory requirements, judgments, orders or directions including, without limitation, the European Commission, the European Council, the European Court of Justice, the European Parliament and the European Air Safety Agency;

Euro, EUR or € means the single currency of the Participating Member States and, in respect of all payments to be made under the Relevant Documents in Euros, immediately available, freely transferable funds;

Eurocontrol Letter has the meaning ascribed to that term in the Deed of Novation and Restatement;

EU-ETS Letter has the meaning ascribed to that term in the Deed of Novation and Restatement;

Event of Default means any of the events or circumstances described in clause 12.1;

Facility means the term loan facility made available under this Agreement as described in clause 2 (The Facility);

Facility Agent means Export Development Canada or such other person as may be appointed agent for the Lenders pursuant to clause 17.12;

Facility Office means the office or offices notified by a Lender to the Facility Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five Business Days' written notice) as the office or offices through which it will perform its obligations under this Agreement;

Final Payment Date means the final repayment date relating to the Loan specified in Schedule 4;

Finance Documents means this Agreement, the Payment Direction Deed, the Termination Side Letter, the Utilisation Request and the Security Documents and all notices, consents, certificates and other documents and agreements to be issued pursuant to any of the foregoing and all other documents which the Facility Agent, the Borrower and the Lessee agree at any time should be Finance Documents;

Finance Parties means the Lenders, the Security Agent and the Facility Agent and Finance Party means each or any of them (as the context may require);

Fixed Rate means 4.455%;

Government Entity means and includes (whether having a distinct legal personality or not) (i) any national government, political sub-division thereof, or local jurisdiction therein; (ii) any board, commission, department, division, organ, instrumentality, court, regulatory or self-regulatory authority, or agency of any entity referred to in (i) above, however constituted; and (iii) any association, organisation or institution (international or otherwise) of which any entity mentioned in (i) or (ii) above is a member or to whose jurisdiction any thereof is subject or in whose activities any thereof is a participant;

Guarantee means the guarantee from the Guarantor in favour of the Security Agent with respect to the Borrower's obligations under the Relevant Documents;

Guarantor means Aerocentury Corp.;

Holding Company means, in relation to a company or corporation, any other company or corporation in respect of which the former is a Subsidiary;

IDERA means an irrevocable deregistration and export request authorisation issued by the Lessee in favour of the Security Agent in the form approved by the Directorate General for Registers and Notaries on 29 February 2016;

Increased Costs has the meaning given to it in clause 14.2.2;

Indebtedness includes any obligation, whether incurred as principal or as surety, for the payment or repayment of money and whether present or future, actual or contingent;

Indemnitees means the Finance Parties and their shareholders, Affiliates, directors, officers, servants, agents and employees;

Insolvency Regulation means Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings (or, for proceedings opened after 26 June 2017, Regulation (EU) No 2015/848 of 20 May 2015 (recast));

ITA means the Income Tax Act 2007;

Lease means the aircraft lease agreement dated 16 December 2010 in respect of the Aircraft (as amended from time to time) originally between Aviacion as lessor and the Lessee as lessee as novated from Aviacion to the Borrower and amended and restated pursuant to the Deed of Novation and Restatement;

Lease Management Agreement means, in relation to the Lease, the lease management agreement entered into or to be entered into between the Borrower and the Lease Manager;

Lease Manager means Aerocentury Corp. or any other lease manager which the Facility Agent may approve from time to time;

Lease Termination Date means, with respect to the Aircraft, any date on which the Lease Period expires or terminates in accordance with the terms and conditions of the Lease;

Lender means:

(a) any Original Lender; and

(b) any bank, financial institution, trust, fund or other entity which has become a Party in accordance with clause 16 (Assignment, Transfers and Lending Offices),

which in each case has not ceased to be a Party in accordance with the terms of this Agreement;

Lenders' Representatives means the Facility Agent and the Security Agent;

Lessee means AIR NOSTRUM, LINEAS AEREAS DEL MEDITERRANEO, S.A., a company incorporated under the laws of Spain whose principal office is at Avda. Comarques del Pais Valencia, 2, 46930 Quart de Poblet, Valencia, Spain;

Lessor Deregistration Power of Attorney means, in respect of the Aircraft, the duly notarised and apostilled power of attorney granted or to be granted by the Borrower to the Security Agent in the form set out in Schedule 7;

LIBOR means in respect of any amount denominated in any currency for any period:

(a) the applicable Screen Rate for the relevant currency; or

(b) (if no Screen Rate is available for the relevant currency or period in respect of that amount) the arithmetic mean (rounded to the nearest one sixteenth of one per cent) of the rates, as supplied to the Facility Agent at its request, quoted by the Reference Banks to leading banks in the Relevant Interbank Market,

as of the Quotation Time for the offering of deposits in that currency and for a period comparable to that period, provided that if, in either case, that rate is less than zero, LIBOR shall be deemed to be zero;

Liquidity Rate means zero point one five per cent (0.15%) per annum;

Loan means the loan made or to be made under the Facility or the principal amount outstanding for the time being of the loan;

Losses means any losses, costs, payments, charges, penalties, demands, liabilities, claims, actions, proceedings, fines, damages, judgements, orders, fees, premiums, expenses and other sanctions of any nature; and Loss shall be construed accordingly;

Major Damage means damage affecting the Aircraft and which is unrepaired (or not totally repaired) and has a repair cost (or remaining repair cost, as applicable) in excess of the Damage Notification Threshold (or its equivalent in any other currency);

Majority Lenders means:

(a) if there is no Loan then outstanding, a Lender or Lenders whose Commitments aggregate more than 66²/₃ % of the Total Facility Commitments (or, if the Total Facility Commitments have been reduced to zero, aggregated more than 66²/₃ % of the Total Facility Commitments immediately prior to the reduction); or

(b) at any other time, a Lender or Lenders whose participations in the Loan then outstanding aggregate more than 66²/₃ % of the Loan then outstanding;

Make-Whole Amount means, with respect to the Loan, an amount equal to the excess, if any, of (a) the present value, as of the date of the relevant prepayment of the Loan, of the respective instalments of principal of and interest on the Loan that, but for such prepayment, would have been payable on each scheduled Payment Date after such prepayment over (b) the principal amount of the Loan then being prepaid. Such present value shall be determined by discounting the amounts of such instalments from their respective scheduled Payment Dates to the date of such prepayment at a rate equal to the sum of the applicable Treasury Rate and 1.00 %;

Manufacturer means Bombardier Inc., as represented by Bombardier Aerospace Commercial Aircraft, a corporation established and existing under the laws of Canada, having an office located at 123 Garratt Boulevard, Toronto, Ontario, Canada;

Margin means one point six eight per cent (1.68%) per annum (which, for the avoidance of doubt, includes an administration fee of zero point zero five per cent (0.05%) per annum;

MPR means the Moveable Property Register (Registro de Bienes Muebles) in Madrid or any replacement or successor registry from time to time;

New Lender has the meaning given to that term in Clause 16.3.2;

Next Rollover Date means 17 September 2016;

Obligor means any or, if the context so permits, each of:

(a) in relation to the Companion Aircraft, the Companion Aircraft Borrower, the Lessee, the Guarantor and the Lease Manager; and

(b) in any other case, the Borrower, the Lessee, the Guarantor and the Lease Manager;

Original Lenders means the banks and financial institutions whose names and addresses are set out in Schedule 1;

Participating Member State means any member state of the European Union that adopts or has adopted the Euro as its lawful currency in accordance with legislation of the European Community relating to Economic and Monetary Union;

Party means a party to this Agreement;

Party Documents means, in relation to any person, the Relevant Documents to which such person is a party;

Payment Date means each of the repayment dates relating to the Loan specified in Schedule 4 provided that:

(a) if a Payment Date would fall on a day that is not a Business Day, it shall be the immediately succeeding Business Day (unless such Business Day falls in the next calendar month, in which case payment shall be made on the immediately preceding Business Day) and the amount of interest payable shall not be adjusted; and

(b) the final Payment Date shall be the Final Payment Date;

Payment Direction Deed means the payment deed entered into or to be entered into between the Borrower, Export Development Canada, Banco Santander, S.A., the Lessee and Aviacion;

Permitted Lien means:

(a) any Security for Taxes not assessed or, if assessed, not yet due and payable, or being contested in good faith by appropriate proceedings;

(b) any Security of a repairer, mechanic, carrier, hangar keeper, airport or air navigation authority or other similar Security arising in the ordinary course of business by operation of law in respect of obligations which are not overdue or are being contested in good faith by appropriate proceedings;

(c) any Security created pursuant to the Security Documents,

but, in the case of each of (a) and (b), only if:

(i) adequate resources have been provided by the Borrower or the Lessee for the payment of such Taxes or obligations; and

(ii) such proceedings, and/or the continued existence of such Security, do not give rise to a material likelihood of the sale, forfeiture or other loss of the Aircraft or any interest therein or of criminal or civil liability on the part of any Finance Party or other Indemnitee;

Post-Lease Responsibility Period means, with respect to the Aircraft, the period commencing on the Lease Termination Date for the Aircraft and ending on the last day of the Aircraft Security Period;

Proceedings means any corporate action, legal proceedings and other procedures and steps of the nature referred to in clause 12.1.6(a) to (d);

Proceeds means any amounts received or recovered by any Finance Party under or in relation to any of the Relevant Documents or the Aircraft (including pursuant to enforcement or realisation of any Security Document, any Total Loss Proceeds and any proceeds of sale of the Aircraft);

Proceeds Deed means the proceeds and intercreditor deed entered into or to be entered into on or about the date of this Agreement between the Borrower, the Guarantor, the Lease Manager and the Finance Parties in respect of the Aircraft;

Prohibited Payment means any offer, gift, payment, promise to pay, commission, fee, loan or other consideration which would constitute (a) bribery or an improper gift or payment under, or a breach of, any law, subordinate legislation, statute, by-law, regulation, treaty, judgment, decision, rule, regulation, notice, order, circular, code of practice or guidance note which is binding or enforceable on or against the Borrower or any Aerocentury Related Party and/or (b) bribery within the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 17 December 1997;

Protocol means the Protocol to the Convention on Matters Specific to Aircraft Equipment opened for signature on 16 November 2001 at Cape Town, South Africa;

Purchase Price means the purchase price for the Aircraft pursuant to the Sale Agreement;

Quotation Day means, in relation to any period for which an interest rate is to be determined, two London business days before the first day of that period, unless market practice differs in the Relevant Interbank Market, in which case the Quotation Day will be determined by the Facility Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days);

Quotation Time means 11:00 a.m. (London time) on the Quotation Day;

Reference Banks means the principal London offices of Bank of America, N.A., Barclays Bank PLC and Citibank, N.A., or such other banks as may be appointed by the Facility Agent in consultation with the Borrower and the Lessee;

Relevant Authority means any national, supranational, regional or local government or governmental, administrative, fiscal, judicial, or government-owned body, department, commission, authority, tribunal, agency or entity, or central bank (or any person, whether or not government-owned and howsoever constituted or called, that exercises the functions of a central bank) which has jurisdiction over the Borrower or any Aerocentury Related Party;

Relevant Documents means the Deed of Novation and Restatement, the Sale Agreement, the Bill of Sale, the Lease, the Lease Management Agreement, the Eurocontrol Letter,  the EU-ETS Letter, the RVG Transfer, each Finance Document, the Effective Time Notice, all notices, consents, certificates and other documents and agreements to be issued pursuant to any of the foregoing and all other documents which the Facility Agent, the Borrower and the Lessee agree at any time should be Relevant Documents;

Relevant Interbank Market means the London interbank market;

Relevant Parties means the Borrower, the Guarantor, the Lease Manager and the Finance Parties and the expression Relevant Party means any of them individually;

RVG Transfer means, in respect of the Aircraft, the deed of novation entered into or to be entered into between the Borrower, Aviacion and the Manufacturer in form and substance satisfactory to the Facility Agent with respect to the residual value guarantee entered into between the Manufacturer and Aviacion with respect to the Aircraft;

Sale Agreement means, in respect of the Aircraft, the policy of sale and purchase of an aircraft entered into or to be entered into between the Borrower (as buyer) and Aviacion (as seller) in form and substance satisfactory to the Facility Agent;

Sale Agreement Pledge means the pledge of credit rights agreement executed or to be executed between the Borrower, Aviacion and the Security Agent in respect of the Borrower's rights under the Sale Agreement.

Sanctions means economic or financial sanctions administered, enacted or enforced by any Sanctions Authority, including any restriction on any the ability of a Party or any Affiliate of a Party to conduct business with any person in any country relevant to the transaction.

Sanctions Authority means (a) Canada, (b) the United Nations, (c) the United States of America, (d) the United Kingdom, (e) the European Union or (f) the respective governmental institutions, agencies and subdivisions of any of the foregoing;

Screen Rate means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for Dollars for the relevant period displayed on page LIBOR 01 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate); if the agreed page is replaced or service ceases to be available, the Facility Agent may specify another page or service displaying the appropriate rate after consultation with the Borrower, the Lessee and the Lenders, respectively;

Security means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest of any kind or other agreement or arrangement having the effect of conferring security (including title transfer and/or retention arrangements having a similar effect);

Security Agent means Export Development Canada or such other person as may be appointed as security agent in respect of the Relevant Documents pursuant to clause 5.11 (Resignation of the Security Agent) of the Proceeds Deed;

Security Assignment means, in respect of the Aircraft, the deed of assignment executed or to be executed by the Borrower in favour of the Security Agent in respect of its rights under, amongst other documents, the Lease;

Security Documents means the Deed of Cross-Collateralisation, the Security Assignment, the Assignment of Insurances, each Warranty Agreement, the Share Charge, the Sale Agreement Pledge, the Lessor Deregistration Power of Attorney, the Lessee Deregistration Power of Attorney, the IDERA, each Aircraft Mortgage, the Guarantee and the Proceeds Deed and all notices, consents, acknowledgements, certificates and other documents and agreements to be issued pursuant to any of the foregoing and all other documents which the Facility Agent, the Borrower and the Lessee agree at any time should be Security Documents;

Share Charge means the security over all of the shares in the Borrower, granted or to be granted by the Guarantor in favour of the Security Agent;

Specified Sanctioned Dealings means:

(a) any direct or indirect dealings involving or benefitting (i) a person that is listed on, or owned or controlled by, or acting on behalf of a person listed on, any list administered by a Sanctions Authority or otherwise the target of Sanctions (ii) a person located in, organised under, owned or controlled by, or acting on behalf of, a person located in or organised under the laws of Iran, Syria, North Korea or Belarus or (iii) a person that is owned or controlled by, or acting for or on behalf of, or providing assistance, support or services of any kind to, or otherwise associated with, any person referred to in (i) or (ii) above;

(b) any business or making or receiving any contribution of funds, goods or services to or for the benefit of any person described in (a)(i) to (a)(iii) above;

(c) any dealing in, or otherwise engaging in any transaction relating to, any property or interests in property subject to prohibitions under Sanctions; and

(d) any transaction that evades, avoids or attempts to violate any of the prohibitions set forth in the Sanctions or has such a purpose.

Subsidiary means any company or entity directly or indirectly controlled by another person;

Tax Credit, Tax Deduction and Tax Payment have the respective meanings given to them in clause 9.1.1;

Taxes includes all present and future taxes, levies, imposts, duties, fees, charges or withholdings of whatever nature and howsoever described, including any VAT imposed, levied, collected or assessed by any Government Entity or taxing authority anywhere in the world together with interest payable in respect of any of the same and penalties imposed or levied in respect of any of the same and Tax and Taxation shall be construed accordingly;

Termination Side Letter means the side letter agreement to the Lease dated on or about the date hereof between the Borrower, the Security Agent, the Guarantor and the Lessee.

Third Parties Act means the Contracts (Rights of Third Parties) Act 1999;

Total Aircraft Commitments means USD9,805,627.25, and each Lender's share of the Total Aircraft Commitments for the Aircraft shall be in the same proportion as its Commitment bears to the Total Facility Commitments;

Total Facility Commitments means, at any given time, the aggregate of the Commitments;

Total Loss Proceeds means the proceeds received and retained (subject to any application in accordance with the Relevant Documents) by the Security Agent from the insurers or reinsurers of the Aircraft in respect of its Total Loss;

Transfer Certificate means a certificate substantially in the form set out in Schedule 6 (Form of Transfer Certificate) or any other form agreed between the Facility Agent and the Lessee;

Transfer Date means, in relation to a transfer, the later of:

(a) the proposed Transfer Date specified in the Transfer Certificate; and

(b) the date on which the Facility Agent executes the Transfer Certificate;

Treasury Rate means, in respect of the Loan and on any date, the semi-annual rate to "swap" floating rate debt (with a maturity approximately equal to the period from such date to the Final Payment Date for the Loan) to fixed rate debt for loans of the same currency as the Loan, obtained from the Bloomberg page IRSB18 (US Semi 30/360 – column 2 (Ask)) at or about 11.00 a.m. New York City time on that date (or, if such page is not available at the relevant time, on such equivalent page as may be selected by the Facility Agent or, if none, the arithmetic mean of equivalent rates (rounded upwards to the nearest one sixteenth of one per cent) as supplied to the Facility Agent at its request quoted by the Reference Banks to leading banks in the Relevant Interbank Market);

Unpaid Sum means any sum due and payable (whether or not recourse to the Borrower is limited by clause 15) but unpaid by any Obligor under the Relevant Documents to which it is a party;

Utilisation Date means, in respect of the Loan, the date, being a Business Day, on which the Loan is or is to be made;

Utilisation Request means, in respect of the Loan, a notice substantially in the form of Schedule 2;

VAT means value added tax and any other tax or duty of a similar nature in any jurisdiction; and

1.2 Headings

Clause headings and the table of contents are inserted for convenience of reference only, have no legal effect and shall be ignored in the interpretation of this Agreement.

1.3 Interpretation

In this Agreement, unless a contrary indication appears:

1.3.1 references to clauses and Schedules are to be construed as references to the clauses of, and Schedules to, this Agreement and references to this Agreement include its Schedules;

1.3.2 references to (or to any specified provision of) this Agreement or any other document shall include this Agreement, that document or the relevant provision as it may from time to time be amended but so that the above is without prejudice to any requirement in any Relevant Document that the prior consent of any party be obtained;

1.3.3 a reference to an amendment includes a supplement, novation, restatement or re-enactment and amended and amending will be construed accordingly;

1.3.4 words importing the plural shall include the singular and vice versa, and words importing a gender include every gender;

1.3.5 references to a person shall be construed as including references to an individual, firm, company, corporation, unincorporated association or body of persons and any Government Entity, whether or not having separate legal personality and references to any Party, the Lease Manager, any Aerocentury Related Party or the Lessee shall be construed so as to include the successors, permitted assignees and permitted transferees of the relevant Party or of the Lease Manager, any Aerocentury Related Party or the Lessee, as applicable;

1.3.6 references to any law or any provision of law is a reference to such law or provision as applied, amended, extended or re-enacted and includes any subordinate legislation;

1.3.7 a reference to an approval shall be construed as a reference to any approval, consent, authorisation, exemption, permit, licence, registration, filing or enrolment by or with any competent authority;

1.3.8 a reference to including shall be construed as a reference to including without limitation, so that any list of items or matters appearing after the word "including" shall be deemed not to be an exhaustive list, but shall be deemed rather to be a representative list, of those items or matters forming a part of the category described prior to the word "including";

1.3.9 a Default, Event of Default, Relevant Event or Termination Event is continuing if it has not been remedied or waived;

1.3.10 control means, in relation to a company or entity, either ownership of more than 50 per cent of the voting share capital (or equivalent right of ownership) of such company or entity or power to direct its policies and management, whether by contract or otherwise (provided that the Borrower shall not be deemed to be controlled by, or a Subsidiary of, the Security Agent (or its nominee) as a result of the rights of the Security Agent under the Relevant Documents or otherwise);

1.3.11 the Convention and the Protocol shall be read and interpreted together as a single instrument as required by Article 6(1) of the Convention;

1.3.12 references to a provision of the Cape Town Convention will, unless it is specifically stated to be a reference to a provision of the Convention or, as the case may be, the Protocol, be a reference whether stated or not, to the relevant provision of the Consolidated Text, and reference to any provision of the Consolidated Text shall include a reference to the provision(s) of the Convention and/or the Protocol from which such provision(s) is/are derived;

1.3.13 in the event that there is any inconsistency between the provisions of the Consolidated Text and those of the Cape Town Convention, the latter shall prevail and any reference in this Agreement to any provision of the Consolidated Text shall be interpreted accordingly;

1.3.14 bankruptcy, liquidation, winding-up, administration, insolvency, examinership, reorganisation or dissolution (and their derivates and cognate expressions) of or in relation to any person or its assets shall each be construed so as to include the others and any equivalent or analogous proceedings, procedure or event under the law of any jurisdiction in which such person is incorporated or any jurisdiction in which such person carries on business or its assets are located; and

1.3.15 references to Ottawa are references to Ottawa, Ontario, Canada.

1.4 Third Party Rights

1.4.1 Unless expressly provided to the contrary in this Agreement, a person who is not a Party has no right under the Third Parties Act to enforce or to enjoy the benefit of any term of this Agreement.

1.4.2 Each Indemnitee shall be entitled to enforce each provision of this Agreement as is expressed to be in its favour, subject to complying with any express condition relating specifically to such provision.

1.4.3 Notwithstanding any term of any Relevant Document, the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time.

1.5 Majority Lenders

Where this Agreement provides for any matter to be determined by reference to the opinion of the Majority Lenders or to be subject to the consent or request of the Majority Lenders or for any action to be taken on the instructions of the Majority Lenders, such opinion, consent, request or instructions shall (as between the Lenders) only be regarded as having been validly given or issued by the Majority Lenders if all the Lenders shall have received prior notice of the matter on which such opinion, consent, request or instructions are required to be obtained and the relevant majority of Lenders shall have given or issued such opinion, consent, request or instructions but so that the Borrower shall be entitled (and bound) to assume that such notice shall have been duly received by each Lender and that the Majority Lenders shall have given or issued such opinion, consent, request or instructions whether or not this is in fact the case.

2 The Facility

2.1 The Facility

Subject to the terms of this Agreement, the Lenders make available to the Borrower a term loan facility in an amount equal to the Total Aircraft Commitments.

2.2 Disbursement

2.2.1 Subject to the terms of this Agreement, following receipt of funds in respect of the Loan from the Lenders, the Facility Agent will pay the Loan in accordance with the provisions of the Payment Direction Deed.

2.2.2 Payment by the Facility Agent of the amount contemplated by clause 2.2.1 in accordance therewith will constitute the making of the Loan to the Borrower in the same amount.

2.3 Finance Parties' rights and obligations

2.3.1 The obligations of each Finance Party under the Relevant Documents are several. Failure by a Finance Party to perform its obligations under the Relevant Documents does not affect the obligations of any other Party under the Relevant Documents. No Finance Party is responsible for the obligations of any other Relevant Party under the Finance Documents.

2.3.2 The rights of each Finance Party under or in connection with the Relevant Documents are separate and independent rights and any debt arising under the Relevant Documents to a Finance Party from any Obligor is a separate and independent debt in respect of which a Finance Party shall be entitled to enforce its rights in accordance with clause 2.3.3.  The rights of each Finance Party include any debt owing to that Finance Party under the Relevant Documents and, for the avoidance of doubt, any part of the Loan or any other amount owed by an Obligor which relates to a Finance Party's participation in the Facility or its role under a Relevant Document (including any such amount payable to the Facility Agent on its behalf) is a debt owing to that Finance Party by that Obligor.

2.3.3 A Finance Party may, except as specifically provided in the Finance Documents, separately enforce its rights under or in connection with the Relevant Documents.

3 Conditions

3.1 Documents, evidence and general conditions precedent

The obligation of each Lender to advance the Loan shall be subject to the conditions that:

3.1.1 the Facility Agent, or its duly authorised representative, shall have received, not later than the proposed Utilisation Date specified in the Utilisation Request for the Loan, the relevant documents and evidence specified in Part A of Schedule 3, each in form and substance satisfactory to the Facility Agent;

3.1.2 the conditions specified in clause 2.2 of the Deed of Novation and Restatement shall have been fulfilled to the satisfaction of the Facility Agent (or waived or deferred by the relevant party (with the consent of the Facility Agent) in accordance with the Deed of Novation and Restatement) and the Facility Agent shall have received such originals or copies as it may require of any documents and evidence provided or required to be provided under such clause;

3.1.3 the conditions specified in clause 7 of the Sale Agreement shall have been fulfilled to the satisfaction of the Facility Agent (or waived or deferred by the relevant party (with the consent of the Facility Agent) in accordance with the Sale Agreement) and the Facility Agent shall have received such originals or copies as it may require of any documents and evidence provided or required to be provided under such clause;

3.1.4 any payment to any Finance Party and/or from any Obligor under the Relevant Documents on or prior to that proposed Utilisation Date shall have been received (or the Facility Agent is satisfied that arrangements are in place such that each such payment will have been received on or prior to that Utilisation Date);

3.1.5 the Facility Agent shall be satisfied that since 31 December 2014 there has been no material adverse change in (a) the financial condition, financial results, business, operations or prospects of the Lessee or (b) the Lessee's ability to perform its obligations under any of its Party Documents;

3.1.6 no Total Loss of, or Major Damage to, the Aircraft shall have occurred;

3.1.7 no Obligor is required to make any deduction for or on account of Tax from any payment it may make under any of its Party Documents;

3.1.8 the representations and warranties set out in clause 10 are true and correct on and as of each such time as if each was made with respect to the facts and circumstances existing at such time; and

3.1.9 no Default shall have occurred and be continuing or would result from the drawdown of the Loan hereunder.

3.2 Waiver of conditions precedent

The conditions specified in this clause 3 are inserted solely for the benefit of the Lenders and may be waived on their behalf in whole or in part and with or without conditions by the Facility Agent acting on the instructions of the Majority Lenders.

3.3 Notification to Lenders

The Facility Agent shall notify the Lenders promptly after receipt by it of the documents and evidence referred to in clause 2.2 of the Deed of Novation and Restatement, in clause 7 of the Sale Agreement and in clause 3.1.1 in form and substance satisfactory to it.

3.4 Conditions subsequent

The Borrower shall provide the Facility Agent with all of the documents and other evidence listed in Part B of Schedule 3 in form and substance satisfactory to the Facility Agent within the timeframes specified therein.

4 Drawdown

4.1 Agreement to advance Loan

Subject to the terms and conditions of this Agreement and the Payment Direction Deed, the Lenders shall advance the Loan to the Borrower if:

4.1.1 the Facility Agent has received a Utilisation Request for the Loan from the Borrower, countersigned by the Lessee, on or before the proposed Utilisation Date specified in the Utilisation Request;

4.1.2 the USD amount specified in that Utilisation Request is not greater than the Total Aircraft Commitments for the Loan;

4.1.3 the proposed Utilisation Date specified in the Utilisation Request is a Business Day;

4.1.4 the Utilisation Request includes confirmations as to the matters contemplated by the form of Utilisation Request scheduled to this Agreement; and

4.1.5 the conditions specified in clause 3.1 have been satisfied or waived.

The Utilisation Request shall be effective on actual receipt by the Facility Agent and, once given, shall be irrevocable.

4.2 Single Utilisation

The Lenders shall only be obliged to advance one Loan in relation to the Aircraft.

4.3 Notification to Lenders

Upon receipt of a Utilisation Request complying with the terms of this Agreement, the Facility Agent shall notify each Lender thereof and of the amount and currency of that Lender's participation in the Loan.

4.4 Cancellation

4.4.1 In relation to the Aircraft, the undrawn Total Aircraft Commitment will be automatically cancelled at the close of business on the Next Rollover Date (unless otherwise agreed by the Parties). For the avoidance of doubt, the undrawn Total Facility Commitment will be automatically cancelled at the close of business on the Next Rollover Date (unless otherwise agreed by the Parties).

4.4.2 In relation to the Aircraft:

(a) the Borrower may, by giving the Facility Agent not less than five Business Days' prior notice countersigned by the Lessee, at any time before a Utilisation Request has been given in relation thereto, cancel all (but not part) of the Total Aircraft Commitments (in which case, the Total Aircraft Commitments for the Aircraft shall for this purpose be deemed to have been the amount set out in column 4 of Schedule 5 (Aircraft)); and

(b) any notice pursuant to paragraph (a) above is irrevocable. The Facility Agent shall notify the Lenders promptly of receipt of any such notice.

4.4.3 No cancellation is allowed except in accordance with the express terms of this Agreement. No amount of the Commitments cancelled under this Agreement may be reinstated subsequently.

5 Loan

5.1 Lenders' participation

5.1.1 If the conditions set out in this Agreement have been met, each Lender shall make its participation in the Loan available by the Utilisation Date through its Facility Office.

5.1.2 The amount of each Lender's participation in the Loan will be equal to the proportion borne by its Commitment to the Total Facility Commitments immediately prior to making the Loan.

5.2 Repayment of Loan

Subject only to clause 10 (Remarketing period) of the Proceeds Deed (if applicable) and clause 5.3, the Borrower shall repay the Loan in 18 consecutive instalments on each Payment Date.  Each such instalment of principal shall be in an amount equal to that set forth against the relevant Payment Date in column 2 of Schedule 4.

5.3 Prepayment of Loan

5.3.1 Subject only to clause 10 (Remarketing period) of the Proceeds Deed (if applicable), if, at any time, in any circumstance and for any reason, the Lease Termination Date occurs (including, for the avoidance of doubt, on the Expiry Date) then, on the Lease Termination Date, the Borrower shall prepay in full the Loan, together with any accrued and unpaid interest and all other amounts then due and payable by the Borrower under this Agreement or any of the other Finance Documents, without need for demand or other notice whatsoever, all of which are expressly waived by the Borrower.

5.3.2 Provided no Default is continuing, the Borrower may, if it gives the Facility Agent not less than 30 days' prior written notice, prepay the whole or any part of the Loan (but, if in part, being an amount of not less than one scheduled instalment of principal for the Loan or an integral multiple of USD500,000 on the date and in the amount specified for such purpose in that notice. Once given, any such notice shall be irrevocable.

5.3.3 Any partial prepayment of the Loan under this Agreement or any other Relevant Document shall be applied in satisfaction pro tanto of the Borrower's periodic obligations with respect to the repayment of principal in relation to the Loan, in inverse order of maturity.

5.3.4 Any prepayment (whether voluntary or not) of all or part of the Loan under this Agreement or any other Relevant Document shall be made together with:

(a) accrued interest on the amount prepaid;

(b) the Make-Whole Amount relating thereto; and

(c) any other amounts payable under this Agreement (including under clause 8.2) pursuant to that prepayment.

5.3.5 Following any partial prepayment of the Loan under this Agreement or any other Relevant Document, the Facility Agent shall supply to the other Parties a replacement Schedule 4 (in substitution for that in force immediately prior to that prepayment) setting out the future repayment obligations with respect to the Loan. In the absence of manifest error in such replacement Schedule 4, (a) the Borrower shall countersign, and procure that the Lessee countersigns, such replacement and (b) such replacement shall be conclusive and binding on the Parties and all references herein to "Schedule 4" shall be deemed to be a reference to Schedule 4 as amended by such replacement.

5.3.6 The Borrower may not prepay all or part of the Loan otherwise than in accordance with the express provisions of this Agreement.

5.4 Re-borrowing

The Borrower may not re-borrow any part of the Loan which is repaid or prepaid.

5.5 Replacement Schedules

Schedule 4 has been calculated on the assumptions that:

5.5.1 the Utilisation Date for the Loan will be the prior to the Next Rollover Date;

5.5.2 the amount of the Loan will be USD9,805,627.25;

5.5.3 the Loan will be denominated in USD.

In the event that any such assumption proves to be incorrect, the Facility Agent shall prepare a replacement of Schedule 4 on or prior to the Utilisation Date calculated by reference to the actual Utilisation Date, currency and Loan on the same basis as the existing Schedule 4. In the absence of manifest error in such replacement Schedule 4, (a) the Borrower shall countersign, and procure that the Lessee countersigns, such replacement and (b) such replacement shall be conclusive and binding on the Parties and all references herein to "Schedule 4" shall be deemed to be a reference to Schedule 4 as amended by such replacement.

6 Interest

6.1 Calculation of interest

Interest shall accrue on the Loan for each Calculation Period at the Fixed Rate.

6.2 Payment of interest

6.2.1 The Borrower shall pay accrued interest on the Loan on each Payment Date in the respective amounts specified against each such Payment Date in column 3 of Schedule 4.

6.2.2 The Borrower agrees and acknowledges that the instalment of accrued interest specified against the first Payment Date in column 3 of Schedule 4 (the "First Interest Amount")includes an amount equal to the Accrued Interest Amount, and the Borrower agrees to pay the First Interest Amount notwithstanding that the Loan was made on the Utilisation Date.

6.3 Default interest

6.3.1 If the Borrower fails to pay any amount payable by it to any Finance Party under a Relevant Document on its due date, interest shall accrue on the Unpaid Sum from the due date up to the date of actual payment (both before and after judgment) for successive Calculation Periods, each of a duration selected by the Facility Agent acting reasonably, at a rate per annum which is the rate equal to the aggregate of: (a) LIBOR, (b) the Margin, (c) the Liquidity Rate and (d) two per cent. (2%).  Any interest accruing under this clause 6.3 shall be immediately payable by the Borrower on demand by the Facility Agent made from time to time.

6.3.2 Default interest (if unpaid) arising on an Unpaid Sum will be compounded with the Unpaid Sum at the end of each Calculation Period applicable to that Unpaid Sum but will remain immediately due and payable.

6.4 Notification of rates of interest

The Facility Agent shall promptly notify the Lenders and the Obligors of the determination of a rate of interest under this Agreement.

6.5 Calculation Periods

6.5.1 The first Calculation Period for the Loan shall commence on the Utilisation Date and shall expire on the first Payment Date.

6.5.2 Each subsequent Calculation Period for the Loan shall start on the last day of the immediately preceding Calculation Period and expire on the next following Payment Date.

6.6 Absence of quotations

If LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by the Quotation Time, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

6.7 Break Costs and Make-Whole

6.7.1 If all or part of an Unpaid Sum is paid by the Borrower on a day other than the last day of a Calculation Period for that Unpaid Sum, the Borrower shall, within five Business Days of demand by a Finance Party, pay to that Finance Party that Finance Party's Break Costs attributable thereto. Each Lender shall, as soon as reasonably practicable after a demand by the Facility Agent, provide a certificate confirming any amount claimed by it under this clause 6.7.1.

6.7.2 If all or part of the Loan is paid by the Borrower on a day or in an amount other than on a Payment Date in the amount set forth against that Payment Date in column 2 of Schedule 4, the Borrower shall, within five Business Days of demand by the Facility Agent, pay to the Facility Agent the Make-Whole Amount relating to the Loan.

6.7.3 If, pursuant to any provision of any Relevant Document, all or part of the Loan becomes due or is repaid or prepaid on any date (the "Applicable Date") falling on or prior to the first Payment Date (other than the amount of the first repayment instalment becoming due and being repaid on the first Payment Date pursuant to clause 5.2) then on the Applicable Date the Borrower shall pay to the Lenders all or a proportionate part of the Accrued Interest Amount (as applicable).

6.8 Third Parties Act

The Lessee may rely on clause 6.4 of this Agreement and may enforce its terms under the Third Parties Act.

7 [Intentionally Omitted]

8 Costs and Expenses

8.1 [Intentionally Omitted]

8.2 Amendment costs

If the Borrower or the Lessee requests an amendment, waiver or consent to or under any Relevant Document, the Borrower shall, or shall procure that the Lessee shall, as soon as practicable and in any event not later than thirty (30) days following demand, reimburse the Lenders' Representatives for the amount of all costs and expenses (including legal fees) reasonably incurred by them (or either of them) in responding to, evaluating, negotiating or complying with that request or requirement.

8.3 Enforcement costs

The Borrower shall, or shall procure that the Lessee shall, within five Business Days of demand, pay to each Finance Party the amount of all Losses (including legal fees) incurred by that Finance Party in good faith in connection with the enforcement of, or the preservation of any rights under, any Relevant Document.

9 Tax gross-up and indemnities

9.1 Definitions

9.1.1 In this Agreement:

Borrower DTTP Filing means an HM Revenue & Customs' Form DTTP2 duly completed and filed by the relevant Borrower, which:

(a) where it relates to a Treaty Lender that is the Original Lender, contains the scheme reference number and jurisdiction of tax residence stated opposite that Lender's name in Schedule 1, and is filed with HM Revenue & Customs within 30 days of the date of this Agreement; or

(b) where it relates to a Treaty Lender that is a New Lender, contains the scheme reference number and jurisdiction of tax residence stated in respect of that Lender in the relevant Transfer Certificate, and is filed with HM Revenue & Customs within 30 days of that Transfer Date;

Protected Party means a Finance Party which is or will be subject to any liability, or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Relevant Document;

Qualifying Lender means:

(a) a Lender which is beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document and is:

(i) a Lender:

(A) which is a bank (as defined for the purpose of section 879 of the ITA) making an advance under a Finance Document and is within the charge to United Kingdom corporation tax as respects any payments of interest made in respect of that advance or would be within such charge as respects such payments apart from section 18A of the CTA; or

(B) in respect of an advance made under a Finance Document by a person that was a bank (as defined for the purpose of section 879 of the ITA) at the time that that advance was made and within the charge to United Kingdom corporation tax as respects any payments of interest made in respect of that advance; or

(ii) a Lender which is:

(A) a company resident in the United Kingdom for United Kingdom tax purposes;

(B) a partnership each member of which is:

(1) a company so resident in the United Kingdom; or

(2) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the CTA;

(C) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company; or

(iii) a Treaty Lender; or

(b) a Lender which is a building society (as defined for the purpose of section 880 of the ITA) making an advance under a Finance Document;

Tax Confirmation means a confirmation by a Lender that the person beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document is either:

(a) a company resident in the United Kingdom for United Kingdom tax purposes;

(b) a partnership each member of which is:

(i) a company so resident in the United Kingdom; or

(ii) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the CTA; or

(c) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company;

Tax Credit means a credit against, relief or remission for, or repayment of any Tax;

Tax Deduction means a deduction or withholding for or on account of Tax from a payment under a Finance Document;

Tax Payment means either the increase in a payment made by the Borrower to a Finance Party under clause 9.2 (Tax gross-up) or a payment under clause 9.3 (Tax indemnity);

Treaty Lender means a Lender which:

(a)is treated as a resident of a Treaty State for the purposes of the Treaty;

(b) does not carry on a business in the United Kingdom through a permanent establishment with which that Lender's participation in the Loan is effectively connected; and

(c) is entitled, under the terms of the Treaty, to claim full exemption from tax imposed by the United Kingdom on interest paid to it pursuant to the Loan;

Treaty State means a jurisdiction having a double taxation agreement (a Treaty) with the United Kingdom which makes provision for full exemption from tax imposed by the United Kingdom on interest; and

UK Non-Bank Lender means a Lender which gives a Tax Confirmation in the Transfer Certificate which it executes on becoming a Party.

9.1.2 Unless a contrary indication appears, in this clause 9 a reference to determines or determined means a determination made in the absolute discretion of the person making the determination.

9.2 Tax gross-up

9.2.1 The Borrower shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.

9.2.2 The Borrower shall promptly upon becoming aware that it must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Facility Agent accordingly. Similarly, a Lender shall notify the Facility Agent on becoming so aware in respect of a payment payable to that Lender. If the Facility Agent receives such notification from a Lender it shall notify the Borrower.

9.2.3 If a Tax Deduction is required by law to be made by the Borrower, the amount of the payment due from the Borrower shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.

9.2.4 A payment shall not be increased under Clause 9.2.3 above by reason of a Tax Deduction on account of Tax imposed by the United Kingdom, if on the date on which the payment falls due:

(a) the payment could have been made to the relevant Lender without a Tax Deduction if the Lender had been a Qualifying Lender, but on that date that Lender is not or has ceased to be a Qualifying Lender other than as a result of any change after the date it became a Lender under this Agreement in (or in the interpretation, administration, or application of) any law or Treaty or any published practice or published concession of any relevant taxing authority; or

(b) the relevant Lender is a Qualifying Lender solely by virtue of paragraph (a)(ii) of the definition of Qualifying Lender and:

(i) an officer of H.M. Revenue & Customs has given (and not revoked) a direction (a "Direction") under section 931 of the ITA which relates to the payment and that Lender has received from the Borrower making the payment or from the Borrower a certified copy of that Direction; and

(ii) the payment could have been made to the Lender without any Tax Deduction if that Direction had not been made; or

(c) the relevant Lender is a Qualifying Lender solely by virtue of paragraph (a)(ii) of the definition of Qualifying Lender and:

(i) the relevant Lender has not given a Tax Confirmation to the Borrower; and

(ii) the payment could have been made to the Lender without any Tax Deduction if the Lender had given a Tax Confirmation to the Borrower, on the basis that the Tax Confirmation would have enabled the Borrower to have formed a reasonable belief that the payment was an "excepted payment" for the purpose of section 930 of the ITA; or

(d) the relevant Lender is a Treaty Lender and the Obligor making the payment is able to demonstrate that the payment could have been made to the Lender without the Tax Deduction had that Lender complied with its obligations under Clause 9.2.7 or Clause 9.2.8 (as applicable) below.

9.2.5 If the Borrower is required to make a Tax Deduction, the Borrower shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.

9.2.6 Within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Borrower shall deliver to the Facility Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.

9.2.7

(a) Subject to paragraph (b) below, a Treaty Lender and the Borrower shall co-operate in completing any procedural formalities necessary for the Borrower to obtain authorisation to make payments without a Tax Deduction.

(b) A New Lender that is a Treaty Lender that holds a passport under the HMRC DT Treaty Passport scheme, shall confirm its scheme reference number and its jurisdiction of tax residence in the Transfer Certificate which it executes and, having done so, that Lender shall be under no obligation pursuant to paragraph 9.2.7(a).

(c) Where the Borrower is required to make a Tax Deduction and the amount of a payment due from the Borrower has been increased pursuant to Clause 9.2.3 above, subject to the Borrower having first complied with its obligations under Clause 9.2.6 above, the Finance Party entitled to that payment shall use reasonable endeavours to claim a repayment from HMRC in respect of that Tax Deduction and, on receipt of such a repayment, shall pay to the Borrower an amount equal to that repayment.

9.2.8 If a Lender has confirmed its scheme reference number and its jurisdiction of tax residence in accordance with paragraph 9.2.7(b) and:

(a) a Borrower making a payment to that Lender has not made a Borrower DTTP Filing in respect of that Lender; or

(b) a Borrower making a payment to that Lender has made a Borrower DTTP Filing in respect of that Lender but:

(i) that Borrower DTTP Filing has been rejected by HM Revenue & Customs;

(ii) HM Revenue & Customs has not given the Borrower authority to make payments to that Lender without a Tax Deduction within 60 days of the date of the Borrower DTTP Filing; or

(iii) HM Revenue & Customs has given authority for the Borrower to make payment to that Lender without a Tax Deduction and that authority expires or is withdrawn by HMRC,

and in each case, the Borrower has notified that Lender in writing, that Lender and the Borrower shall co-operate in completing any additional procedural formalities necessary for that Borrower to obtain authorisation to make that payment without a Tax Deduction.

9.2.9 If a Lender has not confirmed its scheme reference number and jurisdiction of tax residence in accordance with paragraph 9.2.7(b) above, the Borrower shall not make a Borrower DTTP Filing or file any other form relating to the HMRC DT Treaty Passport scheme in respect of that Lender's Commitment(s) or its participation in any Loan unless the Lender otherwise agrees.

9.2.10 A Borrower shall, promptly on making a Borrower DTTP Filing, deliver a copy of that Borrower DTTP Filing to the Facility Agent for delivery to the relevant Lender.

9.2.11 A UK Non-Bank Lender shall promptly notify the Borrower and the Facility Agent if there is any change in the position from that set out in the Tax Confirmation.

9.2.12 Each Lender which becomes a Party to this Agreement after the date of this Agreement shall indicate, in the Transfer Certificate which it executes on becoming a Party, which of the following categories it falls in:

(a) not a Qualifying Lender;

(b) a Qualifying Lender (other than a Treaty Lender); or

(c) a Treaty Lender.

If a New Lender fails to indicate its status in accordance with this Clause 9.2.12 then such New Lender shall be treated for the purposes of this Agreement (including by each Obligor) as if it is not a Qualifying Lender until such time as it notifies the Facility Agent which category applies (and the Facility Agent, upon receipt of such notification, shall inform the Borrower).  For the avoidance of doubt, a Transfer Certificate shall not be invalidated by any failure of a Lender to comply with this Clause 9.2.12.

9.3 Tax indemnity

9.3.1 The Borrower shall (within five Business Days of demand by the Facility Agent) pay to a Protected Party an amount equal to any Loss which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.

9.3.2 Clause 9.3.1 shall not apply with respect to any Tax imposed on a Protected Party:

(a) as a result of a breach by such Protected Party of any of its express obligations under any of its Party Documents (to the extent that such imposition is not caused by the breach or misrepresentation of any other party to the Relevant Documents under or in respect of the Relevant Documents or the negligence or fraudulent or wilful misconduct of any such other party); or

(b) as a result of any negligence or wilful misconduct by such Protected Party with respect to any of the transactions contemplated by, or the performance of any of its express obligations under, its Party Documents; or

(c) as a result of any reasonably avoidable failure or reasonably avoidable delay by such Protected Party to file any relevant Tax return or Tax computation which such Protected Party was obliged to file by any applicable law in its jurisdiction of organisation (to the extent that such imposition is not caused by the breach or misrepresentation of any other party to the Relevant Documents under or in respect of the Relevant Documents or the negligence or fraudulent or wilful misconduct of any such other party); or

(d) as a result of any breach by such Protected Party of applicable law of its jurisdiction of organisation (to the extent that such imposition is not caused by the breach or misrepresentation of any other party to the Relevant Documents under or in respect of the Relevant Documents or the negligence or fraudulent or wilful misconduct of any such other party); or

(e) by any taxing authority or governmental subdivision thereof of its jurisdiction of organisation (or, if different, the jurisdiction in which such Protected Party is resident for tax purposes) with respect to, or measured by reference to, the net income, capital gains or profits of such Protected Party (but not any sum deemed to be received or receivable by it), except Taxes which arise solely by reason of any breach by any Obligor (or by any Permitted Sub-Lessee or any other lessee or user of the Aircraft or the Companion Aircraft) of any of their respective representations, warranties, obligations or covenants under any Relevant Document; or

(f) other than by the jurisdiction of its organisation, that would not have been imposed or payable but for the existence of a connection between such Protected Party and the jurisdiction imposing such Taxes (whether by reason of residence, domicile, a place of business or management, a permanent establishment, a branch or agency or otherwise), except Taxes (A) in respect of which the connection between such Protected Party and the jurisdiction imposing the Tax arises solely by reason of any or all of (x) the negotiation, execution, enforcement, performance, registration or delivery of any of  the Relevant Documents in the jurisdiction imposing the Taxes, (y) the presence, use, operation, maintenance, alteration, registration, repair or replacement of the Aircraft or, in any such case, any part thereof in such jurisdiction or elsewhere or (z) the presence, residence or domicile of the Borrower, the Lessee, any Permitted Sub-Lessee or any other user of the Aircraft or any other party to a Relevant Document in, or payment of any amount by any party under the Relevant Documents from or through, such jurisdiction or (B) imposed as a result of (x) the repair, overhaul, maintenance, improvement, modification or replacement of the Aircraft or, in any such case, any part thereof, (y) the gross negligence, wilful misconduct or reckless disregard with knowledge of the probable consequences of the Borrower, the Lessee, any Permitted Sub-Lessee or other lessee or user of the Aircraft or any other party to a Relevant Document or (z) the breach by the Borrower, the Lessee, any Permitted Sub-Lessee or any other lessee or user of the Aircraft or any other party to a Relevant Document of any of their respective representations, warranties or covenants under any of the Relevant Documents; or

(g) to which clause 9.7 (Value added tax) or clause 9.2 (Tax gross-up) relates, whether or not the relevant Protected Party is entitled to indemnity, payment or compensation thereunder; or

(h) to the extent that the relevant Protected Party has been indemnified against the same (or would, but for the application of an applicable exclusion in the Relevant Documents which expressly applies to such Protected Party (other than clauses 10.1.2(c) and 10.1.2(d) of the Lease), have been indemnified against) under the Relevant Documents.

9.3.3 A Protected Party making or intending to make a claim under clause 9.3.1 shall promptly notify the Facility Agent of the event which will give, or has given, rise to the claim, following which the Facility Agent shall notify the Borrower.

9.3.4 A Protected Party shall, on receiving a payment from the Borrower under this clause 9.3, notify the Facility Agent.

9.3.5 If any Protected Party becomes aware of any Tax which may give rise to an indemnity obligation on the part of the Borrower under this clause 9.3, such Protected Party shall promptly notify the Borrower thereof and, if requested by the Borrower, shall consult (for a period of not more than 30 days) with the Borrower to consider what action may properly be taken to defend or otherwise resist or mitigate the Tax. If such Protected Party and the Borrower consider that such action should be taken as aforesaid, either such Protected Party will take such action or, if such Protected Party so agrees, the Borrower shall be entitled to take such action in the name of such Protected Party, provided that:

(a) no such action may be taken by the Borrower or shall be required to be taken by such Protected Party unless adequate provision in respect of the amount to be indemnified and any associated Losses has been made by the Borrower to the reasonable satisfaction of such Protected Party (having regard to the nature and amount to be indemnified); and

(b) the Borrower shall indemnify such Protected Party in full on demand in respect of any properly incurred Losses suffered or incurred by such Protected Party in connection with any action taken by such Protected Party or the Borrower as aforesaid; and

(c) no Default, Event of Default or Relevant Event is continuing; and

(d) such action does not, in the opinion of such Protected Party, give rise to any risk of (i) any criminal or civil liability on its part, (ii) any risk of the sale, loss or forfeiture of the Aircraft or any part thereof or any interest therein or (iii) any damage to the reputation of such Protected Party or any of its Affiliates; and

(e) if such Protected Party so requires, the Borrower shall have furnished it with a legal opinion (from independent counsel reasonably acceptable to such Finance Party) confirming the reasonable likelihood of such action being determined in favour of such Protected Party.

Each Protected Party shall be entitled to prohibit participation by the Borrower in the defence of a Tax if such Protected Party considers, acting reasonably, that it is necessary that such defence be conducted by it and its own advisers, provided that notwithstanding such prohibition the Protected Party shall continue to keep the Borrower informed of developments relating to such defence.

Failure by any Protected Party to comply with any of the foregoing provisions of this clause 9.3.5 shall not prejudice or discharge any of the indemnity obligations of the Borrower under this clause 9.3.

9.4 Tax Credit

If the Borrower makes a Tax Payment and the relevant Finance Party determines that:

(a) a Tax Credit is attributable either to an increased payment of which that Tax Payment forms part, or to that Tax Payment; and

(b)that Finance Party has obtained, utilised and retained that Tax Credit,

the Finance Party shall, provided no Default is continuing, pay an amount to the Borrower which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made by the Borrower.

9.5 Indemnities on after Tax basis

9.5.1 If and to the extent that any sum payable to any Indemnitee by the Borrower under any Relevant Document by way of indemnity or reimbursement proves to be insufficient, by reason of any Taxation suffered thereon, for that Indemnitee to discharge the corresponding liability to a third party, or to reimburse that Indemnitee for the cost incurred by it in discharging the corresponding liability to a third party, the Borrower shall pay that Indemnitee such additional sum as (after taking into account any Taxation suffered by that Indemnitee on such additional sum) shall be required to make up the relevant deficit.

9.5.2 If and to the extent that any sum (the indemnity sum) constituting (directly or indirectly) an indemnity to any Indemnitee but paid by the Borrower to any person other than that Indemnitee, shall be treated as taxable in the hands of the Indemnitee, the Borrower shall pay to that Indemnitee such sum (the compensating sum) as (after taking into account any Taxation suffered by that Indemnitee on the compensating sum) shall reimburse that Indemnitee for any Taxation suffered by it in respect of the indemnity sum.

9.5.3 For the purposes of this clause 9.5 a sum shall be deemed to be taxable in the hands of a Indemnitee if it falls to be taken into account in computing the profits or gains of that Indemnitee for the purposes of Taxation and, if so, that Indemnitee shall be deemed to have suffered Taxation on the relevant sum at the rate of Taxation applicable to that Indemnitee's profits or gains for the period in which the payment of the relevant sum falls to be taken into account for the purposes of such Taxation.

9.6 Stamp taxes

The Borrower shall pay and, within five Business Days of demand, indemnify each Finance Party against any and all Losses that Finance Party incurs in relation to any and all stamp duty, documentary, registration and other similar Taxes payable in respect of any Relevant Document or any of the transactions contemplated thereby.

9.7 Value added tax

All amounts (including in respect of fees, costs and expenses and other Losses) set out or expressed in a Relevant Document to be payable by any Party to a Finance Party are exclusive of any VAT which is payable in respect thereof. If VAT is payable in respect thereof, the Borrower shall pay the full amount due under that Relevant Document and shall in addition pay all such VAT and indemnify each Finance Party against any claim for the same. The relevant Finance Party shall, promptly following request of the paying Party, provide an appropriate VAT invoice to such Party (provided that any failure to do so shall not prejudice or discharge any obligation of the Borrower under this clause 9.7).

10 Representations and warranties

The Borrower makes the representations and warranties set out in this clause 10 on the date of this Agreement.

10.1 Status

10.1.1 It is a company, duly incorporated and validly existing under the law of its jurisdiction of incorporation.

10.1.2 It has the power to own its assets and carry on its business as it is being conducted.

10.1.3 Its Centre of Main Interests is in England and Wales. It has no "establishment" (as that term is used in the Insolvency Regulation) in any other jurisdiction.  Its central management, decision making, the places of residence of its directors, administration and the place at which meetings of its board of directors are held, are at all times situated in England and Wales.

10.2 Binding obligations

The obligations expressed to be assumed by it in its Party Documents are, subject to any general principles of law limiting its obligations which are specifically referred to in any legal opinion delivered pursuant to clause 3, legal, valid, binding and enforceable obligations.

10.3 Non-conflict with other obligations

The entry into and performance by it of, and the transactions contemplated by, its Party Documents do not and will not conflict with:

(a) any Applicable Law applicable to it;

(b) its constitutional documents; or

(c) any agreement or instrument binding upon it or any of its assets.

10.4 Power and authority

It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, its Party Documents and the transactions contemplated by its Party Documents.

10.5 No other business

It has not:

(a) carried on any business other than the transactions contemplated by the Relevant Documents and any business incidental thereto; or

(b) entered into any contract or agreement with any person or otherwise created or incurred, any liability to any person, in each case other than as provided for in or contemplated by the Relevant Documents and the documents contemplated thereby or other than such liabilities with respect to Taxes, ordinary operating costs and overhead expenses as have arisen or may arise in the ordinary course of its business as referred to in paragraph (a) above; or

(c) had any employees.

10.6 No Default

No Default has occurred and is continuing.

10.7 Validity and admissibility in evidence

10.7.1 All Authorisations required or desirable:

(a) to enable it lawfully to enter into, exercise its rights and comply with its obligations in its Party Documents; and

(b) to make its Party Documents admissible in evidence in any relevant jurisdiction,

have been obtained or effected and are in full force and effect.

10.8 Governing law and enforcement

10.8.1 The choice of governing law stipulated in the Relevant Documents is a valid choice and is binding on the Borrower under the laws of, and will be recognised and given effect to by the courts of, its jurisdiction of incorporation, subject to any general principles of law specifically referred to in any legal opinion delivered pursuant to Clause 3.

10.8.2 Any judgment in relation to a Relevant Document obtained in the place stipulated therein as having jurisdiction in relation thereto will be recognised and enforced by the courts of its jurisdiction of incorporation, subject to any general principles of law specifically referred to in any legal opinion delivered pursuant to Clause 3.

10.9 Deduction of Tax

It is not required to make any deduction for or on account of Tax from any payment it may make to a Qualifying Lender under any of its Party Documents.

10.10 No filing or stamp taxes

10.10.1 Subject to the following provisions of this clause 10.10, under the laws of its jurisdiction of incorporation it is not necessary or advisable that any of the Relevant Documents be filed, recorded or enrolled with any court or other authority or that any stamp, registration or similar tax be paid on or in relation to the Relevant Documents or the transactions contemplated thereby.

10.10.2 It is necessary to register with the United Kingdom Companies House particulars of any charges created under the Security Assignment and each Aircraft Mortgage, in each case within 21 days of the execution thereof.

10.10.3 It is necessary to register the Bill of Sale and the Deed of Novation and Restatement with the MPR and the AMR.

10.10.4 It is necessary to record the IDERA with the Aviation Authority in Spain and to register with the International Registry each international interest referred to in paragraph 8 of Schedule 3 Part B.

10.10.5 It is necessary to obtain the unique authorisation codes for the Airframe from the MPR in respect of the registrations with the International Registry of each international interest referred to in paragraph 8 of Schedule 3 Part B (the "Unique Authorisation Codes").

10.11 Pari passu ranking

Its payment obligations under its Party Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.

10.12 Title warranty

Subject to the completion of the purchase of the Aircraft pursuant to and in accordance with the Sale Agreement, the Borrower will, on the Utilisation Date and at all times thereafter during the Aircraft Security Period, have full legal and beneficial ownership of and title to the Aircraft, free from any Security other than Permitted Liens.

10.13 Applicable Law

10.13.1 Each Aerocentury Related Party is in compliance with:

(a) all Applicable Laws relating to corruption or bribery to which it is subject; and

(b) all other Applicable Laws to which it is subject and in respect of which any non-compliance (i) would, or would be reasonably likely to, have a material adverse effect on its ability to perform its obligations under its Party Documents or (ii) might result in a Security (other than a Permitted Lien) arising over the Aircraft or any other asset or right subject to any of the Security Documents.

10.13.2 No Prohibited Payment has been made or provided, directly or indirectly, by any Aerocentury Related Party, their respective officers or directors or any other person acting on their behalf to, or for the benefit of, any Relevant Authority (or any officer, director or any other person with management responsibilities in, any Relevant Authority) in connection with any Relevant Document.

10.13.3 No Aerocentury Related Party nor any of its directors or officers (or, to the best of its knowledge, any of its Affiliates) is engaged, directly or indirectly, in any activity which is prohibited under the Sanctions, including Specified Sanctioned Dealings.

10.13.4 No Aerocentury Related Party nor any of its Subsidiaries (or, to the best of its knowledge, any director, officer, employer, agent, Affiliate or representative of such Aerocentury Related Party or any of its Subsidiaries) is an individual or entity that is, or is owned or controlled by, or is acting on behalf of a person that is:

(a) the subject of any Sanctions; or

(b) located, organised or resident in a country or territory that is, or whose government is, the subject of territorial Sanctions, unless otherwise notified to each Finance Party.

10.13.5 No Aerocentury Related Party has (and, to the best of its knowledge and belief, no director, officer, shareholder, Affiliate and/or legal adviser of any Aerocentury Related Party has) been convicted in a court of any jurisdiction for violation of any laws relating to corruption, money laundering, fraud or any similar laws.

10.14 Survival and Repetition

The representations and warranties in this clause 10 will (a) survive the execution of this Agreement and the Utilisation Date and (b) be deemed to be repeated by the Borrower on the date of the Utilisation Request, on the Utilisation Date and, save for the representations and warranties set out in Clauses 10.6, 10.9 and 10.10, on each Payment Date, in each case with reference to the facts and circumstances then existing.

11 Undertakings

11.1 The Borrower undertakes in favour of each Finance Party in the terms set out in this clause 11, which undertakings (a) shall remain in force throughout the Aircraft Security Period and (b) shall be performed at no cost to any Finance Party.

11.1.1 Performance of obligations

The Borrower shall perform all of its obligations under its Party Documents.

11.1.2 Amendments, etc.

The Borrower shall not, without the prior written consent of the Facility Agent:

(a) enter into any agreement other than the Relevant Documents;

(b) agree to any amendment to any Relevant Document;

(c) release any other party from any of its obligations, or waive any breach of any of the obligations of any other party, under any Relevant Document;

(d) grant any consent requested by another party (other than a Lenders' Representative) under any Relevant Document;

(e) exercise any right it may have to terminate any Relevant Document or the leasing of the Aircraft thereunder;

(f) exercise any other right, discretion, election or option, or give any notice, under any Relevant Document (other than this Agreement);

(g) consent to any act or omission which would otherwise constitute a breach of any Relevant Document by any other party; or

(h) exercise any right of set-off under or in relation to any Relevant Document or any payment thereunder (whether pursuant to clause 8.8 of the Lease Agreement or otherwise).

The Borrower shall, if so requested by notice in writing by the Facility Agent, exercise those of its rights, powers or discretions under the Lease as the Facility Agent may require, including proceeding by appropriate court action to enforce performance by the Lessee of its obligations under the Lease, terminating the leasing of the Aircraft under the Lease, taking possession of the Aircraft and otherwise asserting or enforcing its rights as "Lessor" thereunder.

11.1.3 Single Purpose Covenant

The Borrower shall not, without the prior written consent of the Facility Agent:

(a) carry on any business other than the transactions contemplated by the Relevant Documents and any business incidental thereto;

(b) enter into any contract or agreement with any person or otherwise create or incur, any liability to any person, in each case other than as provided for in, or contemplated by, the Relevant Documents, and the documents contemplated by the Relevant Documents, other than such liabilities with respect to Taxes, ordinary operating costs and overhead expenses as have arisen or may arise in the ordinary course of its business as referred to in paragraph (a) above;

(c) have any employees;

(d) cease to be validly existing and/or in good standing, or cease to be resident for tax purposes, or cease to have its Centre of Main Interests, in its jurisdiction of incorporation as at the date of this Agreement;

(e) redeem, repurchase, defease, retire or repay any of its share capital or resolve to do so;

(f) declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its share capital (or any class of its share capital);

(g) pay, repay or distribute any dividend or share premium reserve;

(h) pay any management, advisory or other fee to any Aerocentury Related Party (other than to the Lease Manager pursuant to and in accordance with the Lease Management Agreement);

(i) issue any shares or alter any rights attaching to its issued shares as at the date of this Agreement;

(j) make any loan;

(k) incur any borrowing (other than under this Agreement); or

(l) repay or prepay any borrowing (other than the Loan).

11.1.4 Authorisations, etc.

(a) The Borrower shall promptly:

(i) obtain, comply with and do all that is necessary to maintain in full force and effect; and

(ii) supply certified copies to the Facility Agent of,

any Authorisation required under any Applicable Law of its jurisdiction of incorporation to enable it to perform its obligations under its Party Documents and to ensure the legality, validity, enforceability or admissibility in evidence in its jurisdiction of incorporation of its Party Documents.

(b) It shall procure that all relevant protection and perfection filings to be made in its jurisdiction of incorporation in respect of the Security Documents are promptly and timely made, taking account of Applicable Law.

(c) It shall at all times comply with Applicable Law.

(d) It shall not make any Prohibited Payment.

(e) The Borrower will not use, contribute or otherwise make available the proceeds of the Loan for any purpose which is prohibited under the Sanctions, including to any person for the purpose of financing directly or indirectly the activities of any person that (i) is listed on, or owned or controlled by a person that is listed on, or acting on behalf of a person listed on, any list administered by a Sanctions Authority or (ii) is in a country which is subject to Sanctions, to the extent such financing would be prohibited by the Sanctions.

(f) The Borrower and its directors and officers will not (and the Borrower will take all reasonable steps to ensure that none of its directors, officers or Affiliates will), directly or indirectly, engage in any activity which is prohibited under the Sanctions (unless any such activity is conducted in compliance with a permit, certificate or other approval issued under the Sanctions), including Specified Sanctioned Dealings.

11.1.5 Negative Pledge

The Borrower shall not create (or consent to the creation of) or allow to exist any Borrower's Lien over or with respect to, nor will it sell, transfer or otherwise dispose of, all or any of the Collateral or the Assigned Property or its business or assets, other than (in any such case) as expressly permitted by the terms of the Finance Documents or as may otherwise be agreed in writing by the Facility Agent.

11.1.6 Notification of Default

The Borrower shall notify the Facility Agent of any Default or Relevant Event that is continuing as soon as practicable after becoming aware of its occurrence.

11.1.7 Information: miscellaneous

The Borrower shall promptly supply to the Facility Agent (in sufficient copies for all the Lenders, if the Facility Agent so requests) such information regarding its financial condition and business as any Finance Party (through the Facility Agent) may reasonably request.

11.1.8 Notices

The Borrower shall within three (3) Business Days after the receipt by the Borrower of any written notice or other document delivered to it pursuant to the Relevant Documents, deliver a copy to the Facility Agent.

11.1.9 Further Assurance

The Borrower shall execute, acknowledge, deliver, file and register all such additional agreements, instruments, certificates, documents and assurances and perform such other acts or things as the Facility Agent shall reasonably request:

(a) to maintain the registration of the Aircraft in accordance with the Lease;

(b) as a consequence of the Cape Town Convention being or becoming Applicable Law in relation to the Borrower, the Lessee, any Permitted Sub-Lessee or the Airframe or any of the Engines,or Spain being a "Contracting State" for the purposes of the Cape Town Convention, including, without limitation, where this paragraph (b) is applicable, for the purposes of effecting registration on the International Registry of (thereby establishing, preserving or varying the priority of) any applicable international interests, prospective international interests, sales, prospective sales, assignments and prospective assignments and the effect of any agreements relating to priority and subordination, each as created by or contemplated by the Relevant Documents, and/or otherwise ensuring the enforceability of the Relevant Documents in the light of the terms of the Cape Town Convention and having regard to the intent and terms of the Relevant Documents and/or protecting the rights and remedies of the Finance Parties thereunder, including (x) executing and submitting, or procuring the execution of and submission of, an irrevocable de-registration and export request authorisation in respect of the Aircraft in favour of the Security Agent to the aviation authority of the State of registry for recordation, and (y) amending, restating, revising, novating, terminating and replacing, executing, re-executing or otherwise adapting any Relevant Document in such a manner as to permit the interests created under the Relevant Documents to constitute international interests to the satisfaction of the Security Agent and consenting to any registrations on the International Registry as requested by the Security Agent, provided that no action shall be required if it (i) would have the effect of materially altering the terms of this Agreement or otherwise involve any re-negotiation of any of the substantive terms of the Relevant Documents or (ii) it would, or would be reasonably likely to, adversely affect the tax treatment of the transactions contemplated by the Relevant Documents (and the Borrower further undertakes that it will not register or attempt to register or discharge or vary any international interest, or make or attempt to make any other registration or any discharge or amendment of any other registration or consent to any such action, on the International Registry, in relation to the Lessee, any Permitted Sub-Lessee, any Finance Party, the Aircraft, the Airframe, the Engines or any Part, unless requested to do so by the Facility Agent); or

(c) otherwise to give effect to the purposes and intent of the Relevant Documents or the transactions thereby contemplated or to protect the rights and remedies of the Finance Parties thereunder.

Without prejudice to the generality of the foregoing, if requested by the Facility Agent at any time during the Aircraft Security Period, the Borrower shall grant and register in favour of the Security Agent a mortgage over the Aircraft governed by the laws of the State of Registration, and execute, acknowledge, deliver, file and register all such additional agreements, instruments, certificates, documents and assurances and perform such other acts or things as the Facility Agent shall reasonably request in connection therewith, provided that the cost of any registration of such mortgage in the State of Registration shall, to the extent that it exceeds EUR 5,000, be borne by the Lenders (pro rata or as the Lenders may otherwise agree inter se) if: (i) no Event of Default or Termination Event has occurred and is continuing and (ii) the State of Registration is Spain.

11.1.10 "Know your customer" checks

If:

(a) the introduction of or any change in (or in the interpretation, administration or application of) any Applicable Law made after the date of this Agreement;

(b) any change in the status of the Borrower or the composition of its shareholders after the date of this Agreement; or

(c) a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

obliges the Facility Agent or any Lender (or, in the case of paragraph (c) above, any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Facility Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Facility Agent (for itself or on behalf of any Lender) or any Lender (for itself or, in the case of the event described in paragraph (c) above, on behalf of any prospective new Lender) in order for the Facility Agent, such Lender (or, in the case of the event described in paragraph (c) above, any prospective new Lender) to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all Applicable Laws pursuant to the transactions contemplated in the Finance Documents.

11.1.11 Post-lease responsibility

(a) During the Post-Lease Responsibility Period for the Aircraft, the Borrower will comply with its obligations relating to the Aircraft as set out in Schedule 8.

(b) For the period of two years following the expiry of the Aircraft Security Period for the Aircraft, the Borrower shall procure that the Finance Parties are named as additional assureds in relation to the liability insurances for the Aircraft for an amount and on terms otherwise complying with those set out in Schedule 8.

11.1.12 Cape Town Convention

(a) Definitions

In this Agreement, in the context of any references to the Cape Town Convention, the following expressions have the respective meanings given to them in Article 1 of the Consolidated Text and in the context of any references to the Cape Town UK Regulations, such expressions have the respective meanings given to them in Regulation 5 of the Cape Town UK Regulations:

aircraft engines

aircraft object

aircraft register

airframe

applicable law

assignment

associated rights

chargee

creditor

default

international interest

International Registry

irrevocable de-registration and export request authorisation

non-consensual right or interest

prospective international interest

prospective sale

sale

security agreement

security interest

subordination

State of registry

and the expression "situated" will have the meaning given to it in Article 4 of the Consolidated Text.

(b) Cape Town Default

For the purposes of Article 17(1) of the Consolidated Text (including as incorporated into English law pursuant to Regulation 18 of the Cape Town UK Regulations) each of the events which constitutes an Event of Default is an event that constitutes a default or otherwise gives rise to the rights and remedies specified in Article 12 to 15 and 20 of the Consolidated Text including, for the avoidance of doubt, Article 20(1)(e) (including as incorporated into English law pursuant to Regulation 19, 20, 22, 23 and 25 of the Cape Town UK Regulations).  The parties agree that the Security Agent shall have the remedies referred to in Articles 12(1), 15(1) and 20(1) (including 20(1)(e)) of the Consolidated Text.

(c) Borrower Cape Town representations

Without prejudice to clause 11.1.9, in respect of each Aircraft Mortgage, the Borrower represents and warrants in favour of the Security Agent as set out below (and such representations and warranties are deemed to be repeated on the date of each Aircraft Mortgage):

(i) the Airframe is an airframe and an aircraft object; and each Engine is an aircraft engine and an aircraft object for the purposes of Article 10 of the Consolidated Text;

(ii) the Borrower is situated in the United Kingdom for the purposes of Article 3(1) of the Consolidated Text;

(iii) the Airframe is registered in the aircraft register of Spain, which is the State of registry of the Airframe for the purposes of Article 3(3) of the Consolidated Text;

(iv) the Borrower has the power to dispose of the Airframe and each Engine for the purposes of Article 10 of the Consolidated Text;

(v) each Aircraft Mortgage is a security agreement and the security interest constituted by such Aircraft Mortgage is effective to constitute a valid international interest in favour of the Security Agent as creditor and chargee over the Airframe and each Engine for the purposes of the Cape Town Convention;

(vi) no international interests or prospective international interests have been registered with the International Registry in relation to the Airframe or any Engine, other than to the extent that the registrations of such international interests or prospective international interests have been discharged on or before the date hereof to the satisfaction of the Security Agent;

(vii) no sale or prospective sale has been registered with the International Registry in relation to the Airframe or any Engine, other than to the extent that such registration relates to a sale or prospective sale of the Airframe or, as the case may be, Engine that occurred prior to the sale of such aircraft object to the Borrower;

(viii) no non-consensual right or interest exists in relation to the Airframe or any Engine which, under the laws of (i) the jurisdiction where the Borrower is situated, or (ii) the State of registry of the Airframe, has priority over the international interest constituted in respect of the Airframe or, as applicable, the relevant Engine, in favour of the Security Agent as creditor and chargee pursuant to the Aircraft Mortgage, by virtue of a declaration made by such Borrower jurisdiction or by such State of registry in accordance with Article 52 of the Consolidated Text (including as incorporated into English law by Regulation 18 of the Cape Town UK Regulations).

(d) Borrower Cape Town Undertakings

The Borrower gives the following undertakings in favour of the Security Agent for the duration of the Aircraft Security Period:

(i) the Borrower shall cooperate with the Security Agent and will at the Borrower's expense take all actions as may be reasonably requested of it, with respect to effecting registration of any international interest of the Security Agent as creditor and chargee, in respect of each of the Airframe and Engines and the assignment of associated rights and transfer of related international interest in favour of the Security Agent as assignee pursuant to the Security Assignment in priority to all other registrable interests, and shall do all such acts and execute all such documents as may be necessary to perfect and preserve such priority filings and in order to receive the benefit of all rights, powers and remedies permitted by the Consolidated Text;

(ii) if an Engine is replaced by a replacement engine purchased in accordance with clause 14.3 of the Lease, the Borrower and the Security Agent shall, on or prior to title to the replacement engine being vested in the Borrower, take such steps as shall be available to them under the terms of the Consolidated Text (including as incorporated into English law by Regulation 17 of the Cape Town UK Regulations) and as are necessary:

(A) to constitute in favour of the Security Agent as a creditor and a chargee, an international interest in the replacement engine, including (but not limited to) entering into a supplemental aircraft mortgage with the Security Agent in respect of such the replacement engine in substantially the form of each Aircraft Mortgage in respect of the replaced Engine; and

(B) to register such international interest in accordance with Chapter V of the Consolidated Text (including as incorporated into English law by Regulation 17 of the Cape Town UK Regulations); and

(iii) the Borrower shall procure that the Lessee shall, on the Utilisation Date or as soon as practicable after the Utilisation Date, execute and deliver to the Aviation Authority (being the registry authority for the purposes of the Cape Town Convention) the IDERA in favour of the Security Agent.

11.1.13 Lessee Deregistration Power of Attorney

The Borrower shall not (without the Facility Agent's consent) exercise any rights or otherwise act under the Lessee Deregistration Power of Attorney until the end of the Aircraft Security Period.

11.1.14 Effective Time Notice

The Borrower shall not execute the Effective Time Notice without the Facility Agent's prior consent.

11.2 Finance Party undertakings

11.2.1 Each Lender shall promptly upon the request of the Facility Agent supply, or procure the supply of, such documentation and other evidence relating to that Lender or its Affiliates as is reasonably requested by the Facility Agent (for itself) in order for the Facility Agent to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all Applicable Laws pursuant to the transactions contemplated in the Finance Documents.

11.2.2 Each of the Finance Parties severally agrees that:

(a) provided no Event of Default is continuing, it will not interfere with the quiet use, possession and enjoyment of the Aircraft by the Borrower; and

(b) provided no Event of Default or Termination Event is continuing, it will not interfere with the quiet use, possession and enjoyment of the Aircraft by the Lessee.

The exercise by any Finance Parties of their rights under the Relevant Documents shall not constitute such interference.

12 Events of default and Total Loss Prepayment Event

12.1 Each of the events and circumstances set out in clause 12.1 is an Event of Default.

12.1.1 Non-Payment

The Borrower, the Guarantor or the Lease Manager fails to pay any amount due from it under any of its Party Documents in the currency and in the manner stipulated on the due date, unless such amount is paid in the currency and in the manner stipulated within 2 Business Days (in the case of any amount of principal or interest) or 5 Business Days (in any other case) following the due date.

12.1.2 Events of default with no grace period

(a) The Borrower breaches any of its obligations under any of clauses 3.4 (Conditions subsequent),11.1.2 (Amendments, etc.), 11.1.3 (Single purpose covenant) and/or 11.1.5 (Negative pledge).

(b) Other than pursuant to the Share Charge, the Guarantor creates (or consents to the creation of) any Security over or with respect to the shares in the Borrower or sells, transfers or otherwise disposes of any such shares.

12.1.3 Other Obligations

The Borrower, the Guarantor or the Lease Manager commits any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by it under its Party Documents (other than as referred to elsewhere in this clause 12.1) and, in respect of any such breach or omission which is capable of remedy, such action as the Facility Agent may require to remedy such default shall not have been taken within thirty days (or such longer period as may be agreed by the Facility Agent) of the earlier of (a) the Borrower, the Guarantor or the Lease Manager becoming aware of such default and (b) the Facility Agent notifying the Borrower, the Guarantor or the Lease Manager of such default and of such required action.

12.1.4 Misrepresentations

Any representation made by the Borrower, the Guarantor or the Lease Manager in any of its Party Documents or which is contained in any document or certificate furnished under or in connection with its Party Documents proves to have been incorrect in any respect on the date as of which it was made unless the Borrower, the Guarantor or, as the case may be, the Lease Manager takes such steps as the Facility Agent may require to correct such misrepresentation within thirty days (or such longer period as may be agreed by the Facility Agent) of the earlier of (a) the Borrower, the Guarantor or the Lease Manager becoming aware of such misrepresentation and (b) being requested to do so.

12.1.5 Insolvency

(a) The Borrower, the Guarantor or the Lease Manager is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its Indebtedness;

(b) The value of the assets of the Borrower, the Guarantor or the Lease Manager is less than its liabilities (taking into account contingent and prospective liabilities); or

(c) A moratorium is declared in respect of any Indebtedness of the Borrower, the Guarantor or the Lease Manager,

provided that no Event of Default shall arise under this clause 12.1.5 in relation to the insolvency of the Lease Manager if it is replaced within thirty (30) days by a replacement lease manager acceptable to the Facility Agent to the extent that there is no material adverse effect on the Finance Parties during such thirty (30) day period.

12.1.6 Insolvency proceedings

Any corporate action, legal proceedings or other procedure or step are taken in relation to:

(a) the suspension of payments, a moratorium of any indebtedness, bankruptcy, liquidation, winding-up, administration, insolvency, examinership, reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) or dissolution of the Borrower, the Guarantor or the Lease Manager;

(b) a composition, compromise, assignment or arrangement with any creditor of the Borrower, the Guarantor or the Lease Manager;

(c) the appointment of a liquidator, receiver, administrative receiver, examiner, administrator, compulsory manager or other similar officer in respect of the Borrower, the Guarantor or the Lease Manager or any of their respective assets; or

(d) enforcement of any Security over any assets of the Borrower, the Guarantor or the Lease Manager,

or any analogous action, proceedings, procedure or step is taken in any jurisdiction; provided that any Proceedings shall not constitute an Event of Default if (i) they are taken by any party other than the Borrower, the Guarantor or the Lease Manager or any of their respective shareholders, directors or Affiliates and the Borrower, the Guarantor or the Lease Manager is able to demonstrate to the reasonable satisfaction of the Facility Agent that such Proceedings are being contested in good faith by the Borrower, the Guarantor or, as the case may be, the Lease Manager or are frivolous or vexatious and, in any event, such Proceedings are discharged, cancelled, stayed on a permanent basis or dismissed within 7 days, or (ii) they are taken in relation to the Lease Manager and the Lease Manager is replaced within thirty (30) days by a replacement lease manager acceptable to the Facility Agent to the extent that there is no material adverse effect on the Finance Parties during such thirty (30) day period.

12.1.7 Creditors' process

Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of the Borrower, the Guarantor or the Lease Manager, provided that no Event of Default shall arise under this clause 12.1.7 in relation to any such expropriation, attachment, sequestration, distress or execution in respect of any asset or assets of the Lease Manager if the Lease Manager is replaced within thirty (30) days by a replacement lease manager acceptable to the Facility Agent to the extent that there is no material adverse effect on the Finance Parties during such thirty (30) day period.

12.1.8 Repudiation

The Borrower, the Guarantor or the Lease Manager repudiates any of its Party Documents or evidences an intention to repudiate any of its Party Documents (provided that no Event of Default shall arise under this clause 12.1.8 in relation to a repudiation by the Lease Manager in its capacity as the Lease Manager if it is replaced within thirty (30) days by a replacement lease manager acceptable to the Facility Agent).

12.1.9 Cross-default

(a) Subject to clause 10 (Remarketing period) of the Proceeds Deed (if applicable), a Termination Event occurs and is continuing under the Lease.

(b) A "Companion Aircraft Event of Default" occurs and is continuing under any Companion Aircraft Relevant Document.

(c) Subject to clause 10 (Remarketing period) of the Proceeds Deed (as such term is defined in the Companion Aircraft Senior Loan Agreement) (if applicable), a "Companion Aircraft Termination Event" occurs and is continuing under the Companion Aircraft Lease Agreement.

12.1.10 Cessation of business

The Borrower, the Guarantor or the Lease Manager suspends or ceases or threatens to suspend or cease to carry on its business; provided that no Event of Default shall arise under this clause 12.1.10 in relation to the cessation of business of the Lease Manager if it is replaced within thirty (30) days by a replacement lease manager acceptable to the Facility Agent to the extent that there is no material adverse effect on the Finance Parties during such thirty (30) day period.

12.1.11 Post-Lease responsibility

During the Post-Lease Responsibility Period for the Aircraft, the Borrower breaches any of its obligations in paragraphs 1, 2.2, 2.3, 2.4 and/or 4 of Schedule 8. For the avoidance of doubt, any breach by the Borrower of its obligations in any other paragraph of Schedule 8 shall be an Event of Default in accordance with and subject to the provisions of clause 12.1.3.

12.2 Lenders' rights

12.2.1 On and at any time after the occurrence of an Event of Default which is continuing, the Facility Agent may, and shall if so directed by the Majority Lenders, by notice to the Borrower:

(a) cancel any obligation to disburse the Total Facility Commitments not previously disbursed, whereupon they shall immediately be cancelled; and/or

(b) subject to clause 10 (Remarketing period) of the Proceeds Deed, (if applicable), declare that the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents shall be immediately due and payable, whereupon they shall become immediately due and payable.

12.2.2 If at any time an Event of Default is continuing, all Proceeds obtained by the Finance Parties shall be applied in accordance with the Proceeds Deed.

12.2.3 Notwithstanding any other provision of any Relevant Document, no Finance Party shall have any obligation to pay to any Obligor any amount at any time at which a Default is continuing.

12.3 Total Loss Prepayment Event

Notwithstanding any other provision of the Relevant Documents, if the Aircraft suffers a Total Loss (a) the Borrower shall prepay the Loan on or before the Total Loss Payment Date under the Lease and (b) all Total Aircraft Commitments shall automatically be cancelled.

13 Indemnities

13.1 Currency indemnity

13.1.1 If any sum due from the Borrower under the Finance Documents (a Sum), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the First Currency) in which that Sum is payable into another currency (the Second Currency) for the purpose of:

(a) making or filing a claim or proof against the Borrower; or

(b) obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

the Borrower shall as an independent obligation, within five Business Days of written demand, indemnify each Indemnitee to whom that Sum is due against any and all Losses arising out of or as a result of the conversion including any discrepancy between (i) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (ii) the rate or rates of exchange available to that person at the time of its receipt of that Sum.  Any amount due from the Borrower under this Clause 13.1.1 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of any Relevant Document.

13.1.2 The Borrower waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.

13.2 Operational Indemnity

13.2.1 The Borrower shall from time to time within five Business Days of demand indemnify each Indemnitee for all costs and expenses of or arising from the matters referred to in paragraph (a) below and indemnify and hold harmless each Indemnitee from and against all Losses:

(a) relating to, or arising directly or indirectly in any manner or for any cause or reason whatsoever out of the design, manufacture, testing, sale, purchase, delivery, import, export, registration, ownership, possession, control, use, operation, leasing pursuant to the Lease, sub-leasing, wet leasing, insurance, maintenance, repair, refurbishment, condition, service, overhaul, modification, change, alteration, loss, damage, removal, storage or re-delivery of, in or to the Aircraft or any part thereof, or otherwise in connection with the Aircraft or any part thereof, or relating to loss or destruction of or damage to any property, or death or injury of, or other loss of whatsoever nature suffered by, any person caused by, relating to, or arising from or out of (in each case whether directly or indirectly) any of the above matters;

(b) which may at any time be made or brought on the ground that any design, article or material in the Aircraft or any part thereof or the operation or use thereof constitutes an infringement of any patent or other intellectual property right;

(c) which may at any time be incurred by such Indemnitee in preventing or attempting to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Aircraft or any part thereof, or in securing the release of the Aircraft or any part thereof from any such occurrence;

(d) representing costs, expenses or other amounts representing Losses which the Borrower has agreed to pay and which shall be claimed from or paid by any Indemnitee, and against any Losses incurred by any Indemnitee by reason of any delay or failure of the Borrower to pay any such costs, expenses or other amounts and/or which are otherwise sustained or incurred by such Indemnitee as a consequence of any default by the Borrower in the due and punctual performance of any of its obligations under any of the Relevant Documents; and/or

(e) any Total Loss in relation to the Aircraft, the Airframe or any Engine or any part of the Aircraft, the Airframe or any Engine.

13.2.2 The indemnities in clause 13.2.1 shall not extend to any Losses:

(a) which represent ordinary and usual operating and overhead expenses of any Finance Party suffering or incurring such Losses other than any such expense caused directly or indirectly by the occurrence of a Default or Relevant Event; or

(b) suffered by an Indemnitee as a result of a breach by such Indemnitee of any of its express obligations under any of the Relevant Documents to which it is a party (not caused by the breach or misrepresentation of any other party to the Relevant Documents under or in respect of the Relevant Documents or the gross negligence or fraudulent or wilful misconduct of any such other party); or

(c) to the extent that such Losses would not have arisen or been suffered or incurred by any Indemnitee, but for the wilful misconduct or gross negligence on the part of such Indemnitee; or

(d) resulting out of or arising from any Taxes or a loss of Tax benefits or increases in Tax liability (without prejudice to the Finance Parties' rights in respect thereof under this Agreement or the Relevant Documents); or

(e) which in accordance with the terms of any of the Relevant Documents the relevant Finance Party has agreed to bear or which are expressed therein to be for the relevant Finance Party's own account.

13.3 Miscellaneous Indemnities

The Borrower shall, within five Business Days' of written demand, indemnify each Indemnitee against any and all Losses incurred by that Indemnitee as a result of:

13.3.1 the occurrence or continuance of any Default or Relevant Event (including, for the avoidance of doubt and without limitation, Losses incurred in relation to any repossession, sale and/or re-lease of the Aircraft by the Security Agent or in carrying out any work or modification required to put the Aircraft into a condition acceptable to a purchaser or lessee or in storing, insuring and maintaining the Aircraft following any repossession);

13.3.2 any person (other than an Indemnitee) bringing or seeking to bring a claim against any Obligor with respect to any claim for breach by any Obligor of any obligation under any Relevant Document;

13.3.3 a failure by any Obligor to pay any amount due under a Relevant Document on its due date or to perform any other obligation under a Relevant Document when due;

13.3.4 in the case of a Lender, funding, or making arrangements to fund, its participation in the Loan (including entering into any deposits, hedging arrangements and swaps (internally and/or with third parties) to effect or maintain all or any of its Contributions in the Loan) once requested by the Borrower in a Utilisation Request but the Loan not being advanced (or being advanced other than on the proposed Utilisation Date specified in the relevant Utilisation Request) by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Lender alone); or

13.3.5 in connection with the protection, preservation and enforcement of the Security constituted by the Security Documents and/or the protection, preservation and enforcement of the rights of any of the Indemnitees under the Relevant Documents.

Notwithstanding the foregoing, the Borrower need not indemnify an Indemnitee under this clause 13.3 to the extent that the relevant Losses (a) are caused solely by the gross negligence or wilful misconduct of that Indemnitee or (b) are attributable to a breach by that Indemnitee of its express obligations under any of the Relevant Documents to which it is a party (not caused by a breach or misrepresentation of any other party to such Relevant Documents under or in respect of the Relevant Documents or the gross negligence or fraudulent or wilful misconduct of any such other party) or (c) have already been indemnified pursuant to another indemnity provision of this Agreement or any other Relevant Document.

13.4 Indemnity to the Lenders' Representatives

The Borrower shall promptly indemnify each Lenders' Representative against any and all Losses incurred by such Lenders' Representative (acting reasonably) as a result of (a) investigating any event which it reasonably believes to be a Default or a Relevant Event or (b) acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised.

13.5 The Borrower shall indemnify the Security Agent promptly upon receipt of a written demand for any costs and expenses incurred by it in taking any action required of it pursuant to either of clauses 3.5 (Assignment) and 9 (Further Assurance) (or any equivalent provision) of the Security Assignment or either of clause 7.1 (Release/Discharge of Mortgage Agreement) (or any equivalent provision) of the Aircraft Mortgage.

14 Changes in circumstances; mitigation

14.1 Illegality and change in law

14.1.1 Without prejudice to clause 14.5, if:

(a) at any time (i) there is an Applicable Law binding upon any Party or any Obligor in the jurisdiction in which it is formed or has its principal office or Facility Office or in which any action is required to be performed by it for the purposes of this Agreement or any other Relevant Document which renders it unlawful for that Party or Obligor to perform any of its obligations or to exercise any of its rights, under this Agreement or any of the other Relevant Documents or, in the case of any Lender, for that Lender to contribute to or maintain or fund its Commitment and/or Contribution or any part of any of them, including any unlawfulness or illegality giving rise to any economic or financial sanctions administered or enforced by any Sanctions Authority or (ii) a Party or the Lessee (or any Affiliate of a Party or the Lessee) receives written notice or advice from a Sanctions Authority that penalties will be imposed by a Sanctions Authority as a result of the Loan or any other business or financial relationship with another Party or the Lessee (or any Affiliate of any Party or the Lessee); or

(b) by reason of any change in Applicable Law, the rights of the Finance Parties under the Finance Documents are or will be materially and adversely affected; or

(c) by reason of any change in Applicable Law, any Security Document shall cease to constitute duly perfected and enforceable first priority Security in accordance with the terms thereof over any of the relevant Collateral or Assigned Property,

the Facility Agent or, as the case may be, the Borrower shall forthwith notify the other Parties and (prior to the Lease Termination Date) the Lessee thereof and the Facility Agent shall be entitled by written notice (Notice) to the Borrower and (prior to the Lease Termination Date) the Lessee either:

(i) to cancel the Total Aircraft Commitments; or

(ii) if such event occurs after the Utilisation Date, to require the Borrower to prepay the Loan together with all interest accrued thereon and all other amounts then due and owing under the terms of this Agreement,

in each such case on the Relevant Date.

14.1.2 In this clause 14.1, Relevant Date means the later of:

(a) the date of the Notice; and

(b) a future date specified in the Notice being prior to:

(i) the date on which the unlawfulness referred to in clause 14.1.1(a) takes effect; or

(ii) the date on which the change in Applicable Law referred to in clauses 14.1.1(b) or 14.1.1(c) takes effect.

14.2 Increased Costs

14.2.1 Subject to clause 14.4 (Exceptions) the Borrower shall, within five Business Days of a demand by the Facility Agent, pay for the account of a Finance Party the amount of any Increased Cost incurred by that Finance Party or any of its Affiliates which:

(a) arises as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any Applicable Law or (ii) compliance with any Applicable Law made after this Agreement;

(b) is a Basel 3 Increased Cost;

(c) arises as a result of the implementation or application of or compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act or any law or regulation made under, or connected with, that Act; and/or

(d) arises as a result of the implementation or application of, or compliance with, CRD IV or any law or regulation that implements or applies CRD IV.

14.2.2 In this Agreement Increased Costs means:

(a) a reduction in the rate of return from the Facility or the Loan or on a Finance Party's (or its Affiliate's) overall capital;

(b) an additional or increased cost; or

(c) a reduction of any amount due and payable under any Finance Document,

which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitment or funding or performing its obligations or the Loan under any Finance Document.

14.3 Increased Cost claims

14.3.1 A Finance Party intending to make a claim pursuant to clause 14.2 (Increased Costs) shall notify the Facility Agent of the event giving rise to the claim, following which the Facility Agent shall promptly notify in writing the Borrower and (prior to the Lease Termination Date) the Lessee.

14.3.2 Each Finance Party shall, as soon as practicable after a demand by the Facility Agent, provide a certificate confirming the amount and the calculation of its Increased Costs.  The Facility Agent shall make such demand if the Borrower so requests and promptly provide the Borrower with a copy of any certificate that it receives.

14.4 Exceptions

14.4.1 Clause 14.2 (Increased Costs) does not apply to the extent any Increased Cost is:

(a) attributable to a Tax Deduction required by law to be made by the Borrower;

(b) compensated for by clause 9.3 (Tax indemnity) (or would have been compensated for under clause 9.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in clause 9.3.2 applied);

(c) attributable to a breach by the relevant Finance Party of any of its express obligations under any of the Relevant Documents to which it is a party (not caused by the breach or misrepresentation of any other party to the Relevant Documents under or in respect of the Relevant Documents or the gross negligence or fraudulent or wilful misconduct of any such other party); or

(d) attributable to the gross negligence or wilful breach by the relevant Finance Party or its Affiliates of any Applicable Law; or

(e) a Basel 2 Increased Cost, unless such Increased Cost is also the consequence of the introduction of, or any change in, or in the interpretation, administration or application of, any Applicable Law which is not a Basel 2 Regulation.

14.5 Mitigation

14.5.1 Each Finance Party shall, in consultation with the Borrower and (prior to the Lease Termination Date) the Lessee (such consultation to be for a maximum period of 45 days, or such lesser period as may be required by Applicable Law), take such reasonable steps it can take to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of clause 9 (Tax gross-up and indemnities) and clause 14 (Changes in circumstances; mitigation) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.

14.5.2 Clause 14.5.1 above does not in any way limit the obligations of the Obligors under the Relevant Documents.

14.6 Limitation of liability

14.6.1 The Borrower shall indemnify each Finance Party for all Losses reasonably incurred by that Party as a result of steps taken by it under clause 14.5 (Mitigation).

14.6.2 A Finance Party is not obliged to take any steps under clause 14.5 (Mitigation) if, in the opinion of that Finance Party, to do so might be prejudicial to it.

14.6.3 No Finance Party has any liability for any failure to mitigate or reduce any relevant liability pursuant to clause 14.5 (Mitigation).

14.7 Third Parties Act

The Lessee may rely on clauses 14.1 (Illegality and change in law), 14.3 (Increased Cost claims) and 14.5 (Mitigation) and may enforce their terms under the Third Parties Act.

15 Limitation on recourse

Clause 3 (Limitation on recourse) of the Proceeds Deed applies to this Agreement, mutatis mutandis, as if set out in full herein and as if references to "this Deed" were references to this Agreement.

16 Assignment, transfers and lending offices

16.1 Benefit and burden

This Agreement shall be binding upon, and enure for the benefit of, the Parties.

16.2 No assignment by Borrower

The Borrower shall not assign or transfer all or any of its rights and/or obligations under its Party Documents without the prior written consent of all of the Lenders.

16.3 Assignments and transfers by the Lenders

Subject to this clause 16, a Lender (the Existing Lender) may:

16.3.1 assign any of its rights; or

16.3.2 transfer by novation any of its rights and obligations,

under the Relevant Documents to (i) if no Default has occurred and is continuing, another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets or (ii) if an Event of Default has occurred and is continuing, to any person (in each case, the "New Lender"). Any partial assignment or transfer shall be pro rata as between all the Existing Lender's Commitments and/or Contributions in respect of the Loan.

Any such assignment or transfer shall be (a) at the Borrower's cost if it is (i) made pursuant to any mitigation provision of the Relevant Documents, (ii) made while an Event of Default or a Termination Event is continuing or (iii) required by any Applicable Law and (b) otherwise at no cost to the Borrower.

16.4 Conditions of assignment or transfer

16.4.1 Without prejudice to the provisions of clause 16.4.4, the consent of the Borrower is not required for an assignment or transfer by an Existing Lender.

16.4.2 An assignment will only be effective on:

(a) receipt by the Facility Agent of written confirmation from the New Lender (in form and substance satisfactory to the Facility Agent) that the New Lender will assume the same obligations to the Borrower and the other Finance Parties as it would have been under if it was an Original Lender; and

(b) performance by the Facility Agent of all necessary "know your customer" or other similar checks under all Applicable Laws in relation to such assignment to a New Lender, the completion of which the Facility Agent shall promptly notify to the Existing Lender and the New Lender.

16.4.3 A transfer will only be effective if the procedure set out in clause 16.7 (Procedure for transfer) is complied with.

16.4.4 If:

(a) a Lender assigns or transfers any of its rights or obligations under the Relevant Documents or changes its Facility Office; and

(b) as a result of circumstances existing at the date the assignment, transfer or change occurs, the Borrower would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under clause 9 (Tax gross-up and indemnities) or clause 14.2 (Increased Costs),

then the New Lender or Lender acting through its new Facility Office is only entitled to receive (and the Borrower shall only be required to make) payment under those clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been entitled (and the Borrower would have been obliged to pay), had the assignment, transfer or change not occurred.

16.4.5 Each New Lender, by executing the relevant Transfer Certificate, confirms, for the avoidance of doubt, that the Facility Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with the Relevant Documents on or prior to the date on which the transfer or assignment becomes effective in accordance with the Relevant Documents and that it is bound by that decision to the same extent as the Existing Lender would have been had it remained a Lender.

16.5 Assignment or transfer fee

The New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Facility Agent (for its own account) a fee of USD 3,500.

16.6 Limitation of responsibility of Existing Lenders

16.6.1 Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

(a) the legality, validity, effectiveness, adequacy or enforceability of the Relevant Documents or any other documents;

(b) the financial condition of the Obligors;

(c) the performance and observance by the Obligors of their obligations under the Relevant Documents or any other documents;

(d) the application of any Basel 2 Regulation to the transactions contemplated by the Relevant Documents; or

(e) the accuracy of any statements (whether written or oral) made in or in connection with any Relevant Document or any other document,

and any representations or warranties implied by any Applicable Law are excluded.

16.6.2 Each New Lender confirms to the Existing Lender and the other Relevant Parties that it:

(a) has made (and shall continue to make) its own independent investigation and assessment of:

(i) the financial condition and affairs of the Obligors and their related entities in connection with its participation in this Agreement; and

(ii) the application of any relevant Basel 2 Regulation to the transactions contemplated by the Relevant Documents,

and has not relied exclusively on any information provided to it by the Existing Lender in connection with any Relevant Document; and

(b) will continue to make its own independent appraisal of:

(i) the creditworthiness of the Obligors and their related entities; and

(ii) the application of any relevant Basel 2 Regulation to the transactions contemplated by the Relevant Documents,

whilst any amount is or may be outstanding under the Relevant Documents or any Commitment is in force.

16.6.3 Nothing in any Relevant Document obliges an Existing Lender to:

(a) accept a re-transfer from a New Lender of any of the rights and obligations assigned or transferred under this clause 16; or

(b) support any Losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under its Party Documents or by reason of the application of any Basel 2 Regulation to the transactions contemplated by the Relevant Documents or otherwise.

16.7 Procedure for transfer

16.7.1 Subject to the conditions set out in clause 16.4 (Conditions of assignment or transfer) a transfer is effected in accordance with clause 16.7.4 when the Facility Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Facility Agent shall, subject to clause 16.7.2, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Transfer Certificate.

16.7.2 The Facility Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary "know your customer" or other similar checks under all Applicable Laws relating to the transfer to such New Lender.

16.7.3 Each of the Lenders and the Borrower hereby appoint the Facility Agent to execute on their behalf any Transfer Certificate delivered to it in accordance with clause 16.7.1.

16.7.4 On the Transfer Date:

(a) to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Relevant Documents each of the Existing Lender and the Borrower shall be released from further obligations towards one another under the Relevant Documents and their respective rights against one another under the Relevant Documents shall be cancelled (being the Discharged Rights and Obligations);

(b) each of the New Lender and the Borrower shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as the Borrower and the New Lender have assumed and/or acquired the same in place of the Borrower and the Existing Lender;

(c) the New Lender and other Finance Parties shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Existing Lender and the other Finance Parties shall each be released from further obligations to each other under the Relevant Documents; and

(d) the New Lender shall become a Party as a "Lender".

16.8 Copy of Transfer Certificate to Borrower

The Facility Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate, send to the Borrower a copy of that Transfer Certificate.

17 Role of the Facility Agent

17.1 Appointment of the Facility Agent

17.1.1 Each other Finance Party appoints the Facility Agent to act as its agent under and in connection with the Relevant Documents.

17.1.2 Each other Finance Party authorises the Facility Agent to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Facility Agent under or in connection with the Relevant Documents together with any other incidental rights, powers, authorities and discretions.

17.2 Duties of the Facility Agent

17.2.1 The Facility Agent's duties under and in relation to the Relevant Documents are solely mechanical and administrative in nature.

17.2.2 The Facility Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Facility Agent for that Party by any other Party.

17.2.3 Except where a Finance Document specifically provides otherwise, the Facility Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.

17.2.4 If the Facility Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the other Finance Parties.

17.2.5 If the Facility Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Facility Agent) under this Agreement it shall promptly notify the other Finance Parties.

17.2.6 Except as specifically provided in the Finance Documents, the Facility Agent has no obligations of any kind to any other Party under or in connection with the Relevant Documents (and no obligations shall be implied).

17.3 [Intentionally blank]

17.4 [Intentionally blank]

17.5 No fiduciary duties

Nothing in this Agreement constitutes the Facility Agent as a trustee or fiduciary of any other person.  The Facility Agent shall not be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.

17.6 Business with the Obligors

The Facility Agent may accept deposits from, lend money to and generally engage in any kind of banking or other business with any Obligor or any Aerocentury Related Party.

17.7 Rights and discretions of the Facility Agent

17.7.1 The Facility Agent may rely on:

(a) any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and

(b) any statement made by a director, authorised signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify.

17.7.2 The Facility Agent may assume (unless it has received notice to the contrary in its capacity as agent or, as the case may be, trustee for the Lenders) that:

(a) no Default has occurred (unless it has actual knowledge of a Default arising under clause 12.1.1 (Non-payment)); and

(b) any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised.

17.7.3 The Facility Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other professional advisers or experts.

17.7.4 The Facility Agent may act in relation to the Relevant Documents through its personnel and agents.

17.7.5 The Facility Agent may disclose to any other Party or Obligor any information it reasonably believes it has received as agent under the Relevant Documents.

17.7.6 Notwithstanding any other provision of any Relevant Document to the contrary, the Facility Agent is not obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any Applicable Law or a breach of a fiduciary duty or duty of confidentiality.

17.8 Majority Lenders' instructions

17.8.1 Unless a contrary indication appears in a Finance Document, the Facility Agent shall (a) exercise any right, power, authority or discretion vested in it under the Relevant Documents in accordance with any instructions given to it by the Majority Lenders (or, if so instructed by the Majority Lenders, refrain from exercising any right, power, authority or discretion vested in it under the Relevant Documents) and (b) not be liable for any act (or omission) if it acts (or refrains from taking any action) in accordance with an instruction of the Majority Lenders.

17.8.2 Unless a contrary indication appears in a Finance Document, any instructions given to the Facility Agent by the Majority Lenders will be binding on all the Finance Parties.

17.8.3 The Facility Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if appropriate, the Lenders) until it has received such security as it may require for any Losses (together with any associated VAT) which it may incur in complying with the instructions.

17.8.4 In the absence of instructions from the Majority Lenders, (or, if appropriate, the Lenders) the Facility Agent may act (or refrain from taking action) as it considers to be in the best interest of the Lenders.

17.8.5 The Facility Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender's consent) in any legal or arbitration proceedings relating to any Finance Document.

17.9 Responsibility for documentation

The Facility Agent is not responsible:

17.9.1 for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by any Finance Party or any Obligor, any Aerocentury Related Party or any other person given in or in connection with any Relevant Document;

17.9.2 for the legality, validity, effectiveness, adequacy or enforceability of any Relevant Document or any other agreement, arrangement or document entered into, made or executed in anticipation of or in connection with any Relevant Document;

17.9.3 for the application of any Basel 2 Regulation to the transactions contemplated by the Relevant Documents; or

17.9.4 for any determination as to whether any information provided or to be provided to any Finance Party is non public information the use of which may be regulated or prohibited by any Applicable Law relating to insider dealing or otherwise.

17.10 Exclusion of liability

17.10.1 Without limiting clause 17.10.2, neither Lenders' Representative will be liable for any action taken by it under or in connection with any Relevant Document, unless directly caused by its gross negligence or wilful misconduct.

17.10.2 No Party (other than the relevant Lenders' Representative) may take any proceedings against any officer, employee or agent of a Lenders' Representative in respect of any claim it might have against such Lenders' Representative or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Relevant Document and any officer, employee or agent of the Lenders' Representatives may rely on this clause subject to clause 1.4 (Third Party Rights) and the provisions of the Third Parties Act.

17.10.3 The Lenders' Representatives will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Relevant Documents to be paid by such Lenders' Representative if it has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by such Lenders' Representative for that purpose.

17.10.4 Nothing in this Agreement shall oblige the Lenders' Representatives to carry out any "know your customer" or other checks in relation to any person on behalf of any Lender and each Lender confirms to the Lenders' Representatives that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Lenders' Representatives.

17.11 Lenders' indemnity to the Lenders' Representatives

Each Lender shall (in proportion to its share of the Total Facility Commitments or, if the Total Facility Commitments are then zero, to its share of the total Contributions) indemnify the Facility Agent, within three Business Days of demand, against any Losses incurred by the Facility Agent (otherwise than by reason of the Facility Agent's gross negligence or wilful misconduct) in acting as Facility Agent under or in connection with the Relevant Documents (unless the Facility Agent has been reimbursed by an Obligor pursuant to a Relevant Document).

17.12 Resignation of the Facility Agent

17.12.1 The Facility Agent may resign and appoint one of its Affiliates as successor by giving notice to the other Parties and (prior to the Lease Termination Date) the Lessee.

17.12.2 Alternatively the Facility Agent may resign by giving notice to the other Parties and (prior to the Lease Termination Date) the Lessee, in which case the Majority Lenders (after consultation with the Borrower and (prior to the Lease Termination Date) the Lessee) may appoint a successor Facility Agent.

17.12.3 If the Majority Lenders have not appointed a successor Facility Agent in accordance with clause 17.12.2 within 30 days after notice of resignation was given, the Facility Agent (after consultation with the Borrower and (prior to the Lease Termination Date) the Lessee) may appoint a successor Facility Agent.

17.12.4 The retiring Facility Agent shall, at its own cost, make available to the successor Facility Agent such documents and records, enter into such agreements and make such filings and otherwise provide such assistance as the successor Facility Agent may reasonably request for the purposes of performing its functions as Facility Agent under the Relevant Documents.

17.12.5 The resignation notice of a Facility Agent shall only take effect upon the appointment of a successor.

17.12.6 Upon the appointment of a successor, the retiring Facility Agent shall be discharged from any further obligation in respect of the Relevant Documents but shall remain entitled to the benefit of this clause 17. Its successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.

17.12.7 After consultation with the Borrower and (prior to the Lease Termination Date) the Lessee, the Majority Lenders may, by notice to the Facility Agent, require it to resign in accordance with clause 17.12.2. In this event, the Facility Agent shall resign in accordance with clause 17.12.2.

17.13 Confidentiality

17.13.1 In acting as agent for the Finance Parties, the Facility Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments.

17.13.2 If information is received by another division or department of the Facility Agent, it may be treated as confidential to that division or department and the Facility Agent shall not be deemed to have notice of it.

17.14 Relationship with the Lenders

The Facility Agent may treat any person shown in its records as a Lender at the opening of business (in the place of its principal office as notified to the Finance Parties from time to time) as a Lender acting through its Facility Office:

(a) entitled to or liable for any payment due under any Relevant Document on that day; and

(b) entitled to receive and act upon any notice, request, document or communication or make any decision or determination under any Relevant Document made or delivered on that day,

unless it has received not less than five Business Days' prior notice from that Lender to the contrary in accordance with the terms of this Agreement.

17.15 Credit appraisal by the Lenders

Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Relevant Document, each Lender confirms to the Facility Agent that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Relevant Document including but not limited to:

17.15.1 the financial condition, status and nature of each Obligor;

17.15.2 the legality, validity, effectiveness, adequacy or enforceability of any Relevant Document and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Relevant Document;

17.15.3 the application of any Basel 2 Regulation to the transactions contemplated by the Relevant Documents;

17.15.4 whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its assets or any other party or any of such other party's assets under or in connection with any Relevant Document, the transactions contemplated by the Relevant Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Relevant Document; and

17.15.5 the adequacy, accuracy and/or completeness of any information provided by the Facility Agent, any Party or by any other person under or in connection with any Relevant Document, the transactions contemplated by the Relevant Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Relevant Document.

17.16 Deduction from amounts payable by the Lenders' Representatives

If any Party owes an amount to either Lenders' Representative under the Relevant Documents the Lenders' Representatives may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which either Lenders' Representative would otherwise be obliged to make under the Relevant Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Relevant Documents that Party shall be regarded as having received any amount so deducted.

18 Conduct of business by the Finance Parties

No provision of any Relevant Document will:

18.1 interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;

18.2 oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or

18.3 oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.

19 Sharing among the Finance Parties

19.1 Payments to Finance Parties

If a Finance Party (a Recovering Finance Party) receives or recovers any amount from an Obligor other than in accordance with clause 20 (Payment mechanics) (a Recovered Amount) and applies that amount to a payment due under the Relevant Documents then:

19.1.1 the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery, to the Facility Agent;

19.1.2 the Facility Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or made by a Lenders' Representative and distributed in accordance with clause 20 (Payment mechanics), without taking account of any Tax which would be imposed on either Lenders' Representative in relation to the receipt, recovery or distribution; and

19.1.3 the Recovering Finance Party shall, within three Business Days of demand by the Facility Agent, pay to the Facility Agent an amount (the Sharing Payment) equal to such receipt or recovery less any amount which the Facility Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with clause 20.4 (Partial payments).

19.2 Redistribution of payments

The Facility Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it between the Finance Parties (other than the Recovering Finance Party) (the Sharing Finance Parties) in accordance with clause 20.4 (Partial payments).

19.3 Recovering Finance Party's rights

On a distribution by the Facility Agent under clause 19.2 (Redistribution of payments), of a payment received by a Recovering Finance Party from an Obligor, as between the Borrower and the Recovering Finance Party, an amount of the Recovered Amount equal to the Sharing Payment will be treated as not having been paid by that Obligor.

19.4 Reversal of redistribution

If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:

19.4.1 each Sharing Finance Party shall, upon request of the Facility Agent, pay to the Facility Agent for the account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay) (the Redistributed Amount); and

19.4.2 as between the Borrower and each relevant Sharing Finance Party, an amount equal to the relevant Redistributed Amount will be treated as not having been paid by the Borrower.

19.5 Exceptions

19.5.1 This clause 19 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this clause, have a valid and enforceable claim against the Borrower.

19.5.2 A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if:

(a) it notified that other Finance Party of the legal or arbitration proceedings; and

(b) that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings.

20 Payment mechanics

20.1 Payments to the Facility Agent

20.1.1 On each date on which the Borrower or a Lender is required to make a payment under a Finance Document, the Borrower or Lender shall make the same available to the Facility Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Facility Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment.

20.1.2 Payment shall be made to the Dollar Account or to such other account in the principal financial centre of the country of the relevant currency (or, in relation to Euro, in a principal financial centre in a Participating Member State or London) with such bank as the Facility Agent specifies.

20.2 Distributions by the Lenders' Representatives

Each payment received by a Lenders' Representative under the Finance Documents for another Party shall, subject to clause 20.3 (Clawback) be made available by such Lenders' Representative as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to such Lenders' Representative by not less than five Business Days' notice with a bank in the principal financial centre of the country of that currency (or, in relation to Euro, in the principal financial centre of a Participating Member State or London).

20.3 Clawback

20.3.1 Where a sum is to be paid to the Facility Agent under the Relevant Documents for another Party, the Facility Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.

20.3.2 If the Facility Agent pays an amount to another Party and it proves to be the case that the Facility Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Facility Agent shall on demand refund the same to the Facility Agent together with interest on that amount from the date of payment to the date of receipt by the Facility Agent, calculated by the Facility Agent to reflect its cost of funds.

20.4 Partial payments

20.4.1 If a Lenders' Representative receives a payment that is insufficient to discharge all the amounts then due and payable by the Obligors under the Relevant Documents, the relevant Lenders' Representative shall apply that payment towards the obligations of the Obligors under the Relevant Documents in the following order:

(a) first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Lenders' Representatives under the Finance Documents;

(b) secondly, in or towards payment pro rata of any accrued interest, fee or commission due but unpaid under this Agreement;

(c) thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement; and

(d) fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.

20.4.2 The Facility Agent shall, if so directed by the Majority Lenders, vary the order set out in clause 20.4.1(b) to 20.4.1(d).

20.4.3 Clauses 20.4.1 and 20.4.2 will override any appropriation made by an Obligor.

20.5 No set-off by the Borrower

All payments to be made by the Borrower under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

20.6 Business Days

20.6.1 When any payment under any Relevant Document would otherwise be due on a day which is not a Business Day, the due date for payment shall be extended to the next following Business Day, unless such Business Day falls in the next calendar month, in which case payment shall be made on the immediately preceding Business Day.

20.6.2 During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.

20.7 Currency of account

20.7.1 Subject to clauses 20.7.3 to 20.7.5, the currency of account and payment for any sum due from an Obligor under any Relevant Document is Dollars.

20.7.2 A repayment of the Loan or an Unpaid Sum or a part of the Loan or an Unpaid Sum shall be made in the currency in which the Loan or relevant Unpaid Sum is denominated.

20.7.3 Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.

20.7.4 Each payment in respect of Losses or Taxes shall be made in the currency in which the Losses or Taxes are incurred.

20.7.5 Any amount expressed to be payable in a currency other than Dollars shall be paid in that other currency.

21 Set-off

A Finance Party may set off any matured obligation due from the Borrower under the Relevant Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to the Borrower, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

22 Notices

Any communication to be made under or in connection with this Agreement shall be made in accordance with clause 12 (Notices) of the Proceeds Deed, which shall apply to this Agreement, mutatis mutandis, as if set out in full herein and as if references to "this Deed" were references to this Agreement.

23 Calculations and certificates

23.1 Accounts

In any litigation or arbitration proceedings arising out of or in connection with a Relevant Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.

23.2 Certificates and Determinations

Any certification or determination by a Finance Party of a rate or amount under any Relevant Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.

23.3 Day count convention

23.3.1 Subject to clause 23.3.2, any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days.

23.3.2 Any interest accruing on the Loan will accrue from day to day and is calculated on the basis of a year of 360 days consisting of 12 months of 30 days each.

24 Confidentiality

Clause 11.7 (Confidentiality) of the Proceeds Deed applies to this Agreement, mutatis mutandis, as if set out in full herein and as if references to "this Deed" were references to this Agreement.

25 Partial invalidity; remedies and waivers

25.1 If, at any time, any provision of the Relevant Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

25.2 No failure to exercise, nor any delay in exercising, on the part of any Finance Party, any right or remedy under the Relevant Documents shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

26 Amendments and waivers

26.1 Required consents

26.1.1 Subject to clause 26.2 (Exceptions) any term of the Relevant Documents may be amended or waived only with the consent of the Majority Lenders, the Borrower and (prior to the Lease Termination Date) the Lessee and any such amendment or waiver will be binding on all Parties.

26.1.2 The Facility Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this clause.

26.2 Exceptions

26.2.1 An amendment or waiver that has the effect of changing or which relates to:

(a) the definition of "Majority Lenders" in clause 1.1 (Definitions);

(b) an extension to the date of payment of any amount under the Relevant Documents;

(c) a reduction in the amount of any payment of principal, interest, fees or commission payable;

(d) an increase in or an extension of any Commitment;

(e) a change in the currency in which any amount is payable under the Relevant Documents;

(f) any provision which expressly requires the consent of all the Lenders;

(g) clause 2.3 (Finance Parties' rights and obligations), clause 16 (Assignment, transfers and lending offices) or this clause 26; or

(h) any Security Document,

shall not be made without the prior consent of all the Lenders.

26.2.2 An amendment or waiver which relates to the rights or obligations of the Facility Agent or the Security Agent (each in their capacity as such) may not be effected without the consent of the Facility Agent or the Security Agent respectively.

26.3 Third Parties Act

The Lessee may rely on clause 26.1 (Required consents) of this Agreement and may enforce its terms under the Third Parties Act.

27 Counterparts

This Agreement may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.

28 Governing law

This Agreement and any non-contractual obligations connected with it are governed by English law.

29 Enforcement

29.1 Jurisdiction

29.1.1 The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement or any non-contractual obligations connected with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement) (a Dispute).

29.1.2 The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

29.1.3 This clause 29.1 is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by Applicable Law, the Finance Parties may take concurrent proceedings in any number of jurisdictions.

This Agreement has been entered into on the date stated at the beginning of this Agreement.

Schedule 1 Lenders and their Commitments

(1)	(2)	(3)
Name	Facility Office and fax number	Commitment
		($)
Export Development Canada	150 Slater Street	9,805,627.25
	Ottawa, Canada K1A 1K3
	Attention:Loans Services
	Fax:+1 613 598-2514
	and
	Attention:Asset Management/Covenants Officer
	Fax:+1 613 598-3186

Schedule 2 Form of Utilisation Request

From:ACY SN 19002 LIMITED (the Borrower)

AIR NOSTRUM, LINEAS AEREAS DEL MEDITERRANEO, S.A. (the Lessee)

To:EXPORT DEVELOPMENT CANADA (as Facility Agent)

Dated: []

Dear Sirs,

Loan agreement dated [] 2016 (the "Agreement") in respect of the one (1) Bombardier CRJ 1000 aircraft with MSN 19002 (the "Aircraft"): the Borrower as borrower

1 We refer to the Agreement. This is a Utilisation Request. Terms defined in the Agreement have the same meaning in this Utilisation Request unless given a different meaning in this Utilisation Request.

2 The Borrower wishes to borrow the Loan relating to the Aircraft on the following terms:

(a) Proposed Utilisation Date: [ ]

(b) Amount: USD______________

3 We confirm that:

(a) the Purchase Price for the Aircraft is USD [ ]; and

(b) we shall indemnify the Finance Parties in respect of any Losses (including Make-Whole Amount) suffered or incurred if, for any reason, utilisation does not take place on such date or at all.

4 The proceeds of the Loan should be applied in accordance with the provisions of the Payment Direction Deed.

5 This Utilisation Request is irrevocable.

6 The Lessee confirms that (a) the representations and warranties made by it under clause 2 of the Lease remain correct and no Relevant Event has occurred at the date of this Utilisation Request; (b) since 31 December 2014 there has been no material adverse change in (i) the financial condition, financial results, business, operations or prospects of the Lessee or (ii) the Lessee's ability to perform its obligations under any of its Party Documents; and (c) no Total Loss of, or Major Damage to, the Aircraft or any part thereof has occurred.

7 The Borrower confirms that the representations and warranties made by it under clause 10 of the Agreement remain correct and that no Default (not caused by a Relevant Event) has occurred at the date of this Utilisation Request.

8 The Lessee confirms its agreement to this Utilisation Request.

authorised signatory for	authorised signatory for
ACY SN 19002 Limited	AIR NOSTRUM, LINEAS AEREAS DEL MEDITERRANEO, S.A.

Schedule 3 Conditions Precedent and Conditions Subsequent

Part A – Documents and evidence required as conditions precedent

1 Copies, certified by an officer of the Borrower, the Guarantor or the Lease Manager (as applicable) to be a true, complete and up-to-date copy, of the Borrower's, the Guarantor's and the Lease Manager's constituent documents.

2 Copies, certified by an officer of the Borrower, the Guarantor or the Lease Manager (as applicable) to be a true copy, and as being in full force and effect and not amended or rescinded, of resolutions of the Borrower's, the Guarantor's and the Lease Manager's board of directors:

(a) approving the transactions contemplated by the Relevant Documents; and

(b) authorising a person or persons to sign and deliver on its behalf its respective Party Documents and any notices or other documents to be given pursuant thereto.

3 Specimen signatures, authenticated by an officer of the relevant party, of each of the authorised signatories referred to in paragraph 2(b) of this Schedule 3.

4 A copy, certified as a true copy by an officer of the Borrower, the Guarantor or the Lease Manager (as applicable) of all Authorisations (if any) required by the Borrower, the Guarantor or the Lease Manager to authorise the execution, delivery and the performance of its respective Party Documents and the performance by it of its obligations under the same (or, as applicable, a certificate from each such person stating that no such Authorisation is required).

5 An original of each of the following Relevant Documents, duly executed by the parties thereto:

(a) this Agreement;

(b) the Payment Direction Deed;

(c) the Proceeds Deed;

(d) the Guarantee;

(e) the Share Charge (together with all ancillary documents required to be delivered to the Security Agent thereunder on or before the first drawdown hereunder (including the original share certificate);

(f) the Lease Management Agreement; and

(g)the Sale Agreement.

6 A copy, certified as a true copy by an authorised officer of the Borrower, the Guarantor or the Lease Manager (as applicable), of a letter from its agent for receipt of service of process referred to in any Relevant Documents accepting its appointment.

7 A copy, certified as a true copy by an authorised officer of the Borrower, the Guarantor or the Lease Manager (as applicable), of a letter from its agent for receipt of service of process required by any of its Party Documents (to the extent not already covered by the letter provided pursuant to paragraph 6 above) relating to the Aircraft accepting its appointment.

8 The written agreement of the Obligors to any replacement of Schedule 4 referred to in clause 5.5.

9 The original Bill of Sale for the Aircraft.

10 Originals of all historic bills of sale for the Aircraft.

11 An original of each Security Document (in the case of the Lessee Deregistration Power of Attorney and the Lessor Deregistration Power of Attorney, duly notarised and apostilled), the Lease, the Deed of Novation and Restatement, the Effective Time Notice and each other Relevant Document relating to the Loan or Aircraft and not provided under paragraph 5 above or this paragraph 11 (and all documents required by any such document to be delivered to the Finance Parties by the Utilisation Date for the Loan), duly executed by each party thereto.

12 Evidence satisfactory to the Facility Agent that all of the conditions precedent under each of the other Relevant Documents shall have been satisfied or waived in accordance with the terms thereof.

13 Evidence that (a) all Authorisations necessary for any matter or thing contemplated by the Relevant Documents and for the legality, validity, enforceability, admissibility in evidence and effectiveness of the Relevant Documents have been obtained or effected on an unconditional basis and remain in full force and effect (or, in the case of effecting of any registrations and filings, that arrangements satisfactory to the Facility Agent have been made for effecting the same simultaneously with, or within any applicable time limit after, the relevant Delivery) and (b) all registration, notarial, consular and translation fees (if any) due and payable in any applicable jurisdiction in connection with any Relevant Document have been duly paid in full.

14 Legal opinions in form and substance satisfactory to the Facility Agent from:

(a) Clifford Chance LLP, English legal advisers to the Facility Agent;

(b) Berwin Leighton Paisner LLP, English legal advisers to the Borrower;

(c) in-house counsel to the Guarantor;

(d) Aeroiuris, legal advisers to the Lessee;

(e) Clifford Chance New York LLP, New York legal advisers to the Facility Agent;

(f) in-house counsel to the Manufacturer; and

(g) in-house counsel to the Engine Manufacturer.

15 A tax opinion from KPMG Abogados in respect of Spanish tax matters.

16 An insurance opinion from the Facility Agent's insurance adviser.

17 Confirmation from Aviacion that (i) all conditions precedent to the effectiveness of the Sale Agreement have either been waived or satisfied to its satisfaction and (ii) it has received an amount in respect of the Purchase Price for the Aircraft such that, on receipt of the Loan from the Facility Agent (on behalf of the Borrower), Aviacion will have received the Purchase Price in full and will transfer title to the Aircraft to the Borrower.

18 Evidence that the Borrower is in funds to the extent necessary to make the partial payment of the Purchase Price pursuant to clause 3(b) of the Sale Agreement.

19 Evidence that the Borrower is in funds to the extent necessary to make the payments detailed in clauses 8.2 and 8.3 of the Sale Agreement, and that such payments are made.

20 A copy of the run-off liability insurance certificate required pursuant to clause 5.2 of the Deed of Novation and Restatement.

21 A certificate of an authorised signatory of the Guarantor certifying that it has not issued a "warning notice" or "restrictions notice" (in each case as defined in paragraph 1(2) of Schedule 1B of Part 21A of the Companies Act 2006) in respect of any of the Borrower's shares.

22 A certificate of an authorised signatory of the Borrower certifying that it has not received a "warning notice" or "restrictions notice" (in each case as defined in paragraph 1(2) of Schedule 1B of Part 21A of the Companies Act 2006) in respect of any of its shares.

23 A certified true copy of the register of members of the Borrower.

24 Such other documents and evidence as the Facility Agent may reasonably require.

Part B – Conditions Subsequent

Following the Utilisation Date the Facility Agent shall have received the following documents and evidence in form and substance satisfactory to it:

1. Evidence that replacement fireproof plates are installed on the Airframe and Engines in accordance with clause 14.1.9 of the Lease within sixty (60) days following the Utilisation Date.

2. Evidence that the IDERA has been filed with the Aviation Authority as soon as practicable following the Utilisation Date and in any event within sixty (60) days following the Utilisation Date.

3. Evidence that the UCC-1 financing statement in respect of (a) the New York law Aircraft Mortgage naming the relevant Borrower as debtor and the Security Trustee as secured party in respect of the New York law Aircraft Mortgage has been filed with the Recorder of Deeds for the District of Colombia, and (b) the Share Charge naming the Guarantor as debtor and the Security Trustee as secured party has been filed in the State of Delaware, in each case within ten (10) Business Days of the Utilisation Date.

4. Evidence that the relevant documents required for the updated certificate of registration to be issued have been filed with the Aviation Authority as soon as reasonably practicable (and in any event no later than 25 days) following the Utilisation Date, and a copy of the updated certificate of registration issued by the Aviation Authority in respect of the Aircraft as soon as practicable but no later than 120 days following the Utilisation Date.

5. Evidence that the Security Assignment and each Aircraft Mortgage has been registered with the United Kingdom Companies House by no later than twenty one (21) days following the Utilisation Date.

6. Evidence that each of the Bill of Sale and the Deed of Novation and Restatement has been registered with the MPR and the AMR as soon as practicable and in any event no later than 120 days following the Utilisation Date.

7. Evidence that the Unique Authorisation Codes for the Airframe and the Engines have been obtained from the MPR as soon as practicable and in any event no later than three (3) Business Days following the Utilisation Date.

8. Evidence that each of the following registrations has been duly made with the International Registry in the following order as soon as practicable and in any event no later than four (4) Business Days following the Utilisation Date; and no other registration has been made at the International Registry against the relevant Airframe or any relevant Engine:

(a) first, in connection with each Aircraft Mortgage, in respect of the relevant international interest in relation to the Airframe and each Engine, with the Borrower as "debtor" and the Security Agent as "creditor'';

(b) secondly, in connection with the Lease, in respect of the relevant international interest in relation to the Airframe and each Engine, with the Lessee as "debtor" and the Borrower as "creditor'';

(c) thirdly, in connection with the Security Assignment, in respect the relevant assignment of associated rights and transfer of related international interest in relation to the Airframe and each Engine, with the Borrower as "assignor" and the Security Agent as "assignee; and

(d) fourth, in connection with the Bill of Sale, a contract of sale interest in relation to the Airframe and each Engine, with the Borrower as "buyer" and Aviacion as "seller".

9 Legal opinion from Gómez-Acebo & Pombo Abogados, S.L.P., as to the applicability of the Cape Town Convention and the due registration and priority of such international interests, to be provided as soon as practicable after the registrations with the International Registry pursuant to paragraph 8 above.

Schedule 4 Payments

(1)	(2)	(3)	(4)
Repayment Dates	Repayment instalment (USD)	Interest (USD)	Loan (USD)
Sep 17, 2016	493,163.35	111,637.07	9,312,463.90
Dec 17, 2016	499,930.43	104,869.98	8,812,533.47
Mar 17, 2017	506,650.82	98,149.59	8,305,882.65
Jun 17, 2017	510,237.94	94,562.47	7,795,644.71
Sep 17, 2017	516,047.00	88,753.41	7,279,597.71
Dec 17, 2017	522,823.04	81,977.37	6,756,774.67
Mar 17, 2018	529,546.84	75,253.58	6,227,227.83
Jun 17, 2018	533,903.43	70,896.99	5,693,324.40
Sep 17, 2018	539,981.92	64,818.50	5,153,342.48
Dec 17, 2018	546,767.34	58,033.08	4,606,575.14
Mar 17, 2019	553,494.68	51,305.73	4,053,080.46
Jun 17, 2019	558,656.09	46,144.32	3,494,424.37
Sep 17, 2019	565,016.39	39,784.02	2,929,407.98
Dec 17, 2019	571,811.62	32,988.80	2,357,596.36
Mar 17, 2020	578,250.93	26,549.48	1,779,345.43
Jun 17, 2020	584,542.57	20,257.85	1,194,802.86
Sep 17, 2020	591,197.58	13,602.83	603,605.28
Oct 3, 2020	603,605.28	1,195.14	0.00

Schedule 5 Aircraft

(1)	(2)	(3)	(4)
MSN	Registration Mark	Assumed Utilisation Date	Assumed Utilisation Amount (USD)
19002	EC-LJR	17 June 2016	9,805,627.25

Schedule 6 Form of Transfer Certificate

To: [ ] as Facility Agent

From: [The Existing Lender] (the Existing Lender)and [The New Lender] (the New Lender)

Dated: [ ]

Loan agreement dated [ ] 2016 (the Agreement):ACY SN 19002 Limited as Borrower

1 We refer to the Agreement. This is a Transfer Certificate. Terms defined in the Agreement have the same meaning in this Transfer Certificate unless given a different meaning in this Transfer Certificate.

2 We refer to clause 16.7 (Procedure for transfer):

(a) The Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation all or part of the Existing Lender's Commitment, rights and obligations referred to in the Schedule in accordance with clause 16.7 (Procedure for transfer).

(b) The proposed Transfer Date is [ ].

(c) The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of clause 12 (Notices) of the Proceeds Deed are set out in the Schedule.

3 The New Lender (a) expressly acknowledges the limitations on the Existing Lender's and the Borrower's respective obligations set out in, respectively, clauses 16.6.3 and 16.4.4 of the Agreement and (b) confirms that the New Lender (i) is [not] a [Qualifying Lender] and (ii) will notify the Borrower if the New Lender becomes aware that it ceases to be a [Qualifying Lender] (provided that any failure to provide any such notification shall be without prejudice to the rights and obligations of any party).

4 The New Lender irrevocably appoints (a) the Facility Agent as its agent for the purposes of the Agreement and the other Relevant Documents, on the terms and conditions set out in clause17.1 and the other terms of the Agreement and (b) the Security Agent to act as its trustee under and in connection with the Agreement and other Relevant Documents, on the terms and conditions set out in clause 5.1 and the other terms of the Proceeds Deed.

5 This Transfer Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Transfer Certificate.

6 This Transfer Certificate and any non-contractual obligations connected with it are governed by English law.

The Schedule

Commitment/rights and obligations to be transferred

[insert [ ] of Existing Lender's contribution to the transferred and any other relevant details]

[Facility Office address, fax number and attention details for notices and account details for payments,]

[Existing Lender]	[New Lender]
By:	By:

This Transfer Certificate is accepted by the Facility Agent and the Transfer Date is confirmed as [ ].

[Facility Agent] (on behalf of itself, the Borrower and the other Finance Parties)

By:

Schedule 7 Form of Lessor Deregistration Power of Attorney

  PODER DE CANCELACIÓN DE MATRICULA     En [●], a [●] de [●] de 2016. Ante mi, [ ], Notario de [ ],     COMPARECE   D./D.ª [●insert the complete name of the individual appearing before the Notary], mayor de edad, de nacionalidad [●insert nationality], con domicilio profesional en [●insert place of business] y [●pasaporte/documento nacional de identidad] en vigor número [●insert the relevant number]   INTERVIENE   En nombre y representación de [●] (la "Sociedad"), una sociedad debidamente constituida y en vigor con arreglo a las leyes de [Inglaterra y Gales] e inscrita en el Registro de Sociedades de Inglaterra y Gales con número [●].     Actúa en su condición de en su calidad de representante legal de la Sociedad en virtud de [●] [●describe the document of title and particulars of registration where appropriate].     DICE Y OTORGA   Que otorga un poder especial e irrevocable a favor de Export Development Canada con domicilio en 150 Slater Street, Ottawa, Canada K1A 1K3 (el "Acreedor"), para que mediante sus apoderados y representantes legales pueda ejercitar cualesquiera de las siguientes facultades en nombre y representación de la Sociedad en relación con la aeronave Bombardier CRJ‑1000 con número de serie de fabricante [●] y matrícula [●] (la "Aeronave") arrendada a Air Nostrum, Líneas Aéreas del Mediterráneo, S.A. a través de un contrato de arrendamiento operativo (el "Contrato de Arrendamiento Operativo") con fecha [●]: (a)Realizar cuantas actuaciones resulten necesarias, para que el Acreedor pueda tomar la posesión, control y uso de la Aeronave y cancelar el registro de la Aeronave llevado a cabo en el Registro de Matricula de Aeronaves (AMR) y/o en el Registro de Bienes Muebles o cualquier otro, en su caso.   (b)Llevar a cabo cuantos actos sean necesarios o convenientes en relación con el uso, operación y mantenimiento y posesión (incluyendo, sin carácter exhaustivo, la posesión y cancelación de cada inscripción en el Registro de Matrícula de Aeronaves (AMR) y, en su caso, en el Registro de Bienes Muebles) en relación con la devolución de la Aeronave, junto con los motores, equipamientos, registros y otros documentos relacionados con la Aeronave requeridos para abandonar la jurisdicción y territorio en el cual la aeronave esté situada.   (c)Realizar cuantas actuaciones (incluyendo la presentación de instancias y solicitudes y la liquidación de impuestos y tasas) y tomar cuantas medidas sean convenientes o necesarias en el ejercicio de las facultades otorgadas, incluyendo la facultad de representar a la Sociedad ante la Agencia Estatal de Seguridad Aérea en España, o ante cualquier entidad, agencia, ministerio u organismo público español o tribunal y en la medida necesaria para obtener el control de la Aeronave para poder llevar a cabo la exportación de la misma desde España, así como para realizar la cancelación del registro de la Aeronave en cualquier ministerio, departamento, agencia u organismo gubernamental de España o en cualquier otro estado que pueda tener jurisdicción sobre la Aeronave.   (d)Realizar en nombre y representación de la Sociedad cuantos actos sean necesarios y suscribir cuantos documentos deba suscribir la Sociedad para que, en caso de pérdida total de la Aeronave, ya sea real o declarada, el Acreedor pueda recibir del seguro la indemnización por la Aeronave correspondiente al valor acordado determinado en el Contrato de Arrendamiento Operativo y reflejado en las pólizas de seguros. Las facultades anteriores incluyen, sin carácter exhaustivo, la firma del modelo de documentos de pago/liberación que las agencias de seguros utilizan en casos de pérdida total.   (e)Realizar cuantas declaraciones y actuaciones y suscribir cuantos documentos públicos o privados puedan ser convenientes o necesarios para el ejercicio de las facultades conferidas en este poder.   (f)Ordenar a los empleados de Air Nostrum, Líneas Aéreas del Mediterráneo, S.A. que entreguen la posesión de la Aeronave en cualquier jurisdicción que se encuentre, incluso fortuitamente, reclamándoles, si fuera necesario, su entrega con el apoyo de la autoridad local correspondiente, incluyendo a las autoridades aeroportuarias, policía local y cualquier otra entidad, e incluso pudiendo dar instrucciones a los pilotos e interrumpiendo cualquier vuelo que pueda estar realizándose o a punto de realizarse, siempre que (i) dicha instrucción no afecte a la seguridad e integridad de dichos empleados, la tripulación o los pasajeros de la Aeronave, y (ii) no se infrinja ninguna ley aplicable.   (g)Delegar o sustituir a favor de una o más personas, total o parcialmente, las facultades conferidas en el presente poder.   La Sociedad indemnizará al Acreedor y a cualquiera de sus apoderados y representantes legales de todos los costes, reclamaciones, gastos y responsabilidades, cualquiera que fuera la forma en que se hubieran producido, resultantes del ejercicio lícito de las facultades aquí otorgadas, salvo que las anteriores reclamaciones, gastos y responsabilidades sean consecuencia de negligencia grave o dolo del Acreedor o de cualquiera de sus apoderados y representantes legales.   En ausencia de negligencia grave o dolo del Acreedor o de sus apoderados y representantes legales en el ejercicio de las facultades aquí otorgadas, la Sociedad se compromete a ratificar y confirmar cualesquiera actuaciones realizadas lícitamente por el Acreedor o cualquiera de sus apoderados y representantes legales en el ejercicio de las facultades otorgadas al mismo en virtud del presente poder.   Las facultades otorgadas han de ser interpretadas en su más amplio sentido, con el objeto de permitir la obtención del fin para el que han sido conferidas e incluirán en todo caso la facultad de autocontratación.   El presente poder será irrevocable y no podrá ser modificado o limitado de forma alguna sin el consentimiento del Acreedor.   El carácter irrevocable que se otorga al presente poder obedece a la relación subyacente existente entre el poderdante y el apoderado y el mismo ha sido otorgado en interés del apoderado   DEREGISTRATION POWER OF ATTORNEY     In [●], on [●] [●] 2016   Before me [●] Notary Public of [●],     APPEARS   Mr/Ms [●insert the complete name of the individual appearing before the Notary], of full age, a [●insert the nationality] national, with place of business at [●insert professional address], holder of current [●passport number / national identity card number] [●insert the relevant number]   ACTS   In name and on behalf of ACY SN 19002 Limited (the "Company"), a a company duly incorporated and existing under laws of England and Wales, with its registered office at 16 Old Bailey, London EC4M 7EG, England and registered with the Companies House with registration number 10290248.       He/she acts in his/her capacity as legal representative of the Company by virtue of [●] [●describe the document of title and particulars of registration where appropriate].     GRANTS   The Company grants hereby an irrevocable power of attorney in favor of Export Development Canada, with registered office at 150 Slater Street, Ottawa, Canada K1A 1K3 (the "Secured Creditor") so that through its attorneys and legal representatives, may carry out in the name and on behalf of the Company any of the following powers in relation to the aircraft Bombardier CRJ‑1000, with manufacturer serial number 19002 and registration number [●] (the "Aircraft") leased to Air Nostrum, Líneas Aéreas del Mediterráneo, S.A. by means an operational lease agreement (the "Operational Lease Agreement") dated on [●]: (a)Carry out any necessary actions in order for the Secured Creditor to take possession, control and use of the Aircraft and cancel the registry of the Aircraft carried out with the Aircraft Matriculation Registry (AMR) and/or the Movable Property Registry or any other, if any.     (b)Carry out any necessary or convenient measures in relation with the use, operation and maintenance and possession (including but not limited, the possession and cancelation of each registration at the Aircraft Matriculation Registry (AMR), and if applicable, at the Movable Property Registry) in relation with the redelivery of the Aircraft, together with the engines, equipment, registries and other documents related to the Aircraft required to leave the jurisdiction and territory where the Aircraft is located.     (c)Carry out any actions and take any measures that may be convenient or necessary (including the submission of any filing and applications and the payment of taxes and duty) to exercise of the powers granted hereby, including to act in name and on behalf of the Company before the Agencia Estatal de Seguridad Aérea in Spain, or any other entity, agency, ministry, Spanish public corporation or court, provided that it is necessary to obtain the control over the Aircraft in order to make possible the exportation of the Aircraft from Spain, as well as cancel any registration related to the Aircraft in any ministry, department, agency or government agency in Spain or in any other State that could have jurisdiction over the Aircraft.       (d)Carry out in name and on behalf of the Company, any actions that may be necessary and execute any documents that may be necessary, in case of actual or declared total loss of the Aircraft, in order pay or deliver to the Secured Creditor any compensation insurance for the Aircraft for agreed value under the Lease Agreement and included in the insurance policies. The abovementioned powers include, without limitation, the signature of the template form of payment/release that the insurance agencies use in case of total loss.         (e)Make any statement or declarations carry out any action and execute any, public or private, documents that may be necessary or convenient to the exercise of the powers granted herby.     (f)Order Air Nostrum, Líneas Aéreas del Mediterráneo, S.A employees to deliver the possession of the Aircraft in any jurisdiction where it is located, even incidentally; requesting, if it is necessary, its deliver with the support of the relevant local authority, including the airport authorities, local police and any other entity, being possible even give instructions to the pilots and interrupting any flight that is being made or that it is going to be made, as long as: (i) such instruction does not affect the integrity and security of the referred employees, the crew or the passengers of the Aircraft, and (ii) any applicable law is not violated         (g)Delegate or substitute in favour of one ore more persons, partially or totally, the powers granted at this power of attorney.     The Company undertakes to indemnify the Secured Creditor and any of its attorneys or representatives for all the costs, claims, expenses and liabilities incurred in connection with the exercise of the powers granted hereby, except if those claims, cots and liabilities are consequence of gross negligence or willful misconduct of the Security Agent or of any of its attorneys or legal representatives.       In the absence of gross negligence or willful misconduct of the Secured Creditor or its attorneys or legal representatives in the exercise of the power granted hereby, the Company undertakes to ratify and confirm any action legally performed by the Secured Creditor or any of its attorneys and legal representatives in the exercise of the powers granted by virtue of the this power of attorney.   The powers granted hereby will be interpreted in their broadest sense, in order to achieve the purposes for which they have been granted and they will include in every case, the faculty of self-contracting   This power of attorney is irrevocable and it could not be amended or limited in any way, without the prior consent of the Secured Creditor.   The irrevocable nature given to the present power of attorney is due to the underlying relationship existing between the grantor and the attorney, and it has being granted in interest of the attorney.      

SELLO del NOTARIO

SEAL of the NOTARY

___________________________________________

Firma del COMPARECIENTE

Signature of the APPEARER

___________________________________________

Firma del NOTARIO

Signature of the NOTARY

___________________________________________

CERTIFICACIÓN NOTARIAL	NOTARIAL CERTIFICATE
Yo, [●insert the notary's name], notario público con domicilio y en ejercicio en la ciudad de [●insert city where the power is being given] y debidamente facultado con arreglo a la legislación de [Inglaterra y Gales] para autorizar todo tipo de documentos públicos y privados que hayan de surtir efecto en países extranjeros, por la presente certifico y doy fe de lo siguiente:	I, [●insert the notary's name], Notary with abode and occupation in the city of [●insert city where the power is being given], who has been duly sworn and admitted under the laws of [England and Wales] to authenticate all manner of public and private documents that are to take effect abroad. I hereby certify and attest to the following:
―Que [●insert details of the Company] es una sociedad debidamente constituida y en vigor con arreglo a las leyes de [Inglaterra y Gales] e inscrita en el Registro de Sociedades de Inglaterra y Gales con número [●].	―That ACY SN 19002 Limited is a company duly incorporated and existing under laws of England and Wales, with its registered office at 16 Old Bailey, London EC4M 7EG, England and registered with the Companies House with registration number 10290248.
―Que la firma en este poder de D./D.ª [●insert appearer's name], a quien identifico, es auténtica.	―That the signature on this Power of Attorney is that of Mr/Ms [●insert the appearer's name], which I identify and deem to be genuine.
―Que el firmante del poder, D./D.ª  [●insert the appearer's name and personal particulars], en su calidad de representante legal en virtud de [●describe the document of title and particulars of registration where appropriate], posee la capacidad legal necesaria para otorgar el presente poder.	―That the signatory of this Power of Attorney, Mr/Ms.[●insert the appearer's name and personal particulars], in the capacity of legal representative by virtue of [●describe the document of title and particulars of registration where appropriate], has the necessary authority to execute this Power of Attorney.
―Que en el otorgamiento de este poder se han observado todas las formas y solemnidades exigidas para esta clase de documento por la legislación vigente en [Inglaterra y Gales], lugar del otorgamiento.	―That in the execution of this Power of Attorney all the formalities and solemnities necessary for this type of document, under the current laws of England and Wales, have been duly observed.
EN FE Y TESTIMONIO DE LO CUAL expido el presente, que firmo y sello el día [●insert date: day, month, year] en [●insert the city where the power is being given].	IN WITNESS WHEREOF I hereby issue this document, signing it and affixing my seal of office hereto in [●insert the city where the power is being given], on [●insert date: day, month, year].
Firma del NOTARIO Signature of the NOTARY ___________________________________________

APOSTILLE OF THE HAGUE CONVENTION OF 5 OCTOBER 1961

Schedule 8 Covenants during Post-Lease Responsibility Period

1 Registration

The Borrower will take such steps as the Security Agent shall reasonably direct to de-register the Aircraft from the State of Registration and to re-register it in such country as the Security Agent shall reasonably agree. If requested by the Security Agent (acting reasonably), the Borrower shall at its own cost grant and perfect a replacement or additional mortgage over the Aircraft in favour of the Security Agent in such form as the Security Agent shall reasonably require having regard to the laws of the new State of Registration.

2 Storage, Flights and Maintenance

2.1 The Borrower shall procure that the Aircraft is stored in a location reasonably acceptable to the Security Agent in full compliance with all Applicable Laws (including as to insurance) of the State of Registration and of the country where the Aircraft is situated and in accordance with the Manufacturer's and the Engine Manufacturer's operating manuals and instructions and in accordance with the requirements of the Aviation Authority and so as not to invalidate any manufacturers warranties.

2.2 The Borrower shall procure that the Aircraft is not stored, maintained or flown (i) in violation of any law or regulation that applies to the Aircraft, the Borrower, the Lease Manager or any Finance Party, (ii) in a manner that would cause the Aircraft, the Borrower, the Lease Manager or any Finance Party to be in violation of any Applicable Laws or (iii) in breach of the terms of the Insurances (as defined in paragraph 4.1 below). For the avoidance of doubt, it is agreed that flights permitted by the terms of a ferry flight permit issued by the competent authority of the State of Registration shall not be prohibited by the terms of (i) and (ii) above.

2.3 The Borrower shall procure that the Aircraft is not flown other than for test flights or ferry flights. If the Aircraft is flown, the Borrower will procure that such flight will not be for any purpose for which the Aircraft is not designed or reasonably suited, or outside the tolerances and limitations for which the Aircraft was designed and that the Aircraft will be operated in accordance with all Applicable Laws and so as not to invalidate any manufacturer's warranties.

2.4 The Borrower shall not do or permit to be done anything which will or could reasonably be expected to expose the Aircraft, any Engine or any Part to penalty, forfeiture, seizure, arrest, impounding, detention, confiscation, taking in execution, appropriation or destruction, and in any such event will use all reasonable endeavours to procure the immediate release therefrom of the Aircraft, the Engine or the Part so affected, nor shall it abandon the Aircraft, any Engine or any Part.

2.5 The Borrower shall, at its own cost:

(a) incorporate in the Aircraft all Airworthiness Directives which apply to the Aircraft and which have a compliance date during the period from the Lease Termination Date to the end of the Post-Lease Responsibility Period for the Aircraft, in a timely manner and on a terminating action basis;

(b) procure compliance with the Manufacturer's and the Engine Manufacturer's recommendations for aircraft and engines respectively that are in storage;

(c) ensure that no Engine or Part is at any time removed from the Aircraft or an Engine otherwise than during the course of maintaining, servicing, repairing, overhauling or testing the Aircraft or that Engine and then only if it is promptly reinstalled or promptly replaced or substituted by an item complying with the provisions of paragraph (d) below;

(d) ensure that no engine is installed on the Airframe and no part is installed on the Airframe or any Engine (other than for a temporary period insofar as necessary for the purposes of a ferry flight or demonstration flight) unless (i) either it is then the property of the Borrower free and clear of all Security other than Permitted Liens or, on installation on the Airframe or the relevant Engine, title thereto vests in the Borrower free from any Security other than Permitted Liens and (in either such case) such engine or part becomes subject to the Aircraft Mortgage, (ii) it has a value at least equivalent to that of the Engine or Part being replaced and (iii) it (x) is of the same model (or, at the Borrower's option, an improved (but compatible) model) as the Engine or Part to be replaced, (y) is not older than the Engine or Part which is to be replaced and (z) has a residual value equal to or higher than that of the Engine or Part which is to be replaced.

If a substitution of a Part or an Engine is permitted or required by the foregoing provisions of this paragraph (d) (other than for a temporary period insofar as necessary for the purposes of a ferry flight or demonstration flight), immediately upon such installation and without further act (1) title to the replacement part or, as the case may be, engine shall thereupon vest in the Borrower free and clear of all Security other than Permitted Liens and become subject to the Aircraft Mortgage and (2) provided that title to the replacement part or, as the case may be, engine shall have vested, or shall simultaneously therewith vest, in the Borrower and become subject to the Aircraft Mortgage, the replaced Part or, as the case may be, Engine shall thereupon cease to be subject to the Aircraft Mortgage;

(e) ensure that any Engine and each Part which is not installed on the Airframe or any Engine is properly and safely stored and insured in accordance with paragraphs 2.1 and 2.2;

(f) procure that no modification, change or alteration to the Aircraft is made that (i) materially reduces the value, utility or marketability of the Aircraft or (ii) might reasonably be expected to adversely affect the interests of the Finance Parties under the Relevant Documents, except as required by the Manufacturer or by the Aviation Authority.

2.6 The Borrower will not (and will procure that the Lease Manager will not) at any time represent or hold out any Finance Party as carrying goods or passengers on the Aircraft or as being in any way connected or associated with the operation of the Aircraft or as having any operational interest in the Aircraft nor represent itself as the agent of any Finance Party for such purposes.

2.7 The Borrower will not (and will procure that the Lease Manager will not) at any time pledge the credit of any Finance Party for any maintenance, service, repairs, overhauls or modifications relating to the Aircraft.

3 Technical Records

3.1 The Borrower shall ensure that there are kept, in the English language, accurate, complete and current records of all flights made by the Aircraft during the Post-Lease Responsibility Period, and of all maintenance and repairs carried out to the Airframe and each Engine during such period, and shall allow the Security Agent and/or its agents or representatives to examine and take copies of such records.

3.2 The records so kept shall conform with the regulations from time to time in force of the Aviation Authority and with good industry practice, and shall disclose the whereabouts of any Engines or Parts which are not installed on the Airframe.

3.3 The Borrower shall (save as hereinafter provided) procure that all the Manuals and Technical Records are kept in the possession of the person storing or maintaining the Aircraft and the Borrower shall procure that no other person shall have possession of, or control over, the Manuals and Technical Records or any Part except with the prior written consent of the Security Agent.

4 Insurance

4.1 The Borrower shall at its own cost procure that there is maintained and kept in full force and effect with reputable and internationally recognised insurance companies and through reputable and internationally recognised insurance brokers the following insurances with respect to the Aircraft (the Insurances):

(a) "All Risk" hull insurance (with flight, taxiing and ingestion coverages) against loss or damage from whatsoever cause arising, including war and kindred perils. Such policy or policies shall be subject to such exclusions as the Security Agent may approve (which approval shall not be unreasonably withheld) and shall insure the Aircraft on an agreed value basis in Dollars which shall (unless the Security Agent agrees to the contrary) be at all times at least equal to the Minimum Agreed Value;

(b) war risk and related insurance on an agreed value basis for the amount referred to in paragraph 4.1(a) covering the types of all risks specifically excluded from the hull insurance (other than those which cannot be insured against) including:

(i) war, invasion, acts of foreign enemies, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection, martial law, military or usurped power or attempts at usurpation of power; and

(ii) strikes, riots, civil commotion or labour disturbances; and

(iii) any act of one or more persons, whether or not agents of a sovereign power, for political or terrorist purposes and whether the loss or damage resulting therefrom is accidental or intentional; and

(iv) any malicious act or act of sabotage; and

(v) confiscation, nationalisation, seizure, restraint, detention, appropriation, requisition for title by or under the order of any government (whether civil, military or de facto) or public or local authority (other than, to the extent not available, the Government of the State of Registration); and

(vi) hijacking or any unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) made by any person or persons on board the Aircraft.

(c) aircraft third party, passenger, baggage, cargo, mail and airline general third party liability (including products liability) insurance for a combined single limit of $400,000,000 for any one accident (or such higher amount as the Facility Agent may reasonably require) and in the aggregate in respect of products liability and third party war and allied perils.

It is agreed that while the Aircraft is in storage, the insurance coverage described above may be provided in a normal storage policy in accordance with market practice for stored aircraft.

4.2 The insurances to be effected under paragraphs (a) and (b) of clause 4.1 shall be provided on the agreed value basis (and for the amount) therein referred to and each policy taken out in compliance therewith shall, unless the Security Agent otherwise consents in writing:

(a) have a scope and coverage at least as comprehensive as LSW 555D or any replacement therefor;

(b) be expressed and payable in Dollars;

(c) name the Security Agent as loss payee in the event of a Total Loss;

(d) waive any right of subrogation of the insurers to any right of the Borrower against any Finance Party insofar as such waiver is in accordance with normal market practice at the relevant time;

(e) provide (in the event of separate policies being arranged to cover the "All Risk" hull insurance and the "War Risk" and related insurance) that the underwriters subscribing to such insurances agree to a 50/50 claims funding arrangement in the event of any dispute as to which insurance is applicable; and

(f) have deductibles (other than in respect of a Total Loss, where no deductible will apply) which are in accordance with aviation practice generally.

4.3 All the Insurances shall:

(a) name each of the Finance Parties (and, in the case of liability insurances, each of their respective successors and permitted assigns and their respective officers, directors, representatives, agents, shareholders, subsidiaries, partners, contractors, members, managers, affiliates, employees and transferees) as additional named insureds;

(b) be subject to the relevant provisions of AVN67B (or such replacement or amendment thereof as is then customary in the aviation insurance market) as endorsed on the policy;

(c) provide for worldwide coverage, subject only to usual exceptions applicable to an aircraft being stored and such other exceptions as the Security Agent may in writing agree; and

(d) provide that the Finance Parties and their respective successors, assigns and subrogees and their respective officers, directors, shareholders, agents, employees and servants shall not be liable for any insurance premium in respect thereof except in respect of the premium due for the Aircraft and only by set off against insurance proceeds

4.4 The Borrower shall pay or procure the payment of the premiums (or instalments thereof) as required by the terms of the policies relating to the Insurances. In the case of renewals of such policies, the Borrower shall timely renew such policies and shall produce to the Security Agent a certificate from the Borrower's insurance brokers evidencing such renewal, no later than fifteen (15) days after the date of conclusion of renewal negotiations and, in any event, prior to the date on which the Insurances would otherwise have expired.

4.5 If the Borrower shall default in effecting, procuring or maintaining any of the Insurances or if any of the Insurances shall for any reason become void, the Security Agent may (but without any obligation so to do and without prejudice to the Security Agent's and Facility Agent's other rights and remedies hereunder) after notifying the Borrower, effect, procure and maintain such Insurances at the cost of the Borrower (and the Borrower will forthwith upon demand procure the repayment to the Security Agent of all premiums and other moneys from time to time paid by the Security Agent in respect of such Insurances plus accrued interest thereon at the Default Rate) failing which, at any time whilst such default or voidness is continuing, the Borrower shall, without prejudice to its obligations under this Agreement to maintain the Insurances, cause the Aircraft to remain grounded until such provisions are fully complied with.

4.6 The Borrower shall not, without the prior written consent of the Security Agent, create or permit to be created any Security over its interests in the Insurances or take out insurances, or permit itself to be named assured in insurances with respect to the Aircraft or any Engine other than as required under this Agreement, if such insurances will or may prejudice the Insurances or any amount recoverable thereunder.

4.7 The Borrower shall promptly upon the obtaining of new Insurances or the renewal of any Insurances deliver to the Security Agent copies of the current certificate of insurance. The Borrower shall, or will procure that the insurers or insurance brokers will, give to the Security Agent, promptly after the original, and each extended, expiry date of each of the Insurances, current copies of the insurance certificate or other evidence reasonably satisfactory to the Security Agent that the requirements of this paragraph 4 are being complied with together with a letter of undertaking from the Borrower's insurance brokers in form and substance reasonably acceptable to the Security Agent. If any variation is made by the insurers to the terms of any of the Insurances, the Borrower shall procure that notice is given forthwith to the Security Agent of such variation and shall provide such further details in relation thereto (excluding details relating to premiums) as the Security Agent may reasonably require. To the extent that any variation to the terms of any of the Insurances is at the option of the Borrower, the Borrower shall not agree such variation without the prior written consent of the Security Agent if such variation materially adversely affects the rights and/or interests of any Finance Party.

4.8 The Borrower shall not without the prior written consent of the Security Agent:

(a) except as permitted by this paragraph 4 make or permit to be made any material modification to any of the Insurances that would result in the Insurances ceasing to comply with the requirements set out in this paragraph 4;

(b) do or omit to do anything if the consequence of doing or omitting to do that thing would be or might reasonably be expected to be to render any of the Insurances void, voidable or unenforceable or to allow the insurers to recover any payment made by the insurers under any of the Insurances in whole or in part; or

(c) settle, compromise or abandon any claim under any of the Insurances in relation to a total loss (as defined in the Insurances) or permit the same.

4.9 If the insurances required by this paragraph 4 are not effected and maintained through the London insurance market, the Borrower shall procure that the relevant insurers (a) assign the benefit of any reinsurance contract to the Security Agent on terms acceptable to the Security Agent, and (b) maintain in full force and effect reinsurances with reinsurers of recognised standing and acceptable to the Security Agent, and such reinsurances shall:

(a) be on the same terms as the original insurances;

(b) contain a "cut through" clause in terms satisfactory to the Security Agent;

(c) provide in case of any bankruptcy, liquidation, winding-up, administration, insolvency, examinership, reorganisation, dissolution or similar proceedings of or affecting the reassured that the reinsurers' liability shall be to make such payments as would have fallen due under the relevant policy of reinsurance in accordance with the cut through clause referred to in paragraph (b) as if the reassured had (immediately before such bankruptcy, liquidation, dissolution or similar proceedings) discharged its obligations in full under the original insurance policies in respect of which the then relevant policy of reinsurance has been effected; and

(d) be for one hundred per cent. (100%) of the amount of the primary insurances and placed and reinsured in the London aviation reinsurance market with reinsurers of recognised financial standing and reputation.

4.10 If a Total Loss has occurred, all recoveries hereunder up to the amount for which the Borrower is required to insure the Aircraft shall be paid in full to the Security Agent without any deductions or withholding whatsoever.

4.11 All recoveries in respect of (i) repairable damage to the Aircraft not amounting to a total loss or constructive or compromised or agreed or arranged total loss of the Aircraft or the Airframe or (ii) the loss or destruction of any of the Engines where the Airframe is not a total loss or constructive or compromised or agreed or arranged total loss, shall be paid in full in the case of (i), (A) to the repairers against presentation of their invoices or (B) the Security Agent or to its order against presentation of the receipts or other evidence of the repairers evidencing payment of their invoices and in the case of (ii), (C) to the vendor of a replacement engine or (D) to the Security Agent or to its order in reimbursement of the costs of the replacement engine(s).

SIGNATURE PAGE - LOAN AGREEMENT (MSN 19002)

Borrower

Signed for and on behalf of)

ACY SN 19002 LIMITED)

By its duly authorised signatory)

)

in the presence of

Witness Signature:_______________________

Name:

Title:

Address:

Finance Parties

SIGNED	)
for and on behalf of	)
EXPORT DEVELOPMENT CANADA	)
as Facility Agent, Security Agent and Lender	)

EX-10.28

			EXECUTION VERSION
Dated ___________________ 2016
	ACY SN 19003 LIMITED as Borrower EXPORT DEVELOPMENT CANADA as Security Agent and Facility Agent CERTAIN BANKS AND FINANCIAL INSTITUTIONS as Lenders			(1) (2) (3)
		SENIOR LOAN AGREEMENT in respect of financing arrangements relating to one (1) BOMBARDIER CRJ 1000 AIRCRAFT WITH MANUFACTURER'S SERIAL NUMBER 19003

CONTENTS
Clause	Page

1 Definitions and interpretation

2 The Facility

3 Conditions

4 Drawdown

5 Loan

6 Interest

7 [Intentionally Omitted]

8 Costs and Expenses

9 Tax gross-up and indemnities

10 Representations and warranties

11 Undertakings

12 Events of default and Total Loss Prepayment Event

13 Indemnities

14 Changes in circumstances; mitigation

15 Limitation on recourse

16 Assignment, transfers and lending offices

17 Role of the Facility Agent

18 Conduct of business by the Finance Parties

19 Sharing among the Finance Parties

20 Payment mechanics

21 Set-off

22 Notices

23 Calculations and certificates

24 Confidentiality

25 Partial invalidity; remedies and waivers

26 Amendments and waivers

27 Counterparts

28 Governing law

29 Enforcement

Schedule 1 Lenders and their Commitments

Schedule 2 Form of Utilisation Request

Schedule 3 Conditions Precedent and Conditions Subsequent

Schedule 4 Payments

Schedule 5 Aircraft

Schedule 6 Form of Transfer Certificate

Schedule 7 Form of Lessor Deregistration Power of Attorney

Schedule 8 Covenants during Post-Lease Responsibility Period

THIS AGREEMENT is dated ________________ 2016 and made BETWEEN:

(1) ACY SN 19003 LIMITED, a company established under the laws of England and Wales having company number 10290241 with its registered office at 16 Old Bailey, London EC4M 7EG, England (the Borrower);

(2) EXPORT DEVELOPMENT CANADA,of 150 Slater Street, Ottawa, Canada K1A 1K3, as Security Agent (as defined below);

(3) EXPORT DEVELOPMENT CANADA,as above, as Facility Agent (as defined below); and

(4) THE BANKS AND FINANCIAL INSTITUTIONS being the Original Lenders (as defined below).

WHEREAS:

(A) Pursuant to the Sale Agreement, the Borrower has agreed or will agree to purchase the Aircraft from Aviacion.

(B) Pursuant to the Lease, the Borrower has agreed or will agree to lease the Aircraft to the Lessee. This Agreement is the "Loan Agreement" referred to in the Lease and the "Senior Loan Agreement" referred to in the Proceeds Deed.

(C) The Lenders agree to advance the Loan to the Borrower to finance in part its acquisition of the Aircraft.

NOW IT IS AGREED as follows:

1 Definitions and interpretation

1.1 Definitions

In this Agreement, except as otherwise defined herein and except where the context otherwise requires, capitalised words and expressions shall have the respective meanings given to them in the Lease and the following expressions shall have the following meanings:

Accrued Interest Amount means $__________________.

Aerocentury Related Party means the Borrower, the Guarantor and the Lease Manager;

Affiliate means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company;

Aircraft means the (1) Bombardier CRJ 1000 aircraft described in Schedule 5 (Aircraft) (as more particularly described in the Lease);

Aircraft Mortgage means (a) each first priority mortgage over the Aircraft executed or to be executed by the Borrower in favour of the Security Agent, (b) the Cape Town Security Agreement and (c) any replacement thereof from time to time or any additional mortgage or equivalent security over the Aircraft granted in favour of the Finance Parties (or the Security Agent on their behalf) from time to time;

Aircraft Security Period means the period from the Utilisation Date for the Loan to the date on which (a) the Security Agent or the Facility Agent notifies the Borrower and the Finance Parties that the Loan has been repaid in full (together with interest thereon and all other amounts due to any Finance Party under the Relevant Documents) and (b) the Security Agent or the Facility Agent is satisfied that (i) no Default is continuing and (ii) no payment previously made under any Relevant Document to any Finance Party, or by the Lessee to the Borrower, will be ordered to be refunded pursuant to any Applicable Law relating to bankruptcy, liquidation, winding-up, administration, insolvency, examinership, reorganisation or dissolution or for any other reason whatsoever; and the Security Agent or the Facility Agent shall issue such notice promptly upon making the relevant determination;

AMR means the Spanish Aircraft Matriculation Registry (Registro de Aeronaves) and any replacement or successor registry from time to time maintained by the Aviation Authority;

Applicable Law means in relation to any jurisdiction or the European Union, any law, regulation, treaty, directive, decision, rule, regulatory requirement, judgment, order, ordinance, request, guideline or direction or any other act of any Government Entity of such jurisdiction or of any EU Institution whether or not having the force of law and with which any Transaction Party is required to comply, or with which it would, in the normal course of its business, comply;

Assigned Property means any and all property and assets and the rights, title and interest of the Borrower now or at any time expressed to be mortgaged, charged, assigned and/or pledged by the Borrower to the Finance Parties (or the Security Agent on their behalf) pursuant to the Security Documents;

Authorisation means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration;

Aviacion means Aviacion RCII, A.I.E.;

Basel 2 Accord means the "International Convergence of Capital Measurement and Capital Standards, a Revised Framework" published by the Basel Committee on Banking Supervision in June 2004 as updated prior to, and in the form existing on, the date of this Agreement, excluding any amendment thereto arising out of the Basel 3 Accord;

Basel 2 Approach means, in relation to any Finance Party, either the Standardised Approach or the relevant Internal Ratings Based Approach (each as defined in the Basel 2 Accord) adopted by that Finance Party (or any of its Affiliates) for the purposes of implementing or complying with the Basel 2 Accord;

Basel 2 Increased Cost means an Increased Cost which is attributable to the implementation or application of or compliance with any Basel 2 Regulation in force as at the date hereof (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates);

Basel 2 Regulation means (a) any Applicable Law implementing the Basel 2 Accord or (b) any Basel 2 Approach adopted by a Finance Party or any of its Affiliates;

Basel 3 Accord means:

(a) "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December, 2010, each as amended, supplemented or restated;

(b) the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated; and

(c) any further guidance or standards published by the Basel Committee on Banking Supervision relating to "Basel III".

Basel 3 Increased Cost means an Increased Cost which is attributable to the implementation or application of or compliance with any Basel 3 Regulation (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates);

Basel 3 Regulation means any Applicable Law implementing the Basel 3 Accord save and to the extent that it re-enacts a Basel 2 Regulation;

Bill of Sale means, in respect of the Aircraft, the bill of sale relating thereto from Aviacion in favour of the Borrower;

Borrower's Lien means any Security which is created by or is attributable to the debts or liabilities of the Borrower, save to the extent that such Security either:

(a) is constituted by the Security Documents; or

(b) arises as a consequence of the failure by any party (other than the Borrower or any Aerocentury Related Party) to comply with its obligations under the Relevant Documents;

Break Costs means, with respect to an Unpaid Sum, the amount (if any) by which:

(a) the interest which a Lender should have received for the period from the date of receipt of all or any part of its participation in the Unpaid Sum to the last day of the current Calculation Period in respect of the Unpaid Sum, had the Unpaid Sum received been paid on the last day of that Calculation Period,

exceeds:

(b) the amount which that Lender would be able to obtain by placing that Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Calculation Period;

Business Day means a day (other than a Saturday or Sunday) on which banks are open for general business in Ottawa, New York (solely in respect of any obligations which are payable in USD), London and Valencia;

Calculation Period means each period determined in accordance with clause 6.5 or, in relation to an Unpaid Sum, each period determined in accordance with clause 6.3;

Cape Town Convention means, together, the Convention and the Protocol;

Cape Town Security Agreement means the security agreement governed by the laws of England entered into, or to be entered into, as the context shall require, between the Borrower and the Security Trustee, in respect of the Aircraft.

Cape Town UK Regulations means the International Interests in Aircraft Equipment (Cape Town Convention) Regulations 2015 by which the Cape Town Convention has been implemented in the United Kingdom;

Centre of Main Interests has the meaning given to that term in the Insolvency Regulation;

Collateral means all the Security, property, assets, powers, rights, title, benefits and interests (both present and future) constituted by, and conferred on the Security Agent under, the Security Documents and all moneys, property or other assets paid or transferred to or vested in the Security Agent (or any Finance Party) or received or recovered by the Security Agent (or any Finance Party) pursuant to, or in connection with, the Security Documents;

Commitment means:

(a) in relation to an Original Lender, the amount in Dollars set opposite its name in column 3 of Schedule 1 and the amount of any other Commitment transferred to it under this Agreement; and

(b) in relation to any other Lender, the amount in Dollars of any Commitment transferred to it under this Agreement,

to the extent not cancelled, reduced or transferred by it under this Agreement;

Companion Aircraft means the Bombardier CRJ 1000 aircraft with manufacturer's serial number 19002 (as more particularly described in the Companion Aircraft Lease Agreement);

Companion Aircraft Borrower means ACY SN 19002 Limited;

Companion Aircraft Event of Default means an "Event of Default" as defined in the Companion Aircraft Senior Loan Agreement;

Companion Aircraft Lease Agreement means the aircraft lease agreement dated 16 November 2010 (as amended from time to time) in respect of the Companion Aircraft originally between Aviacion as lessor and the Lessee as lessee as novated from Aviacion to the Borrower and amended and restated pursuant to the deed of novation and restatement dated on or about the date hereof between the Companion Aircraft Borrower as new lessor, Aviacion as existing Lessor and the Lessee;

Companion Aircraft Relevant Documents means the "Relevant Documents", as defined in the Companion Aircraft Senior Loan Agreement;

Companion Aircraft Senior Loan Agreement means the senior loan agreement entered into, or to be entered into, as the context may require, in respect of the Companion Aircraft between, amongst others, the Companion Aircraft Borrower as borrower, the Security Agent, the Lenders and the Facility Agent;

Companion Aircraft Termination Event means the occurrence of a "Termination Event" as defined in the Companion Aircraft Lease Agreement;

Consolidated Text means the Consolidated Text of the Convention and the Protocol referred to in, and as set out in the Attachment to, Resolution No.1 adopted by the Diplomatic Conference held at Cape Town, South Africa, at which the Convention and the Protocol were opened for signature;

Contribution means, in relation to any Lender and the Loan at any time, the principal amount of the Loan owing to such Lender at such time;

Controlling Security Agent has the meaning given to it in the Deed of Cross-Collateralisation;

Convention means the Convention on International Interests in Mobile Equipment opened for signature on 16 November 2001 at Cape Town, South Africa;

CRD IV means:

(a) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms; and

(b) Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC;

CTA means the Corporation Tax Act 2009;

Deed of Cross-Collateralisation means the deed of cross-collateralisation entered into, or to be entered into, between, inter alia, the Borrower, the Companion Aircraft Borrower, the Controlling Security Agent, the Security Agent and the Companion Aircraft Security Agent in respect of, inter alia, the Collateral;

Deed of Novation and Restatement means the deed of novation and restatement dated on or about the date hereof between the Borrower as new lessor, Aviacion as existing lessor and the Lessee;

Default means an Event of Default or any event or circumstance which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Relevant Documents or any combination of any of the foregoing) be an Event of Default;

Default Rate means the rate of interest determined pursuant to clause 6.3;

Dollar Account means the following bank account of the Facility Agent:

Account Bank: XXXXXXX

ABA:XXXXXXX

Swift:XXXXXXX

Account Number:XXXXXXX

Account Name:Export Development Canada;

Dollars, USD and $ mean the lawful currency of the United States of America and, in respect of all payments to be made under this Agreement in Dollars, mean funds which are for same day settlement in the New York Clearing House InterBank Payments System (or such other U.S. dollar funds as may at the relevant time be customary for the settlement of international banking transactions denominated in United States dollars);

EDC means Export Development Canada;

Effective Time Notice has the meaning ascribed to that term in the Deed of Novation and Restatement;

Engine Manufacturer means General Electric Company, a New York corporation of 1 Neumann Way, MD F-104, Cincinnati, Ohio 45215-1988, USA;

EU Institution means (whether having a distinct legal personality or not) the organs of the European Union having power to issue binding laws, regulations, directives, decisions, regulatory requirements, judgments, orders or directions including, without limitation, the European Commission, the European Council, the European Court of Justice, the European Parliament and the European Air Safety Agency;

Euro, EUR or € means the single currency of the Participating Member States and, in respect of all payments to be made under the Relevant Documents in Euros, immediately available, freely transferable funds;

Eurocontrol Letter has the meaning ascribed to that term in the Deed of Novation and Restatement;

EU-ETS Letter has the meaning ascribed to that term in the Deed of Novation and Restatement;

Event of Default means any of the events or circumstances described in clause 12.1;

Facility means the term loan facility made available under this Agreement as described in clause 2 (The Facility);

Facility Agent means Export Development Canada or such other person as may be appointed agent for the Lenders pursuant to clause 17.12;

Facility Office means the office or offices notified by a Lender to the Facility Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than five Business Days' written notice) as the office or offices through which it will perform its obligations under this Agreement;

Final Payment Date means the final repayment date relating to the Loan specified in Schedule 4;

Finance Documents means this Agreement, the Payment Direction Deed, the Termination Side Letter, the Utilisation Request and the Security Documents and all notices, consents, certificates and other documents and agreements to be issued pursuant to any of the foregoing and all other documents which the Facility Agent, the Borrower and the Lessee agree at any time should be Finance Documents;

Finance Parties means the Lenders, the Security Agent and the Facility Agent and Finance Party means each or any of them (as the context may require);

Fixed Rate means 4.455%;

Government Entity means and includes (whether having a distinct legal personality or not) (i) any national government, political sub-division thereof, or local jurisdiction therein; (ii) any board, commission, department, division, organ, instrumentality, court, regulatory or self-regulatory authority, or agency of any entity referred to in (i) above, however constituted; and (iii) any association, organisation or institution (international or otherwise) of which any entity mentioned in (i) or (ii) above is a member or to whose jurisdiction any thereof is subject or in whose activities any thereof is a participant;

Guarantee means the guarantee from the Guarantor in favour of the Security Agent with respect to the Borrower's obligations under the Relevant Documents;

Guarantor means Aerocentury Corp.;

Holding Company means, in relation to a company or corporation, any other company or corporation in respect of which the former is a Subsidiary;

IDERA means an irrevocable deregistration and export request authorisation issued by the Lessee in favour of the Security Agent in the form approved by the Directorate General for Registers and Notaries on 29 February 2016;

Increased Costs has the meaning given to it in clause 14.2.2;

Indebtedness includes any obligation, whether incurred as principal or as surety, for the payment or repayment of money and whether present or future, actual or contingent;

Indemnitees means the Finance Parties and their shareholders, Affiliates, directors, officers, servants, agents and employees;

Insolvency Regulation means Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings (or, for proceedings opened after 26 June 2017, Regulation (EU) No 2015/848 of 20 May 2015 (recast));

ITA means the Income Tax Act 2007;

Lease means the aircraft lease agreement dated 16 December 2010 in respect of the Aircraft (as amended from time to time) originally between Aviacion as lessor and the Lessee as lessee as novated from Aviacion to the Borrower and amended and restated pursuant to the Deed of Novation and Restatement;

Lease Management Agreement means, in relation to the Lease, the lease management agreement entered into or to be entered into between the Borrower and the Lease Manager;

Lease Manager means Aerocentury Corp. or any other lease manager which the Facility Agent may approve from time to time;

Lease Termination Date means, with respect to the Aircraft, any date on which the Lease Period expires or terminates in accordance with the terms and conditions of the Lease;

Lender means:

(a) any Original Lender; and

(b) any bank, financial institution, trust, fund or other entity which has become a Party in accordance with clause 16 (Assignment, Transfers and Lending Offices),

which in each case has not ceased to be a Party in accordance with the terms of this Agreement;

Lenders' Representatives means the Facility Agent and the Security Agent;

Lessee means AIR NOSTRUM, LINEAS AEREAS DEL MEDITERRANEO, S.A., a company incorporated under the laws of Spain whose principal office is at Avda. Comarques del Pais Valencia, 2, 46930 Quart de Poblet, Valencia, Spain;

Lessor Deregistration Power of Attorney means, in respect of the Aircraft, the duly notarised and apostilled power of attorney granted or to be granted by the Borrower to the Security Agent in the form set out in Schedule 7;

LIBOR means in respect of any amount denominated in any currency for any period:

(a) the applicable Screen Rate for the relevant currency; or

(b) (if no Screen Rate is available for the relevant currency or period in respect of that amount) the arithmetic mean (rounded to the nearest one sixteenth of one per cent) of the rates, as supplied to the Facility Agent at its request, quoted by the Reference Banks to leading banks in the Relevant Interbank Market,

as of the Quotation Time for the offering of deposits in that currency and for a period comparable to that period, provided that if, in either case, that rate is less than zero, LIBOR shall be deemed to be zero;

Liquidity Rate means zero point one five per cent (0.15%) per annum;

Loan means the loan made or to be made under the Facility or the principal amount outstanding for the time being of the loan;

Losses means any losses, costs, payments, charges, penalties, demands, liabilities, claims, actions, proceedings, fines, damages, judgements, orders, fees, premiums, expenses and other sanctions of any nature; and Loss shall be construed accordingly;

Major Damage means damage affecting the Aircraft and which is unrepaired (or not totally repaired) and has a repair cost (or remaining repair cost, as applicable) in excess of the Damage Notification Threshold (or its equivalent in any other currency);

Majority Lenders means:

(a) if there is no Loan then outstanding, a Lender or Lenders whose Commitments aggregate more than 66²/₃ % of the Total Facility Commitments (or, if the Total Facility Commitments have been reduced to zero, aggregated more than 66²/₃ % of the Total Facility Commitments immediately prior to the reduction); or

(b) at any other time, a Lender or Lenders whose participations in the Loan then outstanding aggregate more than 66²/₃ % of the Loan then outstanding;

Make-Whole Amount means, with respect to the Loan, an amount equal to the excess, if any, of (a) the present value, as of the date of the relevant prepayment of the Loan, of the respective instalments of principal of and interest on the Loan that, but for such prepayment, would have been payable on each scheduled Payment Date after such prepayment over (b) the principal amount of the Loan then being prepaid. Such present value shall be determined by discounting the amounts of such instalments from their respective scheduled Payment Dates to the date of such prepayment at a rate equal to the sum of the applicable Treasury Rate and 1.00 %;

Manufacturer means Bombardier Inc., as represented by Bombardier Aerospace Commercial Aircraft, a corporation established and existing under the laws of Canada, having an office located at 123 Garratt Boulevard, Toronto, Ontario, Canada;

Margin means one point six eight per cent (1.68%) per annum (which, for the avoidance of doubt, includes an administration fee of zero point zero five per cent (0.05%) per annum;

MPR means the Moveable Property Register (Registro de Bienes Muebles) in Madrid or any replacement or successor registry from time to time;

New Lender has the meaning given to that term in Clause 16.3.2;

Next Rollover Date means 17 September 2016;

Obligor means any or, if the context so permits, each of:

(a) in relation to the Companion Aircraft, the Companion Aircraft Borrower, the Lessee, the Guarantor and the Lease Manager; and

(b) in any other case, the Borrower, the Lessee, the Guarantor and the Lease Manager;

Original Lenders means the banks and financial institutions whose names and addresses are set out in Schedule 1;

Participating Member State means any member state of the European Union that adopts or has adopted the Euro as its lawful currency in accordance with legislation of the European Community relating to Economic and Monetary Union;

Party means a party to this Agreement;

Party Documents means, in relation to any person, the Relevant Documents to which such person is a party;

Payment Date means each of the repayment dates relating to the Loan specified in Schedule 4 provided that:

(a) if a Payment Date would fall on a day that is not a Business Day, it shall be the immediately succeeding Business Day (unless such Business Day falls in the next calendar month, in which case payment shall be made on the immediately preceding Business Day) and the amount of interest payable shall not be adjusted; and

(b) the final Payment Date shall be the Final Payment Date;

Payment Direction Deed means the payment deed entered into or to be entered into between the Borrower, Export Development Canada, Banco Santander, S.A., the Lessee and Aviacion;

Permitted Lien means:

(a) any Security for Taxes not assessed or, if assessed, not yet due and payable, or being contested in good faith by appropriate proceedings;

(b) any Security of a repairer, mechanic, carrier, hangar keeper, airport or air navigation authority or other similar Security arising in the ordinary course of business by operation of law in respect of obligations which are not overdue or are being contested in good faith by appropriate proceedings;

(c) any Security created pursuant to the Security Documents,

but, in the case of each of (a) and (b), only if:

(i) adequate resources have been provided by the Borrower or the Lessee for the payment of such Taxes or obligations; and

(ii) such proceedings, and/or the continued existence of such Security, do not give rise to a material likelihood of the sale, forfeiture or other loss of the Aircraft or any interest therein or of criminal or civil liability on the part of any Finance Party or other Indemnitee;

Post-Lease Responsibility Period means, with respect to the Aircraft, the period commencing on the Lease Termination Date for the Aircraft and ending on the last day of the Aircraft Security Period;

Proceedings means any corporate action, legal proceedings and other procedures and steps of the nature referred to in clause 12.1.6(a) to (d);

Proceeds means any amounts received or recovered by any Finance Party under or in relation to any of the Relevant Documents or the Aircraft (including pursuant to enforcement or realisation of any Security Document, any Total Loss Proceeds and any proceeds of sale of the Aircraft);

Proceeds Deed means the proceeds and intercreditor deed entered into or to be entered into on or about the date of this Agreement between the Borrower, the Guarantor, the Lease Manager and the Finance Parties in respect of the Aircraft;

Prohibited Payment means any offer, gift, payment, promise to pay, commission, fee, loan or other consideration which would constitute (a) bribery or an improper gift or payment under, or a breach of, any law, subordinate legislation, statute, by-law, regulation, treaty, judgment, decision, rule, regulation, notice, order, circular, code of practice or guidance note which is binding or enforceable on or against the Borrower or any Aerocentury Related Party and/or (b) bribery within the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions of 17 December 1997;

Protocol means the Protocol to the Convention on Matters Specific to Aircraft Equipment opened for signature on 16 November 2001 at Cape Town, South Africa;

Purchase Price means the purchase price for the Aircraft pursuant to the Sale Agreement;

Quotation Day means, in relation to any period for which an interest rate is to be determined, two London business days before the first day of that period, unless market practice differs in the Relevant Interbank Market, in which case the Quotation Day will be determined by the Facility Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in the Relevant Interbank Market on more than one day, the Quotation Day will be the last of those days);

Quotation Time means 11:00 a.m. (London time) on the Quotation Day;

Reference Banks means the principal London offices of Bank of America, N.A., Barclays Bank PLC and Citibank, N.A., or such other banks as may be appointed by the Facility Agent in consultation with the Borrower and the Lessee;

Relevant Authority means any national, supranational, regional or local government or governmental, administrative, fiscal, judicial, or government-owned body, department, commission, authority, tribunal, agency or entity, or central bank (or any person, whether or not government-owned and howsoever constituted or called, that exercises the functions of a central bank) which has jurisdiction over the Borrower or any Aerocentury Related Party;

Relevant Documents means the Deed of Novation and Restatement, the Sale Agreement, the Bill of Sale, the Lease, the Lease Management Agreement, the Eurocontrol Letter,  the EU-ETS Letter, the RVG Transfer, each Finance Document, the Effective Time Notice, all notices, consents, certificates and other documents and agreements to be issued pursuant to any of the foregoing and all other documents which the Facility Agent, the Borrower and the Lessee agree at any time should be Relevant Documents;

Relevant Interbank Market means the London interbank market;

Relevant Parties means the Borrower, the Guarantor, the Lease Manager and the Finance Parties and the expression Relevant Party means any of them individually;

RVG Transfer means, in respect of the Aircraft, the deed of novation entered into or to be entered into between the Borrower, Aviacion and the Manufacturer in form and substance satisfactory to the Facility Agent with respect to the residual value guarantee entered into between the Manufacturer and Aviacion with respect to the Aircraft;

Sale Agreement means, in respect of the Aircraft, the policy of sale and purchase of an aircraft entered into or to be entered into between the Borrower (as buyer) and Aviacion (as seller) in form and substance satisfactory to the Facility Agent;

Sale Agreement Pledge means the pledge of credit rights agreement executed or to be executed between the Borrower, Aviacion and the Security Agent in respect of the Borrower's rights under the Sale Agreement.

Sanctions means economic or financial sanctions administered, enacted or enforced by any Sanctions Authority, including any restriction on any the ability of a Party or any Affiliate of a Party to conduct business with any person in any country relevant to the transaction.

Sanctions Authority means (a) Canada, (b) the United Nations, (c) the United States of America, (d) the United Kingdom, (e) the European Union or (f) the respective governmental institutions, agencies and subdivisions of any of the foregoing;

Screen Rate means the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person which takes over the administration of that rate) for Dollars for the relevant period displayed on page LIBOR 01 of the Thomson Reuters screen (or any replacement Thomson Reuters page which displays that rate); if the agreed page is replaced or service ceases to be available, the Facility Agent may specify another page or service displaying the appropriate rate after consultation with the Borrower, the Lessee and the Lenders, respectively;

Security means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, trust arrangement or security interest of any kind or other agreement or arrangement having the effect of conferring security (including title transfer and/or retention arrangements having a similar effect);

Security Agent means Export Development Canada or such other person as may be appointed as security agent in respect of the Relevant Documents pursuant to clause 5.11 (Resignation of the Security Agent) of the Proceeds Deed;

Security Assignment means, in respect of the Aircraft, the deed of assignment executed or to be executed by the Borrower in favour of the Security Agent in respect of its rights under, amongst other documents, the Lease;

Security Documents means the Deed of Cross-Collateralisation, the Security Assignment, the Assignment of Insurances, each Warranty Agreement, the Share Charge, the Sale Agreement Pledge, the Lessor Deregistration Power of Attorney, the Lessee Deregistration Power of Attorney, the IDERA, each Aircraft Mortgage, the Guarantee and the Proceeds Deed and all notices, consents, acknowledgements, certificates and other documents and agreements to be issued pursuant to any of the foregoing and all other documents which the Facility Agent, the Borrower and the Lessee agree at any time should be Security Documents;

Share Charge means the security over all of the shares in the Borrower, granted or to be granted by the Guarantor in favour of the Security Agent;

Specified Sanctioned Dealings means:

(a) any direct or indirect dealings involving or benefitting (i) a person that is listed on, or owned or controlled by, or acting on behalf of a person listed on, any list administered by a Sanctions Authority or otherwise the target of Sanctions (ii) a person located in, organised under, owned or controlled by, or acting on behalf of, a person located in or organised under the laws of Iran, Syria, North Korea or Belarus or (iii) a person that is owned or controlled by, or acting for or on behalf of, or providing assistance, support or services of any kind to, or otherwise associated with, any person referred to in (i) or (ii) above;

(b) any business or making or receiving any contribution of funds, goods or services to or for the benefit of any person described in (a)(i) to (a)(iii) above;

(c) any dealing in, or otherwise engaging in any transaction relating to, any property or interests in property subject to prohibitions under Sanctions; and

(d) any transaction that evades, avoids or attempts to violate any of the prohibitions set forth in the Sanctions or has such a purpose.

Subsidiary means any company or entity directly or indirectly controlled by another person;

Tax Credit, Tax Deduction and Tax Payment have the respective meanings given to them in clause 9.1.1;

Taxes includes all present and future taxes, levies, imposts, duties, fees, charges or withholdings of whatever nature and howsoever described, including any VAT imposed, levied, collected or assessed by any Government Entity or taxing authority anywhere in the world together with interest payable in respect of any of the same and penalties imposed or levied in respect of any of the same and Tax and Taxation shall be construed accordingly;

Termination Side Letter means the side letter agreement to the Lease dated on or about the date hereof between the Borrower, the Security Agent, the Guarantor and the Lessee.

Third Parties Act means the Contracts (Rights of Third Parties) Act 1999;

Total Aircraft Commitments means USD9,804,329.09, and each Lender's share of the Total Aircraft Commitments for the Aircraft shall be in the same proportion as its Commitment bears to the Total Facility Commitments;

Total Facility Commitments means, at any given time, the aggregate of the Commitments;

Total Loss Proceeds means the proceeds received and retained (subject to any application in accordance with the Relevant Documents) by the Security Agent from the insurers or reinsurers of the Aircraft in respect of its Total Loss;

Transfer Certificate means a certificate substantially in the form set out in Schedule 6 (Form of Transfer Certificate) or any other form agreed between the Facility Agent and the Lessee;

Transfer Date means, in relation to a transfer, the later of:

(a) the proposed Transfer Date specified in the Transfer Certificate; and

(b) the date on which the Facility Agent executes the Transfer Certificate;

Treasury Rate means, in respect of the Loan and on any date, the semi-annual rate to "swap" floating rate debt (with a maturity approximately equal to the period from such date to the Final Payment Date for the Loan) to fixed rate debt for loans of the same currency as the Loan, obtained from the Bloomberg page IRSB18 (US Semi 30/360 – column 2 (Ask)) at or about 11.00 a.m. New York City time on that date (or, if such page is not available at the relevant time, on such equivalent page as may be selected by the Facility Agent or, if none, the arithmetic mean of equivalent rates (rounded upwards to the nearest one sixteenth of one per cent) as supplied to the Facility Agent at its request quoted by the Reference Banks to leading banks in the Relevant Interbank Market);

Unpaid Sum means any sum due and payable (whether or not recourse to the Borrower is limited by clause 15) but unpaid by any Obligor under the Relevant Documents to which it is a party;

Utilisation Date means, in respect of the Loan, the date, being a Business Day, on which the Loan is or is to be made;

Utilisation Request means, in respect of the Loan, a notice substantially in the form of Schedule 2;

VAT means value added tax and any other tax or duty of a similar nature in any jurisdiction; and

1.2 Headings

Clause headings and the table of contents are inserted for convenience of reference only, have no legal effect and shall be ignored in the interpretation of this Agreement.

1.3 Interpretation

In this Agreement, unless a contrary indication appears:

1.3.1 references to clauses and Schedules are to be construed as references to the clauses of, and Schedules to, this Agreement and references to this Agreement include its Schedules;

1.3.2 references to (or to any specified provision of) this Agreement or any other document shall include this Agreement, that document or the relevant provision as it may from time to time be amended but so that the above is without prejudice to any requirement in any Relevant Document that the prior consent of any party be obtained;

1.3.3 a reference to an amendment includes a supplement, novation, restatement or re-enactment and amended and amending will be construed accordingly;

1.3.4 words importing the plural shall include the singular and vice versa, and words importing a gender include every gender;

1.3.5 references to a person shall be construed as including references to an individual, firm, company, corporation, unincorporated association or body of persons and any Government Entity, whether or not having separate legal personality and references to any Party, the Lease Manager, any Aerocentury Related Party or the Lessee shall be construed so as to include the successors, permitted assignees and permitted transferees of the relevant Party or of the Lease Manager, any Aerocentury Related Party or the Lessee, as applicable;

1.3.6 references to any law or any provision of law is a reference to such law or provision as applied, amended, extended or re-enacted and includes any subordinate legislation;

1.3.7 a reference to an approval shall be construed as a reference to any approval, consent, authorisation, exemption, permit, licence, registration, filing or enrolment by or with any competent authority;

1.3.8 a reference to including shall be construed as a reference to including without limitation, so that any list of items or matters appearing after the word "including" shall be deemed not to be an exhaustive list, but shall be deemed rather to be a representative list, of those items or matters forming a part of the category described prior to the word "including";

1.3.9 a Default, Event of Default, Relevant Event or Termination Event is continuing if it has not been remedied or waived;

1.3.10 control means, in relation to a company or entity, either ownership of more than 50 per cent of the voting share capital (or equivalent right of ownership) of such company or entity or power to direct its policies and management, whether by contract or otherwise (provided that the Borrower shall not be deemed to be controlled by, or a Subsidiary of, the Security Agent (or its nominee) as a result of the rights of the Security Agent under the Relevant Documents or otherwise);

1.3.11 the Convention and the Protocol shall be read and interpreted together as a single instrument as required by Article 6(1) of the Convention;

1.3.12 references to a provision of the Cape Town Convention will, unless it is specifically stated to be a reference to a provision of the Convention or, as the case may be, the Protocol, be a reference whether stated or not, to the relevant provision of the Consolidated Text, and reference to any provision of the Consolidated Text shall include a reference to the provision(s) of the Convention and/or the Protocol from which such provision(s) is/are derived;

1.3.13 in the event that there is any inconsistency between the provisions of the Consolidated Text and those of the Cape Town Convention, the latter shall prevail and any reference in this Agreement to any provision of the Consolidated Text shall be interpreted accordingly;

1.3.14 bankruptcy, liquidation, winding-up, administration, insolvency, examinership, reorganisation or dissolution (and their derivates and cognate expressions) of or in relation to any person or its assets shall each be construed so as to include the others and any equivalent or analogous proceedings, procedure or event under the law of any jurisdiction in which such person is incorporated or any jurisdiction in which such person carries on business or its assets are located; and

1.3.15 references to Ottawa are references to Ottawa, Ontario, Canada.

1.4 Third Party Rights

1.4.1 Unless expressly provided to the contrary in this Agreement, a person who is not a Party has no right under the Third Parties Act to enforce or to enjoy the benefit of any term of this Agreement.

1.4.2 Each Indemnitee shall be entitled to enforce each provision of this Agreement as is expressed to be in its favour, subject to complying with any express condition relating specifically to such provision.

1.4.3 Notwithstanding any term of any Relevant Document, the consent of any person who is not a Party is not required to rescind or vary this Agreement at any time.

1.5 Majority Lenders

Where this Agreement provides for any matter to be determined by reference to the opinion of the Majority Lenders or to be subject to the consent or request of the Majority Lenders or for any action to be taken on the instructions of the Majority Lenders, such opinion, consent, request or instructions shall (as between the Lenders) only be regarded as having been validly given or issued by the Majority Lenders if all the Lenders shall have received prior notice of the matter on which such opinion, consent, request or instructions are required to be obtained and the relevant majority of Lenders shall have given or issued such opinion, consent, request or instructions but so that the Borrower shall be entitled (and bound) to assume that such notice shall have been duly received by each Lender and that the Majority Lenders shall have given or issued such opinion, consent, request or instructions whether or not this is in fact the case.

2 The Facility

2.1 The Facility

Subject to the terms of this Agreement, the Lenders make available to the Borrower a term loan facility in an amount equal to the Total Aircraft Commitments.

2.2 Disbursement

2.2.1 Subject to the terms of this Agreement, following receipt of funds in respect of the Loan from the Lenders, the Facility Agent will pay the Loan in accordance with the provisions of the Payment Direction Deed.

2.2.2 Payment by the Facility Agent of the amount contemplated by clause 2.2.1 in accordance therewith will constitute the making of the Loan to the Borrower in the same amount.

2.3 Finance Parties' rights and obligations

2.3.1 The obligations of each Finance Party under the Relevant Documents are several. Failure by a Finance Party to perform its obligations under the Relevant Documents does not affect the obligations of any other Party under the Relevant Documents. No Finance Party is responsible for the obligations of any other Relevant Party under the Finance Documents.

2.3.2 The rights of each Finance Party under or in connection with the Relevant Documents are separate and independent rights and any debt arising under the Relevant Documents to a Finance Party from any Obligor is a separate and independent debt in respect of which a Finance Party shall be entitled to enforce its rights in accordance with clause 2.3.3.  The rights of each Finance Party include any debt owing to that Finance Party under the Relevant Documents and, for the avoidance of doubt, any part of the Loan or any other amount owed by an Obligor which relates to a Finance Party's participation in the Facility or its role under a Relevant Document (including any such amount payable to the Facility Agent on its behalf) is a debt owing to that Finance Party by that Obligor.

2.3.3 A Finance Party may, except as specifically provided in the Finance Documents, separately enforce its rights under or in connection with the Relevant Documents.

3 Conditions

3.1 Documents, evidence and general conditions precedent

The obligation of each Lender to advance the Loan shall be subject to the conditions that:

3.1.1 the Facility Agent, or its duly authorised representative, shall have received, not later than the proposed Utilisation Date specified in the Utilisation Request for the Loan, the relevant documents and evidence specified in Part A of Schedule 3, each in form and substance satisfactory to the Facility Agent;

3.1.2 the conditions specified in clause 2.2 of the Deed of Novation and Restatement shall have been fulfilled to the satisfaction of the Facility Agent (or waived or deferred by the relevant party (with the consent of the Facility Agent) in accordance with the Deed of Novation and Restatement) and the Facility Agent shall have received such originals or copies as it may require of any documents and evidence provided or required to be provided under such clause;

3.1.3 the conditions specified in clause 7 of the Sale Agreement shall have been fulfilled to the satisfaction of the Facility Agent (or waived or deferred by the relevant party (with the consent of the Facility Agent) in accordance with the Sale Agreement) and the Facility Agent shall have received such originals or copies as it may require of any documents and evidence provided or required to be provided under such clause;

3.1.4 any payment to any Finance Party and/or from any Obligor under the Relevant Documents on or prior to that proposed Utilisation Date shall have been received (or the Facility Agent is satisfied that arrangements are in place such that each such payment will have been received on or prior to that Utilisation Date);

3.1.5 the Facility Agent shall be satisfied that since 31 December 2014 there has been no material adverse change in (a) the financial condition, financial results, business, operations or prospects of the Lessee or (b) the Lessee's ability to perform its obligations under any of its Party Documents;

3.1.6 no Total Loss of, or Major Damage to, the Aircraft shall have occurred;

3.1.7 no Obligor is required to make any deduction for or on account of Tax from any payment it may make under any of its Party Documents;

3.1.8 the representations and warranties set out in clause 10 are true and correct on and as of each such time as if each was made with respect to the facts and circumstances existing at such time; and

3.1.9 no Default shall have occurred and be continuing or would result from the drawdown of the Loan hereunder.

3.2 Waiver of conditions precedent

The conditions specified in this clause 3 are inserted solely for the benefit of the Lenders and may be waived on their behalf in whole or in part and with or without conditions by the Facility Agent acting on the instructions of the Majority Lenders.

3.3 Notification to Lenders

The Facility Agent shall notify the Lenders promptly after receipt by it of the documents and evidence referred to in clause 2.2 of the Deed of Novation and Restatement, in clause 7 of the Sale Agreement and in clause 3.1.1 in form and substance satisfactory to it.

3.4 Conditions subsequent

The Borrower shall provide the Facility Agent with all of the documents and other evidence listed in Part B of Schedule 3 in form and substance satisfactory to the Facility Agent within the timeframes specified therein.

4 Drawdown

4.1 Agreement to advance Loan

Subject to the terms and conditions of this Agreement and the Payment Direction Deed, the Lenders shall advance the Loan to the Borrower if:

4.1.1 the Facility Agent has received a Utilisation Request for the Loan from the Borrower, countersigned by the Lessee, on or before the proposed Utilisation Date specified in the Utilisation Request;

4.1.2 the USD amount specified in that Utilisation Request is not greater than the Total Aircraft Commitments for the Loan;

4.1.3 the proposed Utilisation Date specified in the Utilisation Request is a Business Day;

4.1.4 the Utilisation Request includes confirmations as to the matters contemplated by the form of Utilisation Request scheduled to this Agreement; and

4.1.5 the conditions specified in clause 3.1 have been satisfied or waived.

The Utilisation Request shall be effective on actual receipt by the Facility Agent and, once given, shall be irrevocable.

4.2 Single Utilisation

The Lenders shall only be obliged to advance one Loan in relation to the Aircraft.

4.3 Notification to Lenders

Upon receipt of a Utilisation Request complying with the terms of this Agreement, the Facility Agent shall notify each Lender thereof and of the amount and currency of that Lender's participation in the Loan.

4.4 Cancellation

4.4.1 In relation to the Aircraft, the undrawn Total Aircraft Commitment will be automatically cancelled at the close of business on the Next Rollover Date (unless otherwise agreed by the Parties). For the avoidance of doubt, the undrawn Total Facility Commitment will be automatically cancelled at the close of business on the Next Rollover Date (unless otherwise agreed by the Parties).

4.4.2 In relation to the Aircraft:

(a) the Borrower may, by giving the Facility Agent not less than five Business Days' prior notice countersigned by the Lessee, at any time before a Utilisation Request has been given in relation thereto, cancel all (but not part) of the Total Aircraft Commitments (in which case, the Total Aircraft Commitments for the Aircraft shall for this purpose be deemed to have been the amount set out in column 4 of Schedule 5 (Aircraft)); and

(b) any notice pursuant to paragraph (a) above is irrevocable. The Facility Agent shall notify the Lenders promptly of receipt of any such notice.

4.4.3 No cancellation is allowed except in accordance with the express terms of this Agreement. No amount of the Commitments cancelled under this Agreement may be reinstated subsequently.

5 Loan

5.1 Lenders' participation

5.1.1 If the conditions set out in this Agreement have been met, each Lender shall make its participation in the Loan available by the Utilisation Date through its Facility Office.

5.1.2 The amount of each Lender's participation in the Loan will be equal to the proportion borne by its Commitment to the Total Facility Commitments immediately prior to making the Loan.

5.2 Repayment of Loan

Subject only to clause 10 (Remarketing period) of the Proceeds Deed (if applicable) and clause 5.3, the Borrower shall repay the Loan in 18 consecutive instalments on each Payment Date.  Each such instalment of principal shall be in an amount equal to that set forth against the relevant Payment Date in column 2 of Schedule 4.

5.3 Prepayment of Loan

5.3.1 Subject only to clause 10 (Remarketing period) of the Proceeds Deed (if applicable), if, at any time, in any circumstance and for any reason, the Lease Termination Date occurs (including, for the avoidance of doubt, on the Expiry Date) then, on the Lease Termination Date, the Borrower shall prepay in full the Loan, together with any accrued and unpaid interest and all other amounts then due and payable by the Borrower under this Agreement or any of the other Finance Documents, without need for demand or other notice whatsoever, all of which are expressly waived by the Borrower.

5.3.2 Provided no Default is continuing, the Borrower may, if it gives the Facility Agent not less than 30 days' prior written notice, prepay the whole or any part of the Loan (but, if in part, being an amount of not less than one scheduled instalment of principal for the Loan or an integral multiple of USD500,000 on the date and in the amount specified for such purpose in that notice. Once given, any such notice shall be irrevocable.

5.3.3 Any partial prepayment of the Loan under this Agreement or any other Relevant Document shall be applied in satisfaction pro tanto of the Borrower's periodic obligations with respect to the repayment of principal in relation to the Loan, in inverse order of maturity.

5.3.4 Any prepayment (whether voluntary or not) of all or part of the Loan under this Agreement or any other Relevant Document shall be made together with:

(a) accrued interest on the amount prepaid;

(b) the Make-Whole Amount relating thereto; and

(c) any other amounts payable under this Agreement (including under clause 8.2) pursuant to that prepayment.

5.3.5 Following any partial prepayment of the Loan under this Agreement or any other Relevant Document, the Facility Agent shall supply to the other Parties a replacement Schedule 4 (in substitution for that in force immediately prior to that prepayment) setting out the future repayment obligations with respect to the Loan. In the absence of manifest error in such replacement Schedule 4, (a) the Borrower shall countersign, and procure that the Lessee countersigns, such replacement and (b) such replacement shall be conclusive and binding on the Parties and all references herein to "Schedule 4" shall be deemed to be a reference to Schedule 4 as amended by such replacement.

5.3.6 The Borrower may not prepay all or part of the Loan otherwise than in accordance with the express provisions of this Agreement.

5.4 Re-borrowing

The Borrower may not re-borrow any part of the Loan which is repaid or prepaid.

5.5 Replacement Schedules

Schedule 4 has been calculated on the assumptions that:

5.5.1 the Utilisation Date for the Loan will be the prior to the Next Rollover Date;

5.5.2 the amount of the Loan will be USD9,804,329.09;

5.5.3 the Loan will be denominated in USD.

In the event that any such assumption proves to be incorrect, the Facility Agent shall prepare a replacement of Schedule 4 on or prior to the Utilisation Date calculated by reference to the actual Utilisation Date, currency and Loan on the same basis as the existing Schedule 4. In the absence of manifest error in such replacement Schedule 4, (a) the Borrower shall countersign, and procure that the Lessee countersigns, such replacement and (b) such replacement shall be conclusive and binding on the Parties and all references herein to "Schedule 4" shall be deemed to be a reference to Schedule 4 as amended by such replacement.

6 Interest

6.1 Calculation of interest

Interest shall accrue on the Loan for each Calculation Period at the Fixed Rate.

6.2 Payment of interest

6.2.1 The Borrower shall pay accrued interest on the Loan on each Payment Date in the respective amounts specified against each such Payment Date in column 3 of Schedule 4.

6.2.2 The Borrower agrees and acknowledges that the instalment of accrued interest specified against the first Payment Date in column 3 of Schedule 4 (the "First Interest Amount")includes an amount equal to the Accrued Interest Amount, and the Borrower agrees to pay the First Interest Amount notwithstanding that the Loan was made on the Utilisation Date.

6.3 Default interest

6.3.1 If the Borrower fails to pay any amount payable by it to any Finance Party under a Relevant Document on its due date, interest shall accrue on the Unpaid Sum from the due date up to the date of actual payment (both before and after judgment) for successive Calculation Periods, each of a duration selected by the Facility Agent acting reasonably, at a rate per annum which is the rate equal to the aggregate of: (a) LIBOR, (b) the Margin, (c) the Liquidity Rate and (d) two per cent. (2%).  Any interest accruing under this clause 6.3 shall be immediately payable by the Borrower on demand by the Facility Agent made from time to time.

6.3.2 Default interest (if unpaid) arising on an Unpaid Sum will be compounded with the Unpaid Sum at the end of each Calculation Period applicable to that Unpaid Sum but will remain immediately due and payable.

6.4 Notification of rates of interest

The Facility Agent shall promptly notify the Lenders and the Obligors of the determination of a rate of interest under this Agreement.

6.5 Calculation Periods

6.5.1 The first Calculation Period for the Loan shall commence on the Utilisation Date and shall expire on the first Payment Date.

6.5.2 Each subsequent Calculation Period for the Loan shall start on the last day of the immediately preceding Calculation Period and expire on the next following Payment Date.

6.6 Absence of quotations

If LIBOR is to be determined by reference to the Reference Banks but a Reference Bank does not supply a quotation by the Quotation Time, the applicable LIBOR shall be determined on the basis of the quotations of the remaining Reference Banks.

6.7 Break Costs and Make-Whole

6.7.1 If all or part of an Unpaid Sum is paid by the Borrower on a day other than the last day of a Calculation Period for that Unpaid Sum, the Borrower shall, within five Business Days of demand by a Finance Party, pay to that Finance Party that Finance Party's Break Costs attributable thereto. Each Lender shall, as soon as reasonably practicable after a demand by the Facility Agent, provide a certificate confirming any amount claimed by it under this clause 6.7.1.

6.7.2 If all or part of the Loan is paid by the Borrower on a day or in an amount other than on a Payment Date in the amount set forth against that Payment Date in column 2 of Schedule 4, the Borrower shall, within five Business Days of demand by the Facility Agent, pay to the Facility Agent the Make-Whole Amount relating to the Loan.

6.7.3 If, pursuant to any provision of any Relevant Document, all or part of the Loan becomes due or is repaid or prepaid on any date (the "Applicable Date") falling on or prior to the first Payment Date (other than the amount of the first repayment instalment becoming due and being repaid on the first Payment Date pursuant to clause 5.2) then on the Applicable Date the Borrower shall pay to the Lenders all or a proportionate part of the Accrued Interest Amount (as applicable).

6.8 Third Parties Act

The Lessee may rely on clause 6.4 of this Agreement and may enforce its terms under the Third Parties Act.

7 [Intentionally Omitted]

8 Costs and Expenses

8.1 [Intentionally Omitted]

8.2 Amendment costs

If the Borrower or the Lessee requests an amendment, waiver or consent to or under any Relevant Document, the Borrower shall, or shall procure that the Lessee shall, as soon as practicable and in any event not later than thirty (30) days following demand, reimburse the Lenders' Representatives for the amount of all costs and expenses (including legal fees) reasonably incurred by them (or either of them) in responding to, evaluating, negotiating or complying with that request or requirement.

8.3 Enforcement costs

The Borrower shall, or shall procure that the Lessee shall, within five Business Days of demand, pay to each Finance Party the amount of all Losses (including legal fees) incurred by that Finance Party in good faith in connection with the enforcement of, or the preservation of any rights under, any Relevant Document.

9 Tax gross-up and indemnities

9.1 Definitions

9.1.1 In this Agreement:

Borrower DTTP Filing means an HM Revenue & Customs' Form DTTP2 duly completed and filed by the relevant Borrower, which:

(a) where it relates to a Treaty Lender that is the Original Lender, contains the scheme reference number and jurisdiction of tax residence stated opposite that Lender's name in Schedule 1, and is filed with HM Revenue & Customs within 30 days of the date of this Agreement; or

(b) where it relates to a Treaty Lender that is a New Lender, contains the scheme reference number and jurisdiction of tax residence stated in respect of that Lender in the relevant Transfer Certificate, and is filed with HM Revenue & Customs within 30 days of that Transfer Date;

Protected Party means a Finance Party which is or will be subject to any liability, or required to make any payment, for or on account of Tax in relation to a sum received or receivable (or any sum deemed for the purposes of Tax to be received or receivable) under a Relevant Document;

Qualifying Lender means:

(a) a Lender which is beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document and is:

(i) a Lender:

(A) which is a bank (as defined for the purpose of section 879 of the ITA) making an advance under a Finance Document and is within the charge to United Kingdom corporation tax as respects any payments of interest made in respect of that advance or would be within such charge as respects such payments apart from section 18A of the CTA; or

(B) in respect of an advance made under a Finance Document by a person that was a bank (as defined for the purpose of section 879 of the ITA) at the time that that advance was made and within the charge to United Kingdom corporation tax as respects any payments of interest made in respect of that advance; or

(ii) a Lender which is:

(A) a company resident in the United Kingdom for United Kingdom tax purposes;

(B) a partnership each member of which is:

(1) a company so resident in the United Kingdom; or

(2) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the CTA;

(C) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company; or

(iii) a Treaty Lender; or

(b) a Lender which is a building society (as defined for the purpose of section 880 of the ITA) making an advance under a Finance Document;

Tax Confirmation means a confirmation by a Lender that the person beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document is either:

(a) a company resident in the United Kingdom for United Kingdom tax purposes;

(b) a partnership each member of which is:

(i) a company so resident in the United Kingdom; or

(ii) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the CTA; or

(c) a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company;

Tax Credit means a credit against, relief or remission for, or repayment of any Tax;

Tax Deduction means a deduction or withholding for or on account of Tax from a payment under a Finance Document;

Tax Payment means either the increase in a payment made by the Borrower to a Finance Party under clause 9.2 (Tax gross-up) or a payment under clause 9.3 (Tax indemnity);

Treaty Lender means a Lender which:

(a)is treated as a resident of a Treaty State for the purposes of the Treaty;

(b) does not carry on a business in the United Kingdom through a permanent establishment with which that Lender's participation in the Loan is effectively connected; and

(c) is entitled, under the terms of the Treaty, to claim full exemption from tax imposed by the United Kingdom on interest paid to it pursuant to the Loan;

Treaty State means a jurisdiction having a double taxation agreement (a Treaty) with the United Kingdom which makes provision for full exemption from tax imposed by the United Kingdom on interest; and

UK Non-Bank Lender means a Lender which gives a Tax Confirmation in the Transfer Certificate which it executes on becoming a Party.

9.1.2 Unless a contrary indication appears, in this clause 9 a reference to determines or determined means a determination made in the absolute discretion of the person making the determination.

9.2 Tax gross-up

9.2.1 The Borrower shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.

9.2.2 The Borrower shall promptly upon becoming aware that it must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Facility Agent accordingly. Similarly, a Lender shall notify the Facility Agent on becoming so aware in respect of a payment payable to that Lender. If the Facility Agent receives such notification from a Lender it shall notify the Borrower.

9.2.3 If a Tax Deduction is required by law to be made by the Borrower, the amount of the payment due from the Borrower shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.

9.2.4 A payment shall not be increased under Clause 9.2.3 above by reason of a Tax Deduction on account of Tax imposed by the United Kingdom, if on the date on which the payment falls due:

(a) the payment could have been made to the relevant Lender without a Tax Deduction if the Lender had been a Qualifying Lender, but on that date that Lender is not or has ceased to be a Qualifying Lender other than as a result of any change after the date it became a Lender under this Agreement in (or in the interpretation, administration, or application of) any law or Treaty or any published practice or published concession of any relevant taxing authority; or

(b) the relevant Lender is a Qualifying Lender solely by virtue of paragraph (a)(ii) of the definition of Qualifying Lender and:

(i) an officer of H.M. Revenue & Customs has given (and not revoked) a direction (a "Direction") under section 931 of the ITA which relates to the payment and that Lender has received from the Borrower making the payment or from the Borrower a certified copy of that Direction; and

(ii) the payment could have been made to the Lender without any Tax Deduction if that Direction had not been made; or

(c) the relevant Lender is a Qualifying Lender solely by virtue of paragraph (a)(ii) of the definition of Qualifying Lender and:

(i) the relevant Lender has not given a Tax Confirmation to the Borrower; and

(ii) the payment could have been made to the Lender without any Tax Deduction if the Lender had given a Tax Confirmation to the Borrower, on the basis that the Tax Confirmation would have enabled the Borrower to have formed a reasonable belief that the payment was an "excepted payment" for the purpose of section 930 of the ITA; or

(d) the relevant Lender is a Treaty Lender and the Obligor making the payment is able to demonstrate that the payment could have been made to the Lender without the Tax Deduction had that Lender complied with its obligations under Clause 9.2.7 or Clause 9.2.8 (as applicable) below.

9.2.5 If the Borrower is required to make a Tax Deduction, the Borrower shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.

9.2.6 Within 30 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Borrower shall deliver to the Facility Agent for the Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.

9.2.7

(a) Subject to paragraph (b) below, a Treaty Lender and the Borrower shall co-operate in completing any procedural formalities necessary for the Borrower to obtain authorisation to make payments without a Tax Deduction.

(b) A New Lender that is a Treaty Lender that holds a passport under the HMRC DT Treaty Passport scheme, shall confirm its scheme reference number and its jurisdiction of tax residence in the Transfer Certificate which it executes and, having done so, that Lender shall be under no obligation pursuant to paragraph 9.2.7(a).

(c) Where the Borrower is required to make a Tax Deduction and the amount of a payment due from the Borrower has been increased pursuant to Clause 9.2.3 above, subject to the Borrower having first complied with its obligations under Clause 9.2.6 above, the Finance Party entitled to that payment shall use reasonable endeavours to claim a repayment from HMRC in respect of that Tax Deduction and, on receipt of such a repayment, shall pay to the Borrower an amount equal to that repayment.

9.2.8 If a Lender has confirmed its scheme reference number and its jurisdiction of tax residence in accordance with paragraph 9.2.7(b) and:

(a) a Borrower making a payment to that Lender has not made a Borrower DTTP Filing in respect of that Lender; or

(b) a Borrower making a payment to that Lender has made a Borrower DTTP Filing in respect of that Lender but:

(i) that Borrower DTTP Filing has been rejected by HM Revenue & Customs;

(ii) HM Revenue & Customs has not given the Borrower authority to make payments to that Lender without a Tax Deduction within 60 days of the date of the Borrower DTTP Filing; or

(iii) HM Revenue & Customs has given authority for the Borrower to make payment to that Lender without a Tax Deduction and that authority expires or is withdrawn by HMRC,

and in each case, the Borrower has notified that Lender in writing, that Lender and the Borrower shall co-operate in completing any additional procedural formalities necessary for that Borrower to obtain authorisation to make that payment without a Tax Deduction.

9.2.9 If a Lender has not confirmed its scheme reference number and jurisdiction of tax residence in accordance with paragraph 9.2.7(b) above, the Borrower shall not make a Borrower DTTP Filing or file any other form relating to the HMRC DT Treaty Passport scheme in respect of that Lender's Commitment(s) or its participation in any Loan unless the Lender otherwise agrees.

9.2.10 A Borrower shall, promptly on making a Borrower DTTP Filing, deliver a copy of that Borrower DTTP Filing to the Facility Agent for delivery to the relevant Lender.

9.2.11 A UK Non-Bank Lender shall promptly notify the Borrower and the Facility Agent if there is any change in the position from that set out in the Tax Confirmation.

9.2.12 Each Lender which becomes a Party to this Agreement after the date of this Agreement shall indicate, in the Transfer Certificate which it executes on becoming a Party, which of the following categories it falls in:

(a) not a Qualifying Lender;

(b) a Qualifying Lender (other than a Treaty Lender); or

(c) a Treaty Lender.

If a New Lender fails to indicate its status in accordance with this Clause 9.2.12 then such New Lender shall be treated for the purposes of this Agreement (including by each Obligor) as if it is not a Qualifying Lender until such time as it notifies the Facility Agent which category applies (and the Facility Agent, upon receipt of such notification, shall inform the Borrower).  For the avoidance of doubt, a Transfer Certificate shall not be invalidated by any failure of a Lender to comply with this Clause 9.2.12.

9.3 Tax indemnity

9.3.1 The Borrower shall (within five Business Days of demand by the Facility Agent) pay to a Protected Party an amount equal to any Loss which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.

9.3.2 Clause 9.3.1 shall not apply with respect to any Tax imposed on a Protected Party:

(a) as a result of a breach by such Protected Party of any of its express obligations under any of its Party Documents (to the extent that such imposition is not caused by the breach or misrepresentation of any other party to the Relevant Documents under or in respect of the Relevant Documents or the negligence or fraudulent or wilful misconduct of any such other party); or

(b) as a result of any negligence or wilful misconduct by such Protected Party with respect to any of the transactions contemplated by, or the performance of any of its express obligations under, its Party Documents; or

(c) as a result of any reasonably avoidable failure or reasonably avoidable delay by such Protected Party to file any relevant Tax return or Tax computation which such Protected Party was obliged to file by any applicable law in its jurisdiction of organisation (to the extent that such imposition is not caused by the breach or misrepresentation of any other party to the Relevant Documents under or in respect of the Relevant Documents or the negligence or fraudulent or wilful misconduct of any such other party); or

(d) as a result of any breach by such Protected Party of applicable law of its jurisdiction of organisation (to the extent that such imposition is not caused by the breach or misrepresentation of any other party to the Relevant Documents under or in respect of the Relevant Documents or the negligence or fraudulent or wilful misconduct of any such other party); or

(e) by any taxing authority or governmental subdivision thereof of its jurisdiction of organisation (or, if different, the jurisdiction in which such Protected Party is resident for tax purposes) with respect to, or measured by reference to, the net income, capital gains or profits of such Protected Party (but not any sum deemed to be received or receivable by it), except Taxes which arise solely by reason of any breach by any Obligor (or by any Permitted Sub-Lessee or any other lessee or user of the Aircraft or the Companion Aircraft) of any of their respective representations, warranties, obligations or covenants under any Relevant Document; or

(f) other than by the jurisdiction of its organisation, that would not have been imposed or payable but for the existence of a connection between such Protected Party and the jurisdiction imposing such Taxes (whether by reason of residence, domicile, a place of business or management, a permanent establishment, a branch or agency or otherwise), except Taxes (A) in respect of which the connection between such Protected Party and the jurisdiction imposing the Tax arises solely by reason of any or all of (x) the negotiation, execution, enforcement, performance, registration or delivery of any of  the Relevant Documents in the jurisdiction imposing the Taxes, (y) the presence, use, operation, maintenance, alteration, registration, repair or replacement of the Aircraft or, in any such case, any part thereof in such jurisdiction or elsewhere or (z) the presence, residence or domicile of the Borrower, the Lessee, any Permitted Sub-Lessee or any other user of the Aircraft or any other party to a Relevant Document in, or payment of any amount by any party under the Relevant Documents from or through, such jurisdiction or (B) imposed as a result of (x) the repair, overhaul, maintenance, improvement, modification or replacement of the Aircraft or, in any such case, any part thereof, (y) the gross negligence, wilful misconduct or reckless disregard with knowledge of the probable consequences of the Borrower, the Lessee, any Permitted Sub-Lessee or other lessee or user of the Aircraft or any other party to a Relevant Document or (z) the breach by the Borrower, the Lessee, any Permitted Sub-Lessee or any other lessee or user of the Aircraft or any other party to a Relevant Document of any of their respective representations, warranties or covenants under any of the Relevant Documents; or

(g) to which clause 9.7 (Value added tax) or clause 9.2 (Tax gross-up) relates, whether or not the relevant Protected Party is entitled to indemnity, payment or compensation thereunder; or

(h) to the extent that the relevant Protected Party has been indemnified against the same (or would, but for the application of an applicable exclusion in the Relevant Documents which expressly applies to such Protected Party (other than clauses 10.1.2(c) and 10.1.2(d) of the Lease), have been indemnified against) under the Relevant Documents.

9.3.3 A Protected Party making or intending to make a claim under clause 9.3.1 shall promptly notify the Facility Agent of the event which will give, or has given, rise to the claim, following which the Facility Agent shall notify the Borrower.

9.3.4 A Protected Party shall, on receiving a payment from the Borrower under this clause 9.3, notify the Facility Agent.

9.3.5 If any Protected Party becomes aware of any Tax which may give rise to an indemnity obligation on the part of the Borrower under this clause 9.3, such Protected Party shall promptly notify the Borrower thereof and, if requested by the Borrower, shall consult (for a period of not more than 30 days) with the Borrower to consider what action may properly be taken to defend or otherwise resist or mitigate the Tax. If such Protected Party and the Borrower consider that such action should be taken as aforesaid, either such Protected Party will take such action or, if such Protected Party so agrees, the Borrower shall be entitled to take such action in the name of such Protected Party, provided that:

(a) no such action may be taken by the Borrower or shall be required to be taken by such Protected Party unless adequate provision in respect of the amount to be indemnified and any associated Losses has been made by the Borrower to the reasonable satisfaction of such Protected Party (having regard to the nature and amount to be indemnified); and

(b) the Borrower shall indemnify such Protected Party in full on demand in respect of any properly incurred Losses suffered or incurred by such Protected Party in connection with any action taken by such Protected Party or the Borrower as aforesaid; and

(c) no Default, Event of Default or Relevant Event is continuing; and

(d) such action does not, in the opinion of such Protected Party, give rise to any risk of (i) any criminal or civil liability on its part, (ii) any risk of the sale, loss or forfeiture of the Aircraft or any part thereof or any interest therein or (iii) any damage to the reputation of such Protected Party or any of its Affiliates; and

(e) if such Protected Party so requires, the Borrower shall have furnished it with a legal opinion (from independent counsel reasonably acceptable to such Finance Party) confirming the reasonable likelihood of such action being determined in favour of such Protected Party.

Each Protected Party shall be entitled to prohibit participation by the Borrower in the defence of a Tax if such Protected Party considers, acting reasonably, that it is necessary that such defence be conducted by it and its own advisers, provided that notwithstanding such prohibition the Protected Party shall continue to keep the Borrower informed of developments relating to such defence.

Failure by any Protected Party to comply with any of the foregoing provisions of this clause 9.3.5 shall not prejudice or discharge any of the indemnity obligations of the Borrower under this clause 9.3.

9.4 Tax Credit

If the Borrower makes a Tax Payment and the relevant Finance Party determines that:

(a) a Tax Credit is attributable either to an increased payment of which that Tax Payment forms part, or to that Tax Payment; and

(b)that Finance Party has obtained, utilised and retained that Tax Credit,

the Finance Party shall, provided no Default is continuing, pay an amount to the Borrower which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made by the Borrower.

9.5 Indemnities on after Tax basis

9.5.1 If and to the extent that any sum payable to any Indemnitee by the Borrower under any Relevant Document by way of indemnity or reimbursement proves to be insufficient, by reason of any Taxation suffered thereon, for that Indemnitee to discharge the corresponding liability to a third party, or to reimburse that Indemnitee for the cost incurred by it in discharging the corresponding liability to a third party, the Borrower shall pay that Indemnitee such additional sum as (after taking into account any Taxation suffered by that Indemnitee on such additional sum) shall be required to make up the relevant deficit.

9.5.2 If and to the extent that any sum (the indemnity sum) constituting (directly or indirectly) an indemnity to any Indemnitee but paid by the Borrower to any person other than that Indemnitee, shall be treated as taxable in the hands of the Indemnitee, the Borrower shall pay to that Indemnitee such sum (the compensating sum) as (after taking into account any Taxation suffered by that Indemnitee on the compensating sum) shall reimburse that Indemnitee for any Taxation suffered by it in respect of the indemnity sum.

9.5.3 For the purposes of this clause 9.5 a sum shall be deemed to be taxable in the hands of a Indemnitee if it falls to be taken into account in computing the profits or gains of that Indemnitee for the purposes of Taxation and, if so, that Indemnitee shall be deemed to have suffered Taxation on the relevant sum at the rate of Taxation applicable to that Indemnitee's profits or gains for the period in which the payment of the relevant sum falls to be taken into account for the purposes of such Taxation.

9.6 Stamp taxes

The Borrower shall pay and, within five Business Days of demand, indemnify each Finance Party against any and all Losses that Finance Party incurs in relation to any and all stamp duty, documentary, registration and other similar Taxes payable in respect of any Relevant Document or any of the transactions contemplated thereby.

9.7 Value added tax

All amounts (including in respect of fees, costs and expenses and other Losses) set out or expressed in a Relevant Document to be payable by any Party to a Finance Party are exclusive of any VAT which is payable in respect thereof. If VAT is payable in respect thereof, the Borrower shall pay the full amount due under that Relevant Document and shall in addition pay all such VAT and indemnify each Finance Party against any claim for the same. The relevant Finance Party shall, promptly following request of the paying Party, provide an appropriate VAT invoice to such Party (provided that any failure to do so shall not prejudice or discharge any obligation of the Borrower under this clause 9.7).

10 Representations and warranties

The Borrower makes the representations and warranties set out in this clause 10 on the date of this Agreement.

10.1 Status

10.1.1 It is a company, duly incorporated and validly existing under the law of its jurisdiction of incorporation.

10.1.2 It has the power to own its assets and carry on its business as it is being conducted.

10.1.3 Its Centre of Main Interests is in England and Wales. It has no "establishment" (as that term is used in the Insolvency Regulation) in any other jurisdiction.  Its central management, decision making, the places of residence of its directors, administration and the place at which meetings of its board of directors are held, are at all times situated in England and Wales.

10.2 Binding obligations

The obligations expressed to be assumed by it in its Party Documents are, subject to any general principles of law limiting its obligations which are specifically referred to in any legal opinion delivered pursuant to clause 3, legal, valid, binding and enforceable obligations.

10.3 Non-conflict with other obligations

The entry into and performance by it of, and the transactions contemplated by, its Party Documents do not and will not conflict with:

(a) any Applicable Law applicable to it;

(b) its constitutional documents; or

(c) any agreement or instrument binding upon it or any of its assets.

10.4 Power and authority

It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, its Party Documents and the transactions contemplated by its Party Documents.

10.5 No other business

It has not:

(a) carried on any business other than the transactions contemplated by the Relevant Documents and any business incidental thereto; or

(b) entered into any contract or agreement with any person or otherwise created or incurred, any liability to any person, in each case other than as provided for in or contemplated by the Relevant Documents and the documents contemplated thereby or other than such liabilities with respect to Taxes, ordinary operating costs and overhead expenses as have arisen or may arise in the ordinary course of its business as referred to in paragraph (a) above; or

(c) had any employees.

10.6 No Default

No Default has occurred and is continuing.

10.7 Validity and admissibility in evidence

10.7.1 All Authorisations required or desirable:

(a) to enable it lawfully to enter into, exercise its rights and comply with its obligations in its Party Documents; and

(b) to make its Party Documents admissible in evidence in any relevant jurisdiction,

have been obtained or effected and are in full force and effect.

10.8 Governing law and enforcement

10.8.1 The choice of governing law stipulated in the Relevant Documents is a valid choice and is binding on the Borrower under the laws of, and will be recognised and given effect to by the courts of, its jurisdiction of incorporation, subject to any general principles of law specifically referred to in any legal opinion delivered pursuant to Clause 3.

10.8.2 Any judgment in relation to a Relevant Document obtained in the place stipulated therein as having jurisdiction in relation thereto will be recognised and enforced by the courts of its jurisdiction of incorporation, subject to any general principles of law specifically referred to in any legal opinion delivered pursuant to Clause 3.

10.9 Deduction of Tax

It is not required to make any deduction for or on account of Tax from any payment it may make to a Qualifying Lender under any of its Party Documents.

10.10 No filing or stamp taxes

10.10.1 Subject to the following provisions of this clause 10.10, under the laws of its jurisdiction of incorporation it is not necessary or advisable that any of the Relevant Documents be filed, recorded or enrolled with any court or other authority or that any stamp, registration or similar tax be paid on or in relation to the Relevant Documents or the transactions contemplated thereby.

10.10.2 It is necessary to register with the United Kingdom Companies House particulars of any charges created under the Security Assignment and each Aircraft Mortgage, in each case within 21 days of the execution thereof.

10.10.3 It is necessary to register the Bill of Sale and the Deed of Novation and Restatement with the MPR and the AMR.

10.10.4 It is necessary to record the IDERA with the Aviation Authority in Spain and to register with the International Registry each international interest referred to in paragraph 8 of Schedule 3 Part B.

10.10.5 It is necessary to obtain the unique authorisation codes for the Airframe from the MPR in respect of the registrations with the International Registry of each international interest referred to in paragraph 8 of Schedule 3 Part B (the "Unique Authorisation Codes").

10.11 Pari passu ranking

Its payment obligations under its Party Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law applying to companies generally.

10.12 Title warranty

Subject to the completion of the purchase of the Aircraft pursuant to and in accordance with the Sale Agreement, the Borrower will, on the Utilisation Date and at all times thereafter during the Aircraft Security Period, have full legal and beneficial ownership of and title to the Aircraft, free from any Security other than Permitted Liens.

10.13 Applicable Law

10.13.1 Each Aerocentury Related Party is in compliance with:

(a) all Applicable Laws relating to corruption or bribery to which it is subject; and

(b) all other Applicable Laws to which it is subject and in respect of which any non-compliance (i) would, or would be reasonably likely to, have a material adverse effect on its ability to perform its obligations under its Party Documents or (ii) might result in a Security (other than a Permitted Lien) arising over the Aircraft or any other asset or right subject to any of the Security Documents.

10.13.2 No Prohibited Payment has been made or provided, directly or indirectly, by any Aerocentury Related Party, their respective officers or directors or any other person acting on their behalf to, or for the benefit of, any Relevant Authority (or any officer, director or any other person with management responsibilities in, any Relevant Authority) in connection with any Relevant Document.

10.13.3 No Aerocentury Related Party nor any of its directors or officers (or, to the best of its knowledge, any of its Affiliates) is engaged, directly or indirectly, in any activity which is prohibited under the Sanctions, including Specified Sanctioned Dealings.

10.13.4 No Aerocentury Related Party nor any of its Subsidiaries (or, to the best of its knowledge, any director, officer, employer, agent, Affiliate or representative of such Aerocentury Related Party or any of its Subsidiaries) is an individual or entity that is, or is owned or controlled by, or is acting on behalf of a person that is:

(a) the subject of any Sanctions; or

(b) located, organised or resident in a country or territory that is, or whose government is, the subject of territorial Sanctions, unless otherwise notified to each Finance Party.

10.13.5 No Aerocentury Related Party has (and, to the best of its knowledge and belief, no director, officer, shareholder, Affiliate and/or legal adviser of any Aerocentury Related Party has) been convicted in a court of any jurisdiction for violation of any laws relating to corruption, money laundering, fraud or any similar laws.

10.14 Survival and Repetition

The representations and warranties in this clause 10 will (a) survive the execution of this Agreement and the Utilisation Date and (b) be deemed to be repeated by the Borrower on the date of the Utilisation Request, on the Utilisation Date and, save for the representations and warranties set out in Clauses 10.6, 10.9 and 10.10, on each Payment Date, in each case with reference to the facts and circumstances then existing.

11 Undertakings

11.1 The Borrower undertakes in favour of each Finance Party in the terms set out in this clause 11, which undertakings (a) shall remain in force throughout the Aircraft Security Period and (b) shall be performed at no cost to any Finance Party.

11.1.1 Performance of obligations

The Borrower shall perform all of its obligations under its Party Documents.

11.1.2 Amendments, etc.

The Borrower shall not, without the prior written consent of the Facility Agent:

(a) enter into any agreement other than the Relevant Documents;

(b) agree to any amendment to any Relevant Document;

(c) release any other party from any of its obligations, or waive any breach of any of the obligations of any other party, under any Relevant Document;

(d) grant any consent requested by another party (other than a Lenders' Representative) under any Relevant Document;

(e) exercise any right it may have to terminate any Relevant Document or the leasing of the Aircraft thereunder;

(f) exercise any other right, discretion, election or option, or give any notice, under any Relevant Document (other than this Agreement);

(g) consent to any act or omission which would otherwise constitute a breach of any Relevant Document by any other party; or

(h) exercise any right of set-off under or in relation to any Relevant Document or any payment thereunder (whether pursuant to clause 8.8 of the Lease Agreement or otherwise).

The Borrower shall, if so requested by notice in writing by the Facility Agent, exercise those of its rights, powers or discretions under the Lease as the Facility Agent may require, including proceeding by appropriate court action to enforce performance by the Lessee of its obligations under the Lease, terminating the leasing of the Aircraft under the Lease, taking possession of the Aircraft and otherwise asserting or enforcing its rights as "Lessor" thereunder.

11.1.3 Single Purpose Covenant

The Borrower shall not, without the prior written consent of the Facility Agent:

(a) carry on any business other than the transactions contemplated by the Relevant Documents and any business incidental thereto;

(b) enter into any contract or agreement with any person or otherwise create or incur, any liability to any person, in each case other than as provided for in, or contemplated by, the Relevant Documents, and the documents contemplated by the Relevant Documents, other than such liabilities with respect to Taxes, ordinary operating costs and overhead expenses as have arisen or may arise in the ordinary course of its business as referred to in paragraph (a) above;

(c) have any employees;

(d) cease to be validly existing and/or in good standing, or cease to be resident for tax purposes, or cease to have its Centre of Main Interests, in its jurisdiction of incorporation as at the date of this Agreement;

(e) redeem, repurchase, defease, retire or repay any of its share capital or resolve to do so;

(f) declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its share capital (or any class of its share capital);

(g) pay, repay or distribute any dividend or share premium reserve;

(h) pay any management, advisory or other fee to any Aerocentury Related Party (other than to the Lease Manager pursuant to and in accordance with the Lease Management Agreement);

(i) issue any shares or alter any rights attaching to its issued shares as at the date of this Agreement;

(j) make any loan;

(k) incur any borrowing (other than under this Agreement); or

(l) repay or prepay any borrowing (other than the Loan).

11.1.4 Authorisations, etc.

(a) The Borrower shall promptly:

(i) obtain, comply with and do all that is necessary to maintain in full force and effect; and

(ii) supply certified copies to the Facility Agent of,

any Authorisation required under any Applicable Law of its jurisdiction of incorporation to enable it to perform its obligations under its Party Documents and to ensure the legality, validity, enforceability or admissibility in evidence in its jurisdiction of incorporation of its Party Documents.

(b) It shall procure that all relevant protection and perfection filings to be made in its jurisdiction of incorporation in respect of the Security Documents are promptly and timely made, taking account of Applicable Law.

(c) It shall at all times comply with Applicable Law.

(d) It shall not make any Prohibited Payment.

(e) The Borrower will not use, contribute or otherwise make available the proceeds of the Loan for any purpose which is prohibited under the Sanctions, including to any person for the purpose of financing directly or indirectly the activities of any person that (i) is listed on, or owned or controlled by a person that is listed on, or acting on behalf of a person listed on, any list administered by a Sanctions Authority or (ii) is in a country which is subject to Sanctions, to the extent such financing would be prohibited by the Sanctions.

(f) The Borrower and its directors and officers will not (and the Borrower will take all reasonable steps to ensure that none of its directors, officers or Affiliates will), directly or indirectly, engage in any activity which is prohibited under the Sanctions (unless any such activity is conducted in compliance with a permit, certificate or other approval issued under the Sanctions), including Specified Sanctioned Dealings.

11.1.5 Negative Pledge

The Borrower shall not create (or consent to the creation of) or allow to exist any Borrower's Lien over or with respect to, nor will it sell, transfer or otherwise dispose of, all or any of the Collateral or the Assigned Property or its business or assets, other than (in any such case) as expressly permitted by the terms of the Finance Documents or as may otherwise be agreed in writing by the Facility Agent.

11.1.6 Notification of Default

The Borrower shall notify the Facility Agent of any Default or Relevant Event that is continuing as soon as practicable after becoming aware of its occurrence.

11.1.7 Information: miscellaneous

The Borrower shall promptly supply to the Facility Agent (in sufficient copies for all the Lenders, if the Facility Agent so requests) such information regarding its financial condition and business as any Finance Party (through the Facility Agent) may reasonably request.

11.1.8 Notices

The Borrower shall within three (3) Business Days after the receipt by the Borrower of any written notice or other document delivered to it pursuant to the Relevant Documents, deliver a copy to the Facility Agent.

11.1.9 Further Assurance

The Borrower shall execute, acknowledge, deliver, file and register all such additional agreements, instruments, certificates, documents and assurances and perform such other acts or things as the Facility Agent shall reasonably request:

(a) to maintain the registration of the Aircraft in accordance with the Lease;

(b) as a consequence of the Cape Town Convention being or becoming Applicable Law in relation to the Borrower, the Lessee, any Permitted Sub-Lessee or the Airframe or any of the Engines,or Spain being a "Contracting State" for the purposes of the Cape Town Convention, including, without limitation, where this paragraph (b) is applicable, for the purposes of effecting registration on the International Registry of (thereby establishing, preserving or varying the priority of) any applicable international interests, prospective international interests, sales, prospective sales, assignments and prospective assignments and the effect of any agreements relating to priority and subordination, each as created by or contemplated by the Relevant Documents, and/or otherwise ensuring the enforceability of the Relevant Documents in the light of the terms of the Cape Town Convention and having regard to the intent and terms of the Relevant Documents and/or protecting the rights and remedies of the Finance Parties thereunder, including (x) executing and submitting, or procuring the execution of and submission of, an irrevocable de-registration and export request authorisation in respect of the Aircraft in favour of the Security Agent to the aviation authority of the State of registry for recordation, and (y) amending, restating, revising, novating, terminating and replacing, executing, re-executing or otherwise adapting any Relevant Document in such a manner as to permit the interests created under the Relevant Documents to constitute international interests to the satisfaction of the Security Agent and consenting to any registrations on the International Registry as requested by the Security Agent, provided that no action shall be required if it (i) would have the effect of materially altering the terms of this Agreement or otherwise involve any re-negotiation of any of the substantive terms of the Relevant Documents or (ii) it would, or would be reasonably likely to, adversely affect the tax treatment of the transactions contemplated by the Relevant Documents (and the Borrower further undertakes that it will not register or attempt to register or discharge or vary any international interest, or make or attempt to make any other registration or any discharge or amendment of any other registration or consent to any such action, on the International Registry, in relation to the Lessee, any Permitted Sub-Lessee, any Finance Party, the Aircraft, the Airframe, the Engines or any Part, unless requested to do so by the Facility Agent); or

(c) otherwise to give effect to the purposes and intent of the Relevant Documents or the transactions thereby contemplated or to protect the rights and remedies of the Finance Parties thereunder.

Without prejudice to the generality of the foregoing, if requested by the Facility Agent at any time during the Aircraft Security Period, the Borrower shall grant and register in favour of the Security Agent a mortgage over the Aircraft governed by the laws of the State of Registration, and execute, acknowledge, deliver, file and register all such additional agreements, instruments, certificates, documents and assurances and perform such other acts or things as the Facility Agent shall reasonably request in connection therewith, provided that the cost of any registration of such mortgage in the State of Registration shall, to the extent that it exceeds EUR 5,000, be borne by the Lenders (pro rata or as the Lenders may otherwise agree inter se) if: (i) no Event of Default or Termination Event has occurred and is continuing and (ii) the State of Registration is Spain.

11.1.10 "Know your customer" checks

If:

(a) the introduction of or any change in (or in the interpretation, administration or application of) any Applicable Law made after the date of this Agreement;

(b) any change in the status of the Borrower or the composition of its shareholders after the date of this Agreement; or

(c) a proposed assignment or transfer by a Lender of any of its rights and obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,

obliges the Facility Agent or any Lender (or, in the case of paragraph (c) above, any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, the Borrower shall promptly upon the request of the Facility Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Facility Agent (for itself or on behalf of any Lender) or any Lender (for itself or, in the case of the event described in paragraph (c) above, on behalf of any prospective new Lender) in order for the Facility Agent, such Lender (or, in the case of the event described in paragraph (c) above, any prospective new Lender) to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all Applicable Laws pursuant to the transactions contemplated in the Finance Documents.

11.1.11 Post-lease responsibility

(a) During the Post-Lease Responsibility Period for the Aircraft, the Borrower will comply with its obligations relating to the Aircraft as set out in Schedule 8.

(b) For the period of two years following the expiry of the Aircraft Security Period for the Aircraft, the Borrower shall procure that the Finance Parties are named as additional assureds in relation to the liability insurances for the Aircraft for an amount and on terms otherwise complying with those set out in Schedule 8.

11.1.12 Cape Town Convention

(a) Definitions

In this Agreement, in the context of any references to the Cape Town Convention, the following expressions have the respective meanings given to them in Article 1 of the Consolidated Text and in the context of any references to the Cape Town UK Regulations, such expressions have the respective meanings given to them in Regulation 5 of the Cape Town UK Regulations:

aircraft engines

aircraft object

aircraft register

airframe

applicable law

assignment

associated rights

chargee

creditor

default

international interest

International Registry

irrevocable de-registration and export request authorisation

non-consensual right or interest

prospective international interest

prospective sale

sale

security agreement

security interest

subordination

State of registry

and the expression "situated" will have the meaning given to it in Article 4 of the Consolidated Text.

(b) Cape Town Default

For the purposes of Article 17(1) of the Consolidated Text (including as incorporated into English law pursuant to Regulation 18 of the Cape Town UK Regulations) each of the events which constitutes an Event of Default is an event that constitutes a default or otherwise gives rise to the rights and remedies specified in Article 12 to 15 and 20 of the Consolidated Text including, for the avoidance of doubt, Article 20(1)(e) (including as incorporated into English law pursuant to Regulation 19, 20, 22, 23 and 25 of the Cape Town UK Regulations).  The parties agree that the Security Agent shall have the remedies referred to in Articles 12(1), 15(1) and 20(1) (including 20(1)(e)) of the Consolidated Text.

(c) Borrower Cape Town representations

Without prejudice to clause 11.1.9, in respect of each Aircraft Mortgage, the Borrower represents and warrants in favour of the Security Agent as set out below (and such representations and warranties are deemed to be repeated on the date of each Aircraft Mortgage):

(i) the Airframe is an airframe and an aircraft object; and each Engine is an aircraft engine and an aircraft object for the purposes of Article 10 of the Consolidated Text;

(ii) the Borrower is situated in the United Kingdom for the purposes of Article 3(1) of the Consolidated Text;

(iii) the Airframe is registered in the aircraft register of Spain, which is the State of registry of the Airframe for the purposes of Article 3(3) of the Consolidated Text;

(iv) the Borrower has the power to dispose of the Airframe and each Engine for the purposes of Article 10 of the Consolidated Text;

(v) each Aircraft Mortgage is a security agreement and the security interest constituted by such Aircraft Mortgage is effective to constitute a valid international interest in favour of the Security Agent as creditor and chargee over the Airframe and each Engine for the purposes of the Cape Town Convention;

(vi) no international interests or prospective international interests have been registered with the International Registry in relation to the Airframe or any Engine, other than to the extent that the registrations of such international interests or prospective international interests have been discharged on or before the date hereof to the satisfaction of the Security Agent;

(vii) no sale or prospective sale has been registered with the International Registry in relation to the Airframe or any Engine, other than to the extent that such registration relates to a sale or prospective sale of the Airframe or, as the case may be, Engine that occurred prior to the sale of such aircraft object to the Borrower;

(viii) no non-consensual right or interest exists in relation to the Airframe or any Engine which, under the laws of (i) the jurisdiction where the Borrower is situated, or (ii) the State of registry of the Airframe, has priority over the international interest constituted in respect of the Airframe or, as applicable, the relevant Engine, in favour of the Security Agent as creditor and chargee pursuant to the Aircraft Mortgage, by virtue of a declaration made by such Borrower jurisdiction or by such State of registry in accordance with Article 52 of the Consolidated Text (including as incorporated into English law by Regulation 18 of the Cape Town UK Regulations).

(d) Borrower Cape Town Undertakings

The Borrower gives the following undertakings in favour of the Security Agent for the duration of the Aircraft Security Period:

(i) the Borrower shall cooperate with the Security Agent and will at the Borrower's expense take all actions as may be reasonably requested of it, with respect to effecting registration of any international interest of the Security Agent as creditor and chargee, in respect of each of the Airframe and Engines and the assignment of associated rights and transfer of related international interest in favour of the Security Agent as assignee pursuant to the Security Assignment in priority to all other registrable interests, and shall do all such acts and execute all such documents as may be necessary to perfect and preserve such priority filings and in order to receive the benefit of all rights, powers and remedies permitted by the Consolidated Text;

(ii) if an Engine is replaced by a replacement engine purchased in accordance with clause 14.3 of the Lease, the Borrower and the Security Agent shall, on or prior to title to the replacement engine being vested in the Borrower, take such steps as shall be available to them under the terms of the Consolidated Text (including as incorporated into English law by Regulation 17 of the Cape Town UK Regulations) and as are necessary:

(A) to constitute in favour of the Security Agent as a creditor and a chargee, an international interest in the replacement engine, including (but not limited to) entering into a supplemental aircraft mortgage with the Security Agent in respect of such the replacement engine in substantially the form of each Aircraft Mortgage in respect of the replaced Engine; and

(B) to register such international interest in accordance with Chapter V of the Consolidated Text (including as incorporated into English law by Regulation 17 of the Cape Town UK Regulations); and

(iii) the Borrower shall procure that the Lessee shall, on the Utilisation Date or as soon as practicable after the Utilisation Date, execute and deliver to the Aviation Authority (being the registry authority for the purposes of the Cape Town Convention) the IDERA in favour of the Security Agent.

11.1.13 Lessee Deregistration Power of Attorney

The Borrower shall not (without the Facility Agent's consent) exercise any rights or otherwise act under the Lessee Deregistration Power of Attorney until the end of the Aircraft Security Period.

11.1.14 Effective Time Notice

The Borrower shall not execute the Effective Time Notice without the Facility Agent's prior consent.

11.2 Finance Party undertakings

11.2.1 Each Lender shall promptly upon the request of the Facility Agent supply, or procure the supply of, such documentation and other evidence relating to that Lender or its Affiliates as is reasonably requested by the Facility Agent (for itself) in order for the Facility Agent to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all Applicable Laws pursuant to the transactions contemplated in the Finance Documents.

11.2.2 Each of the Finance Parties severally agrees that:

(a) provided no Event of Default is continuing, it will not interfere with the quiet use, possession and enjoyment of the Aircraft by the Borrower; and

(b) provided no Event of Default or Termination Event is continuing, it will not interfere with the quiet use, possession and enjoyment of the Aircraft by the Lessee.

The exercise by any Finance Parties of their rights under the Relevant Documents shall not constitute such interference.

12 Events of default and Total Loss Prepayment Event

12.1 Each of the events and circumstances set out in clause 12.1 is an Event of Default.

12.1.1 Non-Payment

The Borrower, the Guarantor or the Lease Manager fails to pay any amount due from it under any of its Party Documents in the currency and in the manner stipulated on the due date, unless such amount is paid in the currency and in the manner stipulated within 2 Business Days (in the case of any amount of principal or interest) or 5 Business Days (in any other case) following the due date.

12.1.2 Events of default with no grace period

(a) The Borrower breaches any of its obligations under any of clauses 3.4 (Conditions subsequent),11.1.2 (Amendments, etc.), 11.1.3 (Single purpose covenant) and/or 11.1.5 (Negative pledge).

(b) Other than pursuant to the Share Charge, the Guarantor creates (or consents to the creation of) any Security over or with respect to the shares in the Borrower or sells, transfers or otherwise disposes of any such shares.

12.1.3 Other Obligations

The Borrower, the Guarantor or the Lease Manager commits any breach of or omits to observe any of the obligations or undertakings expressed to be assumed by it under its Party Documents (other than as referred to elsewhere in this clause 12.1) and, in respect of any such breach or omission which is capable of remedy, such action as the Facility Agent may require to remedy such default shall not have been taken within thirty days (or such longer period as may be agreed by the Facility Agent) of the earlier of (a) the Borrower, the Guarantor or the Lease Manager becoming aware of such default and (b) the Facility Agent notifying the Borrower, the Guarantor or the Lease Manager of such default and of such required action.

12.1.4 Misrepresentations

Any representation made by the Borrower, the Guarantor or the Lease Manager in any of its Party Documents or which is contained in any document or certificate furnished under or in connection with its Party Documents proves to have been incorrect in any respect on the date as of which it was made unless the Borrower, the Guarantor or, as the case may be, the Lease Manager takes such steps as the Facility Agent may require to correct such misrepresentation within thirty days (or such longer period as may be agreed by the Facility Agent) of the earlier of (a) the Borrower, the Guarantor or the Lease Manager becoming aware of such misrepresentation and (b) being requested to do so.

12.1.5 Insolvency

(a) The Borrower, the Guarantor or the Lease Manager is unable or admits inability to pay its debts as they fall due, suspends making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors with a view to rescheduling any of its Indebtedness;

(b) The value of the assets of the Borrower, the Guarantor or the Lease Manager is less than its liabilities (taking into account contingent and prospective liabilities); or

(c) A moratorium is declared in respect of any Indebtedness of the Borrower, the Guarantor or the Lease Manager,

provided that no Event of Default shall arise under this clause 12.1.5 in relation to the insolvency of the Lease Manager if it is replaced within thirty (30) days by a replacement lease manager acceptable to the Facility Agent to the extent that there is no material adverse effect on the Finance Parties during such thirty (30) day period.

12.1.6 Insolvency proceedings

Any corporate action, legal proceedings or other procedure or step are taken in relation to:

(a) the suspension of payments, a moratorium of any indebtedness, bankruptcy, liquidation, winding-up, administration, insolvency, examinership, reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) or dissolution of the Borrower, the Guarantor or the Lease Manager;

(b) a composition, compromise, assignment or arrangement with any creditor of the Borrower, the Guarantor or the Lease Manager;

(c) the appointment of a liquidator, receiver, administrative receiver, examiner, administrator, compulsory manager or other similar officer in respect of the Borrower, the Guarantor or the Lease Manager or any of their respective assets; or

(d) enforcement of any Security over any assets of the Borrower, the Guarantor or the Lease Manager,

or any analogous action, proceedings, procedure or step is taken in any jurisdiction; provided that any Proceedings shall not constitute an Event of Default if (i) they are taken by any party other than the Borrower, the Guarantor or the Lease Manager or any of their respective shareholders, directors or Affiliates and the Borrower, the Guarantor or the Lease Manager is able to demonstrate to the reasonable satisfaction of the Facility Agent that such Proceedings are being contested in good faith by the Borrower, the Guarantor or, as the case may be, the Lease Manager or are frivolous or vexatious and, in any event, such Proceedings are discharged, cancelled, stayed on a permanent basis or dismissed within 7 days, or (ii) they are taken in relation to the Lease Manager and the Lease Manager is replaced within thirty (30) days by a replacement lease manager acceptable to the Facility Agent to the extent that there is no material adverse effect on the Finance Parties during such thirty (30) day period.

12.1.7 Creditors' process

Any expropriation, attachment, sequestration, distress or execution affects any asset or assets of the Borrower, the Guarantor or the Lease Manager, provided that no Event of Default shall arise under this clause 12.1.7 in relation to any such expropriation, attachment, sequestration, distress or execution in respect of any asset or assets of the Lease Manager if the Lease Manager is replaced within thirty (30) days by a replacement lease manager acceptable to the Facility Agent to the extent that there is no material adverse effect on the Finance Parties during such thirty (30) day period.

12.1.8 Repudiation

The Borrower, the Guarantor or the Lease Manager repudiates any of its Party Documents or evidences an intention to repudiate any of its Party Documents (provided that no Event of Default shall arise under this clause 12.1.8 in relation to a repudiation by the Lease Manager in its capacity as the Lease Manager if it is replaced within thirty (30) days by a replacement lease manager acceptable to the Facility Agent).

12.1.9 Cross-default

(a) Subject to clause 10 (Remarketing period) of the Proceeds Deed (if applicable), a Termination Event occurs and is continuing under the Lease.

(b) A "Companion Aircraft Event of Default" occurs and is continuing under any Companion Aircraft Relevant Document.

(c) Subject to clause 10 (Remarketing period) of the Proceeds Deed (as such term is defined in the Companion Aircraft Senior Loan Agreement) (if applicable), a "Companion Aircraft Termination Event" occurs and is continuing under the Companion Aircraft Lease Agreement.

12.1.10 Cessation of business

The Borrower, the Guarantor or the Lease Manager suspends or ceases or threatens to suspend or cease to carry on its business; provided that no Event of Default shall arise under this clause 12.1.10 in relation to the cessation of business of the Lease Manager if it is replaced within thirty (30) days by a replacement lease manager acceptable to the Facility Agent to the extent that there is no material adverse effect on the Finance Parties during such thirty (30) day period.

12.1.11 Post-Lease responsibility

During the Post-Lease Responsibility Period for the Aircraft, the Borrower breaches any of its obligations in paragraphs 1, 2.2, 2.3, 2.4 and/or 4 of Schedule 8. For the avoidance of doubt, any breach by the Borrower of its obligations in any other paragraph of Schedule 8 shall be an Event of Default in accordance with and subject to the provisions of clause 12.1.3.

12.2 Lenders' rights

12.2.1 On and at any time after the occurrence of an Event of Default which is continuing, the Facility Agent may, and shall if so directed by the Majority Lenders, by notice to the Borrower:

(a) cancel any obligation to disburse the Total Facility Commitments not previously disbursed, whereupon they shall immediately be cancelled; and/or

(b) subject to clause 10 (Remarketing period) of the Proceeds Deed, (if applicable), declare that the Loan, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents shall be immediately due and payable, whereupon they shall become immediately due and payable.

12.2.2 If at any time an Event of Default is continuing, all Proceeds obtained by the Finance Parties shall be applied in accordance with the Proceeds Deed.

12.2.3 Notwithstanding any other provision of any Relevant Document, no Finance Party shall have any obligation to pay to any Obligor any amount at any time at which a Default is continuing.

12.3 Total Loss Prepayment Event

Notwithstanding any other provision of the Relevant Documents, if the Aircraft suffers a Total Loss (a) the Borrower shall prepay the Loan on or before the Total Loss Payment Date under the Lease and (b) all Total Aircraft Commitments shall automatically be cancelled.

13 Indemnities

13.1 Currency indemnity

13.1.1 If any sum due from the Borrower under the Finance Documents (a Sum), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the First Currency) in which that Sum is payable into another currency (the Second Currency) for the purpose of:

(a) making or filing a claim or proof against the Borrower; or

(b) obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

the Borrower shall as an independent obligation, within five Business Days of written demand, indemnify each Indemnitee to whom that Sum is due against any and all Losses arising out of or as a result of the conversion including any discrepancy between (i) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (ii) the rate or rates of exchange available to that person at the time of its receipt of that Sum.  Any amount due from the Borrower under this Clause 13.1.1 shall be due as a separate debt and shall not be affected by judgment being obtained for any other sums due under or in respect of any Relevant Document.

13.1.2 The Borrower waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable.

13.2 Operational Indemnity

13.2.1 The Borrower shall from time to time within five Business Days of demand indemnify each Indemnitee for all costs and expenses of or arising from the matters referred to in paragraph (a) below and indemnify and hold harmless each Indemnitee from and against all Losses:

(a) relating to, or arising directly or indirectly in any manner or for any cause or reason whatsoever out of the design, manufacture, testing, sale, purchase, delivery, import, export, registration, ownership, possession, control, use, operation, leasing pursuant to the Lease, sub-leasing, wet leasing, insurance, maintenance, repair, refurbishment, condition, service, overhaul, modification, change, alteration, loss, damage, removal, storage or re-delivery of, in or to the Aircraft or any part thereof, or otherwise in connection with the Aircraft or any part thereof, or relating to loss or destruction of or damage to any property, or death or injury of, or other loss of whatsoever nature suffered by, any person caused by, relating to, or arising from or out of (in each case whether directly or indirectly) any of the above matters;

(b) which may at any time be made or brought on the ground that any design, article or material in the Aircraft or any part thereof or the operation or use thereof constitutes an infringement of any patent or other intellectual property right;

(c) which may at any time be incurred by such Indemnitee in preventing or attempting to prevent the arrest, confiscation, seizure, taking in execution, impounding, forfeiture or detention of the Aircraft or any part thereof, or in securing the release of the Aircraft or any part thereof from any such occurrence;

(d) representing costs, expenses or other amounts representing Losses which the Borrower has agreed to pay and which shall be claimed from or paid by any Indemnitee, and against any Losses incurred by any Indemnitee by reason of any delay or failure of the Borrower to pay any such costs, expenses or other amounts and/or which are otherwise sustained or incurred by such Indemnitee as a consequence of any default by the Borrower in the due and punctual performance of any of its obligations under any of the Relevant Documents; and/or

(e) any Total Loss in relation to the Aircraft, the Airframe or any Engine or any part of the Aircraft, the Airframe or any Engine.

13.2.2 The indemnities in clause 13.2.1 shall not extend to any Losses:

(a) which represent ordinary and usual operating and overhead expenses of any Finance Party suffering or incurring such Losses other than any such expense caused directly or indirectly by the occurrence of a Default or Relevant Event; or

(b) suffered by an Indemnitee as a result of a breach by such Indemnitee of any of its express obligations under any of the Relevant Documents to which it is a party (not caused by the breach or misrepresentation of any other party to the Relevant Documents under or in respect of the Relevant Documents or the gross negligence or fraudulent or wilful misconduct of any such other party); or

(c) to the extent that such Losses would not have arisen or been suffered or incurred by any Indemnitee, but for the wilful misconduct or gross negligence on the part of such Indemnitee; or

(d) resulting out of or arising from any Taxes or a loss of Tax benefits or increases in Tax liability (without prejudice to the Finance Parties' rights in respect thereof under this Agreement or the Relevant Documents); or

(e) which in accordance with the terms of any of the Relevant Documents the relevant Finance Party has agreed to bear or which are expressed therein to be for the relevant Finance Party's own account.

13.3 Miscellaneous Indemnities

The Borrower shall, within five Business Days' of written demand, indemnify each Indemnitee against any and all Losses incurred by that Indemnitee as a result of:

13.3.1 the occurrence or continuance of any Default or Relevant Event (including, for the avoidance of doubt and without limitation, Losses incurred in relation to any repossession, sale and/or re-lease of the Aircraft by the Security Agent or in carrying out any work or modification required to put the Aircraft into a condition acceptable to a purchaser or lessee or in storing, insuring and maintaining the Aircraft following any repossession);

13.3.2 any person (other than an Indemnitee) bringing or seeking to bring a claim against any Obligor with respect to any claim for breach by any Obligor of any obligation under any Relevant Document;

13.3.3 a failure by any Obligor to pay any amount due under a Relevant Document on its due date or to perform any other obligation under a Relevant Document when due;

13.3.4 in the case of a Lender, funding, or making arrangements to fund, its participation in the Loan (including entering into any deposits, hedging arrangements and swaps (internally and/or with third parties) to effect or maintain all or any of its Contributions in the Loan) once requested by the Borrower in a Utilisation Request but the Loan not being advanced (or being advanced other than on the proposed Utilisation Date specified in the relevant Utilisation Request) by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of default or negligence by that Lender alone); or

13.3.5 in connection with the protection, preservation and enforcement of the Security constituted by the Security Documents and/or the protection, preservation and enforcement of the rights of any of the Indemnitees under the Relevant Documents.

Notwithstanding the foregoing, the Borrower need not indemnify an Indemnitee under this clause 13.3 to the extent that the relevant Losses (a) are caused solely by the gross negligence or wilful misconduct of that Indemnitee or (b) are attributable to a breach by that Indemnitee of its express obligations under any of the Relevant Documents to which it is a party (not caused by a breach or misrepresentation of any other party to such Relevant Documents under or in respect of the Relevant Documents or the gross negligence or fraudulent or wilful misconduct of any such other party) or (c) have already been indemnified pursuant to another indemnity provision of this Agreement or any other Relevant Document.

13.4 Indemnity to the Lenders' Representatives

The Borrower shall promptly indemnify each Lenders' Representative against any and all Losses incurred by such Lenders' Representative (acting reasonably) as a result of (a) investigating any event which it reasonably believes to be a Default or a Relevant Event or (b) acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised.

13.5 The Borrower shall indemnify the Security Agent promptly upon receipt of a written demand for any costs and expenses incurred by it in taking any action required of it pursuant to either of clauses 3.5 (Assignment) and 9 (Further Assurance) (or any equivalent provision) of the Security Assignment or either of clause 7.1 (Release/Discharge of Mortgage Agreement) (or any equivalent provision) of the Aircraft Mortgage.

14 Changes in circumstances; mitigation

14.1 Illegality and change in law

14.1.1 Without prejudice to clause 14.5, if:

(a) at any time (i) there is an Applicable Law binding upon any Party or any Obligor in the jurisdiction in which it is formed or has its principal office or Facility Office or in which any action is required to be performed by it for the purposes of this Agreement or any other Relevant Document which renders it unlawful for that Party or Obligor to perform any of its obligations or to exercise any of its rights, under this Agreement or any of the other Relevant Documents or, in the case of any Lender, for that Lender to contribute to or maintain or fund its Commitment and/or Contribution or any part of any of them, including any unlawfulness or illegality giving rise to any economic or financial sanctions administered or enforced by any Sanctions Authority or (ii) a Party or the Lessee (or any Affiliate of a Party or the Lessee) receives written notice or advice from a Sanctions Authority that penalties will be imposed by a Sanctions Authority as a result of the Loan or any other business or financial relationship with another Party or the Lessee (or any Affiliate of any Party or the Lessee); or

(b) by reason of any change in Applicable Law, the rights of the Finance Parties under the Finance Documents are or will be materially and adversely affected; or

(c) by reason of any change in Applicable Law, any Security Document shall cease to constitute duly perfected and enforceable first priority Security in accordance with the terms thereof over any of the relevant Collateral or Assigned Property,

the Facility Agent or, as the case may be, the Borrower shall forthwith notify the other Parties and (prior to the Lease Termination Date) the Lessee thereof and the Facility Agent shall be entitled by written notice (Notice) to the Borrower and (prior to the Lease Termination Date) the Lessee either:

(i) to cancel the Total Aircraft Commitments; or

(ii) if such event occurs after the Utilisation Date, to require the Borrower to prepay the Loan together with all interest accrued thereon and all other amounts then due and owing under the terms of this Agreement,

in each such case on the Relevant Date.

14.1.2 In this clause 14.1, Relevant Date means the later of:

(a) the date of the Notice; and

(b) a future date specified in the Notice being prior to:

(i) the date on which the unlawfulness referred to in clause 14.1.1(a) takes effect; or

(ii) the date on which the change in Applicable Law referred to in clauses 14.1.1(b) or 14.1.1(c) takes effect.

14.2 Increased Costs

14.2.1 Subject to clause 14.4 (Exceptions) the Borrower shall, within five Business Days of a demand by the Facility Agent, pay for the account of a Finance Party the amount of any Increased Cost incurred by that Finance Party or any of its Affiliates which:

(a) arises as a result of (i) the introduction of or any change in (or in the interpretation, administration or application of) any Applicable Law or (ii) compliance with any Applicable Law made after this Agreement;

(b) is a Basel 3 Increased Cost;

(c) arises as a result of the implementation or application of or compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act or any law or regulation made under, or connected with, that Act; and/or

(d) arises as a result of the implementation or application of, or compliance with, CRD IV or any law or regulation that implements or applies CRD IV.

14.2.2 In this Agreement Increased Costs means:

(a) a reduction in the rate of return from the Facility or the Loan or on a Finance Party's (or its Affiliate's) overall capital;

(b) an additional or increased cost; or

(c) a reduction of any amount due and payable under any Finance Document,

which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitment or funding or performing its obligations or the Loan under any Finance Document.

14.3 Increased Cost claims

14.3.1 A Finance Party intending to make a claim pursuant to clause 14.2 (Increased Costs) shall notify the Facility Agent of the event giving rise to the claim, following which the Facility Agent shall promptly notify in writing the Borrower and (prior to the Lease Termination Date) the Lessee.

14.3.2 Each Finance Party shall, as soon as practicable after a demand by the Facility Agent, provide a certificate confirming the amount and the calculation of its Increased Costs.  The Facility Agent shall make such demand if the Borrower so requests and promptly provide the Borrower with a copy of any certificate that it receives.

14.4 Exceptions

14.4.1 Clause 14.2 (Increased Costs) does not apply to the extent any Increased Cost is:

(a) attributable to a Tax Deduction required by law to be made by the Borrower;

(b) compensated for by clause 9.3 (Tax indemnity) (or would have been compensated for under clause 9.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in clause 9.3.2 applied);

(c) attributable to a breach by the relevant Finance Party of any of its express obligations under any of the Relevant Documents to which it is a party (not caused by the breach or misrepresentation of any other party to the Relevant Documents under or in respect of the Relevant Documents or the gross negligence or fraudulent or wilful misconduct of any such other party); or

(d) attributable to the gross negligence or wilful breach by the relevant Finance Party or its Affiliates of any Applicable Law; or

(e) a Basel 2 Increased Cost, unless such Increased Cost is also the consequence of the introduction of, or any change in, or in the interpretation, administration or application of, any Applicable Law which is not a Basel 2 Regulation.

14.5 Mitigation

14.5.1 Each Finance Party shall, in consultation with the Borrower and (prior to the Lease Termination Date) the Lessee (such consultation to be for a maximum period of 45 days, or such lesser period as may be required by Applicable Law), take such reasonable steps it can take to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of clause 9 (Tax gross-up and indemnities) and clause 14 (Changes in circumstances; mitigation) including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.

14.5.2 Clause 14.5.1 above does not in any way limit the obligations of the Obligors under the Relevant Documents.

14.6 Limitation of liability

14.6.1 The Borrower shall indemnify each Finance Party for all Losses reasonably incurred by that Party as a result of steps taken by it under clause 14.5 (Mitigation).

14.6.2 A Finance Party is not obliged to take any steps under clause 14.5 (Mitigation) if, in the opinion of that Finance Party, to do so might be prejudicial to it.

14.6.3 No Finance Party has any liability for any failure to mitigate or reduce any relevant liability pursuant to clause 14.5 (Mitigation).

14.7 Third Parties Act

The Lessee may rely on clauses 14.1 (Illegality and change in law), 14.3 (Increased Cost claims) and 14.5 (Mitigation) and may enforce their terms under the Third Parties Act.

15 Limitation on recourse

Clause 3 (Limitation on recourse) of the Proceeds Deed applies to this Agreement, mutatis mutandis, as if set out in full herein and as if references to "this Deed" were references to this Agreement.

16 Assignment, transfers and lending offices

16.1 Benefit and burden

This Agreement shall be binding upon, and enure for the benefit of, the Parties.

16.2 No assignment by Borrower

The Borrower shall not assign or transfer all or any of its rights and/or obligations under its Party Documents without the prior written consent of all of the Lenders.

16.3 Assignments and transfers by the Lenders

Subject to this clause 16, a Lender (the Existing Lender) may:

16.3.1 assign any of its rights; or

16.3.2 transfer by novation any of its rights and obligations,

under the Relevant Documents to (i) if no Default has occurred and is continuing, another bank or financial institution or to a trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets or (ii) if an Event of Default has occurred and is continuing, to any person (in each case, the "New Lender"). Any partial assignment or transfer shall be pro rata as between all the Existing Lender's Commitments and/or Contributions in respect of the Loan.

Any such assignment or transfer shall be (a) at the Borrower's cost if it is (i) made pursuant to any mitigation provision of the Relevant Documents, (ii) made while an Event of Default or a Termination Event is continuing or (iii) required by any Applicable Law and (b) otherwise at no cost to the Borrower.

16.4 Conditions of assignment or transfer

16.4.1 Without prejudice to the provisions of clause 16.4.4, the consent of the Borrower is not required for an assignment or transfer by an Existing Lender.

16.4.2 An assignment will only be effective on:

(a) receipt by the Facility Agent of written confirmation from the New Lender (in form and substance satisfactory to the Facility Agent) that the New Lender will assume the same obligations to the Borrower and the other Finance Parties as it would have been under if it was an Original Lender; and

(b) performance by the Facility Agent of all necessary "know your customer" or other similar checks under all Applicable Laws in relation to such assignment to a New Lender, the completion of which the Facility Agent shall promptly notify to the Existing Lender and the New Lender.

16.4.3 A transfer will only be effective if the procedure set out in clause 16.7 (Procedure for transfer) is complied with.

16.4.4 If:

(a) a Lender assigns or transfers any of its rights or obligations under the Relevant Documents or changes its Facility Office; and

(b) as a result of circumstances existing at the date the assignment, transfer or change occurs, the Borrower would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under clause 9 (Tax gross-up and indemnities) or clause 14.2 (Increased Costs),

then the New Lender or Lender acting through its new Facility Office is only entitled to receive (and the Borrower shall only be required to make) payment under those clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been entitled (and the Borrower would have been obliged to pay), had the assignment, transfer or change not occurred.

16.4.5 Each New Lender, by executing the relevant Transfer Certificate, confirms, for the avoidance of doubt, that the Facility Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with the Relevant Documents on or prior to the date on which the transfer or assignment becomes effective in accordance with the Relevant Documents and that it is bound by that decision to the same extent as the Existing Lender would have been had it remained a Lender.

16.5 Assignment or transfer fee

The New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Facility Agent (for its own account) a fee of USD 3,500.

16.6 Limitation of responsibility of Existing Lenders

16.6.1 Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:

(a) the legality, validity, effectiveness, adequacy or enforceability of the Relevant Documents or any other documents;

(b) the financial condition of the Obligors;

(c) the performance and observance by the Obligors of their obligations under the Relevant Documents or any other documents;

(d) the application of any Basel 2 Regulation to the transactions contemplated by the Relevant Documents; or

(e) the accuracy of any statements (whether written or oral) made in or in connection with any Relevant Document or any other document,

and any representations or warranties implied by any Applicable Law are excluded.

16.6.2 Each New Lender confirms to the Existing Lender and the other Relevant Parties that it:

(a) has made (and shall continue to make) its own independent investigation and assessment of:

(i) the financial condition and affairs of the Obligors and their related entities in connection with its participation in this Agreement; and

(ii) the application of any relevant Basel 2 Regulation to the transactions contemplated by the Relevant Documents,

and has not relied exclusively on any information provided to it by the Existing Lender in connection with any Relevant Document; and

(b) will continue to make its own independent appraisal of:

(i) the creditworthiness of the Obligors and their related entities; and

(ii) the application of any relevant Basel 2 Regulation to the transactions contemplated by the Relevant Documents,

whilst any amount is or may be outstanding under the Relevant Documents or any Commitment is in force.

16.6.3 Nothing in any Relevant Document obliges an Existing Lender to:

(a) accept a re-transfer from a New Lender of any of the rights and obligations assigned or transferred under this clause 16; or

(b) support any Losses directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under its Party Documents or by reason of the application of any Basel 2 Regulation to the transactions contemplated by the Relevant Documents or otherwise.

16.7 Procedure for transfer

16.7.1 Subject to the conditions set out in clause 16.4 (Conditions of assignment or transfer) a transfer is effected in accordance with clause 16.7.4 when the Facility Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Facility Agent shall, subject to clause 16.7.2, as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Transfer Certificate.

16.7.2 The Facility Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary "know your customer" or other similar checks under all Applicable Laws relating to the transfer to such New Lender.

16.7.3 Each of the Lenders and the Borrower hereby appoint the Facility Agent to execute on their behalf any Transfer Certificate delivered to it in accordance with clause 16.7.1.

16.7.4 On the Transfer Date:

(a) to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Relevant Documents each of the Existing Lender and the Borrower shall be released from further obligations towards one another under the Relevant Documents and their respective rights against one another under the Relevant Documents shall be cancelled (being the Discharged Rights and Obligations);

(b) each of the New Lender and the Borrower shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as the Borrower and the New Lender have assumed and/or acquired the same in place of the Borrower and the Existing Lender;

(c) the New Lender and other Finance Parties shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New Lender been an Original Lender with the rights and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Existing Lender and the other Finance Parties shall each be released from further obligations to each other under the Relevant Documents; and

(d) the New Lender shall become a Party as a "Lender".

16.8 Copy of Transfer Certificate to Borrower

The Facility Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate, send to the Borrower a copy of that Transfer Certificate.

17 Role of the Facility Agent

17.1 Appointment of the Facility Agent

17.1.1 Each other Finance Party appoints the Facility Agent to act as its agent under and in connection with the Relevant Documents.

17.1.2 Each other Finance Party authorises the Facility Agent to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Facility Agent under or in connection with the Relevant Documents together with any other incidental rights, powers, authorities and discretions.

17.2 Duties of the Facility Agent

17.2.1 The Facility Agent's duties under and in relation to the Relevant Documents are solely mechanical and administrative in nature.

17.2.2 The Facility Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Facility Agent for that Party by any other Party.

17.2.3 Except where a Finance Document specifically provides otherwise, the Facility Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.

17.2.4 If the Facility Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the other Finance Parties.

17.2.5 If the Facility Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Facility Agent) under this Agreement it shall promptly notify the other Finance Parties.

17.2.6 Except as specifically provided in the Finance Documents, the Facility Agent has no obligations of any kind to any other Party under or in connection with the Relevant Documents (and no obligations shall be implied).

17.3 [Intentionally blank]

17.4 [Intentionally blank]

17.5 No fiduciary duties

Nothing in this Agreement constitutes the Facility Agent as a trustee or fiduciary of any other person.  The Facility Agent shall not be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.

17.6 Business with the Obligors

The Facility Agent may accept deposits from, lend money to and generally engage in any kind of banking or other business with any Obligor or any Aerocentury Related Party.

17.7 Rights and discretions of the Facility Agent

17.7.1 The Facility Agent may rely on:

(a) any representation, notice or document believed by it to be genuine, correct and appropriately authorised; and

(b) any statement made by a director, authorised signatory or employee of any person regarding any matters which may reasonably be assumed to be within his knowledge or within his power to verify.

17.7.2 The Facility Agent may assume (unless it has received notice to the contrary in its capacity as agent or, as the case may be, trustee for the Lenders) that:

(a) no Default has occurred (unless it has actual knowledge of a Default arising under clause 12.1.1 (Non-payment)); and

(b) any right, power, authority or discretion vested in any Party or the Majority Lenders has not been exercised.

17.7.3 The Facility Agent may engage, pay for and rely on the advice or services of any lawyers, accountants, surveyors or other professional advisers or experts.

17.7.4 The Facility Agent may act in relation to the Relevant Documents through its personnel and agents.

17.7.5 The Facility Agent may disclose to any other Party or Obligor any information it reasonably believes it has received as agent under the Relevant Documents.

17.7.6 Notwithstanding any other provision of any Relevant Document to the contrary, the Facility Agent is not obliged to do or omit to do anything if it would or might in its reasonable opinion constitute a breach of any Applicable Law or a breach of a fiduciary duty or duty of confidentiality.

17.8 Majority Lenders' instructions

17.8.1 Unless a contrary indication appears in a Finance Document, the Facility Agent shall (a) exercise any right, power, authority or discretion vested in it under the Relevant Documents in accordance with any instructions given to it by the Majority Lenders (or, if so instructed by the Majority Lenders, refrain from exercising any right, power, authority or discretion vested in it under the Relevant Documents) and (b) not be liable for any act (or omission) if it acts (or refrains from taking any action) in accordance with an instruction of the Majority Lenders.

17.8.2 Unless a contrary indication appears in a Finance Document, any instructions given to the Facility Agent by the Majority Lenders will be binding on all the Finance Parties.

17.8.3 The Facility Agent may refrain from acting in accordance with the instructions of the Majority Lenders (or, if appropriate, the Lenders) until it has received such security as it may require for any Losses (together with any associated VAT) which it may incur in complying with the instructions.

17.8.4 In the absence of instructions from the Majority Lenders, (or, if appropriate, the Lenders) the Facility Agent may act (or refrain from taking action) as it considers to be in the best interest of the Lenders.

17.8.5 The Facility Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender's consent) in any legal or arbitration proceedings relating to any Finance Document.

17.9 Responsibility for documentation

The Facility Agent is not responsible:

17.9.1 for the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by any Finance Party or any Obligor, any Aerocentury Related Party or any other person given in or in connection with any Relevant Document;

17.9.2 for the legality, validity, effectiveness, adequacy or enforceability of any Relevant Document or any other agreement, arrangement or document entered into, made or executed in anticipation of or in connection with any Relevant Document;

17.9.3 for the application of any Basel 2 Regulation to the transactions contemplated by the Relevant Documents; or

17.9.4 for any determination as to whether any information provided or to be provided to any Finance Party is non public information the use of which may be regulated or prohibited by any Applicable Law relating to insider dealing or otherwise.

17.10 Exclusion of liability

17.10.1 Without limiting clause 17.10.2, neither Lenders' Representative will be liable for any action taken by it under or in connection with any Relevant Document, unless directly caused by its gross negligence or wilful misconduct.

17.10.2 No Party (other than the relevant Lenders' Representative) may take any proceedings against any officer, employee or agent of a Lenders' Representative in respect of any claim it might have against such Lenders' Representative or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Relevant Document and any officer, employee or agent of the Lenders' Representatives may rely on this clause subject to clause 1.4 (Third Party Rights) and the provisions of the Third Parties Act.

17.10.3 The Lenders' Representatives will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Relevant Documents to be paid by such Lenders' Representative if it has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by such Lenders' Representative for that purpose.

17.10.4 Nothing in this Agreement shall oblige the Lenders' Representatives to carry out any "know your customer" or other checks in relation to any person on behalf of any Lender and each Lender confirms to the Lenders' Representatives that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Lenders' Representatives.

17.11 Lenders' indemnity to the Lenders' Representatives

Each Lender shall (in proportion to its share of the Total Facility Commitments or, if the Total Facility Commitments are then zero, to its share of the total Contributions) indemnify the Facility Agent, within three Business Days of demand, against any Losses incurred by the Facility Agent (otherwise than by reason of the Facility Agent's gross negligence or wilful misconduct) in acting as Facility Agent under or in connection with the Relevant Documents (unless the Facility Agent has been reimbursed by an Obligor pursuant to a Relevant Document).

17.12 Resignation of the Facility Agent

17.12.1 The Facility Agent may resign and appoint one of its Affiliates as successor by giving notice to the other Parties and (prior to the Lease Termination Date) the Lessee.

17.12.2 Alternatively the Facility Agent may resign by giving notice to the other Parties and (prior to the Lease Termination Date) the Lessee, in which case the Majority Lenders (after consultation with the Borrower and (prior to the Lease Termination Date) the Lessee) may appoint a successor Facility Agent.

17.12.3 If the Majority Lenders have not appointed a successor Facility Agent in accordance with clause 17.12.2 within 30 days after notice of resignation was given, the Facility Agent (after consultation with the Borrower and (prior to the Lease Termination Date) the Lessee) may appoint a successor Facility Agent.

17.12.4 The retiring Facility Agent shall, at its own cost, make available to the successor Facility Agent such documents and records, enter into such agreements and make such filings and otherwise provide such assistance as the successor Facility Agent may reasonably request for the purposes of performing its functions as Facility Agent under the Relevant Documents.

17.12.5 The resignation notice of a Facility Agent shall only take effect upon the appointment of a successor.

17.12.6 Upon the appointment of a successor, the retiring Facility Agent shall be discharged from any further obligation in respect of the Relevant Documents but shall remain entitled to the benefit of this clause 17. Its successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.

17.12.7 After consultation with the Borrower and (prior to the Lease Termination Date) the Lessee, the Majority Lenders may, by notice to the Facility Agent, require it to resign in accordance with clause 17.12.2. In this event, the Facility Agent shall resign in accordance with clause 17.12.2.

17.13 Confidentiality

17.13.1 In acting as agent for the Finance Parties, the Facility Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments.

17.13.2 If information is received by another division or department of the Facility Agent, it may be treated as confidential to that division or department and the Facility Agent shall not be deemed to have notice of it.

17.14 Relationship with the Lenders

The Facility Agent may treat any person shown in its records as a Lender at the opening of business (in the place of its principal office as notified to the Finance Parties from time to time) as a Lender acting through its Facility Office:

(a) entitled to or liable for any payment due under any Relevant Document on that day; and

(b) entitled to receive and act upon any notice, request, document or communication or make any decision or determination under any Relevant Document made or delivered on that day,

unless it has received not less than five Business Days' prior notice from that Lender to the contrary in accordance with the terms of this Agreement.

17.15 Credit appraisal by the Lenders

Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Relevant Document, each Lender confirms to the Facility Agent that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Relevant Document including but not limited to:

17.15.1 the financial condition, status and nature of each Obligor;

17.15.2 the legality, validity, effectiveness, adequacy or enforceability of any Relevant Document and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Relevant Document;

17.15.3 the application of any Basel 2 Regulation to the transactions contemplated by the Relevant Documents;

17.15.4 whether that Lender has recourse, and the nature and extent of that recourse, against any Party or any of its assets or any other party or any of such other party's assets under or in connection with any Relevant Document, the transactions contemplated by the Relevant Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Relevant Document; and

17.15.5 the adequacy, accuracy and/or completeness of any information provided by the Facility Agent, any Party or by any other person under or in connection with any Relevant Document, the transactions contemplated by the Relevant Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Relevant Document.

17.16 Deduction from amounts payable by the Lenders' Representatives

If any Party owes an amount to either Lenders' Representative under the Relevant Documents the Lenders' Representatives may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which either Lenders' Representative would otherwise be obliged to make under the Relevant Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Relevant Documents that Party shall be regarded as having received any amount so deducted.

18 Conduct of business by the Finance Parties

No provision of any Relevant Document will:

18.1 interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;

18.2 oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or

18.3 oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.

19 Sharing among the Finance Parties

19.1 Payments to Finance Parties

If a Finance Party (a Recovering Finance Party) receives or recovers any amount from an Obligor other than in accordance with clause 20 (Payment mechanics) (a Recovered Amount) and applies that amount to a payment due under the Relevant Documents then:

19.1.1 the Recovering Finance Party shall, within three Business Days, notify details of the receipt or recovery, to the Facility Agent;

19.1.2 the Facility Agent shall determine whether the receipt or recovery is in excess of the amount the Recovering Finance Party would have been paid had the receipt or recovery been received or made by a Lenders' Representative and distributed in accordance with clause 20 (Payment mechanics), without taking account of any Tax which would be imposed on either Lenders' Representative in relation to the receipt, recovery or distribution; and

19.1.3 the Recovering Finance Party shall, within three Business Days of demand by the Facility Agent, pay to the Facility Agent an amount (the Sharing Payment) equal to such receipt or recovery less any amount which the Facility Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with clause 20.4 (Partial payments).

19.2 Redistribution of payments

The Facility Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it between the Finance Parties (other than the Recovering Finance Party) (the Sharing Finance Parties) in accordance with clause 20.4 (Partial payments).

19.3 Recovering Finance Party's rights

On a distribution by the Facility Agent under clause 19.2 (Redistribution of payments), of a payment received by a Recovering Finance Party from an Obligor, as between the Borrower and the Recovering Finance Party, an amount of the Recovered Amount equal to the Sharing Payment will be treated as not having been paid by that Obligor.

19.4 Reversal of redistribution

If any part of the Sharing Payment received or recovered by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:

19.4.1 each Sharing Finance Party shall, upon request of the Facility Agent, pay to the Facility Agent for the account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay) (the Redistributed Amount); and

19.4.2 as between the Borrower and each relevant Sharing Finance Party, an amount equal to the relevant Redistributed Amount will be treated as not having been paid by the Borrower.

19.5 Exceptions

19.5.1 This clause 19 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this clause, have a valid and enforceable claim against the Borrower.

19.5.2 A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if:

(a) it notified that other Finance Party of the legal or arbitration proceedings; and

(b) that other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings.

20 Payment mechanics

20.1 Payments to the Facility Agent

20.1.1 On each date on which the Borrower or a Lender is required to make a payment under a Finance Document, the Borrower or Lender shall make the same available to the Facility Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Facility Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment.

20.1.2 Payment shall be made to the Dollar Account or to such other account in the principal financial centre of the country of the relevant currency (or, in relation to Euro, in a principal financial centre in a Participating Member State or London) with such bank as the Facility Agent specifies.

20.2 Distributions by the Lenders' Representatives

Each payment received by a Lenders' Representative under the Finance Documents for another Party shall, subject to clause 20.3 (Clawback) be made available by such Lenders' Representative as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to such Lenders' Representative by not less than five Business Days' notice with a bank in the principal financial centre of the country of that currency (or, in relation to Euro, in the principal financial centre of a Participating Member State or London).

20.3 Clawback

20.3.1 Where a sum is to be paid to the Facility Agent under the Relevant Documents for another Party, the Facility Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.

20.3.2 If the Facility Agent pays an amount to another Party and it proves to be the case that the Facility Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Facility Agent shall on demand refund the same to the Facility Agent together with interest on that amount from the date of payment to the date of receipt by the Facility Agent, calculated by the Facility Agent to reflect its cost of funds.

20.4 Partial payments

20.4.1 If a Lenders' Representative receives a payment that is insufficient to discharge all the amounts then due and payable by the Obligors under the Relevant Documents, the relevant Lenders' Representative shall apply that payment towards the obligations of the Obligors under the Relevant Documents in the following order:

(a) first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Lenders' Representatives under the Finance Documents;

(b) secondly, in or towards payment pro rata of any accrued interest, fee or commission due but unpaid under this Agreement;

(c) thirdly, in or towards payment pro rata of any principal due but unpaid under this Agreement; and

(d) fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents.

20.4.2 The Facility Agent shall, if so directed by the Majority Lenders, vary the order set out in clause 20.4.1(b) to 20.4.1(d).

20.4.3 Clauses 20.4.1 and 20.4.2 will override any appropriation made by an Obligor.

20.5 No set-off by the Borrower

All payments to be made by the Borrower under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

20.6 Business Days

20.6.1 When any payment under any Relevant Document would otherwise be due on a day which is not a Business Day, the due date for payment shall be extended to the next following Business Day, unless such Business Day falls in the next calendar month, in which case payment shall be made on the immediately preceding Business Day.

20.6.2 During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the original due date.

20.7 Currency of account

20.7.1 Subject to clauses 20.7.3 to 20.7.5, the currency of account and payment for any sum due from an Obligor under any Relevant Document is Dollars.

20.7.2 A repayment of the Loan or an Unpaid Sum or a part of the Loan or an Unpaid Sum shall be made in the currency in which the Loan or relevant Unpaid Sum is denominated.

20.7.3 Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.

20.7.4 Each payment in respect of Losses or Taxes shall be made in the currency in which the Losses or Taxes are incurred.

20.7.5 Any amount expressed to be payable in a currency other than Dollars shall be paid in that other currency.

21 Set-off

A Finance Party may set off any matured obligation due from the Borrower under the Relevant Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to the Borrower, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.

22 Notices

Any communication to be made under or in connection with this Agreement shall be made in accordance with clause 12 (Notices) of the Proceeds Deed, which shall apply to this Agreement, mutatis mutandis, as if set out in full herein and as if references to "this Deed" were references to this Agreement.

23 Calculations and certificates

23.1 Accounts

In any litigation or arbitration proceedings arising out of or in connection with a Relevant Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.

23.2 Certificates and Determinations

Any certification or determination by a Finance Party of a rate or amount under any Relevant Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.

23.3 Day count convention

23.3.1 Subject to clause 23.3.2, any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days.

23.3.2 Any interest accruing on the Loan will accrue from day to day and is calculated on the basis of a year of 360 days consisting of 12 months of 30 days each.

24 Confidentiality

Clause 11.7 (Confidentiality) of the Proceeds Deed applies to this Agreement, mutatis mutandis, as if set out in full herein and as if references to "this Deed" were references to this Agreement.

25 Partial invalidity; remedies and waivers

25.1 If, at any time, any provision of the Relevant Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

25.2 No failure to exercise, nor any delay in exercising, on the part of any Finance Party, any right or remedy under the Relevant Documents shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement are cumulative and not exclusive of any rights or remedies provided by law.

26 Amendments and waivers

26.1 Required consents

26.1.1 Subject to clause 26.2 (Exceptions) any term of the Relevant Documents may be amended or waived only with the consent of the Majority Lenders, the Borrower and (prior to the Lease Termination Date) the Lessee and any such amendment or waiver will be binding on all Parties.

26.1.2 The Facility Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this clause.

26.2 Exceptions

26.2.1 An amendment or waiver that has the effect of changing or which relates to:

(a) the definition of "Majority Lenders" in clause 1.1 (Definitions);

(b) an extension to the date of payment of any amount under the Relevant Documents;

(c) a reduction in the amount of any payment of principal, interest, fees or commission payable;

(d) an increase in or an extension of any Commitment;

(e) a change in the currency in which any amount is payable under the Relevant Documents;

(f) any provision which expressly requires the consent of all the Lenders;

(g) clause 2.3 (Finance Parties' rights and obligations), clause 16 (Assignment, transfers and lending offices) or this clause 26; or

(h) any Security Document,

shall not be made without the prior consent of all the Lenders.

26.2.2 An amendment or waiver which relates to the rights or obligations of the Facility Agent or the Security Agent (each in their capacity as such) may not be effected without the consent of the Facility Agent or the Security Agent respectively.

26.3 Third Parties Act

The Lessee may rely on clause 26.1 (Required consents) of this Agreement and may enforce its terms under the Third Parties Act.

27 Counterparts

This Agreement may be executed in any number of counterparts, and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.

28 Governing law

This Agreement and any non-contractual obligations connected with it are governed by English law.

29 Enforcement

29.1 Jurisdiction

29.1.1 The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement or any non-contractual obligations connected with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement) (a Dispute).

29.1.2 The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.

29.1.3 This clause 29.1 is for the benefit of the Finance Parties only. As a result, no Finance Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by Applicable Law, the Finance Parties may take concurrent proceedings in any number of jurisdictions.

This Agreement has been entered into on the date stated at the beginning of this Agreement.

Schedule 1 Lenders and their Commitments

(1)	(2)	(3)
Name	Facility Office and fax number	Commitment
		($)
Export Development Canada	150 Slater Street	9,804,329.09
	Ottawa, Canada K1A 1K3
	Attention:Loans Services
	Fax:+1 613 598-2514
	and
	Attention:Asset Management/Covenants Officer
	Fax:+1 613 598-3186

Schedule 2 Form of Utilisation Request

From:ACY SN 19003 LIMITED (the Borrower)

AIR NOSTRUM, LINEAS AEREAS DEL MEDITERRANEO, S.A. (the Lessee)

To:EXPORT DEVELOPMENT CANADA (as Facility Agent)

Dated: []

Dear Sirs,

Loan agreement dated [] 2016 (the "Agreement") in respect of the one (1) Bombardier CRJ 1000 aircraft with MSN 19003 (the "Aircraft"): the Borrower as borrower

1 We refer to the Agreement. This is a Utilisation Request. Terms defined in the Agreement have the same meaning in this Utilisation Request unless given a different meaning in this Utilisation Request.

2 The Borrower wishes to borrow the Loan relating to the Aircraft on the following terms:

(a) Proposed Utilisation Date: [ ]

(b) Amount: USD______________

3 We confirm that:

(a) the Purchase Price for the Aircraft is USD [ ]; and

(b) we shall indemnify the Finance Parties in respect of any Losses (including Make-Whole Amount) suffered or incurred if, for any reason, utilisation does not take place on such date or at all.

4 The proceeds of the Loan should be applied in accordance with the provisions of the Payment Direction Deed.

5 This Utilisation Request is irrevocable.

6 The Lessee confirms that (a) the representations and warranties made by it under clause 2 of the Lease remain correct and no Relevant Event has occurred at the date of this Utilisation Request; (b) since 31 December 2014 there has been no material adverse change in (i) the financial condition, financial results, business, operations or prospects of the Lessee or (ii) the Lessee's ability to perform its obligations under any of its Party Documents; and (c) no Total Loss of, or Major Damage to, the Aircraft or any part thereof has occurred.

7 The Borrower confirms that the representations and warranties made by it under clause 10 of the Agreement remain correct and that no Default (not caused by a Relevant Event) has occurred at the date of this Utilisation Request.

8 The Lessee confirms its agreement to this Utilisation Request.

authorised signatory for	authorised signatory for
ACY SN 19003 Limited	AIR NOSTRUM, LINEAS AEREAS DEL MEDITERRANEO, S.A.

Schedule 3 Conditions Precedent and Conditions Subsequent

Part A – Documents and evidence required as conditions precedent

1 Copies, certified by an officer of the Borrower, the Guarantor or the Lease Manager (as applicable) to be a true, complete and up-to-date copy, of the Borrower's, the Guarantor's and the Lease Manager's constituent documents.

2 Copies, certified by an officer of the Borrower, the Guarantor or the Lease Manager (as applicable) to be a true copy, and as being in full force and effect and not amended or rescinded, of resolutions of the Borrower's, the Guarantor's and the Lease Manager's board of directors:

(a) approving the transactions contemplated by the Relevant Documents; and

(b) authorising a person or persons to sign and deliver on its behalf its respective Party Documents and any notices or other documents to be given pursuant thereto.

3 Specimen signatures, authenticated by an officer of the relevant party, of each of the authorised signatories referred to in paragraph 2(b) of this Schedule 3.

4 A copy, certified as a true copy by an officer of the Borrower, the Guarantor or the Lease Manager (as applicable) of all Authorisations (if any) required by the Borrower, the Guarantor or the Lease Manager to authorise the execution, delivery and the performance of its respective Party Documents and the performance by it of its obligations under the same (or, as applicable, a certificate from each such person stating that no such Authorisation is required).

5 An original of each of the following Relevant Documents, duly executed by the parties thereto:

(a) this Agreement;

(b) the Payment Direction Deed;

(c) the Proceeds Deed;

(d) the Guarantee;

(e) the Share Charge (together with all ancillary documents required to be delivered to the Security Agent thereunder on or before the first drawdown hereunder (including the original share certificate);

(f) the Lease Management Agreement; and

(g)the Sale Agreement.

6 A copy, certified as a true copy by an authorised officer of the Borrower, the Guarantor or the Lease Manager (as applicable), of a letter from its agent for receipt of service of process referred to in any Relevant Documents accepting its appointment.

7 A copy, certified as a true copy by an authorised officer of the Borrower, the Guarantor or the Lease Manager (as applicable), of a letter from its agent for receipt of service of process required by any of its Party Documents (to the extent not already covered by the letter provided pursuant to paragraph 6 above) relating to the Aircraft accepting its appointment.

8 The written agreement of the Obligors to any replacement of Schedule 4 referred to in clause 5.5.

9 The original Bill of Sale for the Aircraft.

10 Originals of all historic bills of sale for the Aircraft.

11 An original of each Security Document (in the case of the Lessee Deregistration Power of Attorney and the Lessor Deregistration Power of Attorney, duly notarised and apostilled), the Lease, the Deed of Novation and Restatement, the Effective Time Notice and each other Relevant Document relating to the Loan or Aircraft and not provided under paragraph 5 above or this paragraph 11 (and all documents required by any such document to be delivered to the Finance Parties by the Utilisation Date for the Loan), duly executed by each party thereto.

12 Evidence satisfactory to the Facility Agent that all of the conditions precedent under each of the other Relevant Documents shall have been satisfied or waived in accordance with the terms thereof.

13 Evidence that (a) all Authorisations necessary for any matter or thing contemplated by the Relevant Documents and for the legality, validity, enforceability, admissibility in evidence and effectiveness of the Relevant Documents have been obtained or effected on an unconditional basis and remain in full force and effect (or, in the case of effecting of any registrations and filings, that arrangements satisfactory to the Facility Agent have been made for effecting the same simultaneously with, or within any applicable time limit after, the relevant Delivery) and (b) all registration, notarial, consular and translation fees (if any) due and payable in any applicable jurisdiction in connection with any Relevant Document have been duly paid in full.

14 Legal opinions in form and substance satisfactory to the Facility Agent from:

(a) Clifford Chance LLP, English legal advisers to the Facility Agent;

(b) Berwin Leighton Paisner LLP, English legal advisers to the Borrower;

(c) in-house counsel to the Guarantor;

(d) Aeroiuris, legal advisers to the Lessee;

(e) Clifford Chance New York LLP, New York legal advisers to the Facility Agent;

(f) in-house counsel to the Manufacturer; and

(g) in-house counsel to the Engine Manufacturer.

15 A tax opinion from KPMG Abogados in respect of Spanish tax matters.

16 An insurance opinion from the Facility Agent's insurance adviser.

17 Confirmation from Aviacion that (i) all conditions precedent to the effectiveness of the Sale Agreement have either been waived or satisfied to its satisfaction and (ii) it has received an amount in respect of the Purchase Price for the Aircraft such that, on receipt of the Loan from the Facility Agent (on behalf of the Borrower), Aviacion will have received the Purchase Price in full and will transfer title to the Aircraft to the Borrower.

18 Evidence that the Borrower is in funds to the extent necessary to make the partial payment of the Purchase Price pursuant to clause 3(b) of the Sale Agreement.

19 Evidence that the Borrower is in funds to the extent necessary to make the payments detailed in clauses 8.2 and 8.3 of the Sale Agreement, and that such payments are made.

20 A copy of the run-off liability insurance certificate required pursuant to clause 5.2 of the Deed of Novation and Restatement.

21 A certificate of an authorised signatory of the Guarantor certifying that it has not issued a "warning notice" or "restrictions notice" (in each case as defined in paragraph 1(2) of Schedule 1B of Part 21A of the Companies Act 2006) in respect of any of the Borrower's shares.

22 A certificate of an authorised signatory of the Borrower certifying that it has not received a "warning notice" or "restrictions notice" (in each case as defined in paragraph 1(2) of Schedule 1B of Part 21A of the Companies Act 2006) in respect of any of its shares.

23 A certified true copy of the register of members of the Borrower.

24 Such other documents and evidence as the Facility Agent may reasonably require.

Part B – Conditions Subsequent

Following the Utilisation Date the Facility Agent shall have received the following documents and evidence in form and substance satisfactory to it:

1. Evidence that replacement fireproof plates are installed on the Airframe and Engines in accordance with clause 14.1.9 of the Lease within sixty (60) days following the Utilisation Date.

2. Evidence that the IDERA has been filed with the Aviation Authority as soon as practicable following the Utilisation Date and in any event within sixty (60) days following the Utilisation Date.

3. Evidence that the UCC-1 financing statement in respect of (a) the New York law Aircraft Mortgage naming the relevant Borrower as debtor and the Security Trustee as secured party in respect of the New York law Aircraft Mortgage has been filed with the Recorder of Deeds for the District of Colombia, and (b) the Share Charge naming the Guarantor as debtor and the Security Trustee as secured party has been filed in the State of Delaware, in each case within ten (10) Business Days of the Utilisation Date.

4. Evidence that the relevant documents required for the updated certificate of registration to be issued have been filed with the Aviation Authority as soon as reasonably practicable (and in any event no later than 25 days) following the Utilisation Date, and a copy of the updated certificate of registration issued by the Aviation Authority in respect of the Aircraft as soon as practicable but no later than 120 days following the Utilisation Date.

5. Evidence that the Security Assignment and each Aircraft Mortgage has been registered with the United Kingdom Companies House by no later than twenty one (21) days following the Utilisation Date.

6. Evidence that each of the Bill of Sale and the Deed of Novation and Restatement has been registered with the MPR and the AMR as soon as practicable and in any event no later than 120 days following the Utilisation Date.

7. Evidence that the Unique Authorisation Codes for the Airframe and the Engines have been obtained from the MPR as soon as practicable and in any event no later than three (3) Business Days following the Utilisation Date.

8. Evidence that each of the following registrations has been duly made with the International Registry in the following order as soon as practicable and in any event no later than four (4) Business Days following the Utilisation Date; and no other registration has been made at the International Registry against the relevant Airframe or any relevant Engine:

(a) first, in connection with each Aircraft Mortgage, in respect of the relevant international interest in relation to the Airframe and each Engine, with the Borrower as "debtor" and the Security Agent as "creditor'';

(b) secondly, in connection with the Lease, in respect of the relevant international interest in relation to the Airframe and each Engine, with the Lessee as "debtor" and the Borrower as "creditor'';

(c) thirdly, in connection with the Security Assignment, in respect the relevant assignment of associated rights and transfer of related international interest in relation to the Airframe and each Engine, with the Borrower as "assignor" and the Security Agent as "assignee; and

(d) fourth, in connection with the Bill of Sale, a contract of sale interest in relation to the Airframe and each Engine, with the Borrower as "buyer" and Aviacion as "seller".

9 Legal opinion from Gómez-Acebo & Pombo Abogados, S.L.P., as to the applicability of the Cape Town Convention and the due registration and priority of such international interests, to be provided as soon as practicable after the registrations with the International Registry pursuant to paragraph 8 above.

Schedule 4 Payments

(1)	(2)	(3)	(4)
Repayment Dates	Repayment instalment (USD)	Interest (USD)	Loan (USD)
Sep 17, 2016	493,230.43	111,622.29	9,311,098.66
Dec 17, 2016	499,998.11	104,854.61	8,811,100.55
Mar 17, 2017	506,719.09	98,133.63	8,304,381.46
Jun 17, 2017	510,307.34	94,545.38	7,794,074.12
Sep 17, 2017	516,117.19	88,735.53	7,277,956.93
Dec 17, 2017	522,893.83	81,958.89	6,755,063.10
Mar 17, 2018	529,618.21	75,234.52	6,225,444.89
Jun 17, 2018	533,976.03	70,876.69	5,691,468.86
Sep 17, 2018	540,055.35	64,797.37	5,151,413.51
Dec 17, 2018	546,841.37	58,011.36	4,604,572.14
Mar 17, 2019	553,569.30	51,283.42	4,051,002.84
Jun 17, 2019	558,732.05	46,120.67	3,492,270.79
Sep 17, 2019	565,093.22	39,759.50	2,927,177.57
Dec 17, 2019	571,889.04	32,963.68	2,355,288.53
Mar 17, 2020	578,329.23	26,523.49	1,776,959.30
Jun 17, 2020	584,622.04	20,230.68	1,192,337.26
Sep 17, 2020	591,277.96	13,574.76	601,059.30
Nov 7, 2020	601,059.30	3,793.44	0.00

Schedule 5 Aircraft

(1)	(2)	(3)	(4)
MSN	Registration Mark	Assumed Utilisation Date	Assumed Utilisation Amount (USD)
19003	EC-LJS	17 June 2016	9,804,329.09

Schedule 6 Form of Transfer Certificate

To: [ ] as Facility Agent

From: [The Existing Lender] (the Existing Lender)and [The New Lender] (the New Lender)

Dated: [ ]

Loan agreement dated [ ] 2016 (the Agreement):ACY SN 19003 Limited as Borrower

1 We refer to the Agreement. This is a Transfer Certificate. Terms defined in the Agreement have the same meaning in this Transfer Certificate unless given a different meaning in this Transfer Certificate.

2 We refer to clause 16.7 (Procedure for transfer):

(a) The Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation all or part of the Existing Lender's Commitment, rights and obligations referred to in the Schedule in accordance with clause 16.7 (Procedure for transfer).

(b) The proposed Transfer Date is [ ].

(c) The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of clause 12 (Notices) of the Proceeds Deed are set out in the Schedule.

3 The New Lender (a) expressly acknowledges the limitations on the Existing Lender's and the Borrower's respective obligations set out in, respectively, clauses 16.6.3 and 16.4.4 of the Agreement and (b) confirms that the New Lender (i) is [not] a [Qualifying Lender] and (ii) will notify the Borrower if the New Lender becomes aware that it ceases to be a [Qualifying Lender] (provided that any failure to provide any such notification shall be without prejudice to the rights and obligations of any party).

4 The New Lender irrevocably appoints (a) the Facility Agent as its agent for the purposes of the Agreement and the other Relevant Documents, on the terms and conditions set out in clause17.1 and the other terms of the Agreement and (b) the Security Agent to act as its trustee under and in connection with the Agreement and other Relevant Documents, on the terms and conditions set out in clause 5.1 and the other terms of the Proceeds Deed.

5 This Transfer Certificate may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Transfer Certificate.

6 This Transfer Certificate and any non-contractual obligations connected with it are governed by English law.

The Schedule

Commitment/rights and obligations to be transferred

[insert [ ] of Existing Lender's contribution to the transferred and any other relevant details]

[Facility Office address, fax number and attention details for notices and account details for payments,]

[Existing Lender]	[New Lender]
By:	By:

This Transfer Certificate is accepted by the Facility Agent and the Transfer Date is confirmed as [ ].

[Facility Agent] (on behalf of itself, the Borrower and the other Finance Parties)

By:

Schedule 7 Form of Lessor Deregistration Power of Attorney

  PODER DE CANCELACIÓN DE MATRICULA     En [●], a [●] de [●] de 2016. Ante mi, [ ], Notario de [ ],     COMPARECE   D./D.ª [●insert the complete name of the individual appearing before the Notary], mayor de edad, de nacionalidad [●insert nationality], con domicilio profesional en [●insert place of business] y [●pasaporte/documento nacional de identidad] en vigor número [●insert the relevant number]   INTERVIENE   En nombre y representación de [●] (la "Sociedad"), una sociedad debidamente constituida y en vigor con arreglo a las leyes de [Inglaterra y Gales] e inscrita en el Registro de Sociedades de Inglaterra y Gales con número [●].     Actúa en su condición de en su calidad de representante legal de la Sociedad en virtud de [●] [●describe the document of title and particulars of registration where appropriate].     DICE Y OTORGA   Que otorga un poder especial e irrevocable a favor de Export Development Canada con domicilio en 150 Slater Street, Ottawa, Canada K1A 1K3 (el "Acreedor"), para que mediante sus apoderados y representantes legales pueda ejercitar cualesquiera de las siguientes facultades en nombre y representación de la Sociedad en relación con la aeronave Bombardier CRJ‑1000 con número de serie de fabricante [●] y matrícula [●] (la "Aeronave") arrendada a Air Nostrum, Líneas Aéreas del Mediterráneo, S.A. a través de un contrato de arrendamiento operativo (el "Contrato de Arrendamiento Operativo") con fecha [●]: (a)Realizar cuantas actuaciones resulten necesarias, para que el Acreedor pueda tomar la posesión, control y uso de la Aeronave y cancelar el registro de la Aeronave llevado a cabo en el Registro de Matricula de Aeronaves (AMR) y/o en el Registro de Bienes Muebles o cualquier otro, en su caso.   (b)Llevar a cabo cuantos actos sean necesarios o convenientes en relación con el uso, operación y mantenimiento y posesión (incluyendo, sin carácter exhaustivo, la posesión y cancelación de cada inscripción en el Registro de Matrícula de Aeronaves (AMR) y, en su caso, en el Registro de Bienes Muebles) en relación con la devolución de la Aeronave, junto con los motores, equipamientos, registros y otros documentos relacionados con la Aeronave requeridos para abandonar la jurisdicción y territorio en el cual la aeronave esté situada.   (c)Realizar cuantas actuaciones (incluyendo la presentación de instancias y solicitudes y la liquidación de impuestos y tasas) y tomar cuantas medidas sean convenientes o necesarias en el ejercicio de las facultades otorgadas, incluyendo la facultad de representar a la Sociedad ante la Agencia Estatal de Seguridad Aérea en España, o ante cualquier entidad, agencia, ministerio u organismo público español o tribunal y en la medida necesaria para obtener el control de la Aeronave para poder llevar a cabo la exportación de la misma desde España, así como para realizar la cancelación del registro de la Aeronave en cualquier ministerio, departamento, agencia u organismo gubernamental de España o en cualquier otro estado que pueda tener jurisdicción sobre la Aeronave.   (d)Realizar en nombre y representación de la Sociedad cuantos actos sean necesarios y suscribir cuantos documentos deba suscribir la Sociedad para que, en caso de pérdida total de la Aeronave, ya sea real o declarada, el Acreedor pueda recibir del seguro la indemnización por la Aeronave correspondiente al valor acordado determinado en el Contrato de Arrendamiento Operativo y reflejado en las pólizas de seguros. Las facultades anteriores incluyen, sin carácter exhaustivo, la firma del modelo de documentos de pago/liberación que las agencias de seguros utilizan en casos de pérdida total.   (e)Realizar cuantas declaraciones y actuaciones y suscribir cuantos documentos públicos o privados puedan ser convenientes o necesarios para el ejercicio de las facultades conferidas en este poder.   (f)Ordenar a los empleados de Air Nostrum, Líneas Aéreas del Mediterráneo, S.A. que entreguen la posesión de la Aeronave en cualquier jurisdicción que se encuentre, incluso fortuitamente, reclamándoles, si fuera necesario, su entrega con el apoyo de la autoridad local correspondiente, incluyendo a las autoridades aeroportuarias, policía local y cualquier otra entidad, e incluso pudiendo dar instrucciones a los pilotos e interrumpiendo cualquier vuelo que pueda estar realizándose o a punto de realizarse, siempre que (i) dicha instrucción no afecte a la seguridad e integridad de dichos empleados, la tripulación o los pasajeros de la Aeronave, y (ii) no se infrinja ninguna ley aplicable.   (g)Delegar o sustituir a favor de una o más personas, total o parcialmente, las facultades conferidas en el presente poder.   La Sociedad indemnizará al Acreedor y a cualquiera de sus apoderados y representantes legales de todos los costes, reclamaciones, gastos y responsabilidades, cualquiera que fuera la forma en que se hubieran producido, resultantes del ejercicio lícito de las facultades aquí otorgadas, salvo que las anteriores reclamaciones, gastos y responsabilidades sean consecuencia de negligencia grave o dolo del Acreedor o de cualquiera de sus apoderados y representantes legales.   En ausencia de negligencia grave o dolo del Acreedor o de sus apoderados y representantes legales en el ejercicio de las facultades aquí otorgadas, la Sociedad se compromete a ratificar y confirmar cualesquiera actuaciones realizadas lícitamente por el Acreedor o cualquiera de sus apoderados y representantes legales en el ejercicio de las facultades otorgadas al mismo en virtud del presente poder.   Las facultades otorgadas han de ser interpretadas en su más amplio sentido, con el objeto de permitir la obtención del fin para el que han sido conferidas e incluirán en todo caso la facultad de autocontratación.   El presente poder será irrevocable y no podrá ser modificado o limitado de forma alguna sin el consentimiento del Acreedor.   El carácter irrevocable que se otorga al presente poder obedece a la relación subyacente existente entre el poderdante y el apoderado y el mismo ha sido otorgado en interés del apoderado   DEREGISTRATION POWER OF ATTORNEY     In [●], on [●] [●] 2016   Before me [●] Notary Public of [●],     APPEARS   Mr/Ms [●insert the complete name of the individual appearing before the Notary], of full age, a [●insert the nationality] national, with place of business at [●insert professional address], holder of current [●passport number / national identity card number] [●insert the relevant number]   ACTS   In name and on behalf of ACY SN 19003 Limited (the "Company"), a a company duly incorporated and existing under laws of England and Wales, with its registered office at 16 Old Bailey, London EC4M 7EG, England and registered with the Companies House with registration number 10290241.       He/she acts in his/her capacity as legal representative of the Company by virtue of [●] [●describe the document of title and particulars of registration where appropriate].     GRANTS   The Company grants hereby an irrevocable power of attorney in favor of Export Development Canada, with registered office at 150 Slater Street, Ottawa, Canada K1A 1K3 (the "Secured Creditor") so that through its attorneys and legal representatives, may carry out in the name and on behalf of the Company any of the following powers in relation to the aircraft Bombardier CRJ‑1000, with manufacturer serial number 19003 and registration number [●] (the "Aircraft") leased to Air Nostrum, Líneas Aéreas del Mediterráneo, S.A. by means an operational lease agreement (the "Operational Lease Agreement") dated on [●]: (a)Carry out any necessary actions in order for the Secured Creditor to take possession, control and use of the Aircraft and cancel the registry of the Aircraft carried out with the Aircraft Matriculation Registry (AMR) and/or the Movable Property Registry or any other, if any.     (b)Carry out any necessary or convenient measures in relation with the use, operation and maintenance and possession (including but not limited, the possession and cancelation of each registration at the Aircraft Matriculation Registry (AMR), and if applicable, at the Movable Property Registry) in relation with the redelivery of the Aircraft, together with the engines, equipment, registries and other documents related to the Aircraft required to leave the jurisdiction and territory where the Aircraft is located.     (c)Carry out any actions and take any measures that may be convenient or necessary (including the submission of any filing and applications and the payment of taxes and duty) to exercise of the powers granted hereby, including to act in name and on behalf of the Company before the Agencia Estatal de Seguridad Aérea in Spain, or any other entity, agency, ministry, Spanish public corporation or court, provided that it is necessary to obtain the control over the Aircraft in order to make possible the exportation of the Aircraft from Spain, as well as cancel any registration related to the Aircraft in any ministry, department, agency or government agency in Spain or in any other State that could have jurisdiction over the Aircraft.       (d)Carry out in name and on behalf of the Company, any actions that may be necessary and execute any documents that may be necessary, in case of actual or declared total loss of the Aircraft, in order pay or deliver to the Secured Creditor any compensation insurance for the Aircraft for agreed value under the Lease Agreement and included in the insurance policies. The abovementioned powers include, without limitation, the signature of the template form of payment/release that the insurance agencies use in case of total loss.         (e)Make any statement or declarations carry out any action and execute any, public or private, documents that may be necessary or convenient to the exercise of the powers granted herby.     (f)Order Air Nostrum, Líneas Aéreas del Mediterráneo, S.A employees to deliver the possession of the Aircraft in any jurisdiction where it is located, even incidentally; requesting, if it is necessary, its deliver with the support of the relevant local authority, including the airport authorities, local police and any other entity, being possible even give instructions to the pilots and interrupting any flight that is being made or that it is going to be made, as long as: (i) such instruction does not affect the integrity and security of the referred employees, the crew or the passengers of the Aircraft, and (ii) any applicable law is not violated         (g)Delegate or substitute in favour of one ore more persons, partially or totally, the powers granted at this power of attorney.     The Company undertakes to indemnify the Secured Creditor and any of its attorneys or representatives for all the costs, claims, expenses and liabilities incurred in connection with the exercise of the powers granted hereby, except if those claims, cots and liabilities are consequence of gross negligence or willful misconduct of the Security Agent or of any of its attorneys or legal representatives.       In the absence of gross negligence or willful misconduct of the Secured Creditor or its attorneys or legal representatives in the exercise of the power granted hereby, the Company undertakes to ratify and confirm any action legally performed by the Secured Creditor or any of its attorneys and legal representatives in the exercise of the powers granted by virtue of the this power of attorney.   The powers granted hereby will be interpreted in their broadest sense, in order to achieve the purposes for which they have been granted and they will include in every case, the faculty of self-contracting   This power of attorney is irrevocable and it could not be amended or limited in any way, without the prior consent of the Secured Creditor.   The irrevocable nature given to the present power of attorney is due to the underlying relationship existing between the grantor and the attorney, and it has being granted in interest of the attorney.      

SELLO del NOTARIO

SEAL of the NOTARY

___________________________________________

Firma del COMPARECIENTE

Signature of the APPEARER

___________________________________________

Firma del NOTARIO

Signature of the NOTARY

___________________________________________

CERTIFICACIÓN NOTARIAL	NOTARIAL CERTIFICATE
Yo, [●insert the notary's name], notario público con domicilio y en ejercicio en la ciudad de [●insert city where the power is being given] y debidamente facultado con arreglo a la legislación de [Inglaterra y Gales] para autorizar todo tipo de documentos públicos y privados que hayan de surtir efecto en países extranjeros, por la presente certifico y doy fe de lo siguiente:	I, [●insert the notary's name], Notary with abode and occupation in the city of [●insert city where the power is being given], who has been duly sworn and admitted under the laws of [England and Wales] to authenticate all manner of public and private documents that are to take effect abroad. I hereby certify and attest to the following:
―Que [●insert details of the Company] es una sociedad debidamente constituida y en vigor con arreglo a las leyes de [Inglaterra y Gales] e inscrita en el Registro de Sociedades de Inglaterra y Gales con número [●].	―That ACY SN 19003 Limited is a company duly incorporated and existing under laws of England and Wales, with its registered office at 16 Old Bailey, London EC4M 7EG, England and registered with the Companies House with registration number 10290241.
―Que la firma en este poder de D./D.ª [●insert appearer's name], a quien identifico, es auténtica.	―That the signature on this Power of Attorney is that of Mr/Ms [●insert the appearer's name], which I identify and deem to be genuine.
―Que el firmante del poder, D./D.ª  [●insert the appearer's name and personal particulars], en su calidad de representante legal en virtud de [●describe the document of title and particulars of registration where appropriate], posee la capacidad legal necesaria para otorgar el presente poder.	―That the signatory of this Power of Attorney, Mr/Ms.[●insert the appearer's name and personal particulars], in the capacity of legal representative by virtue of [●describe the document of title and particulars of registration where appropriate], has the necessary authority to execute this Power of Attorney.
―Que en el otorgamiento de este poder se han observado todas las formas y solemnidades exigidas para esta clase de documento por la legislación vigente en [Inglaterra y Gales], lugar del otorgamiento.	―That in the execution of this Power of Attorney all the formalities and solemnities necessary for this type of document, under the current laws of England and Wales, have been duly observed.
EN FE Y TESTIMONIO DE LO CUAL expido el presente, que firmo y sello el día [●insert date: day, month, year] en [●insert the city where the power is being given].	IN WITNESS WHEREOF I hereby issue this document, signing it and affixing my seal of office hereto in [●insert the city where the power is being given], on [●insert date: day, month, year].
Firma del NOTARIO Signature of the NOTARY ___________________________________________

APOSTILLE OF THE HAGUE CONVENTION OF 5 OCTOBER 1961

Schedule 8 Covenants during Post-Lease Responsibility Period

1 Registration

The Borrower will take such steps as the Security Agent shall reasonably direct to de-register the Aircraft from the State of Registration and to re-register it in such country as the Security Agent shall reasonably agree. If requested by the Security Agent (acting reasonably), the Borrower shall at its own cost grant and perfect a replacement or additional mortgage over the Aircraft in favour of the Security Agent in such form as the Security Agent shall reasonably require having regard to the laws of the new State of Registration.

2 Storage, Flights and Maintenance

2.1 The Borrower shall procure that the Aircraft is stored in a location reasonably acceptable to the Security Agent in full compliance with all Applicable Laws (including as to insurance) of the State of Registration and of the country where the Aircraft is situated and in accordance with the Manufacturer's and the Engine Manufacturer's operating manuals and instructions and in accordance with the requirements of the Aviation Authority and so as not to invalidate any manufacturers warranties.

2.2 The Borrower shall procure that the Aircraft is not stored, maintained or flown (i) in violation of any law or regulation that applies to the Aircraft, the Borrower, the Lease Manager or any Finance Party, (ii) in a manner that would cause the Aircraft, the Borrower, the Lease Manager or any Finance Party to be in violation of any Applicable Laws or (iii) in breach of the terms of the Insurances (as defined in paragraph 4.1 below). For the avoidance of doubt, it is agreed that flights permitted by the terms of a ferry flight permit issued by the competent authority of the State of Registration shall not be prohibited by the terms of (i) and (ii) above.

2.3 The Borrower shall procure that the Aircraft is not flown other than for test flights or ferry flights. If the Aircraft is flown, the Borrower will procure that such flight will not be for any purpose for which the Aircraft is not designed or reasonably suited, or outside the tolerances and limitations for which the Aircraft was designed and that the Aircraft will be operated in accordance with all Applicable Laws and so as not to invalidate any manufacturer's warranties.

2.4 The Borrower shall not do or permit to be done anything which will or could reasonably be expected to expose the Aircraft, any Engine or any Part to penalty, forfeiture, seizure, arrest, impounding, detention, confiscation, taking in execution, appropriation or destruction, and in any such event will use all reasonable endeavours to procure the immediate release therefrom of the Aircraft, the Engine or the Part so affected, nor shall it abandon the Aircraft, any Engine or any Part.

2.5 The Borrower shall, at its own cost:

(a) incorporate in the Aircraft all Airworthiness Directives which apply to the Aircraft and which have a compliance date during the period from the Lease Termination Date to the end of the Post-Lease Responsibility Period for the Aircraft, in a timely manner and on a terminating action basis;

(b) procure compliance with the Manufacturer's and the Engine Manufacturer's recommendations for aircraft and engines respectively that are in storage;

(c) ensure that no Engine or Part is at any time removed from the Aircraft or an Engine otherwise than during the course of maintaining, servicing, repairing, overhauling or testing the Aircraft or that Engine and then only if it is promptly reinstalled or promptly replaced or substituted by an item complying with the provisions of paragraph (d) below;

(d) ensure that no engine is installed on the Airframe and no part is installed on the Airframe or any Engine (other than for a temporary period insofar as necessary for the purposes of a ferry flight or demonstration flight) unless (i) either it is then the property of the Borrower free and clear of all Security other than Permitted Liens or, on installation on the Airframe or the relevant Engine, title thereto vests in the Borrower free from any Security other than Permitted Liens and (in either such case) such engine or part becomes subject to the Aircraft Mortgage, (ii) it has a value at least equivalent to that of the Engine or Part being replaced and (iii) it (x) is of the same model (or, at the Borrower's option, an improved (but compatible) model) as the Engine or Part to be replaced, (y) is not older than the Engine or Part which is to be replaced and (z) has a residual value equal to or higher than that of the Engine or Part which is to be replaced.

If a substitution of a Part or an Engine is permitted or required by the foregoing provisions of this paragraph (d) (other than for a temporary period insofar as necessary for the purposes of a ferry flight or demonstration flight), immediately upon such installation and without further act (1) title to the replacement part or, as the case may be, engine shall thereupon vest in the Borrower free and clear of all Security other than Permitted Liens and become subject to the Aircraft Mortgage and (2) provided that title to the replacement part or, as the case may be, engine shall have vested, or shall simultaneously therewith vest, in the Borrower and become subject to the Aircraft Mortgage, the replaced Part or, as the case may be, Engine shall thereupon cease to be subject to the Aircraft Mortgage;

(e) ensure that any Engine and each Part which is not installed on the Airframe or any Engine is properly and safely stored and insured in accordance with paragraphs 2.1 and 2.2;

(f) procure that no modification, change or alteration to the Aircraft is made that (i) materially reduces the value, utility or marketability of the Aircraft or (ii) might reasonably be expected to adversely affect the interests of the Finance Parties under the Relevant Documents, except as required by the Manufacturer or by the Aviation Authority.

2.6 The Borrower will not (and will procure that the Lease Manager will not) at any time represent or hold out any Finance Party as carrying goods or passengers on the Aircraft or as being in any way connected or associated with the operation of the Aircraft or as having any operational interest in the Aircraft nor represent itself as the agent of any Finance Party for such purposes.

2.7 The Borrower will not (and will procure that the Lease Manager will not) at any time pledge the credit of any Finance Party for any maintenance, service, repairs, overhauls or modifications relating to the Aircraft.

3 Technical Records

3.1 The Borrower shall ensure that there are kept, in the English language, accurate, complete and current records of all flights made by the Aircraft during the Post-Lease Responsibility Period, and of all maintenance and repairs carried out to the Airframe and each Engine during such period, and shall allow the Security Agent and/or its agents or representatives to examine and take copies of such records.

3.2 The records so kept shall conform with the regulations from time to time in force of the Aviation Authority and with good industry practice, and shall disclose the whereabouts of any Engines or Parts which are not installed on the Airframe.

3.3 The Borrower shall (save as hereinafter provided) procure that all the Manuals and Technical Records are kept in the possession of the person storing or maintaining the Aircraft and the Borrower shall procure that no other person shall have possession of, or control over, the Manuals and Technical Records or any Part except with the prior written consent of the Security Agent.

4 Insurance

4.1 The Borrower shall at its own cost procure that there is maintained and kept in full force and effect with reputable and internationally recognised insurance companies and through reputable and internationally recognised insurance brokers the following insurances with respect to the Aircraft (the Insurances):

(a) "All Risk" hull insurance (with flight, taxiing and ingestion coverages) against loss or damage from whatsoever cause arising, including war and kindred perils. Such policy or policies shall be subject to such exclusions as the Security Agent may approve (which approval shall not be unreasonably withheld) and shall insure the Aircraft on an agreed value basis in Dollars which shall (unless the Security Agent agrees to the contrary) be at all times at least equal to the Minimum Agreed Value;

(b) war risk and related insurance on an agreed value basis for the amount referred to in paragraph 4.1(a) covering the types of all risks specifically excluded from the hull insurance (other than those which cannot be insured against) including:

(i) war, invasion, acts of foreign enemies, hostilities (whether war be declared or not), civil war, rebellion, revolution, insurrection, martial law, military or usurped power or attempts at usurpation of power; and

(ii) strikes, riots, civil commotion or labour disturbances; and

(iii) any act of one or more persons, whether or not agents of a sovereign power, for political or terrorist purposes and whether the loss or damage resulting therefrom is accidental or intentional; and

(iv) any malicious act or act of sabotage; and

(v) confiscation, nationalisation, seizure, restraint, detention, appropriation, requisition for title by or under the order of any government (whether civil, military or de facto) or public or local authority (other than, to the extent not available, the Government of the State of Registration); and

(vi) hijacking or any unlawful seizure or wrongful exercise of control of the Aircraft or crew in flight (including any attempt at such seizure or control) made by any person or persons on board the Aircraft.

(c) aircraft third party, passenger, baggage, cargo, mail and airline general third party liability (including products liability) insurance for a combined single limit of $400,000,000 for any one accident (or such higher amount as the Facility Agent may reasonably require) and in the aggregate in respect of products liability and third party war and allied perils.

It is agreed that while the Aircraft is in storage, the insurance coverage described above may be provided in a normal storage policy in accordance with market practice for stored aircraft.

4.2 The insurances to be effected under paragraphs (a) and (b) of clause 4.1 shall be provided on the agreed value basis (and for the amount) therein referred to and each policy taken out in compliance therewith shall, unless the Security Agent otherwise consents in writing:

(a) have a scope and coverage at least as comprehensive as LSW 555D or any replacement therefor;

(b) be expressed and payable in Dollars;

(c) name the Security Agent as loss payee in the event of a Total Loss;

(d) waive any right of subrogation of the insurers to any right of the Borrower against any Finance Party insofar as such waiver is in accordance with normal market practice at the relevant time;

(e) provide (in the event of separate policies being arranged to cover the "All Risk" hull insurance and the "War Risk" and related insurance) that the underwriters subscribing to such insurances agree to a 50/50 claims funding arrangement in the event of any dispute as to which insurance is applicable; and

(f) have deductibles (other than in respect of a Total Loss, where no deductible will apply) which are in accordance with aviation practice generally.

4.3 All the Insurances shall:

(a) name each of the Finance Parties (and, in the case of liability insurances, each of their respective successors and permitted assigns and their respective officers, directors, representatives, agents, shareholders, subsidiaries, partners, contractors, members, managers, affiliates, employees and transferees) as additional named insureds;

(b) be subject to the relevant provisions of AVN67B (or such replacement or amendment thereof as is then customary in the aviation insurance market) as endorsed on the policy;

(c) provide for worldwide coverage, subject only to usual exceptions applicable to an aircraft being stored and such other exceptions as the Security Agent may in writing agree; and

(d) provide that the Finance Parties and their respective successors, assigns and subrogees and their respective officers, directors, shareholders, agents, employees and servants shall not be liable for any insurance premium in respect thereof except in respect of the premium due for the Aircraft and only by set off against insurance proceeds

4.4 The Borrower shall pay or procure the payment of the premiums (or instalments thereof) as required by the terms of the policies relating to the Insurances. In the case of renewals of such policies, the Borrower shall timely renew such policies and shall produce to the Security Agent a certificate from the Borrower's insurance brokers evidencing such renewal, no later than fifteen (15) days after the date of conclusion of renewal negotiations and, in any event, prior to the date on which the Insurances would otherwise have expired.

4.5 If the Borrower shall default in effecting, procuring or maintaining any of the Insurances or if any of the Insurances shall for any reason become void, the Security Agent may (but without any obligation so to do and without prejudice to the Security Agent's and Facility Agent's other rights and remedies hereunder) after notifying the Borrower, effect, procure and maintain such Insurances at the cost of the Borrower (and the Borrower will forthwith upon demand procure the repayment to the Security Agent of all premiums and other moneys from time to time paid by the Security Agent in respect of such Insurances plus accrued interest thereon at the Default Rate) failing which, at any time whilst such default or voidness is continuing, the Borrower shall, without prejudice to its obligations under this Agreement to maintain the Insurances, cause the Aircraft to remain grounded until such provisions are fully complied with.

4.6 The Borrower shall not, without the prior written consent of the Security Agent, create or permit to be created any Security over its interests in the Insurances or take out insurances, or permit itself to be named assured in insurances with respect to the Aircraft or any Engine other than as required under this Agreement, if such insurances will or may prejudice the Insurances or any amount recoverable thereunder.

4.7 The Borrower shall promptly upon the obtaining of new Insurances or the renewal of any Insurances deliver to the Security Agent copies of the current certificate of insurance. The Borrower shall, or will procure that the insurers or insurance brokers will, give to the Security Agent, promptly after the original, and each extended, expiry date of each of the Insurances, current copies of the insurance certificate or other evidence reasonably satisfactory to the Security Agent that the requirements of this paragraph 4 are being complied with together with a letter of undertaking from the Borrower's insurance brokers in form and substance reasonably acceptable to the Security Agent. If any variation is made by the insurers to the terms of any of the Insurances, the Borrower shall procure that notice is given forthwith to the Security Agent of such variation and shall provide such further details in relation thereto (excluding details relating to premiums) as the Security Agent may reasonably require. To the extent that any variation to the terms of any of the Insurances is at the option of the Borrower, the Borrower shall not agree such variation without the prior written consent of the Security Agent if such variation materially adversely affects the rights and/or interests of any Finance Party.

4.8 The Borrower shall not without the prior written consent of the Security Agent:

(a) except as permitted by this paragraph 4 make or permit to be made any material modification to any of the Insurances that would result in the Insurances ceasing to comply with the requirements set out in this paragraph 4;

(b) do or omit to do anything if the consequence of doing or omitting to do that thing would be or might reasonably be expected to be to render any of the Insurances void, voidable or unenforceable or to allow the insurers to recover any payment made by the insurers under any of the Insurances in whole or in part; or

(c) settle, compromise or abandon any claim under any of the Insurances in relation to a total loss (as defined in the Insurances) or permit the same.

4.9 If the insurances required by this paragraph 4 are not effected and maintained through the London insurance market, the Borrower shall procure that the relevant insurers (a) assign the benefit of any reinsurance contract to the Security Agent on terms acceptable to the Security Agent, and (b) maintain in full force and effect reinsurances with reinsurers of recognised standing and acceptable to the Security Agent, and such reinsurances shall:

(a) be on the same terms as the original insurances;

(b) contain a "cut through" clause in terms satisfactory to the Security Agent;

(c) provide in case of any bankruptcy, liquidation, winding-up, administration, insolvency, examinership, reorganisation, dissolution or similar proceedings of or affecting the reassured that the reinsurers' liability shall be to make such payments as would have fallen due under the relevant policy of reinsurance in accordance with the cut through clause referred to in paragraph (b) as if the reassured had (immediately before such bankruptcy, liquidation, dissolution or similar proceedings) discharged its obligations in full under the original insurance policies in respect of which the then relevant policy of reinsurance has been effected; and

(d) be for one hundred per cent. (100%) of the amount of the primary insurances and placed and reinsured in the London aviation reinsurance market with reinsurers of recognised financial standing and reputation.

4.10 If a Total Loss has occurred, all recoveries hereunder up to the amount for which the Borrower is required to insure the Aircraft shall be paid in full to the Security Agent without any deductions or withholding whatsoever.

4.11 All recoveries in respect of (i) repairable damage to the Aircraft not amounting to a total loss or constructive or compromised or agreed or arranged total loss of the Aircraft or the Airframe or (ii) the loss or destruction of any of the Engines where the Airframe is not a total loss or constructive or compromised or agreed or arranged total loss, shall be paid in full in the case of (i), (A) to the repairers against presentation of their invoices or (B) the Security Agent or to its order against presentation of the receipts or other evidence of the repairers evidencing payment of their invoices and in the case of (ii), (C) to the vendor of a replacement engine or (D) to the Security Agent or to its order in reimbursement of the costs of the replacement engine(s).

SIGNATURE PAGE - LOAN AGREEMENT (MSN 19003)

Borrower

Signed for and on behalf of)

ACY SN 19003 LIMITED)

By its duly authorised signator      )

)

in the presence of

Witness Signature:_______________________

Name:

Title:

Address:

Finance Parties

SIGNED	)
for and on behalf of	)
EXPORT DEVELOPMENT CANADA	)
as Facility Agent, Security Agent and Lender	)

EX-10.29

EXECUTION VERSION

DEED OF GUARANTEE GRANTED BY AEROCENTURY CORP. IN FAVOUR OF EXPORT DEVELOPMENT CANADA IN RELATION TO ONE (1) BOMBARDIER CRJ 1000 AIRCRAFT BEARING MANUFACTURER'S SERIAL NUMBER 19002

178384-4-6491-v9.070-40595385

CONTENTS

ClausePage

1.Interpretation ..................................................................................................................... 1

2.Guarantee........................................................................................................................... 2

3.Preservation of Rights ....................................................................................................... 3

4.Representations ................................................................................................................. 5

5.Covenants .......................................................................................................................... 6

6.Payments ........................................................................................................................... 6

7.Tax Gross Up and Indemnities .......................................................................................... 7

8.Currency Indemnity...........................................................................................................7

9.Partial Invalidity ................................................................................................................ 8

10.Remedies and Waivers ...................................................................................................... 8

11.Amendments...................................................................................................................... 8

12.Notices ............................................................................................................................... 8

13.Calculations and Certificates ............................................................................................. 9

14.Benefit of Guarantee ......................................................................................................... 9

15.Relevant Document ........................................................................................................... 9

16.Third Party Rights ........................................................................................................... 10

17.Law and Jurisdiction ....................................................................................................... 10

178384-4-6491-v9.070-40595385

THIS DEED OF GUARANTEE (this "Guarantee") is made by way of deed on

___________________ 2016 by AEROCENTURY CORP. (the "Guarantor") in favour of EXPORT DEVELOPMENT CANADA, as security trustee for and on behalf  of the Lenders and the other Finance Parties (the "Security Agent").

WHEREAS

(A) Pursuant to a senior loan agreement dated on or about the date hereof (such agreement, as from time to time amended, supplemented or novated, being herein called the "Senior Loan Agreement") between ACY SN 19002 Limited (the "Borrower"), as borrower, the Security Agent, as security trustee for and on behalf of the Finance Parties,  Export  Development  Canada,  as  facility  agent  for  and  on  behalf  of  the Lenders, and Export Development Canada as  the Original Lender, the Original Lender has agreed to provide the Borrower with a senior loan facility in order to partially fund the Borrower's acquisition of the Aircraft.

(B) It is a condition precedent to the obligations of the Original Lender to make the senior loan facility available under the Senior Loan Agreement that the Guarantor execute and deliver this Guarantee to the Security Agent.

NOW, THEREFORE, in consideration of the Security Agent and the Finance  Parties entering into the Relevant Documents the Guarantor hereby agrees for the benefit of the Security Agent and the Finance Parties as follows:

1.         INTERPRETATION

1.1 Unless otherwise defined herein, all terms used herein which are defined in the Senior Loan Agreement shall have the respective meanings given to them in the Senior Loan Agreement.

1.2       In this Agreement:

"Aircraft" means the one (1) Bombardier CRJ 1000 aircraft bearing manufacturer's serial number 19002.

"Company Costs" means the costs of the Borrower's incorporation, continued existence as a company of good standing (which shall include the costs of any audit, share trustee, company secretarial and tax filings and fees payable to Templeco Corporate Services pursuant to the corporate services agreement entered into between the Borrower and Templeco Corporate Services as corporate services provider) and the costs of the bankruptcy, liquidation, winding-up, administration, insolvency, examinership, reorganisation or dissolution of the Borrower.

"Guaranteed Obligations" means any and all obligations and liabilities (irrespective of whether such obligations and liabilities are present, future, actual, prospective or contingent) of the Borrower:

(a) to pay to the Finance Parties or any of them any and all amounts payable or expressed to be payable under or in connection with the Relevant Documents or any of them to which the Borrower is a party, provided that if in accordance with such Relevant Documents the recourse of the Finance Parties to the Borrower in respect of any such amounts is limited by the provisions of clause

3.2 (Limitation on recourse) of the Proceeds Deed then such amounts shall only constitute Guaranteed Obligations to the extent that the Finance Parties have recourse to the Borrower in accordance with clause 3.2 (Limitation on recourse) of the Proceeds Deed; and

(b) under, or in respect of any Losses incurred by any Finance Party as a consequence of a breach by the Borrower of, clause 11 (Undertakings) of the SeniorLoan  Agreement  (other  than  clause  11.1.1  (Performance  of obligations)) and clause 10 (Remarketing Period) of the Proceeds Deed, any provision of the Termination Side Letter, clauses 6 (Assignor's Covenants) and

9 (Further Assurance) of the Security Assignment, clauses 2.2.3 (Provisions Ancillary to Grants of Security) and 4 (Covenants of the Borrower) of the Aircraft Mortgage, and clauses 5 (Further Assurance) and 7 (Chargor's Representations and Undertakings) of the Share Charge.

"Lease Management Fees" means the management fees payable to Aerocentury Corp. pursuant to the lease management services agreement entered into between the Borrower and Aerocentury Corp. as lease manager on or about the date hereof.

"Tax Deduction" means a deduction or withholding for or on account of Tax from a payment to be made by the Guarantor to the Security Agent or the Finance Parties pursuant to this Guarantee.

1.3 Unless a contrary indication appears, this Guarantee shall be interpreted in accordance with the rules of interpretation set out in clause 1.3 (Interpretation) of the Senior Loan Agreement mutatis mutandis.

1.4Clause headings are for ease of reference only.

1.5"$" and "dollars" denote lawful currency of the United States of America.

2.GUARANTEE

2.1 The Guarantor hereby irrevocably and unconditionally guarantees to the Security Agent and the other Finance Parties, on the terms set out in this Guarantee, the due and punctual payment and performance by the Borrower of the Guaranteed Obligations and agrees, within three (3) Business Days of receipt of the Security Agent's first written demand, to perform such Guaranteed Obligations which the Borrower shall at any time be liable to perform and pay to the Security Agent for account of the relevant Finance Parties every sum or sums of money which is payable pursuant to any of the Guaranteed Obligations.

2.2 The Guarantor hereby irrevocably and unconditionally agrees as a primary obligation to indemnify the Security Agent and the other Finance Parties on first demand by the Security Agent for and against any Loss incurred by any Finance Party as a result of any of the obligations, including without limitation, payment obligations, of the Borrower under or pursuant to the Relevant Documents to which the Borrower is a party being or becoming void, voidable, unenforceable or ineffective as against the Borrower for any reason whatsoever, whether or not known to any of the Finance Parties or any other person, the amount of such Loss being the amount which the

person or persons suffering it would otherwise have been entitled to recover from the

Borrower.

2.3 The Guarantor hereby irrevocably and unconditionally agrees and undertakes with the Security  Agent  that  the  Guarantor  will indemnify the Borrower and keep the Borrower indemnified and held harmless from and against the Company Costs and the Lease Management Fees, and the Guarantor undertakes with the Security Agent that whenever the Borrower does not pay any Company Cost or Lease Management Fee when due, the Guarantor shall immediately on demand pay that amount as if it was the principal obligor.

3.PRESERVATION OF RIGHTS

3.1 The obligations of the Guarantor herein contained shall be in addition to and shall be independent of every other Security which the Finance Parties or any of them may at any time hold in respect of any of the Borrower's obligations under the Relevant Documents.

3.2 The obligations of the Guarantor herein contained shall constitute and be continuing obligations notwithstanding any settlement of account or other matters or things whatsoever and, in particular, but without limitation, shall not be considered satisfied by any intermediate payment or satisfaction of all or any of the Borrower's obligations under the Relevant Documents and shall continue in full force and effect until full, final and indefeasible discharge of the Borrower's obligations pursuant to the Relevant Documents.

3.3 Neither the obligations of the Guarantor herein contained nor the rights, powers and remedies conferred in respect of the Guarantor upon the Security Agent and the other Finance Parties hereby or by law shall be discharged, impaired or otherwise affected by:

(a) the   bankruptcy,   liquidation,   winding-up,   administration,   insolvency, examinership, reorganisation or dissolution of the Borrower or any change in its status, function, control or ownership;

(b) any of the obligations of the Borrower under the Relevant Documents or any Security taken in respect of the obligations of the Borrower thereunder being or becoming illegal, invalid, unenforceable or ineffective in any respect;

(c) time or other indulgence being granted or agreed to be granted to the Borrower in respect of its obligations under the Relevant Documents or any such other Security;

(d) any amendment to, or any variation, waiver or release of, any obligation of the Borrower under, or any condition arising or applying in relation to, the Relevant Documents or in relation to any such Security;

(e) any failure to realise or fully to realise the value of, or any release, discharge, exchange or substitution of, any Security taken in respect of the Borrower's obligations under the Relevant Documents;

(f) any failure to take or fully to take any Security which it is contemplated should be taken by any of the Finance Parties pursuant to any of the provisions of the Relevant Documents or otherwise agreed to be taken in respect of the Borrower's obligations under the Relevant Documents; or

(g) any other act, event or omission which, but for this Clause 3.3 might operate to discharge, impair or otherwise affect any of the obligations of the Guarantor herein contained or any of the rights, powers or remedies conferred upon the Security Agent or the other Finance Parties by this Guarantee or by law.

3.4 Any settlement or discharge between the Guarantor and the Security Agent or any other Finance Party in respect of the Guaranteed Obligations shall be conditional upon no security or payment to the Security Agent or any Finance Party by the Borrower or the Guarantor or any other person on behalf of the Borrower or, as the case may be, the Guarantor, being avoided or reduced by virtue of any provision or enactment relatingto  bankruptcy,  liquidation,  winding-up,  administration,  insolvency, examinership, reorganisation or dissolution for the time being in force and, if any such security or payment in respect of the Guaranteed Obligations is so avoided or reduced, the Security Agent or the other relevant Finance Party shall be entitled to recover the value or amount of such security or payment so avoided or reduced from the Guarantor subsequently as if such settlement or discharge had not occurred.

3.5 Neither the Security Agent nor any other Finance Party shall be obliged before exercising any of the rights, powers or remedies conferred upon it in respect of the Guarantor hereby or by law:

(a)to make any demand of the Borrower;

(b)to take any action or obtain judgment in any court against the Borrower;

(c) to make or file any claim or proof in a bankruptcy, liquidation, winding-up, administration, insolvency, examinership, reorganisation or dissolution of the Borrower; or

(d) to enforce or seek to enforce any other security taken in respect of any of the obligations of the Borrower under the Relevant Documents.

3.6 The Guarantor agrees that until the expiry of the Aircraft Security Period it shall not exercise any rights which it may at any time have by reason of performance by it of its obligations hereunder:

(a)to be indemnified by the Borrower; and/or

(b) to claim any contribution from any other guarantor of the Borrower's obligations under the Relevant Documents to which the Borrower is a party; and/or

(c) to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Security Agent or any other Finance Party hereunder or of any other Security taken pursuant to, or in connection with, the Relevant Documents by all or any of the Finance Parties.

4.REPRESENTATIONS

4.1 The Guarantor represents and warrants on the date hereof, on the date of the Utilisation Request, on the Utilisation Date and (save for the representations and warranties made or given pursuant to Clause 4.1(d) and Clause 4.1(e)) on each Payment Date that:

(a) it has power to enter into this Guarantee and to exercise its rights and perform its obligations hereunder and all action required to authorise its execution of this Guarantee and its performance of its obligations hereunder has been duly taken;

(b) under the laws of England and Wales, the claims of the Security Agent or any other Finance Party against the Guarantor under this Guarantee will rank at least pari passu with the claims of all its unsecured and unsubordinated creditors save those whose claims are preferred solely by any bankruptcy, liquidation,winding-up,    administration,    insolvency,    examinership, reorganisation or dissolution or other similar laws of general application;

(c) all acts, conditions and things required to be done, fulfilled and performed in order  (i)  to enable it  lawfully  to  enter into,  exercise  its rights  under  and perform and comply with the obligations expressed to be assumed by it in this Guarantee, (ii) to ensure that the obligations expressed to be assumed by it in this Guarantee are legal, valid and binding, and (iii) to make this Guarantee admissible in evidence in England and Wales or in any other relevant jurisdiction have been done, fulfilled and performed;

(d) under the laws of England and Wales, it is not necessary that this Guarantee be filed, recorded or enrolled with any court or other authority in England and Wales or that any stamp, registration or similar tax be paid on or in relation to this Guarantee;

(e) under the laws of England and Wales, there are no restrictions on, nor are any Authorisations required of, the Guarantor or the Borrower in respect of the payment by the Guarantor and the Borrower of United States dollars to the Security Agent or the Finance Parties in connection with the discharge of their respective obligations under this Guarantee and the Relevant Documents;

(f) the obligations expressed to be assumed by it in this Guarantee are its legal, valid and binding obligations enforceable in accordance with the terms hereof except insofar as enforceability may be limited by (i) applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally or (ii) application of general principles of equity and/or (iii) such other qualifications specifically referred to in any qualifications section of any legal opinion in respect of this Guarantee delivered to the Facility Agent under Schedule 3 of the Senior Loan Agreement;

(g) the execution of this Guarantee and its exercise of its rights and performance of its obligations hereunder do not constitute and will not result in any breach of any law, agreement or treaty binding on the Guarantor;

(h)the Guarantor directly owns all of the Borrower's share capital; and

(i) in any proceedings taken in the Guarantor's jurisdiction of incorporation or in any other jurisdiction in relation to this Guarantee, the Guarantor will not be entitled to claim for the Guarantor or any of the Guarantor's assets immunity from suit, execution, attachment or other legal process.

5.COVENANTS

5.1The Guarantor shall:

(a) obtain, comply with the terms of and do all that is necessary to maintain in full force and effect all Authorisations required in or by the laws and regulations of any relevant jurisdiction applicable to it to enable it lawfully to enter into and  perform  its  obligations  under  this  Guarantee,  to  ensure  the  legality, validity, enforceability or admissibility in evidence in any relevant jurisdiction of this Guarantee and in relation to the payment of United States dollars by the Guarantor to the Security Agent and the other Finance Parties;

(b) retain at least (directly) one hundred per cent. (100%) of the issued share capital of the Borrower, unless the prior written consent of the Security Agent has been obtained;

(c) ensure that at all times the claims of the Security Agent and the other Finance Parties against it under this Guarantee rank at least pari passu with the claims of all unsecured and unsubordinated creditors save those whose claims are preferred by any bankruptcy, insolvency or other similar laws of general application;

(d) procure that the Borrower complies and continues to comply with the undertakings provided in clauses 11 (Undertakings), 16 (Assignment, transfers and lending offices) and 26 (Amendments and waivers) of the Senior Loan Agreement and any analogous provisions in any Security Document; and

(e) ensure that (i) the Borrower is properly and prudently managed and maintained in a manner consistent with good industry practice, and (ii) the Borrower complies with all its obligations under Applicable Law.

6.PAYMENTS

6.1 On each date upon which this Guarantee requires an amount to be paid by the Guarantor hereunder, the Guarantor shall make the same available to the Security Agent by payment in the currency in which the same is due from the Borrower in accordance with the terms of the relevant Relevant Document and in immediately available, freely transferable, cleared funds to such account as the Security Agent shall from time to time have specified for this purpose.

6.2 All payments to be made by the Guarantor under this Guarantee shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

7.TAX GROSS UP AND INDEMNITIES

7.1 The Guarantor shall make all payments to be made by it under this Guarantee without any Tax Deduction, unless a Tax Deduction is required by law.

7.2 The Guarantor shall promptly upon becoming aware that it must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Security Agent accordingly.

7.3 If a Tax Deduction is required by law to be made by the Guarantor, the amount of the payment due from it shall be increased to an amount which (after making any Tax Deduction and any other payments required in connection with any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.

7.4 If the Guarantor is required to make a Tax Deduction, it shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.

7.5 Within thirty (30) days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Guarantor shall deliver to the Security Agent for any Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment has been paid to the relevant taxing authority.

8.CURRENCY INDEMNITY

8.1 If any sum due from the Guarantor under this Guarantee (a "Sum"), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the "First Currency") in which that Sum is payable in accordance with a demand made pursuant to this Guarantee into another currency (the "Second Currency") for the purpose of:

8.1.1     making or filing a claim or proof against the Guarantor;

8.1.2 obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

the Guarantor shall as an independent obligation, within three (3) Business Days of receipt of the Security Agent's written demand, indemnify the Security Agent on behalf of any relevant Finance Party to whom that Sum is due against any Loss arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum, in each case such rate of exchange to be the prevailing rate of exchange for such amount then available to the Security Agent.

8.2 The Guarantor waives any right it may have in any applicable jurisdiction to pay any amount under this Guarantee in a currency or currency unit other than that in which it is expressed to be payable in the demand made under this Guarantee. If the Guarantor fails to pay any amount under this Guarantee in the currency in which it is demanded, the Guarantor hereby indemnifies the Security Agent on behalf of any relevant

result of the conversion of the amount received into the currency of the amount demanded at such rate of exchange to be the prevailing rate of exchange for such amount then available to such Finance Party.

9.PARTIAL INVALIDITY

If, at any time, any provision of the Relevant Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

10.REMEDIES AND WAIVERS

No failure to exercise, nor any delay in exercising, on the part of the Security Agent or any other Finance Party, any right or remedy under the Relevant Documents shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Guarantee are cumulative and not exclusive of any rights or remedies provided by law.

11.AMENDMENTS

Any term of this Guarantee may be amended only with the consent of the Security

Agent and the Guarantor.

12.NOTICES

12.1 Any communication or demand to be made under or in connection with this Guarantee shall be made in writing and, unless otherwise stated, may be made by fax or letter.

12.2 The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each party for any communication, demand or document to be made or delivered under or in connection with this Guarantee is that identified with its name on the below signature pages or any substitute address or fax number or department or officer as notified by such party to the other party by not less than five (5) Business Days' notice.

12.3 Any communication, demand or document made or delivered by one person to another under or in connection with this Guarantee will only be effective and for all purposes shall be deemed received:

(a)      if by way of fax, when received in legible form; or

(b) if by way of letter, when it has been left at the relevant address or five (5) Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address,

and, if a particular department and/or officer is specified as part of its address details provided under Clause 12.2, if addressed to that department and/or officer.

be effective only when actually received by the Security Agent and then only if it is expressly marked for the attention of the department and/or officer identified with the Security Agent's signature below (or any substitute department and/or officer as the Security Agent shall specify for this purpose).

12.5 Any communication or document made or delivered to the Borrower in accordance with any Relevant Document will be deemed to have been made or delivered to the Guarantor.

12.6 Promptly upon receipt of notification of an address or fax number or change of address or fax number pursuant to Clause 12.2 or changing its own address or fax number, the Security Agent shall notify the other parties to the Relevant Documents.

12.7Any notice given under or in connection with this Guarantee must be in English.

13.CALCULATIONS AND CERTIFICATES

13.1 In any litigation or arbitration proceedings arising out of or in connection with this Guarantee, the entries made in the accounts maintained by a Finance Party are, in the absence of manifest error, prima facie evidence of the matters to which they relate.

13.2 Any certification or determination by a Finance Party of a rate or amount under this Guarantee given in reasonable detail will be, in the absence of manifest error, prima facie evidence of the matters to which it relates.

14.BENEFIT OF GUARANTEE

14.1 This Guarantee shall be binding upon and enure to the benefit of each party hereto and its successors, assigns and transferees.

14.2 The Guarantor shall not be entitled to assign or transfer all or any of its rights, benefits and obligations hereunder without the prior written consent of the Security Agent.

14.3 The Guarantor agrees and acknowledges that if the Security Agent is replaced by, or assigns or transfers all or any of its rights, benefits and obligations under the Relevant Documents to, another person (such person being referred to as the "New Security Agent") in accordance with the provisions of the Relevant Documents then such New Security Agent shall be entitled to the same rights, title and interest in and to this Guarantee as the Security Agent has immediately prior to such replacement, assignment or transfer.   The Guarantor hereby  agrees  to  take  all  such  actions, including without limitation, the execution of such documents, as requested by the Security Agent which are necessary or desirable in order to effect any replacement, assignment or transfer contemplated pursuant to this Clause 14 and/or to ensure the New Security Agent is  entitled  to  such rights, title  and  interest in  and to this Guarantee.

15.RELEVANT DOCUMENT

The parties hereto agree that this Guarantee is a Relevant Document for the purposes of, and as defined in, the Senior Loan Agreement.

16.THIRD PARTY RIGHTS

A person who is not a party to this Guarantee will have no rights under the Contract (Rights of Third Parties) Act, 1999 (the "Act") to enforce any of the terms hereof, provided that each Finance Party may enforce its rights under this Guarantee in accordance with the terms of the Act.

17.LAW AND JURISDICTION

17.1 This Guarantee, and any non-contractual obligations in connection herewith, shall be governed by, and construed in accordance with, English law.

17.2 The parties agree that the courts of England shall have exclusive jurisdiction to hear and determine any suit, action or proceeding, and to settle any disputes, which may arise out of or in connection with this Guarantee and for such purposes irrevocably submits to the jurisdiction of such courts.

17.3 The Guarantor irrevocably waives any objection which it may have now or hereafter to such courts as are referred to in Clause 17.2 being nominated as the forum to hear and determine any suit, action or proceeding, and to settle any disputes, which may arise out of or in connection with this Guarantee and agrees not to claim that any such court is an inconvenient or inappropriate forum.

17.4 The submission to the courts of England is for the benefit of the Security Agent and the other Finance Parties only and shall not (and shall not be construed so as to) limit the rights of the Security Agent or any other Finance Party to take proceedings against the Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not.

17.5 The Guarantor hereby consents generally in respect of any legal action or proceeding arising out of or in connection with this Guarantee, to the giving of any relief or the issue of any process in connection with such action or proceeding including, without limitation, the making, enforcement or execution against any property whatsoever (irrespective of its use or intended use) of any order or judgment which may be made or given in such action or proceeding.

17.6 To the extent that the Guarantor may in any jurisdiction claim for itself or its assets immunity from suit, execution, attachment (whether in aid of execution, before judgment or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed), the Guarantor hereby irrevocably agrees not to claim and hereby irrevocably waives such immunity to the fullest extent permitted by the laws of such jurisdiction and, in particular, to the extent that in any proceedings taken in England the foregoing waiver of immunity shall have the fullest scope permitted by and be construed in accordance with the English State Immunity Act 1978 and that this waiver is intended to be irrevocable for the purposes of such Act.

17.7 Without prejudice to any other mode of service allowed under any Applicable Law, the Guarantor:

17.7.1 irrevocably appoints Temple Secretarial Limited at 16 Old Bailey, London EC4M 7EG or at its registered office from time to time as its agent for service of process in relation to any proceedings before the English courts in connection with any Relevant Document; and

17.7.2 agrees that failure by a process agent to notify the Guarantor of the proceeding will not invalidate the proceedings concerned.

IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to be duly executed and delivered as a deed the day and year first before written.

SIGNATURES – GUARANTEE (MSN 19002)

The Guarantor

SIGNED as a DEED                                                ) on behalf of AEROCENTURY CORP.                  ) a Delaware corporation, acting by                            )

) being a person who, in accordance with the laws of ) that territory, is acting under the authority of           ) AEROCENTURY CORP.                                      ) In the presence of:

Witness's signature: Name:

Address:        AeroCentury Corp., 1440 Chapin Avenue, Suite 310, Burlingame, CA 94010

Fax:               +1 650 696 3929

Attention:      President

SIGNATURES

The Security Agent

EXECUTED and DELIVERED as a DEED            ) by EXPORT DEVELOPMENT CANADA          ) as Security Agent                                                      )

acting by:

In the presence of:

Witness: Name: Address:

Address:Export Development Canada

150 Slater Street Ottawa, Ontario Canada  K1A 1K3

Fax:+1 613 598 2514 and +1 613 598 3186

Attention:Loan Services/Asset Management

EX-10.30

EXECUTION VERSION

DEED OF GUARANTEE GRANTED BY AEROCENTURY CORP. IN FAVOUR OF EXPORT DEVELOPMENT CANADA IN RELATION TO ONE (1) BOMBARDIER CRJ 1000 AIRCRAFT BEARING MANUFACTURER'S SERIAL NUMBER 19003

178384-4-6509-v2.070-40595385

CONTENTS

ClausePage

1.Interpretation ..................................................................................................................... 1

2.Guarantee........................................................................................................................... 2

3.Preservation of Rights ....................................................................................................... 3

4.Representations ................................................................................................................. 5

5.Covenants .......................................................................................................................... 6

6.Payments ........................................................................................................................... 6

7.Tax Gross Up and Indemnities .......................................................................................... 7

8.Currency Indemnity...........................................................................................................7

9.Partial Invalidity ................................................................................................................ 8

10.Remedies and Waivers ...................................................................................................... 8

11.Amendments...................................................................................................................... 8

12.Notices ............................................................................................................................... 8

13.Calculations and Certificates ............................................................................................. 9

14.Benefit of Guarantee ......................................................................................................... 9

15.Relevant Document ........................................................................................................... 9

16.Third Party Rights ........................................................................................................... 10

17.Law and Jurisdiction ....................................................................................................... 10

178384-4-6509-v2.070-40595385

THIS DEED OF GUARANTEE (this "Guarantee") is made by way of deed on

___________________ 2016 by AEROCENTURY CORP. (the "Guarantor") in favour of EXPORT DEVELOPMENT CANADA, as security trustee for and on behalf  of the Lenders and the other Finance Parties (the "Security Agent").

WHEREAS

(A) Pursuant to a senior loan agreement dated on or about the date hereof (such agreement, as from time to time amended, supplemented or novated, being herein called the "Senior Loan Agreement") between ACY SN 19003 Limited (the "Borrower"), as borrower, the Security Agent, as security trustee for and on behalf of the Finance Parties,  Export  Development  Canada,  as  facility  agent  for  and  on  behalf  of  the Lenders, and Export Development Canada as  the Original Lender, the Original Lender has agreed to provide the Borrower with a senior loan facility in order to partially fund the Borrower's acquisition of the Aircraft.

(B) It is a condition precedent to the obligations of the Original Lender to make the senior loan facility available under the Senior Loan Agreement that the Guarantor execute and deliver this Guarantee to the Security Agent.

NOW, THEREFORE, in consideration of the Security Agent and the Finance  Parties entering into the Relevant Documents the Guarantor hereby agrees for the benefit of the Security Agent and the Finance Parties as follows:

1.         INTERPRETATION

1.1 Unless otherwise defined herein, all terms used herein which are defined in the Senior Loan Agreement shall have the respective meanings given to them in the Senior Loan Agreement.

1.2       In this Agreement:

"Aircraft" means the one (1) Bombardier CRJ 1000 aircraft bearing manufacturer's serial number 19003.

"Company Costs" means the costs of the Borrower's incorporation, continued existence as a company of good standing (which shall include the costs of any audit, share trustee, company secretarial and tax filings and fees payable to Templeco Corporate Services pursuant to the corporate services agreement entered into between the Borrower and Templeco Corporate Services as corporate services provider) and the costs of the bankruptcy, liquidation, winding-up, administration, insolvency, examinership, reorganisation or dissolution of the Borrower.

"Guaranteed Obligations" means any and all obligations and liabilities (irrespective of whether such obligations and liabilities are present, future, actual, prospective or contingent) of the Borrower:

(a) to pay to the Finance Parties or any of them any and all amounts payable or expressed to be payable under or in connection with the Relevant Documents or any of them to which the Borrower is a party, provided that if in accordance with such Relevant Documents the recourse of the Finance Parties to the Borrower in respect of any such amounts is limited by the provisions of clause

3.2 (Limitation on recourse) of the Proceeds Deed then such amounts shall only constitute Guaranteed Obligations to the extent that the Finance Parties have recourse to the Borrower in accordance with clause 3.2 (Limitation on recourse) of the Proceeds Deed; and

(b) under, or in respect of any Losses incurred by any Finance Party as a consequence of a breach by the Borrower of, clause 11 (Undertakings) of the SeniorLoan  Agreement  (other  than  clause  11.1.1  (Performance  of obligations)) and clause 10 (Remarketing Period) of the Proceeds Deed, any provision of the Termination Side Letter, clauses 6 (Assignor's Covenants) and

9 (Further Assurance) of the Security Assignment, clauses 2.2.3 (Provisions Ancillary to Grants of Security) and 4 (Covenants of the Borrower) of the Aircraft Mortgage, and clauses 5 (Further Assurance) and 7 (Chargor's Representations and Undertakings) of the Share Charge.

"Lease Management Fees" means the management fees payable to Aerocentury Corp. pursuant to the lease management services agreement entered into between the Borrower and Aerocentury Corp. as lease manager on or about the date hereof.

"Tax Deduction" means a deduction or withholding for or on account of Tax from a payment to be made by the Guarantor to the Security Agent or the Finance Parties pursuant to this Guarantee.

1.3 Unless a contrary indication appears, this Guarantee shall be interpreted in accordance with the rules of interpretation set out in clause 1.3 (Interpretation) of the Senior Loan Agreement mutatis mutandis.

1.4Clause headings are for ease of reference only.

1.5"$" and "dollars" denote lawful currency of the United States of America.

2.GUARANTEE

2.1 The Guarantor hereby irrevocably and unconditionally guarantees to the Security Agent and the other Finance Parties, on the terms set out in this Guarantee, the due and punctual payment and performance by the Borrower of the Guaranteed Obligations and agrees, within three (3) Business Days of receipt of the Security Agent's first written demand, to perform such Guaranteed Obligations which the Borrower shall at any time be liable to perform and pay to the Security Agent for account of the relevant Finance Parties every sum or sums of money which is payable pursuant to any of the Guaranteed Obligations.

2.2 The Guarantor hereby irrevocably and unconditionally agrees as a primary obligation to indemnify the Security Agent and the other Finance Parties on first demand by the Security Agent for and against any Loss incurred by any Finance Party as a result of any of the obligations, including without limitation, payment obligations, of the Borrower under or pursuant to the Relevant Documents to which the Borrower is a party being or becoming void, voidable, unenforceable or ineffective as against the Borrower for any reason whatsoever, whether or not known to any of the Finance Parties or any other person, the amount of such Loss being the amount which the

person or persons suffering it would otherwise have been entitled to recover from the

Borrower.

2.3 The Guarantor hereby irrevocably and unconditionally agrees and undertakes with the Security  Agent  that  the  Guarantor  will indemnify the Borrower and keep the Borrower indemnified and held harmless from and against the Company Costs and the Lease Management Fees, and the Guarantor undertakes with the Security Agent that whenever the Borrower does not pay any Company Cost or Lease Management Fee when due, the Guarantor shall immediately on demand pay that amount as if it was the principal obligor.

3.PRESERVATION OF RIGHTS

3.1 The obligations of the Guarantor herein contained shall be in addition to and shall be independent of every other Security which the Finance Parties or any of them may at any time hold in respect of any of the Borrower's obligations under the Relevant Documents.

3.2 The obligations of the Guarantor herein contained shall constitute and be continuing obligations notwithstanding any settlement of account or other matters or things whatsoever and, in particular, but without limitation, shall not be considered satisfied by any intermediate payment or satisfaction of all or any of the Borrower's obligations under the Relevant Documents and shall continue in full force and effect until full, final and indefeasible discharge of the Borrower's obligations pursuant to the Relevant Documents.

3.3 Neither the obligations of the Guarantor herein contained nor the rights, powers and remedies conferred in respect of the Guarantor upon the Security Agent and the other Finance Parties hereby or by law shall be discharged, impaired or otherwise affected by:

(a) the   bankruptcy,   liquidation,   winding-up,   administration,   insolvency, examinership, reorganisation or dissolution of the Borrower or any change in its status, function, control or ownership;

(b) any of the obligations of the Borrower under the Relevant Documents or any Security taken in respect of the obligations of the Borrower thereunder being or becoming illegal, invalid, unenforceable or ineffective in any respect;

(c) time or other indulgence being granted or agreed to be granted to the Borrower in respect of its obligations under the Relevant Documents or any such other Security;

(d) any amendment to, or any variation, waiver or release of, any obligation of the Borrower under, or any condition arising or applying in relation to, the Relevant Documents or in relation to any such Security;

(e) any failure to realise or fully to realise the value of, or any release, discharge, exchange or substitution of, any Security taken in respect of the Borrower's obligations under the Relevant Documents;

(f) any failure to take or fully to take any Security which it is contemplated should be taken by any of the Finance Parties pursuant to any of the provisions of the Relevant Documents or otherwise agreed to be taken in respect of the Borrower's obligations under the Relevant Documents; or

(g) any other act, event or omission which, but for this Clause 3.3 might operate to discharge, impair or otherwise affect any of the obligations of the Guarantor herein contained or any of the rights, powers or remedies conferred upon the Security Agent or the other Finance Parties by this Guarantee or by law.

3.4 Any settlement or discharge between the Guarantor and the Security Agent or any other Finance Party in respect of the Guaranteed Obligations shall be conditional upon no security or payment to the Security Agent or any Finance Party by the Borrower or the Guarantor or any other person on behalf of the Borrower or, as the case may be, the Guarantor, being avoided or reduced by virtue of any provision or enactment relatingto  bankruptcy,  liquidation,  winding-up,  administration,  insolvency, examinership, reorganisation or dissolution for the time being in force and, if any such security or payment in respect of the Guaranteed Obligations is so avoided or reduced, the Security Agent or the other relevant Finance Party shall be entitled to recover the value or amount of such security or payment so avoided or reduced from the Guarantor subsequently as if such settlement or discharge had not occurred.

3.5 Neither the Security Agent nor any other Finance Party shall be obliged before exercising any of the rights, powers or remedies conferred upon it in respect of the Guarantor hereby or by law:

(a)to make any demand of the Borrower;

(b)to take any action or obtain judgment in any court against the Borrower;

(c) to make or file any claim or proof in a bankruptcy, liquidation, winding-up, administration, insolvency, examinership, reorganisation or dissolution of the Borrower; or

(d) to enforce or seek to enforce any other security taken in respect of any of the obligations of the Borrower under the Relevant Documents.

3.6 The Guarantor agrees that until the expiry of the Aircraft Security Period it shall not exercise any rights which it may at any time have by reason of performance by it of its obligations hereunder:

(a)to be indemnified by the Borrower; and/or

(b) to claim any contribution from any other guarantor of the Borrower's obligations under the Relevant Documents to which the Borrower is a party; and/or

(c) to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Security Agent or any other Finance Party hereunder or of any other Security taken pursuant to, or in connection with, the Relevant Documents by all or any of the Finance Parties.

4.REPRESENTATIONS

4.1 The Guarantor represents and warrants on the date hereof, on the date of the Utilisation Request, on the Utilisation Date and (save for the representations and warranties made or given pursuant to Clause 4.1(d) and Clause 4.1(e)) on each Payment Date that:

(a) it has power to enter into this Guarantee and to exercise its rights and perform its obligations hereunder and all action required to authorise its execution of this Guarantee and its performance of its obligations hereunder has been duly taken;

(b) under the laws of England and Wales, the claims of the Security Agent or any other Finance Party against the Guarantor under this Guarantee will rank at least pari passu with the claims of all its unsecured and unsubordinated creditors save those whose claims are preferred solely by any bankruptcy, liquidation,winding-up,    administration,    insolvency,    examinership, reorganisation or dissolution or other similar laws of general application;

(c) all acts, conditions and things required to be done, fulfilled and performed in order  (i)  to enable it  lawfully  to  enter into,  exercise  its rights  under  and perform and comply with the obligations expressed to be assumed by it in this Guarantee, (ii) to ensure that the obligations expressed to be assumed by it in this Guarantee are legal, valid and binding, and (iii) to make this Guarantee admissible in evidence in England and Wales or in any other relevant jurisdiction have been done, fulfilled and performed;

(d) under the laws of England and Wales, it is not necessary that this Guarantee be filed, recorded or enrolled with any court or other authority in England and Wales or that any stamp, registration or similar tax be paid on or in relation to this Guarantee;

(e) under the laws of England and Wales, there are no restrictions on, nor are any Authorisations required of, the Guarantor or the Borrower in respect of the payment by the Guarantor and the Borrower of United States dollars to the Security Agent or the Finance Parties in connection with the discharge of their respective obligations under this Guarantee and the Relevant Documents;

(f) the obligations expressed to be assumed by it in this Guarantee are its legal, valid and binding obligations enforceable in accordance with the terms hereof except insofar as enforceability may be limited by (i) applicable bankruptcy, insolvency or similar laws affecting creditors' rights generally or (ii) application of general principles of equity and/or (iii) such other qualifications specifically referred to in any qualifications section of any legal opinion in respect of this Guarantee delivered to the Facility Agent under Schedule 3 of the Senior Loan Agreement;

(g) the execution of this Guarantee and its exercise of its rights and performance of its obligations hereunder do not constitute and will not result in any breach of any law, agreement or treaty binding on the Guarantor;

(h)the Guarantor directly owns all of the Borrower's share capital; and

(i) in any proceedings taken in the Guarantor's jurisdiction of incorporation or in any other jurisdiction in relation to this Guarantee, the Guarantor will not be entitled to claim for the Guarantor or any of the Guarantor's assets immunity from suit, execution, attachment or other legal process.

5.COVENANTS

5.1The Guarantor shall:

(a) obtain, comply with the terms of and do all that is necessary to maintain in full force and effect all Authorisations required in or by the laws and regulations of any relevant jurisdiction applicable to it to enable it lawfully to enter into and  perform  its  obligations  under  this  Guarantee,  to  ensure  the  legality, validity, enforceability or admissibility in evidence in any relevant jurisdiction of this Guarantee and in relation to the payment of United States dollars by the Guarantor to the Security Agent and the other Finance Parties;

(b) retain at least (directly) one hundred per cent. (100%) of the issued share capital of the Borrower, unless the prior written consent of the Security Agent has been obtained;

(c) ensure that at all times the claims of the Security Agent and the other Finance Parties against it under this Guarantee rank at least pari passu with the claims of all unsecured and unsubordinated creditors save those whose claims are preferred by any bankruptcy, insolvency or other similar laws of general application;

(d) procure that the Borrower complies and continues to comply with the undertakings provided in clauses 11 (Undertakings), 16 (Assignment, transfers and lending offices) and 26 (Amendments and waivers) of the Senior Loan Agreement and any analogous provisions in any Security Document; and

(e) ensure that (i) the Borrower is properly and prudently managed and maintained in a manner consistent with good industry practice, and (ii) the Borrower complies with all its obligations under Applicable Law.

6.PAYMENTS

6.1 On each date upon which this Guarantee requires an amount to be paid by the Guarantor hereunder, the Guarantor shall make the same available to the Security Agent by payment in the currency in which the same is due from the Borrower in accordance with the terms of the relevant Relevant Document and in immediately available, freely transferable, cleared funds to such account as the Security Agent shall from time to time have specified for this purpose.

6.2 All payments to be made by the Guarantor under this Guarantee shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

7.TAX GROSS UP AND INDEMNITIES

7.1 The Guarantor shall make all payments to be made by it under this Guarantee without any Tax Deduction, unless a Tax Deduction is required by law.

7.2 The Guarantor shall promptly upon becoming aware that it must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Security Agent accordingly.

7.3 If a Tax Deduction is required by law to be made by the Guarantor, the amount of the payment due from it shall be increased to an amount which (after making any Tax Deduction and any other payments required in connection with any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.

7.4 If the Guarantor is required to make a Tax Deduction, it shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.

7.5 Within thirty (30) days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Guarantor shall deliver to the Security Agent for any Finance Party entitled to the payment evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment has been paid to the relevant taxing authority.

8.CURRENCY INDEMNITY

8.1 If any sum due from the Guarantor under this Guarantee (a "Sum"), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency (the "First Currency") in which that Sum is payable in accordance with a demand made pursuant to this Guarantee into another currency (the "Second Currency") for the purpose of:

8.1.1     making or filing a claim or proof against the Guarantor;

8.1.2 obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,

the Guarantor shall as an independent obligation, within three (3) Business Days of receipt of the Security Agent's written demand, indemnify the Security Agent on behalf of any relevant Finance Party to whom that Sum is due against any Loss arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum, in each case such rate of exchange to be the prevailing rate of exchange for such amount then available to the Security Agent.

8.2 The Guarantor waives any right it may have in any applicable jurisdiction to pay any amount under this Guarantee in a currency or currency unit other than that in which it is expressed to be payable in the demand made under this Guarantee. If the Guarantor fails to pay any amount under this Guarantee in the currency in which it is demanded, the Guarantor hereby indemnifies the Security Agent on behalf of any relevant

result of the conversion of the amount received into the currency of the amount demanded at such rate of exchange to be the prevailing rate of exchange for such amount then available to such Finance Party.

9.PARTIAL INVALIDITY

If, at any time, any provision of the Relevant Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

10.REMEDIES AND WAIVERS

No failure to exercise, nor any delay in exercising, on the part of the Security Agent or any other Finance Party, any right or remedy under the Relevant Documents shall operate as a waiver, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Guarantee are cumulative and not exclusive of any rights or remedies provided by law.

11.AMENDMENTS

Any term of this Guarantee may be amended only with the consent of the Security

Agent and the Guarantor.

12.NOTICES

12.1 Any communication or demand to be made under or in connection with this Guarantee shall be made in writing and, unless otherwise stated, may be made by fax or letter.

12.2 The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each party for any communication, demand or document to be made or delivered under or in connection with this Guarantee is that identified with its name on the below signature pages or any substitute address or fax number or department or officer as notified by such party to the other party by not less than five (5) Business Days' notice.

12.3 Any communication, demand or document made or delivered by one person to another under or in connection with this Guarantee will only be effective and for all purposes shall be deemed received:

(a)      if by way of fax, when received in legible form; or

(b) if by way of letter, when it has been left at the relevant address or five (5) Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address,

and, if a particular department and/or officer is specified as part of its address details provided under Clause 12.2, if addressed to that department and/or officer.

be effective only when actually received by the Security Agent and then only if it is expressly marked for the attention of the department and/or officer identified with the Security Agent's signature below (or any substitute department and/or officer as the Security Agent shall specify for this purpose).

12.5 Any communication or document made or delivered to the Borrower in accordance with any Relevant Document will be deemed to have been made or delivered to the Guarantor.

12.6 Promptly upon receipt of notification of an address or fax number or change of address or fax number pursuant to Clause 12.2 or changing its own address or fax number, the Security Agent shall notify the other parties to the Relevant Documents.

12.7Any notice given under or in connection with this Guarantee must be in English.

13.CALCULATIONS AND CERTIFICATES

13.1 In any litigation or arbitration proceedings arising out of or in connection with this Guarantee, the entries made in the accounts maintained by a Finance Party are, in the absence of manifest error, prima facie evidence of the matters to which they relate.

13.2 Any certification or determination by a Finance Party of a rate or amount under this Guarantee given in reasonable detail will be, in the absence of manifest error, prima facie evidence of the matters to which it relates.

14.BENEFIT OF GUARANTEE

14.1 This Guarantee shall be binding upon and enure to the benefit of each party hereto and its successors, assigns and transferees.

14.2 The Guarantor shall not be entitled to assign or transfer all or any of its rights, benefits and obligations hereunder without the prior written consent of the Security Agent.

14.3 The Guarantor agrees and acknowledges that if the Security Agent is replaced by, or assigns or transfers all or any of its rights, benefits and obligations under the Relevant Documents to, another person (such person being referred to as the "New Security Agent") in accordance with the provisions of the Relevant Documents then such New Security Agent shall be entitled to the same rights, title and interest in and to this Guarantee as the Security Agent has immediately prior to such replacement, assignment or transfer.   The Guarantor hereby  agrees  to  take  all  such  actions, including without limitation, the execution of such documents, as requested by the Security Agent which are necessary or desirable in order to effect any replacement, assignment or transfer contemplated pursuant to this Clause 14 and/or to ensure the New Security Agent is  entitled  to  such rights, title  and  interest in  and to this Guarantee.

15.RELEVANT DOCUMENT

The parties hereto agree that this Guarantee is a Relevant Document for the purposes of, and as defined in, the Senior Loan Agreement.

16.THIRD PARTY RIGHTS

A person who is not a party to this Guarantee will have no rights under the Contract (Rights of Third Parties) Act, 1999 (the "Act") to enforce any of the terms hereof, provided that each Finance Party may enforce its rights under this Guarantee in accordance with the terms of the Act.

17.LAW AND JURISDICTION

17.1 This Guarantee, and any non-contractual obligations in connection herewith, shall be governed by, and construed in accordance with, English law.

17.2 The parties agree that the courts of England shall have exclusive jurisdiction to hear and determine any suit, action or proceeding, and to settle any disputes, which may arise out of or in connection with this Guarantee and for such purposes irrevocably submits to the jurisdiction of such courts.

17.3 The Guarantor irrevocably waives any objection which it may have now or hereafter to such courts as are referred to in Clause 17.2 being nominated as the forum to hear and determine any suit, action or proceeding, and to settle any disputes, which may arise out of or in connection with this Guarantee and agrees not to claim that any such court is an inconvenient or inappropriate forum.

17.4 The submission to the courts of England is for the benefit of the Security Agent and the other Finance Parties only and shall not (and shall not be construed so as to) limit the rights of the Security Agent or any other Finance Party to take proceedings against the Guarantor in any other court of competent jurisdiction nor shall the taking of proceedings in any one or more jurisdictions preclude the taking of proceedings in any other jurisdiction, whether concurrently or not.

17.5 The Guarantor hereby consents generally in respect of any legal action or proceeding arising out of or in connection with this Guarantee, to the giving of any relief or the issue of any process in connection with such action or proceeding including, without limitation, the making, enforcement or execution against any property whatsoever (irrespective of its use or intended use) of any order or judgment which may be made or given in such action or proceeding.

17.6 To the extent that the Guarantor may in any jurisdiction claim for itself or its assets immunity from suit, execution, attachment (whether in aid of execution, before judgment or otherwise) or other legal process and to the extent that in any such jurisdiction there may be attributed to itself or its assets such immunity (whether or not claimed), the Guarantor hereby irrevocably agrees not to claim and hereby irrevocably waives such immunity to the fullest extent permitted by the laws of such jurisdiction and, in particular, to the extent that in any proceedings taken in England the foregoing waiver of immunity shall have the fullest scope permitted by and be construed in accordance with the English State Immunity Act 1978 and that this waiver is intended to be irrevocable for the purposes of such Act.

17.7 Without prejudice to any other mode of service allowed under any Applicable Law, the Guarantor:

17.7.1 irrevocably appoints Temple Secretarial Limited at 16 Old Bailey, London EC4M 7EG or at its registered office from time to time as its agent for service of process in relation to any proceedings before the English courts in connection with any Relevant Document; and

17.7.2 agrees that failure by a process agent to notify the Guarantor of the proceeding will not invalidate the proceedings concerned.

IN WITNESS WHEREOF, the parties hereto have caused this Guarantee to be duly executed and delivered as a deed the day and year first before written.

SIGNATURES – GUARANTEE (MSN 19003)

The Guarantor

SIGNED as a DEED                                                ) on behalf of AEROCENTURY CORP.                  ) a Delaware corporation, acting by                            )

) being a person who, in accordance with the laws of ) that territory, is acting under the authority of           ) AEROCENTURY CORP.                                      ) In the presence of:

Witness's signature: Name:

Address:        AeroCentury Corp., 1440 Chapin Avenue, Suite 310, Burlingame, CA 94010

Fax:               +1 650 696 3929

Attention:      President

SIGNATURES

The Security Agent

EXECUTED and DELIVERED as a DEED            ) by EXPORT DEVELOPMENT CANADA          ) as Security Agent                                                      )

acting by:

In the presence of:

Witness: Name: Address:

Address:Export Development Canada

150 Slater Street Ottawa, Ontario Canada  K1A 1K3

Fax:+1 613 598 2514 and +1 613 598 3186

Attention:Loan Services/Asset Management

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 11, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	AEROCENTURY CORP
Entity Central Index Key	0001036848
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		1,566,699
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016

XML

Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Assets:
Cash and cash equivalents	$ 2,219,900	$ 2,721,000
Accounts receivable, including deferred rent of $537,300 and $359,200 at June 30, 2016 and December 31, 2015, respectively	3,221,500	5,693,500
Finance leases receivable	11,753,500	11,895,600
Aircraft and aircraft engines held for lease, net of accumulated depreciation of $30,324,800 and $31,074,600 at June 30, 2016 and December 31, 2015, respectively	133,444,300	155,258,100
Assets held for sale	2,388,500	5,228,400
Prepaid expenses and other	1,298,600	228,400
Total assets	154,326,300	181,025,000
Liabilities:
Accounts payable and accrued expenses	1,094,700	1,138,400
Notes payable and accrued interest, net of unamortized debt issuance costs of $2,440,500 and $2,814,000 at June 30, 2016 and December 31, 2015, respectively	76,368,800	107,621,600
Maintenance reserves	14,237,200	13,230,000
Accrued maintenance costs	1,734,600	382,300
Security deposits	2,859,600	3,212,600
Unearned revenues	3,400,100	1,957,400
Deferred income taxes	12,620,500	12,204,200
Total liabilities	112,315,500	139,746,500
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value, 2,000,000 shares authorized, no shares issued or outstanding	0	0
Common stock, $0.001 par value, 10,000,000 shares authorized, 1,629,999 shares issued and outstanding	1,600	1,600
Paid-in capital	14,780,100	14,780,100
Retained earnings	27,733,200	27,000,900
Shareholders equity before treasury stock	42,514,900	41,782,600
Treasury stock at cost, 63,300 shares	(504,100)	(504,100)
Total stockholders' equity	42,010,800	41,278,500
Total liabilities and stockholders' equity	$ 154,326,300	$ 181,025,000

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Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Assets:
Accounts receivable, deferred rent	$ 537,300	$ 359,200
Aircraft and aircraft engines held for lease, accumulated depreciation	30,324,800	31,074,600
Liabilities:
Unamortized debt issuance costs	$ 2,440,500	$ 2,814,000
Stockholders' equity:
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, authorized (in shares)	2,000,000	2,000,000
Preferred stock, issued (in shares)	0	0
Preferred stock, outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized (in shares)	10,000,000	10,000,000
Common stock, issued (in shares)	1,629,999	1,629,999
Common stock, outstanding (in shares)	1,629,999	1,629,999
Treasury stock (in shares)	63,300	63,300

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Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Revenues and other income:
Operating lease revenue, net	$ 4,935,200	$ 6,332,400	$ 10,979,500	$ 12,770,200
Finance lease revenue	187,000	91,400	372,100	91,400
Net gain on disposal of assets	2,146,500	0	2,146,500	460,000
Net gain on sales-type finance leases	42,000	2,681,900	47,400	4,083,800
Maintenance reserves revenue, net	0	261,700	0	589,000
Other income	300	500	1,700	900
Total Income	7,311,000	9,367,900	13,547,200	17,995,300
Expenses:
Depreciation	1,871,100	2,322,100	3,950,600	4,649,900
Interest	1,138,800	1,468,100	2,427,900	3,346,400
Management fees	1,172,500	1,416,400	2,436,500	2,849,700
Maintenance	1,501,100	1,458,200	1,821,000	2,840,200
Professional fees, general and administrative and other	557,800	309,400	982,400	720,000
Provision for impairment in value of aircraft	246,200	147,500	321,200	147,500
Bad debt expense	262,900	0	262,900	0
Insurance	73,400	103,200	150,000	88,700
Other taxes	22,500	57,500	45,300	115,200
Total expenses	6,846,300	7,282,400	12,397,800	14,757,600
Income before income tax provision	464,700	2,085,500	1,149,400	3,237,700
Income tax provision	166,100	730,200	417,100	1,130,200
Net income	$ 298,600	$ 1,355,300	$ 732,300	$ 2,107,500
Earnings per share:
Basic (in dollars per share)	$ 0.19	$ 0.88	$ 0.47	$ 1.37
Diluted (in dollars per share)	$ 0.19	$ 0.87	$ 0.47	$ 1.36
Weighted average shares used in earnings per share computations:
Basic (in shares)	1,566,699	1,543,257	1,566,699	1,543,257
Diluted (in shares)	1,566,699	1,555,008	1,566,699	1,553,904

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Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Statements of Cash Flows (Unaudited) [Abstract]
Net cash provided by operating activities	$ 8,125,800	$ 5,577,500
Investing activities:
Proceeds from sale of aircraft and aircraft engines held for lease, net of re-sale fees	2,062,600	1,400,000
Proceeds from sale of assets held for sale, net of re-sale fees	3,059,900	1,816,300
Proceeds from insurance	18,886,700	0
Acquisition costs related to aircraft purchases	(971,100)	(1,333,700)
Net cash provided by investing activities	23,038,100	1,882,600
Financing activities:
Repayments of Credit Facility	(31,600,000)	(6,000,000)
Debt issuance costs	(65,000)	(59,600)
Net cash used in financing activities	(31,665,000)	(6,059,600)
Net (decrease)/increase in cash and cash equivalents	(501,100)	1,400,500
Cash and cash equivalents, beginning of period	2,721,000	1,840,500
Cash and cash equivalents, end of period	$ 2,219,900	$ 3,241,000

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Statements of Cash Flows (Unaudited) (Parenthetical) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Statements of Cash Flows (Unaudited) [Abstract]
Interest paid	$ 2,058,200	$ 2,586,400
Income taxes paid	$ 800	$ 800

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Organization and Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2016

Organization and Summary of Significant Accounting Policies [Abstract]

Organization and Summary of Significant Accounting Policies

1.Organization and Summary of Significant Accounting Policies

(a)The Company and Basis of Presentation

AeroCentury Corp. ("the Company"), a Delaware corporation incorporated in 1997, typically acquires used regional aircraft and engines for lease to foreign and domestic regional carriers.

The condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the three-month and six-month periods ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2015.

(b)Use of Estimates

The Company's financial statements have been prepared in accordance with GAAP.  The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable for making judgments that are not readily apparent from other sources.

The most significant estimates with regard to these financial statements are the residual values and useful lives of the assets, the amount and timing of cash flows associated with each asset that are used to evaluate whether assets are impaired, accrued maintenance costs, accounting for income taxes, and the amounts recorded as allowances for doubtful accounts.

(c)Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs, to the extent possible. The fair value hierarchy under GAAP is based on three levels of inputs.

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis

The carrying amount of the Company's money market funds included in cash and cash equivalents was $947,400 and $1,946,600 at June 30, 2016 and December 31, 2015, respectively.  The fair value of the Company's money market funds would be categorized as Level 1 under the GAAP fair value hierarchy.

As of June 30, 2016 and December 31, 2015, there were no liabilities that were required to be measured and recorded at fair value on a recurring basis.

Assets Measured and Recorded at Fair Value on a Nonrecurring Basis

The Company determines fair value of long-lived assets held and used, such as aircraft and aircraft engines held for lease and assets held for sale, by reference to independent appraisals, quoted market prices (e.g., offers to purchase) and other factors. An impairment charge is recorded when the Company believes that the carrying value of an asset will not be recovered through future net cash flows and that the asset's carrying value exceeds its fair value. 

Assets held for lease

The Company recorded impairment charges of $0 and $147,500 on its aircraft held for lease during the three months and six months ended June 30, 2016 and 2015, respectively. 

Assets held for sale

The Company recorded a $246,200 impairment charge on an engine held for sale during the three months ended June 30, 2016, resulting in a carrying value of $295,000. The fair value of this asset would be categorized as Level 3 under the GAAP fair value hierarchy.  No such impairment charges were recorded during the three months ended June 30, 2015.  During the six months ended June 30, 2016, the Company also recorded a $75,000 impairment charge on two of its aircraft held for sale.  The aircraft were sold during the second quarter. 

Fair Value of Other Financial Instruments

The Company's financial instruments, other than cash and cash equivalents, consist principally of finance leases receivable and amounts borrowed under its credit facility (the "Credit Facility").  The fair value of accounts receivable, finance leases receivable, accounts payable and the Company's maintenance reserves and accrued maintenance costs approximates the carrying value of these financial instruments.

Borrowings under the Company's Credit Facility bear floating rates of interest that reset periodically to a market benchmark rate plus a credit margin.  The Company believes the effective interest rate under the Credit Facility approximates current market rates for such indebtedness at the balance sheet date, and therefore that the outstanding principal and accrued interest of $78,809,300 and $110,435,600 at June 30, 2016 and December 31, 2015, respectively, approximate its fair values on such dates.  The fair value of the Company's outstanding balance of its Credit Facility would be categorized as Level 3 under the GAAP fair value hierarchy.

(d)Finance Leases

The Company has five aircraft finance leases that contain lessee purchase options at prices substantially below the assets' estimated residual values at the exercise date for the option.  Consequently, the Company considers the purchase options to be bargain purchase options and has classified the leases as sales-type finance leases for financial accounting purposes.  The Company reports the discounted present value of (i) future minimum lease payments (including the bargain purchase option) and (ii) any residual value not subject to a bargain purchase option as a finance lease receivable on its balance sheet and accrues interest on the balance of the finance lease receivable based on the interest rate inherent in the applicable lease over the term of the lease.  For sales-type finance leases, the Company recognizes the difference between the net book value of the aircraft and the net investment in sales-type finance leases, less any initial direct costs and lease incentives, as a gain or loss. 

The Company recognized interest earned on finance leases in the amount of $187,000 and $91,400 in the quarters ended June 30, 2016 and 2015, respectively and $372,100 and $91,400 in the six months ended June 30, 2016 and 2015, respectively.

(e)Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments -- Credit Losses (Topic 326) ("ASU 2016-13"), which will modify accounting for credit losses on most financial assets measured at amortized cost, including net investment in leases.  Unlike current accounting, which delays credit loss recognition until a probable loss is incurred, the new model will use a current expected credit loss ("CECL") model that will estimate future credit losses over the entire term of the financial instrument.  As such, it is generally expected that adoption of the CECL model will result in earlier recognition of credit losses than current GAAP.  The Company will be required to adopt ASU 2016-13 for its yearly and interim periods beginning after December 15, 2019, although adoption in the preceding year and periods is permitted.  The Company has not yet estimated the impact of adoption of this standard on its financial statements.

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Finance Leases Receivable

6 Months Ended

Jun. 30, 2016

Finance Leases Receivable [Abstract]

Finance Leases Receivable

2.Finance Leases Receivable

During the second quarter of 2016, the Company leased a turboprop aircraft pursuant to a finance lease and recorded a gain of $42,000. 

During the second quarter of 2015, the Company leased a turboprop aircraft pursuant to a finance lease and recorded a gain of $2,535,100.  The Company also recorded an additional gain of $146,800 on a turboprop aircraft that was leased pursuant to a finance lease during the first quarter of 2015 in connection with the renegotiation of the terms of that finance lease during the second quarter of 2015.

At June 30, 2016 and December 31, 2015, the net investment included in sales-type finance leases receivable were as follows:

	June 30, 2016			December 31, 2015
Gross minimum lease payments receivable	$	13,808,500		$	14,074,500
Less unearned interest		(2,055,000	)		(2,178,900	)
Finance leases receivable	$	11,753,500		$	11,895,600

As of June 30, 2016, future minimum lease payments receivable under sales-type finance leases were as follows:

Years ending
Remainder of 2016	$	1,547,800
2017		2,564,100
2018		2,331,600
2019		3,607,600
2020		1,395,600
Thereafter		2,361,800
	$	13,808,500

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Aircraft and Aircraft Engines Held for Lease or Sale

6 Months Ended

Jun. 30, 2016

Aircraft and Aircraft Engines Held for Lease or Sale [Abstract]

Aircraft and Aircraft Engines Held for Lease or Sale

3.Aircraft and Aircraft Engines Held for Lease or Sale

(a)Assets Held for Lease

At June 30, 2016 and December 31, 2015, the Company's aircraft and aircraft engines held for lease consisted of the following:

	June 30, 2016					December 31, 2015
Type	Number owned		% of net book value			Number owned		% of net book value
Turboprop aircraft		14		39	%		16		45	%
Regional jet aircraft		8		55	%		8		49	%
Engines		4		6	%		5		6	%

During the second quarter of 2016, the Company used cash of $963,600 primarily for deposits associated with anticipated future acquisitions.  During the second quarter of 2015, the Company paid $23,900 for costs related to assets acquired in late 2014.

In April 2016, one of the Company's turboprop aircraft was involved in an accident and was declared a total loss by the lessee's insurer.  The Company received insurance proceeds of $17,640,000 in May 2016 and recorded a gain of $2,146,500.  The Company also received insurance proceeds of $1,246,700 related to damage sustained on another aircraft in 2015.

During the second quarter of 2016, the Company extended the lease for one of its assets and leased two engines that were off lease at March 31, 2016.

Six of the Company's assets held for lease, comprised of five turboprop aircraft and one engine, were off lease at June 30, 2016, representing 8% of the net book value of the Company's aircraft and engines held for lease.  As discussed in Note 8, the Company entered into sales-type finance leases for two of its off-lease turboprop aircraft and expects to deliver the aircraft during the third quarter..

As of June 30, 2016, minimum future lease revenue payments receivable under noncancelable operating leases were as follows:

Years ending
Remainder of 2016	$	9,504,400
2017		16,259,000
2018		12,218,900
2019		11,528,100
2020		10,407,100
Thereafter		17,211,700
	$	77,129,200

(b)Assets Held for Sale

During the second quarter of 2016, the Company sold two regional jet aircraft that had been written down to their net sales values and were held for sale at December 31, 2015. 

Assets held for sale at June 30, 2016 included a turboprop aircraft and three turboprop airframes being sold in parts. During the three months ended June 30, 2016 and 2015, the Company received $41,100 and $129,400 respectively, from the sale of parts belonging to two of the airframes, which proceeds reduced their carrying values.

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Notes Payable and Accrued Interest

6 Months Ended

Jun. 30, 2016

Notes Payable and Accrued Interest [Abstract]

Notes Payable and Accrued Interest

4.Notes Payable and Accrued Interest

At June 30, 2016 and December 31, 2015, the Company's notes payable and accrued interest consisted of the following:

	June 30, 2016			December 31, 2015
Credit Facility principal	$	78,800,000		$	110,400,000
Unamortized debt issuance costs		(2,440,500	)		(2,814,000	)
Credit Facility accrued interest		9,300			35,600
	$	76,368,800		$	107,621,600

The Company's $150 million Credit Facility is provided by a syndicate of banks and is secured by all of the Company's assets, including its aircraft and engine portfolio.  The Credit Facility, which expires on May 31, 2019, can be expanded to a maximum of $180 million.  The Company was in compliance with all covenants under the Credit Facility at June 30, 2016 and December 31, 2015.

The unused amount of the Credit Facility was $71,200,000 and $39,600,000 as of June 30, 2016 and December 31, 2015, respectively.

The weighted average interest rate on the Credit Facility was 3.81% and 3.80% at June 30, 2016 and December 31, 2015, respectively.

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Contingencies

6 Months Ended

Jun. 30, 2016

Contingencies [Abstract]

Contingencies

5.Contingencies

In the ordinary conduct of the Company's business, the Company is subject to lawsuits, arbitrations and administrative proceedings from time to time. The Company believes that the outcome of any existing or known threatened proceedings, even if determined adversely, should not have a material adverse effect on the Company's business, financial condition, liquidity or results of operations.

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Computation of Earnings Per Share

6 Months Ended

Jun. 30, 2016

Computation of Earnings Per Share [Abstract]

Computation of Earnings Per Share

6.Computation of Earnings Per Share

Basic and diluted earnings per share are calculated as follows:

	For the Six Months Ended June 30,				For the Three Months Ended June 30,
	2016		2015		2016		2015
Net income	$	732,300	$	2,107,500	$	298,600	$	1,355,300
Weighted average shares outstanding for the period		1,566,699		1,543,257		1,566,699		1,543,257
Dilutive effect of warrants		-		10,647		-		11,751
Weighted average diluted shares used in calculation    of diluted earnings per share		1,566,699		1,553,904		1,566,699		1,555,008
Basic earnings per share	$	0.47	$	1.37	$	0.19	$	0.88
Diluted earnings per share	$	0.47	$	1.36	$	0.19	$	0.87

Basic earnings per common share is computed using net income and the weighted average number of common shares outstanding during the period.  Diluted earnings per common share are computed using net income and the weighted average number of common shares outstanding, assuming dilution.  Weighted average common shares outstanding, assuming dilution, include potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include the assumed exercise of warrants using the treasury stock method.  The warrants were exercised in December 2015 and there is, therefore, no dilutive effect for the quarter or six months ended June 30, 2016.

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Related Party Transactions

6 Months Ended

Jun. 30, 2016

Related Party Transactions [Abstract]

Related Party Transactions

7.Related Party Transactions

The Company's portfolio of leased aircraft assets is managed and administered under the terms of a management agreement with JetFleet Management Corp. ("JMC"), which is an integrated aircraft management, marketing and financing business and a subsidiary of JetFleet Holding Corp. ("JHC").  Certain officers of the Company are also officers of JHC and JMC and one such officer also holds a significant ownership position in both JHC and the Company.

Under the management agreement, JMC receives a monthly management fee based on the net asset value of the assets under management.  JMC also receives an acquisition fee for locating assets for the Company.  Acquisition fees are included in the cost basis of the asset purchased.  JMC may receive a remarketing fee in connection with the re-lease or sale of the Company's assets. Remarketing fees are amortized over the applicable lease term or included in the gain or loss on sale.

Fees incurred during the three months and six months ended June 30, 2016 and 2015 were as follows:

	For the Six Months Ended June 30,				For the Three Months Ended June 30,
	2016		2015		2016		2015
Management fees	$	2,436,500	$	2,849,700	$	1,172,500	$	1,416,400
Acquisition fees		-		-		-		-
Remarketing fees		58,800		424,200		58,800		225,200

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Subsequent Events

6 Months Ended

Jun. 30, 2016

Subsequent Events [Abstract]

Subsequent Events

8.Subsequent Events

In July 2016, the Company sold a spare engine that had been written down to its net sales price at June 30, 2016 and classified as held for sale. 

During July 2016, the Company entered into sales-type finance leases for two turboprop aircraft that were off lease at June 30, 2016 and expects to deliver the aircraft during the third quarter.

In August 2016, the Company purchased two Bombardier CRJ-1000 aircraft on lease to a regional carrier in Europe and assumed the debt related to these aircraft.  The aircraft will be held in two special-purpose subsidiaries, which were funded by the Company.

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Organization and Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Organization and Summary of Significant Accounting Policies [Abstract]

The Company and Basis of Presentation

(a)The Company and Basis of Presentation

AeroCentury Corp. ("the Company"), a Delaware corporation incorporated in 1997, typically acquires used regional aircraft and engines for lease to foreign and domestic regional carriers.

The condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements.  In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.  Operating results for the three-month and six-month periods ended June 30, 2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 2015.

Use of Estimates

(b)Use of Estimates

The Company's financial statements have been prepared in accordance with GAAP.  The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.  The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable for making judgments that are not readily apparent from other sources.

The most significant estimates with regard to these financial statements are the residual values and useful lives of the assets, the amount and timing of cash flows associated with each asset that are used to evaluate whether assets are impaired, accrued maintenance costs, accounting for income taxes, and the amounts recorded as allowances for doubtful accounts.

Fair Value Measurements

(c)Fair Value Measurements

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs, to the extent possible. The fair value hierarchy under GAAP is based on three levels of inputs.

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis

The carrying amount of the Company's money market funds included in cash and cash equivalents was $947,400 and $1,946,600 at June 30, 2016 and December 31, 2015, respectively.  The fair value of the Company's money market funds would be categorized as Level 1 under the GAAP fair value hierarchy.

As of June 30, 2016 and December 31, 2015, there were no liabilities that were required to be measured and recorded at fair value on a recurring basis.

Assets Measured and Recorded at Fair Value on a Nonrecurring Basis

The Company determines fair value of long-lived assets held and used, such as aircraft and aircraft engines held for lease and assets held for sale, by reference to independent appraisals, quoted market prices (e.g., offers to purchase) and other factors. An impairment charge is recorded when the Company believes that the carrying value of an asset will not be recovered through future net cash flows and that the asset's carrying value exceeds its fair value. 

Assets held for lease

The Company recorded impairment charges of $0 and $147,500 on its aircraft held for lease during the three months and six months ended June 30, 2016 and 2015, respectively. 

Assets held for sale

The Company recorded a $246,200 impairment charge on an engine held for sale during the three months ended June 30, 2016, resulting in a carrying value of $295,000. The fair value of this asset would be categorized as Level 3 under the GAAP fair value hierarchy.  No such impairment charges were recorded during the three months ended June 30, 2015.  During the six months ended June 30, 2016, the Company also recorded a $75,000 impairment charge on two of its aircraft held for sale.  The aircraft were sold during the second quarter. 

Fair Value of Other Financial Instruments

The Company's financial instruments, other than cash and cash equivalents, consist principally of finance leases receivable and amounts borrowed under its credit facility (the "Credit Facility").  The fair value of accounts receivable, finance leases receivable, accounts payable and the Company's maintenance reserves and accrued maintenance costs approximates the carrying value of these financial instruments.

Borrowings under the Company's Credit Facility bear floating rates of interest that reset periodically to a market benchmark rate plus a credit margin.  The Company believes the effective interest rate under the Credit Facility approximates current market rates for such indebtedness at the balance sheet date, and therefore that the outstanding principal and accrued interest of $78,809,300 and $110,435,600 at June 30, 2016 and December 31, 2015, respectively, approximate its fair values on such dates.  The fair value of the Company's outstanding balance of its Credit Facility would be categorized as Level 3 under the GAAP fair value hierarchy.

Finance Leases

(d)Finance Leases

The Company has five aircraft finance leases that contain lessee purchase options at prices substantially below the assets' estimated residual values at the exercise date for the option.  Consequently, the Company considers the purchase options to be bargain purchase options and has classified the leases as sales-type finance leases for financial accounting purposes.  The Company reports the discounted present value of (i) future minimum lease payments (including the bargain purchase option) and (ii) any residual value not subject to a bargain purchase option as a finance lease receivable on its balance sheet and accrues interest on the balance of the finance lease receivable based on the interest rate inherent in the applicable lease over the term of the lease.  For sales-type finance leases, the Company recognizes the difference between the net book value of the aircraft and the net investment in sales-type finance leases, less any initial direct costs and lease incentives, as a gain or loss. 

The Company recognized interest earned on finance leases in the amount of $187,000 and $91,400 in the quarters ended June 30, 2016 and 2015, respectively and $372,100 and $91,400 in the six months ended June 30, 2016 and 2015, respectively.

Recent Accounting Pronouncements

(e)Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments -- Credit Losses (Topic 326) ("ASU 2016-13"), which will modify accounting for credit losses on most financial assets measured at amortized cost, including net investment in leases.  Unlike current accounting, which delays credit loss recognition until a probable loss is incurred, the new model will use a current expected credit loss ("CECL") model that will estimate future credit losses over the entire term of the financial instrument.  As such, it is generally expected that adoption of the CECL model will result in earlier recognition of credit losses than current GAAP.  The Company will be required to adopt ASU 2016-13 for its yearly and interim periods beginning after December 15, 2019, although adoption in the preceding year and periods is permitted.  The Company has not yet estimated the impact of adoption of this standard on its financial statements.

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Finance Leases Receivable (Tables)

6 Months Ended

Jun. 30, 2016

Finance Leases Receivable [Abstract]

Net investment included in sales-type finance leases receivable

At June 30, 2016 and December 31, 2015, the net investment included in sales-type finance leases receivable were as follows:

	June 30, 2016			December 31, 2015
Gross minimum lease payments receivable	$	13,808,500		$	14,074,500
Less unearned interest		(2,055,000	)		(2,178,900	)
Finance leases receivable	$	11,753,500		$	11,895,600

Minimum future lease revenue payments receivable under sales-type finance leases

As of June 30, 2016, future minimum lease payments receivable under sales-type finance leases were as follows:

Years ending
Remainder of 2016	$	1,547,800
2017		2,564,100
2018		2,331,600
2019		3,607,600
2020		1,395,600
Thereafter		2,361,800
	$	13,808,500

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Aircraft and Aircraft Engines Held for Lease or Sale (Tables)

6 Months Ended

Jun. 30, 2016

Aircraft and Aircraft Engines Held for Lease or Sale [Abstract]

Aircraft and aircraft engines held for lease

At June 30, 2016 and December 31, 2015, the Company's aircraft and aircraft engines held for lease consisted of the following:

	June 30, 2016					December 31, 2015
Type	Number owned		% of net book value			Number owned		% of net book value
Turboprop aircraft		14		39	%		16		45	%
Regional jet aircraft		8		55	%		8		49	%
Engines		4		6	%		5		6	%

Minimum future lease revenue payments receivable under noncancelable operating eases

As of June 30, 2016, minimum future lease revenue payments receivable under noncancelable operating leases were as follows:

Years ending
Remainder of 2016	$	9,504,400
2017		16,259,000
2018		12,218,900
2019		11,528,100
2020		10,407,100
Thereafter		17,211,700
	$	77,129,200

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Notes Payable and Accrued Interest (Tables)

6 Months Ended

Jun. 30, 2016

Notes Payable and Accrued Interest [Abstract]

Notes payable and accrued interest

At June 30, 2016 and December 31, 2015, the Company's notes payable and accrued interest consisted of the following:

	June 30, 2016			December 31, 2015
Credit Facility principal	$	78,800,000		$	110,400,000
Unamortized debt issuance costs		(2,440,500	)		(2,814,000	)
Credit Facility accrued interest		9,300			35,600
	$	76,368,800		$	107,621,600

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Computation of Earnings Per Share (Tables)

6 Months Ended

Jun. 30, 2016

Computation of Earnings Per Share [Abstract]

Computation of earnings per share

Basic and diluted earnings per share are calculated as follows:

	For the Six Months Ended June 30,				For the Three Months Ended June 30,
	2016		2015		2016		2015
Net income	$	732,300	$	2,107,500	$	298,600	$	1,355,300
Weighted average shares outstanding for the period		1,566,699		1,543,257		1,566,699		1,543,257
Dilutive effect of warrants		-		10,647		-		11,751
Weighted average diluted shares used in calculation    of diluted earnings per share		1,566,699		1,553,904		1,566,699		1,555,008
Basic earnings per share	$	0.47	$	1.37	$	0.19	$	0.88
Diluted earnings per share	$	0.47	$	1.36	$	0.19	$	0.87

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Related Party Transactions (Tables)

6 Months Ended

Jun. 30, 2016

Related Party Transactions [Abstract]

Related party fees

Fees incurred during the three months and six months ended June 30, 2016 and 2015 were as follows:

	For the Six Months Ended June 30,				For the Three Months Ended June 30,
	2016		2015		2016		2015
Management fees	$	2,436,500	$	2,849,700	$	1,172,500	$	1,416,400
Acquisition fees		-		-		-		-
Remarketing fees		58,800		424,200		58,800		225,200

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Organization and Summary of Significant Accounting Policies (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($) Aircraft	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) Aircraft	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)
Capital Leased Assets [Line Items]
Impairment charge	$ 246,200	$ 147,500	$ 321,200	$ 147,500
Notes payable and accrued interest	76,368,800		$ 76,368,800		$ 107,621,600
Finance Leases [Abstract]
Number of aircraft with finance leases that contain lessee purchase options | Aircraft			5
Interest earned on finance lease	187,000	91,400	$ 372,100	91,400
Credit Facility [Member]
Capital Leased Assets [Line Items]
Notes payable and accrued interest	78,809,300		78,809,300		110,435,600
Held for Sale [Member]
Capital Leased Assets [Line Items]
Impairment charge			75,000
Recurring [Member]
Assets and Liabilities Measured and Recorded at Fair Value on a Recurring Basis [Abstract]
Money market funds included in cash and cash equivalents	947,400		947,400		1,946,600
Liabilities recorded at fair value	0		0		$ 0
Aircraft [Member] | Held for Lease [Member]
Capital Leased Assets [Line Items]
Impairment charge	$ 0	147,500	0	147,500
Aircraft [Member] | Held for Sale [Member]
Capital Leased Assets [Line Items]
Impairment charge			$ 75,000
Number of aircraft held for sale | Aircraft	2		2
Engine [Member] | Held for Sale [Member]
Capital Leased Assets [Line Items]
Impairment charge	$ 246,200	0
Fair value of assets	$ 295,000	$ 0	$ 295,000	$ 0

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Finance Leases Receivable (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Loans And Leases Receivable Disclosure [Line Items]
Net gain on sales-type finance leases	$ 42,000	$ 2,681,900	$ 47,400	$ 4,083,800
Net Investment [Abstract]
Gross minimum lease payments receivable	13,808,500		13,808,500		$ 14,074,500
Less unearned interest	(2,055,000)		(2,055,000)		(2,178,900)
Finance leases receivable	11,753,500		11,753,500		11,895,600
Minimum Future Lease Revenue Payments [Abstract]
Remainder of 2016	1,547,800		1,547,800
2017	2,564,100		2,564,100
2018	2,331,600		2,331,600
2019	3,607,600		3,607,600
2020	1,395,600		1,395,600
Thereafter	2,361,800		2,361,800
Total	13,808,500		$ 13,808,500		$ 14,074,500
Turboprop Aircraft [Member] | Financing lease [member]
Loans And Leases Receivable Disclosure [Line Items]
Net gain on sales-type finance leases	$ 42,000	2,535,100
Turboprop Aircraft [Member] | Renegotiated Financing Lease [Member]
Loans And Leases Receivable Disclosure [Line Items]
Net gain on sales-type finance leases		$ 146,800

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Aircraft and Aircraft Engines Held for Lease or Sale (Details)	1 Months Ended	3 Months Ended		6 Months Ended
	May 31, 2016 USD ($)	Jun. 30, 2016 USD ($) Aircraft	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) Aircraft Asset	Jun. 30, 2015 USD ($)	Dec. 31, 2015 Aircraft
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
Remainder of 2016		$ 9,504,400		$ 9,504,400
2017		16,259,000		16,259,000
2018		12,218,900		12,218,900
2019		11,528,100		11,528,100
2020		10,407,100		10,407,100
Thereafter		17,211,700		17,211,700
Total		77,129,200		77,129,200
Payment for equipment and acquisition costs related to aircraft purchased					$ 23,900
Proceeds from insurance				18,886,700	0
Gain from insurance		$ 2,146,500	$ 0	$ 2,146,500	460,000
Number of assets lease term extended | Aircraft				1
Number of off leased assets leased | Aircraft		2
Asset impairment charge		$ 246,200	147,500	$ 321,200	147,500
Proceeds from the sale of airframe parts				$ 3,059,900	1,816,300
Held for Lease [Member]
Aircraft and aircraft engines held for lease or sale [Abstract]
Percentage of net book value		8.00%		8.00%
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
Payment for equipment and acquisition costs related to aircraft purchased				$ 963,600
Number of aircraft repossessed | Asset				3
Number of off leased assets leased | Asset				6
Percentage of net book value		8.00%		8.00%
Held for Sale [Member]
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
Asset impairment charge				$ 75,000
Proceeds from the sale of airframe parts				$ 41,100	$ 129,400
Turboprop Aircraft [Member]
Aircraft and aircraft engines held for lease or sale [Abstract]
Number owned | Aircraft		14		14		16
Percentage of net book value		39.00%		39.00%		45.00%
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
Number of aircraft sales type finance leases | Aircraft				2
Proceeds from insurance	$ 17,640,000			$ 1,246,700
Gain from insurance				$ 2,146,500
Percentage of net book value		39.00%		39.00%		45.00%
Turboprop Aircraft [Member] | Held for Lease [Member]
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
Number of off leased assets leased | Asset				5
Turboprop Airframe [Member] | Held for Sale [Member]
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
Number of aircraft sold | Aircraft				2
Number of aircraft held for sale | Aircraft		3		3
Regional Jet Aircraft [Member]
Aircraft and aircraft engines held for lease or sale [Abstract]
Number owned | Aircraft		8		8		8
Percentage of net book value		55.00%		55.00%		49.00%
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
Percentage of net book value		55.00%		55.00%		49.00%
Number of aircraft sold | Aircraft		2
Other Regional Jet Aircraft [Member]
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
Number of aircraft held for sale | Aircraft		2		2
Engines [Member]
Aircraft and aircraft engines held for lease or sale [Abstract]
Number owned | Aircraft		4		4		5
Percentage of net book value		6.00%		6.00%		6.00%
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
Percentage of net book value		6.00%		6.00%		6.00%
Engines [Member] | Held for Lease [Member]
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
Number of off leased assets leased | Asset				1
Engines [Member] | Held for Sale [Member]
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract]
Asset impairment charge		$ 246,200	$ 0

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Notes Payable and Accrued Interest (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Notes Payable and Accrued Interest [Abstract]
Unamortized debt issuance costs	$ (2,440,500)	$ (2,814,000)
Notes payable and accrued interest	76,368,800	107,621,600
Credit Facility [Member]
Notes Payable and Accrued Interest [Abstract]
Credit Facility principal	78,800,000	110,400,000
Unamortized debt issuance costs	(2,440,500)	(2,814,000)
Credit Facility accrued interest	9,300	35,600
Notes payable and accrued interest	76,368,800	107,621,600
Credit Facility [Abstract]
Credit facility maximum borrowing capacity	150,000,000
Credit facility potential maximum borrowing capacity	180,000,000
Unused amount of the credit facility	$ 71,200,000	$ 39,600,000
Weighted average interest rate on credit facility	3.81%	3.80%

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Computation of Earnings Per Share (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Basic and diluted earning/loss per share [Abstract]
Net income	$ 298,600	$ 1,355,300	$ 732,300	$ 2,107,500
Weighted average shares outstanding for the period (in shares)	1,566,699	1,543,257	1,566,699	1,543,257
Dilutive effect of warrants (in shares)	0	11,751	0	10,647
Weighted average diluted shares used in calculation of diluted earnings per share (in shares)	1,566,699	1,555,008	1,566,699	1,553,904
Basic earnings per share (in dollars per share)	$ 0.19	$ 0.88	$ 0.47	$ 1.37
Diluted earnings per share (in dollars per share)	$ 0.19	$ 0.87	$ 0.47	$ 1.36
Potentially outstanding shares was not included in the calculation of diluted loss per share (in shares)			0

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Related Party Transactions (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Related Party Transaction [Line Items]
Management fees	$ 1,172,500	$ 1,416,400	$ 2,436,500	$ 2,849,700
Jet Fleet Management Corp. [Member]
Related Party Transaction [Line Items]
Management fees	1,172,500	1,416,400	2,436,500	2,849,700
Acquisition fees	0	0	0	0
Remarketing fees	$ 58,800	$ 225,200	$ 58,800	$ 424,200

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Subsequent Events (Details) - Turboprop Aircraft [Member] - Aircraft	1 Months Ended	6 Months Ended
	Jul. 31, 2016	Jun. 30, 2016
Subsequent Event [Line Items]
Number of aircraft sales type finance leases		2
Subsequent Event [Member]
Subsequent Event [Line Items]
Number of aircraft sales type finance leases	2