Aircraft Lease Securitisation II Limited

Transcription

1 LISTING PARTICULARS Aircraft Lease Securitisation II Limited Investing in the Initial Class A Notes involves risks. See "Risk Factors" beginning on page 33. Aircraft Lease Securitisation II Limited ("ALS"), a special purpose company incorporated under the laws of Bermuda, issued Class A-1 Floating Rate Asset Backed Notes Series (the "Class A-1 Notes") and Class A-2 Floating Rate Asset Backed Notes Series (the "Class A-2 Notes" and, together with the Class A-1 Notes, the "Initial Class A Notes" ) on June 26, ALS also has issued and will in the future issue Class E-1 Fixed Rate Deferrable Interest Asset Backed Notes Series (the "Class E-1 Notes") to AerVenture Leasing 1 Limited ("AerVenture Leasing") as described herein. None of the Initial Class A Notes nor the Class E-1 Notes are being offered pursuant to these listing particulars. AerVenture Leasing may transfer all or a portion of the Class E-1 Notes in the future subject to certain transfer restrictions. The proceeds from the issuance, and increases in the principal amount, of the Initial Class A Notes and the issuances of the Class E-1 Notes will be used by ALS to acquire aircraft and pay certain expenses. Together, the Initial Class A Notes, the Class E-1 Notes, any additional subclasses of notes issued by ALS from time to time, and any notes refinancing the Initial Class A Notes or any additional notes, are the "Notes". Through the acquisition of various companies which will become its wholly-owned subsidiaries or owner trusts, which will be wholly beneficially owned by it, ALS expects to acquire 30 aircraft and related leases between the date of these listing particulars and September 30, ALS does not expect to begin acquiring aircraft until April The date the first aircraft are delivered to ALS is referred to as the "Initial Delivery Date". Prior to the Initial Delivery Date, the only source of payment for the obligations of ALS will be the proceeds from the issuance of Class E-1 Notes to AerVenture Leasing. The only sources of payment for the Initial Class A Notes and other obligations of AL S after the Initial Delivery Date will be payments received from the leasing of aircraft by ALS and its subsidiaries (collectively, the "ALS Group") (including security deposits and maintenance reserves, other than to the extent required to be segregated from other funds pursuant to any lease), earnings from invested funds, proceeds from any dispositions of aircraft, insurance proceeds, any amounts on deposit in the cash collateral accounts, any drawings under the liquidity facility (in respect of interest on the Initial Class A Notes, commitment fees, certain expenses and hedge payments only), and any other liquidity enhancement facilities which may be established in the future, any net payments under hedge arrangements, advances made under the Class A-1 Note Funding Agreement (as defined in these listing particulars) (in respect of a portion of the purchase price of the Initial Aircraft only), certain amounts related to the delivery of aircraft with substitute leases, the net proceeds in connection with any refinancing of any Notes and, in respect of interest on the Initial Class A Notes, commitment fees, certain expenses and hedge payments due on prior to the first interest payment date after the Initial Delivery Date only, proceeds from Class E-1 Notes. (Continued on inside of front cover.) AerCap Ireland will act as primary servicer with respect to the 30 initial aircraft and any additional aircraft acquired by the ALS Group, AerCap Administrative Services Limited will act as primary administrative agent, Deutsche Bank Trust Company Americas will act as trustee, security trustee, operating bank, cash manager and reference agent and AerCap Cash Manager II Limited will act as insurance servicer and financial administrative agent, in each case as further described in these listing particulars. Calyon provides a liquidity facility to ALS which may be drawn upon, subject to certain conditions, to pay certain expenses, senior hedge payments, commitment fees and interest on the Initial Class A Notes to the extent of available funds thereunder. Calyon also acts as the servicing agent and funding agent, in each case as further described in these listing particulars. Maximum aggregate Expected final principal amount Interest rate (1) payment date (2) Final maturity date Initial Class A Notes... $1,000,000,000 LIBOR % March 15, 2020 June 26, 2038 (1) London interbank offered rate, LIBOR, for one-month U.S. dollar deposits or, under certain circumstances described herein, the Interpolated LIBOR Rate (as defined herein). (2) Based on the assumptions set forth under "Note Payment Assumptions". The Initial Class A Notes have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of any other jurisdiction. The Initial Class A Notes will be offered and sold only to "qualified institutional buyers" (as defined in Rule 144A under the Securities Act ("Rule 144A")) (each such person a "QIB"), (ii) outside the United States in compliance with Regulation S of the Securities Act ("Regulation S") and (iii) to institutional "accredited investors" (as defined in Rule 501(A)(1), (2) or (7) of Regulation D under the Securities Act) or an entity all of the equity owners of which are institutional accredited investors (collectively, "Institutional Accredited Investors"). For a description of certain restrictions on resale, see "Transfer Restrictions". Sole Structuring Agent and Sole Book Runner Calyon The date of these listing particulars is June 27, 2008.

2 The other obligations of ALS will include, among others, operating expenses, hedge payments, the obligation to make maintenance payments to lessees and the obligation to refund security deposits to lessees. The Notes are solely obligations of ALS and do not represent obligations of Deutsche Bank Trust Company Americas, AerVenture Leasing, AerCap Ireland or any of their affiliates. Payments on the Notes will be subordinated to certain of ALS's other obligations, including those relating to certain expenses, as further described herein. Application has been made to The Irish Stock Exchange Limited (the "Irish Stock Exchange") for the Class A-2 Notes to be admitted to the official list of the Irish Stock Exchange (the "Official List") and to trading on the Alternative Securities Market. There can be no assurance that such admission will be granted or maintained. This document constitutes listing particulars for the purposes of the application for the Class A-2 Notes to be admitted to the Official List of the Irish Stock Exchange and to trading on the Alternative Securities Market and does not constitute a prospectus for the purposes of Directive 2003/71/EC of the European Parliament and of the Council of 4 November 2005 (the "Prospectus Directive"). Application has been made to the Irish Stock Exchange for these listing particulars to be approved. ii

3 The Initial Class A Notes will only be sold (i) to QIBs in the United States in reliance on Rule 144A, (ii) in offshore transactions in reliance on Regulation S and (iii) to Institutional Accredited Investors. Each Class A-1 Commitment Holder may at any time after the Initial Delivery Date, subject to certain restrictions, sell Initial Class A Notes (including Class A-2 Notes) representing all or a portion of the total amount of the Initial Class A Notes it holds. Any offered Class A-1 Notes will be issued in definitive fully registered form and the offered Class A-2 Notes will be issued as one or more global securities in reliance on Rule 144A or Regulation S in registered form, which will be deposited with Deutsche Bank Trust Company Americas as custodian for the Depository Trust Company ("DTC"). Beneficial interests in the Class A-2 Notes consisting of global securities will be shown on, and transfers thereof will be effected only through, records maintained in book-entry form by DTC or its nominee and its participants (including Clearstream Banking, société anonyme ("Clearstream, Luxembourg") or Euroclear Bank S.A./N.V., as operator of the Euroclear System ("Euroclear") holding through their respective depositories, Citibank, N.A. and Euroclear Bank S.A./N.V. Institutional Accredited Investors that are not QIBs will receive Class A-2 Notes in definitive fully registered form which cannot be traded through the facilities of DTC, except in connection with a transfer to a QIB or pursuant to Regulation S. CERTAIN PERSONS PARTICIPATING IN ANY OFFERING OF THE INITIAL CLASS A NOTES MAY, SUBJECT TO COMPLIANCE WITH APPLICABLE LAWS (INCLUDING, WITHOUT LIMITATION, THE EU COUNCIL DIRECTIVE 2003/6/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL OF 28 JANUARY 2003 ON INSIDER DEALING MARKET MANIPULATION (MARKET ABUSE), ENGAGE ON BEHALF OF THE CLASS A-1 COMMITMENT HOLDERS OFFERING SUCH INITIAL CLASS A NOTES IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE INITIAL CLASS A NOTES. SPECIFICALLY, THE CLASS A-1 COMMITMENT HOLDERS OFFERING SUCH INITIAL CLASS A NOTES, OR ANOTHER PARTY ACTING ON THEIR BEHALF, MAY OVER-ALLOT IN CONNECTION WITH THE OFFERING, AND MAY BID FOR, AND PURCHASE, THE INITIAL CLASS A NOTES IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "PLAN OF DISTRIBUTION". There will be no market for the Initial Class A Notes prior to the offering of the Initial Class A Notes. The Class A-1 Commitment Holders have advised ALS that they may from time to time make a market in the Initial Class A Notes. The Class A-1 Commitment Holders are not obligated, however, to make a market in the Initial Class A Notes and any such market making may be discontinued at any time at the sole discretion of the Class A-1 Commitment Holders. Accordingly, no assurance can be given as to the liquidity of or trading market for the Initial Class A Notes. See "Risk Factors Risks Relating to Capital Markets". Unless otherwise stated, all monetary amounts are expressed herein in U.S. dollars ("$"). Various numbers and percentages set out in these listing particulars have been rounded and accordingly may not total exactly. These listing particulars may not be used to sell these securities. The information in these listing particulars is accurate only on the date of these listing particulars and will not be updated. Notice to New Hampshire Residents NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION FOR A LICENSE HAS BEEN FILED UNDER RSA 421-B WITH THE STATE OF NEW HAMPSHIRE NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE, COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR QUALIFICATIONS OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON, SECURITY, OR TRANSACTION. IT IS UNLAWFUL TO MAKE, OR CAUSE TO BE MADE, TO ANY PROSPECTIVE PURCHASER, CUSTOMER, OR CLIENT ANY REPRESENTATION INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH. These listing particulars do not constitute an offer of any securities. iii

4 ALS accepts responsibility for the information contained in these listing particulars. To the best knowledge and belief of ALS, having taken all reasonable care to ensure that such is the case, the information contained in these listing particulars (except as aforesaid) is in accordance with the facts and does not omit anything that is likely to affect the import of such information. Laws in certain jurisdictions may restrict the distribution of these listing particulars and the offer and sale of the Initial Class A Notes. Persons into whose possession these listing particulars or any of the Initial Class A Notes are delivered must inform themselves about, and observe, any such restrictions. Each prospective purchaser of the Initial Class A Notes must comply with all applicable laws and regulations in force in any jurisdiction in which it purchases the Initial Class A Notes or possesses these listing particulars and must obtain any consent, approval or permission required by any governmental agency or under any regulations in force in any jurisdiction to which it is subject or in which it makes such purchases, offers or sales, and neither of ALS nor the Class A-1 Commitment Holders will have any responsibility therefor. Neither the delivery of these listing particulars nor any sale of the Initial Class A Notes implies that there has been no change in the affairs of ALS since the date of these listing particulars or that information contained in these listing particulars is correct as of any date after the date on the cover of these listing particulars. These listing particulars have been prepared by ALS solely for use in connection with the admission of the Class A- 2 Notes to the Official List of the Irish Stock Exchange and to trading on the Alternative Security Market thereof. These listing particulars do not constitute an offer to any person or to the public generally to purchase for or otherwise acquire the Initial Class A Notes. Distribution of these listing particulars in the United States is unauthorized, and any disclosure of any of its contents, without the prior written consent of ALS, is prohibited. Each person in the United States, by accepting delivery of these listing particulars, agrees to the foregoing and agrees not to make any photocopies of these listing particulars or any documents referred to herein. These listing particulars contain summaries, believed to be accurate, of the terms of certain documents. All such summaries are qualified in their entirety by this reference. Market data and certain industry forecasts used throughout these listing particulars were obtained from publicly available information and industry publications. Industry publications generally state that the information contained in those publications has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. Similarly, such information, while believed to be reliable, has not been independently verified, and none of ALS, each of its subsidiaries and each of the Class A-1 Commitment Holders makes any representation as to the accuracy of such information. ALS has accurately reproduced such information and, as far as ALS is aware and is able to ascertain, no facts have been omitted which would render such information inaccurate or misleading. ALS has agreed that it will make available, upon request to any holder or prospective purchaser of the Initial Class A Notes, the information required pursuant to Rule 144A(d)(4) under the Securities Act with respect to itself during any period in which it is not subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or not exempt by virtue of Rule 12g3-2(b) thereunder. Any such request for information should be made to the primary administrative agent, AerCap Administrative Services Limited, AerCap House, Shannon, County Clare, Ireland. Notwithstanding anything herein to the contrary, except as reasonably necessary to comply with applicable securities laws, you (and each of your employees, representatives or other agents) may disclose to any and all persons, without limitation of any kind, the "tax treatment" and "tax structure" (in each case, within the meaning of Treasury Regulation Section and applicable state and local tax laws) and all materials of any kind (including opinions or other tax analyses) of the transaction contemplated hereby that are provided to you (or your representatives) relating to such tax treatment and tax structure. None of ALS, the Class A-1 Commitment Holders or any of their respective representatives is making any representation to you regarding the legality of an investment by you under appropriate legal investment or similar laws. You should consult with your own advisors as to legal, tax, business, financial and related aspects of a purchase of the Initial Class A Notes or as to the ability of particular purchasers to purchase the Initial Class A Notes under applicable legal investment restrictions. All purchasers whose investment authority is subject to legal iv

5 restrictions should consult with their legal advisors to determine whether and to what extent the Initial Class A Notes would constitute legal investments for them. THE INITIAL CLASS A NOTES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT, OR THE SECURITIES LAWS OF ANY OTHER JURISDICTION. THE INITIAL CLASS A NOTES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THE INITIAL CLASS A NOTES OR ANY OFFERING OF THE INITIAL CLASS A NOTES OR THE ACCURACY OR ADEQUACY OF THESE LISTING PARTICULARS. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL. THE HOLDER OF ANY INITIAL CLASS A NOTE, BY SUCH PURCHASE, AGREES FOR THE BENEFIT OF THE ISSUER THAT SUCH INITIAL CLASS A NOTE IS BEING ACQUIRED FOR ITS OWN ACCOUNT AND NOT WITH A VIEW TO DISTRIBUTION AND MAY BE RESOLD, PLEDGED OR TRANSFERRED ONLY (1) TO THE ISSUER (UPON REDEMPTION THEREOF OR OTHERWISE), (2) TO A PERSON THE TRANSFEROR REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (3) OUTSIDE THE UNITED STATES TO A PERSON WHO IS NOT A U.S. PERSON (AS SUCH TERM IS DEFINED IN REGULATION S) IN A TRANSACTION IN COMPLIANCE WITH REGULATION S, (4) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) OR AN ENTITY, ALL OF THE EQUITY OWNERS OF WHICH ARE INSTITUTIONAL ACCREDITED INVESTORS OR (5) IN A TRANSACTION OTHERWISE EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION, IN EACH SUCH CASE, IN COMPLIANCE WITH THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER JURISDICTION. SEE "TRANSFER RESTRICTIONS". BERMUDA REGULATIONS ALS HAS RECEIVED A DIRECTION FROM THE MINISTER OF FINANCE OF BERMUDA THAT PART III AND SECTION 35 OF PART IV OF THE COMPANIES ACT 1981 OF BERMUDA RELATING TO PROSPECTUSES AND PUBLIC OFFERS SHALL NOT APPLY TO THE OFFERING OF THE INITIAL CLASS A NOTES, PROVIDED THAT THE INITIAL CLASS A NOTES ARE ONLY OFFERED TO (A) "QUALIFIED INSTITUTIONAL BUYERS", WITHIN THE MEANING OF RULE 144A OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), (B) PERSONS IN OFFSHORE TRANSACTIONS IN RELIANCE ON REGULATION S OF THE 1933 ACT AND (C) TO INSTITUTIONAL "ACCREDITED INVESTORS" (AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) OR AN ENTITY, ALL OF THE EQUITY OWNERS OF WHICH ARE INSTITUTIONAL ACCREDITED INVESTORS. THE REGISTRAR OF COMPANIES OF BERMUDA AND THE MINISTER OF FINANCE OF BERMUDA ACCEPT NO RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS OF ANY PROPOSAL OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINIONS EXPRESSED IN THESE LISTING PARTICULARS. This communication is directed only at persons who (i) are outside the United Kingdom or (ii) have professional experience in matters relating to investments or (iii) are persons falling within Article 49(2)(a) to (d) ("high net worth companies, unincorporated associations, etc.") of The Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (all such persons together being referred to as "relevant persons"). This communication must not be acted on or relied on by persons who are not relevant persons. Any investment or investment activity to which this communication relates is available only to relevant persons and will be engaged in only with relevant persons. The Initial Class A Notes have not been and will not be registered under the Securities and Exchange Law of Japan, and the Selling Class A Noteholders have agreed that it will not offer or sell any Initial Class A Notes, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for reoffering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the v

6 registration requirements of, and otherwise in compliance with, the Securities and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan. IN MAKING AN INVESTMENT DECISION, YOU MUST RELY ON YOUR OWN EXAMINATION OF ALS AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS AND RISKS INVOLVED. THE INITIAL CLASS A NOTES HAVE NOT BEEN RECOMMENDED BY ANY UNITED STATES FEDERAL OR STATE SECURITIES COMMISSION, ANY FOREIGN SECURITIES COMMISSION OR ANY OTHER REGULATORY AUTHORITY. FURTHERMORE, THESE AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THESE LISTING PARTICULARS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. Forward Looking Statements THESE LISTING PARTICULARS CONTAIN CERTAIN FORWARD LOOKING STATEMENTS (AS SUCH TERM IS DEFINED IN THE UNITED STATES PRIVATE SECURITIES REFORM ACT OF 1995) AND INFORMATION RELATING TO ALS THAT IS BASED ON THE BELIEFS OF ALS, AS WELL AS ASSUMPTIONS MADE BY AND INFORMATION CURRENTLY AVAILABLE TO ALS. WHEN USED IN THESE LISTING PARTICULARS, THE WORDS "ESTIMATE", "PROJECT", "BELIEVE", "ANTICIPATE", "INTEND", "EXPECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD LOOKING STATEMENTS. SUCH STATEMENTS REFLECT THE CURRENT VIEWS OF ALS WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS AND UNCERTAINTIES, INCLUDING THOSE DISCUSSED UNDER "RISK FACTORS", THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED IN SUCH FORWARD LOOKING STATEMENTS. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. ALS DOES NOT UNDERTAKE ANY OBLIGATION TO RELEASE PUBLICLY OR TO THE NOTEHOLDERS ANY REVISIONS TO THESE FORWARD LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS. NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, IS MADE BY ANY OF THE SELLING CLASS A NOTEHOLDERS AS TO THE ACCURACY OR COMPLETENESS OF THE INFORMATION SET FORTH HEREIN, AND NOTHING CONTAINED IN THESE LISTING PARTICULARS IS, OR SHALL BE RELIED UPON AS, A PROMISE OR REPRESENTATION, WHETHER AS TO THE PAST OR FUTURE. THE SELLING CLASS A NOTEHOLDERS HAVE NOT INDEPENDENTLY VERIFIED ANY OF SUCH INFORMATION AND ASSUMES NO RESPONSIBILITY FOR ITS ACCURACY OR COMPLETENESS. THE INITIAL CLASS A NOTES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE INDENTURE AND ALL APPLICABLE SECURITIES LAWS OF THE UNITED STATES, ANY STATE THEREOF OR OF ANY OTHER JURISDICTION, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. Certain capitalized terms have specific meanings for the purposes of these listing particulars. Such terms are defined in these listing particulars, including the Glossary herein. The "Index of Certain Defined Terms" of these listing particulars lists the page of these listing particulars on which each such term is defined. References herein are to sections of these listing particulars unless otherwise stated. vi

7 TABLE OF CONTENTS SUMMARY...1 The Initial Class A Notes...5 The Initial Aircraft and Lessees...7 Overview of Priority of Payments...14 THE TRANSACTION...16 RISK FACTORS...33 Risks Relating to the Aviation Industry...33 Risks Relating to the ALS Group and Its Business...36 Risks Relating to the Aircraft...41 Risks Relating to the Leases...47 Risks Relating to the Lessees...51 Risks Relating to the Class A-1 Note Funding Agreement...55 Risks Relating to Payments on the Initial Class A Notes...56 Certain Bankruptcy and Other Considerations...59 Risks Relating to Taxes...60 Risks Relating to Rights of Holders of Initial Class A Notes...62 Risks Relating to Absence of Market And Market Conditions...62 Risks Relating to Ratings of the Initial Class A Notes...63 THE PARTIES...64 ALS...64 AerCap...65 Seller...67 Servicer...67 Administrative Agent...69 Cash Manager...69 Trustee, Class A-1 Trustee, Security Trustee, Operating Bank and Reference Agent...69 Liquidity Provider, Class A-1 Funding Agent and Servicing Agent...69 USE OF PROCEEDS...71 THE INITIAL AIRCRAFT AND LEASES...72 ALS's Ownership of the Aircraft...72 Appraisers' Reports...72 Acquisition of Additional Aircraft...76 Initial Leases...76 Indemnification and Insurance of the Aircraft...79 The Lessees...80 THE COMMERCIAL AIRCRAFT INDUSTRY...83 Introduction...83 Air Transport Industry...83 Drivers of Aircraft Demand...88 Aircraft Replacement Demand...94 Drivers of Aircraft Supply...97 Used Aircraft Market Long-Term Fleet Outlook Aircraft Leasing Industry Outlook Asset Selection And Asset Management Aircraft Lease Rates and Trends Aircraft Values and Trends Conclusion MANAGEMENT OF THE ALS GROUP Directors Beneficial Ownership of ALS The Servicer Company Management MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION Overview Audited Financial Statements Liquidity Interest Rate Risk and Management NOTE PAYMENT ASSUMPTIONS Revenue Assumptions Other Assumptions Principal Repayments Under the Base Case DESCRIPTION OF THE PURCHASE AGREEMENT Purchase of the Aircraft Substitute Aircraft Payment for Initial Aircraft and Non-Delivery of Initial Aircraft DESCRIPTION OF THE LIQUIDITY FACILITY General Drawings Reimbursement of Drawings Liquidity Events of Default Liquidity Provider DESCRIPTION OF THE CLASS A-1 NOTE FUNDING AGREEMENT General Advances Termination and Reduction of Commitments Indemnities Class A-1 Commitment Holders Class A-1 Funding Agent DESCRIPTION OF NOTES General Ratings Payments Payment of Principal and Interest Indenture Covenants Operating Covenants Indenture Events of Default and Remedies Subordination Modification and Waiver Accounts Notices to Noteholders vii

8 Governing Law and Jurisdiction Book Entry; Delivery and Form; Definitive Notes DESCRIPTION OF THE SECURITY TRUST AGREEMENT The Collateral Voting Rights of the ALS Group Remedies Subordination Cape Town Convention Foreign Security Documents TAXATION Irish Tax Considerations Certain Bermuda Tax Considerations Certain United States Tax Considerations Other Taxes CERTAIN ERISA CONSIDERATIONS RESALE AGREEMENT REPORTS TO NOTEHOLDERS BOOK-ENTRY REGISTRATION, GLOBAL CLEARANCE AND SETTLEMENT Global Clearance and Settlement TRANSFER RESTRICTIONS LEGAL MATTERS EXPERTS IRISH LISTING AND GENERAL INFORMATION CUSIP, ISIN and Common Code GLOSSARY INDEX OF DEFINED TERMS APPENDIX 1 MONTHLY GROSS REVENUES BASED ON THE NOTE PAYMENT ASSUMPTIONS...A1-1 APPENDIX 2 ASSUMED PORTFOLIO VALUE...A2-1 APPENDIX 3 EXPECTED TARGET PRINCIPAL BALANCE...A3-1 APPENDIX 4 POOL FACTORS...A4-1 APPENDIX 5 LEASE RATE FACTORS...A5-1 APPENDIX 6 LEASE RATE FACTOR MODIFIERS...A6-1 APPENDIX 7 APPRAISALS...A7-1 viii

9 Summary The following summary contains basic information about the Initial Class A Notes. It may not contain all information that may be important to you. References herein are to sections of these listing particulars unless otherwise stated. The Summary uses terms defined elsewhere in these listing particulars, including in the "Glossary". An Index referencing terms defined in these listing particulars beings on page 224. ALS. Aircraft Lease Securitisation II Limited ("ALS") is a special purpose company incorporated under the laws of Bermuda on May 22, 2008 for certain limited purposes, including to purchase and own aircraft assets and related leases (at any time, all of such aircraft assets and related leases then owned directly or indirectly by ALS, the "Portfolio"). As of the date of these listing particulars, ALS does not own any aircraft assets or related leases, but expects to acquire 30 aircraft (collectively, the "Initial Aircraft") and related leases through ownership interests it will directly or indirectly hold in entities (including, without limitation, grantor trusts to be formed under the laws of Utah and special purpose companies incorporated under the laws of Ireland having limited liability) owning the aircraft and leases, as more fully described below in " ALS Aircraft Ownership Structure". ALS commenced business operations on June 26, 2008 (the "Initial Closing Date") upon the issuance of the Initial Class A Notes and a portion of the Class E-1 Notes. ALS's registered office is Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda. ALS will maintain a website for its monthly, quarterly and annual reports at Information contained on this website is not part of, and is not incorporated into, these listing particulars. For further information see "Management's Discussion and Analysis of Financial Condition". ALS Aircraft Ownership Structure. As of the date of these listing particulars, ALS expects to acquire 30 Initial Aircraft and related leases through the ownership of (a) the shares in one special purpose company incorporated under the laws of Ireland with limited liability (the "Holding Company") that does not own aircraft or leases, but holds or will hold (i) the beneficial interests in five owner trusts formed pursuant to trust agreements governed by the laws of Utah that own aircraft assets and related leases (collectively, the "Indirect Aircraft Owner Trusts"), (ii) the shares in ten special purpose companies incorporated under the laws of Ireland with limited liability that own aircraft assets and related leases (collectively, the "Indirect Aircraft Companies" and, together with the Indirect Aircraft Owner Trusts, the "Indirect Aircraft-Owning Entities") and (iii) the shares in one special purpose company formed under the laws of the United Kingdom and one special purpose company formed under the laws of Bermuda (collectively, the "Initial Leasing Intermediaries" and, together with the incorporated Indirect Aircraft- Owning Entities, the "Indirect Initial Subsidiaries"); (b) the beneficial interest in 13 owner trusts formed pursuant to trust agreements governed by the laws of Utah that own aircraft assets and related leases (collectively, the "Direct Aircraft Owner Trusts" and, together with the Indirect Aircraft Owner Trusts, the "Initial Aircraft Owner Trusts"); and (c) the shares in two special purpose companies incorporated under the laws of Ireland with limited liability that own aircraft assets and related leases (collectively, the "Direct Aircraft Companies", together with the Indirect Aircraft Companies, the "Initial Aircraft Companies", the Direct Aircraft Companies together with the Direct Aircraft Owner Trusts, the "Direct Aircraft-Owning Entities", and the Direct Aircraft-Owning Entities together with the Holding Company, the "Direct Initial Subsidiaries"). Together, the Initial Aircraft Companies and the Initial Aircraft Owner Trusts are referred to herein as the "Initial Aircraft-Owning Entities". Together, the Direct Initial Subsidiaries and the Indirect Initial Subsidiaries are referred to herein as the "Initial Subsidiaries". The direct or indirect subsidiaries of ALS at any time are, collectively, the "Subsidiaries". The "ALS Group" refers to ALS and the Subsidiaries. ALS Aircraft. The "Aircraft" in the portfolio will comprise the Initial Aircraft acquired by ALS and any additional aircraft ALS may acquire from various sellers either directly or indirectly through the acquisition of the ownership interest in additional companies or owner trusts (each, an "Additional Aircraft"). The leases existing in respect of each Initial Aircraft at the Delivery Date for such Initial Aircraft are referred to as the "Initial Leases". The "Leases" comprise the Initial Leases, any lease or similar arrangement in respect of any Additional Aircraft existing at the time ALS acquires such Additional Aircraft (each, an "Additional Lease") and any future lease or similar arrangement with respect to any Aircraft (each, a "Future Lease"). The lessees under the Initial Leases are referred to as the "Initial Lessees" and, collectively, the Initial Lessees and lessees under any Additional Leases and Future Leases are referred to as the "Lessees". The descriptions in these listing particulars of the Initial Aircraft, the Initial Leases and the Initial Lessees are based on the aircraft and leases that are expected as of May 5, 2008 to be acquired 1

10 by ALS. ALS may acquire aircraft or leases in substitution for one or more of the aircraft and leases described herein, or may acquire fewer than 30 aircraft and related leases. ALS will not directly own any of the Initial Aircraft. ALS expects to hold 100% of the ownership interest in the Direct Aircraft-Owning Entities and the Holding Company, which ALS expects will hold 100% of the ownership interest in the Indirect Aircraft-Owning Entities, and ALS expects to hold 100% of the ownership interest in the Initial Aircraft-Owning Entities. Each of the Initial Aircraft is owned or will be owned directly by one of the Initial Aircraft-Owning Entities. The Initial Aircraft had an aggregate Recent Appraised Value of $1,372,134,715, calculated as of October 31, See "The Transaction Aircraft Appraised Value". ALS has agreed to acquire the Initial Aircraft indirectly, through the purchase of the ownership interests in the Holding Company and the Direct Aircraft-Owning Entities, pursuant to a purchase agreement dated as of the Initial Closing Date, between AerVenture Leasing 1 Limited ("AerVenture Leasing"), as seller (the "Seller"), and ALS, as purchaser (the "Purchase Agreement"). Under the Purchase Agreement, AerVenture Leasing has agreed to deliver the Initial Aircraft to ALS in the period between the Initial Delivery Date and September 30, 2010 (the "Delivery Period") and the date during the Delivery Period on which an Initial Aircraft is delivered to ALS is referred to herein as the "Delivery Date" of such Initial Aircraft. ALS does not own any aircraft or leases, nor will ALS acquire any aircraft or leases until the initial Delivery Date (the "Initial Delivery Date"), upon which ALS expects to indirectly acquire 15 or more of the Initial Aircraft. The Initial Delivery Date is not expected to occur prior to April Each of the expected Initial Aircraft is one of the 70 new Airbus A320 family aircraft that AerVenture Limited ("AerVenture"), which wholly owns AerVenture Leasing, agreed to purchase from Airbus pursuant to an aircraft purchase agreement dated as of December 30, 2005 (the "Airbus Purchase Agreement"). Under the Airbus Purchase Agreement (as amended as of May 5, 2008, including to reflect conversion options exercised by AerVenture), Airbus SAS ("Airbus") agreed to manufacture and deliver 16 new model A , 51 new model A and three new model A aircraft (subject to conversion rights contained therein) to AerVenture between November 2007 and September 2012 (each of such 70 aircraft, a "New Airbus Aircraft"). The New Airbus Aircraft include (a) the 30 aircraft described herein that are expected to be the Initial Aircraft and (b) approximately 27 aircraft that AerVenture Leasing will be permitted, pursuant to the Purchase Agreement, to deliver to ALS as a substitute for any one of the aircraft expected at the Initial Closing Date to be an Initial Aircraft, subject to certain conditions, including that each such substitute Aircraft must be subject to an Initial Lease that commences on or before the Delivery Date for such Aircraft and other conditions as further described in these listing particulars. See "Description of the Purchase Agreement". The date that each New Airbus Aircraft (as of May 5, 2008) is scheduled to be (in the case of the New Airbus Aircraft that have not yet been delivered) or has actually been (in the case of the New Airbus Aircraft that have been delivered) delivered from Airbus to AerVenture or its assignee is referred to herein as the "Scheduled Delivery Date" of such aircraft. The actual delivery of any New Airbus Aircraft that has not yet been delivered from Airbus as of May 5, 2008 may occur on a different date from the Scheduled Delivery Date for such aircraft and, in some cases, the actual delivery date may be significantly later than the Scheduled Delivery Date. AerVenture has assigned, or will assign, its rights under the Airbus Purchase Agreement with respect to each Initial Aircraft to the relevant Initial Aircraft-Owning Entity prior to the Delivery Date therefor. ALS Leases. As of May 5, 2008, 22 of the expected Initial Aircraft were subject to a lease (each, an "Existing Initial Lease") with eight expected Initial Lessees based in eight countries, and nine of the expected Initial Aircraft were subject to a letter of intent to enter into a lease agreement (each, an "Initial Lease LOI" and, collectively, together with the Existing Initial Leases, the "Existing Leasing Contracts") with five expected Initial Lessees based in five countries. AerVenture Leasing expects to enter into an Initial Lease for each Initial Aircraft subject to an Initial Lease LOI. However, the parties to each Initial Lease LOI have agreed to enter into a lease agreement pursuant to such Initial Lease LOI subject to various conditions, including conditions such as obtaining internal approvals and agreeing on specific terms of the lease agreement. Thus, there can be no assurance that AerVenture Leasing will be able to reach an agreement with each relevant lessee to enter into a lease agreement on the same terms described in the Initial Lease LOI or at all. Furthermore, one or more of the Initial Aircraft may be delivered with an Initial Lease that substitutes the expected Initial Lease for such Initial Aircraft described in these listing particulars. Under the Purchase Agreement, AerVenture Leasing will not be permitted to deliver any Initial Aircraft to ALS unless such Initial Aircraft is subject to an Initial Lease satisfying certain conditions set forth in the Indenture and described in "Description of Notes", including certain concentration limits. AerVenture Leasing 2

11 expects that each Initial Aircraft will be subject to an Initial Lease prior to the Scheduled Delivery Date for such Initial Aircraft. See "The Initial Aircraft and Leases". Class A-1 Note Funding Agreement. On the Initial Closing Date, ALS, Calyon, as funding agent (the "Class A-1 Funding Agent"), each initial commitment holder, including Calyon (each, an "Initial Class A-1 Commitment Holder") and Deutsche Bank Trust Company Americas, in its capacity as operating bank (the "Operating Bank") and indenture trustee (the "Trustee") entered into a note funding agreement (the "Class A-1 Note Funding Agreement") pursuant to which each commitment holder party thereto, from time to time and in accordance with the terms thereof (each commitment holder, including each Initial Class A-1 Commitment Holder, a "Class A-1 Commitment Holder") will, subject to the conditions therein, make Advances (as defined herein) in an aggregate amount up to but not exceeding its commitment set out in the Class A-1 Note Funding Agreement (each, a "Commitment") during the Draw Period (as defined herein) to ALS in connection with the purchase of the Initial Aircraft from the Seller. The Commitments of each Class A-1 Commitment Holder are collectively referred to herein as the "Class A-1 Commitments". The Class A-1 Commitments will not at any time exceed in the aggregate $1,000,000,000 (as such amount may be reduced from time to time). On the Initial Closing Date, Deutsche Bank Trust Company Americas, as cash manager (the "Cash Manager"), directed the Operating Bank to establish an account for each Advance (the "Funding Account") and an account for the Level 1 Advance Amounts (as defined below) in respect of the Initial Aircraft (the "Aircraft Purchase Account"). Pursuant to the Class A-1 Note Funding Agreement, ALS will request, prior to the Delivery Date of each Initial Aircraft, an advance (each, a "Level 1 Advance") by the Class A-1 Commitment Holders in an aggregate amount equal to the cash portion of the purchase price in respect of the Initial Aircraft-Owning Entity owning such Initial Aircraft allocated to each such Initial Aircraft in accordance with the terms of the Purchase Agreement (with respect to each Initial Aircraft, the "Level 1 Advance Amount") on an Advance Date on or before such Delivery Date. Such Level 1 Advance Amount, subject to the conditions precedent set forth in the Class A-1 Note Funding Agreement, will be transferred from the Funding Account to the Aircraft Purchase Account on such Delivery Date. ALS is permitted to request a Level 1 Advance under the Class A-1 Note Funding Agreement in an aggregate amount equal to 71% of the Initial Appraised Value (as defined herein) of such Initial Aircraft. On each Delivery Date of each Initial Aircraft, the Level 1 Advance Amount on deposit in the Aircraft Purchase Account will be applied, together with the issuance of a portion of the Class E-1 Notes to AerVenture Leasing, to purchase the Initial Subsidiaries that own and/or lease the Initial Aircraft to be delivered on such Delivery Date. See "Description of the Purchase Agreement Payment for Initial Aircraft and Non-Delivery of Initial Aircraft". In addition, in connection with the delivery of the thirtieth Initial Aircraft to ALS pursuant to the Purchase Agreement, and subject to the conditions precedent set forth in the Class A-1 Note Funding Agreement, ALS will be permitted to request an advance (each, a "Level 2 Advance") under the Class A-1 Note Funding Agreement in respect of each Initial Aircraft that was delivered to ALS (the date that such Level 2 Advances are made, which will be no earlier than the first date that 30 Initial Aircraft have been delivered to ALS pursuant to the Purchase Agreement, the "Level 2 Advance Date"). On the Level 2 Advance Date, the Class A-1 Commitment Holders will make the Level 2 Advances, each in an amount equal to the Level 2 Advance Amount (as defined below) for each Initial Aircraft, which Level 2 Advance Amount will be transferred from the Funding Account to the Note Account for the Class E-1 Notes for payment to AerVenture Leasing. The "Level 2 Advance Amount" for each Initial Aircraft delivered to ALS pursuant to the Purchase Agreement will be equal to (a) if on the Level 2 Advance Date, the ratings of the Initial Class A Notes are at least A: outlook stable by Standard & Poor's and A2: outlook stable by Moody's, 3% of the Initial Appraised Value of such Initial Aircraft or (b) otherwise, (x) the maximum percentage (not to exceed 3%) of the Initial Appraised Value of such Initial Aircraft that would allow the ratings of the Initial Class A Notes to be increased to A: outlook stable by Standard & Poor's and A2: outlook stable, as confirmed by a Rating Agency Confirmation or (y) if such confirmation referred to in clause (x) cannot be obtained from the Rating Agencies, zero; provided that the Level 2 Advance Amount will not exceed the sum of the Class A-1 Undrawn Commitments (as defined herein) on the Level 2 Advance Date. The term "outlook stable" in relation to the Class A-1 Notes and the Class A-2 Notes means all Class A-1 Notes and all Class A-2 Notes that are not (v) on negative watch, (w) on a negative outlook, (x) under review for possible downgrade, (y) under review for credit watch or (z) any term synonymous with the terms stated in clauses (v) through (y). 3

12 Each payment of a Level 1 Advance Amount or Level 2 Advance Amount is referred to herein as an "Advance", and the amount of any Advance is referred to herein as an "Advance Amount". The aggregate Advance Amount paid at the end of the Delivery Period will depend upon how many of the Initial Aircraft are delivered to ALS, whether the appraised value of the Aircraft (as described in the definition of Initial Appraised Value) applied in calculating the purchase price of the Initial Aircraft-Owning Entity is less than the appraised value of such Aircraft as of October 31, 2007 and whether any Substitute Aircraft have been delivered. The date on which any Advance is made is referred to as an "Advance Date". ALS Notes. On the Initial Closing Date, ALS issued the Class A-1 Floating Rate Asset Backed Notes Series (the "Class A-1 Notes") to each Initial Class A-1 Commitment Holder pursuant to a trust indenture dated as of the Initial Closing Date (the "Indenture") among ALS, Deutsche Bank Trust Company Americas as the Trustee, the Operating Bank and the Cash Manager, and Calyon as the Class A-1 Funding Agent and the initial primary liquidity provider (the "Liquidity Provider"). Initially, each of the Class A-1 Notes issued to an Initial Class A-1 Commitment Holder has an outstanding principal balance equal to zero and a stated amount equal to the principal amount of such Class A-1 Commitment Holder's Commitment under the Class A-1 Note Funding Agreement. Upon each Class A-1 Commitment Holder advancing its portion of an Advance Amount on an Advance Date in accordance with the provisions of the Class A-1 Note Funding Agreement and, as described above, the principal amount of the Class A-1 Notes held by such Class A-1 Commitment Holder will increase in an amount equal to such portion of such Advance Amount in accordance with the provisions of the Indenture. On the Initial Closing Date, ALS also issued the Class A-2 Floating Rate Asset Backed Notes Series (the "Class A-2 Notes" and, together with the Class A-1 Notes, the "Initial Class A Notes") pursuant to the Indenture. Initially, the Class A-2 Notes also has a zero outstanding principal balance until interests in funded Class A-1 Notes are exchanged for interests in the Class A-2 Notes as part of an offering of Initial Class A Notes by the Class A-1 Commitment Holders to investors in accordance with the terms of a resale agreement dated as of the Initial Closing Date (the "Resale Agreement") among ALS, Calyon as reselling noteholder agent, AerCap Holdings N.V. ("AerCap"), AerVenture and the Class A-1 Commitment Holders, the Class A-1 Note Funding Agreement and the Indenture. The outstanding principal balance of the Class A-2 Notes will not increase as a result of the Advances made by the Class A-1 Commitment Holders under the Class A-1 Note Funding Agreement. The aggregate outstanding principal balance of the Class A-1 Notes and Class A-2 Notes, when taken together, may not at any time exceed $1,000,000,000. ALS will also issue an aggregate principal amount of up to $418,000,000 Class E-1 Fixed Rate Deferrable Interest Asset Backed Notes Series (the "Class E-1 Notes" and, together with the Initial Class A Notes, the "Initial Notes") to AerVenture Leasing, AerCap and AerVenture pursuant the Indenture, including (i) $9,328,850 of Class E-1 Notes issued on the Initial Closing Date to AerVenture Leasing, (ii) up to an aggregate amount of $5,000,000 of Class E-1 Notes that may be issued to AerVenture Leasing between the Initial Closing Date and the Initial Delivery Date, (iii) each Class E-1 Note to be issued to AerVenture Leasing in connection with the delivery of each Initial Aircraft to ALS in an amount equal to the Initial Appraised Value of such Initial Aircraft minus the amount of the Level 1 Advance Amount related to such Initial Aircraft and (iv) an amount of Class E-1 Notes to be issued from time to time to each of AerCap and AerVenture equal to the amount of expenses paid by such person pursuant to the Resale Agreement. The Advances made by the Class A-1 Commitment Holders pursuant to the Class A-1 Note Funding Agreement and a portion of the Class E-1 Notes will be used by ALS to purchase the Initial Aircraft on each Delivery Date and redeem a portion of the Class E-1 Notes held by AerVenture Leasing on the Level 2 Advance Date. All of the Initial Notes, any additional subclasses of notes issued by ALS from time to time (any such notes, the "Additional Notes"), and any notes refinancing the Initial Class A Notes or any Additional Notes (any such notes, the "Refinancing Notes"), together and, in each case, issued in accordance with the provisions of the Indenture are referred to in these listing particulars as the "Notes". On the Initial Closing Date, the Initial Notes issued on the Initial Closing Date were ALS's only outstanding debt. To secure repayment of the Notes, each of ALS and each Initial Subsidiary will pledge its ownership interest in any Subsidiary, and its interest in the Initial Leases and certain other assets held by it. See the "Ownership Structure" chart in this section. 4

13 THE INITIAL CLASS A NOTES The following table summarizes the principal terms of the Initial Class A Notes. Initial Class A Notes Maximum aggregate amount (1)... $1,000,000,000 Expected ratings (2) Moody's... A1 Standard & Poor's... A+ Interest rate... LIBOR+ 1.85% Expected weighted average life (years) (3) Initial Loan to Value (3)(4)... 74% Initial Loan to Assumed First Year's Net Revenue (3)(4)(5)(6) x Assumed Interest Coverage Ratio (3)(6)(7) x Expected Final Payment Date (3)... March 15, 2020 Final Maturity Date... June 26, 2038 (1) Pursuant to the Indenture, ALS may issue Initial Class A Notes up to the aggregate amount set forth in the table above. The aggregate amount of Initial Class A Notes actually issued by ALS may be lower than this amount if (a) the appraised value of any Initial Aircraft used to calculate the Level 1 Advance Amount and Level 2 Advance Amount for such Initial Aircraft pursuant to the Class A-1 Note Funding Agreement is lower than that calculated based on appraisals dated as of October 31, 2007, (b) the ratings of the Initial Class A Notes on the Level 2 Advance Date are lower than A2: outlook stable, from Moody's, and A: outlook stable, from Standard & Poor's, (c) AerVenture Leasing delivers fewer than all of the Initial Aircraft, (d) one or more Substitute Aircraft are delivered in the place of aircraft expected as of the Initial Closing Date to be Initial Aircraft or (e) one or more Initial Aircraft are delivered with a Substitute Lease in the place of the lease of such Aircraft expected as of the Initial Closing Date. The effect of each of these factors on the aggregate principal amount of the Initial Class A Notes is further described in these listing particulars. (2) It was a condition of issuance that the Initial Class A Notes receive these ratings as of the Initial Closing Date. (3) Based on the assumptions set forth in "Note Payment Assumptions" and does not reflect actual results to the extent such results differ from the assumptions set forth in "Note Payment Assumptions", including but not limited to the issuance of a principal amount of Initial Class A Notes less than the maximum aggregate amount set forth in the table above (as further discussed in note (1) above). (4) "Initial Loan to Value" for the Initial Class A Notes is the percentage of the maximum aggregate principal amount of the Initial Class A Notes, divided by the aggregate Recent Appraised Values of the Initial Aircraft in the amount of $1,372,134,715. Following the Initial Closing Date, the loan to value ratio for the Initial Class A Notes may fluctuate and, depending upon the delivery of Initial Aircraft, changes in the valuations of the Aircraft, the performance of the Portfolio and the actual aggregate principal amount of Initial Class A Notes issued, may be higher or lower than the Initial Loan to Value ratio. Furthermore, acquisitions of Additional Aircraft and the related issuances of Additional Notes to finance such acquisitions are not subject to loan to value ratio conditions. Accordingly, an acquisition of Additional Aircraft and related issuance of Additional Notes may result in an increase in the loan to value ratio to a level in excess of the Initial Loan to Value percentage set forth above, but any such acquisition is subject to Rating Agency Confirmation and consent of the Class A-1 Trustee (acting at the written direction of all of the Holders of the Class A-1 Notes) and other conditions described in these listing particulars. (5) "Initial Loan to Assumed First Year's Net Revenue" means, for the Initial Class A Notes, the initial aggregate principal amount of such subclass as a multiple of the Assumed First Year's Net Revenue. (6) "Assumed First Year's Net Revenue" means the assumed gross revenues of the ALS Group for the 12 monthly periods ending May 31, 2011 plus reinvestment income, plus net receipts under any Hedge Agreements less assumed leasing costs of the ALS Group, fees payable to all Service Providers, the Trustee, the Security Trustee and other general and administrative costs assumed to be incurred by the ALS Group in that period in accordance with the assumptions set forth under "Note Payment Assumptions". Actual net revenues may be lower than Assumed First Year's Net Revenue because, among other things, the actual Delivery Date of each Initial Aircraft may differ from the Scheduled Delivery Date for such Aircraft, one or more Substitute Aircraft may be delivered in the place of the aircraft expected to be delivered as Initial Aircraft at the date of these listing particulars, one or more Initial Aircraft may be delivered with a Substitute Lease in the place of the lease of such Aircraft expected as of the date of these listing particulars, fewer than 30 Initial Aircraft may be delivered, the aggregate principal amount of Initial Class A Notes may be lower than assumed (as discussed in note (1) above), the amounts payable under the Leases may not be paid, re-lease rates may be lower than assumed and the maintenance, releasing and other expenses of the ALS Group may be higher than assumed. Accordingly, the loan to net revenue ratio may be significantly lower than the Initial Loan to Assumed First Year's Net Revenue ratio presented above. 5

14 (7) "Assumed Interest Coverage Ratio" means the ratio obtained by dividing Assumed First Year's Net Revenue by the sum of (i) the interest assumed to be payable on the Initial Class A Notes in accordance with the assumptions set forth under "Note Payment Assumptions" for the 12 monthly periods ending May 31, 2011 and (ii) the fees assumed to be payable to the liquidity provider and the senior hedge payments assumed to be payable, in each case, that rank senior in priority of payment to the interest on the Initial Class A Notes, in accordance with those assumptions for that period. For the same reasons as discussed above in note (4), the interest coverage ratio may be significantly lower than the Assumed Interest Coverage Ratio presented above. 6

15 THE INITIAL AIRCRAFT AND LESSEES The following tables, pie charts and graphs summarize as of May 5, 2008 specified information about the Initial Aircraft and the Initial Lessees based on the Existing Leasing Contracts. The actual mix of Aircraft, Lessees and Leases in the Portfolio at the end of the Delivery Period may be different if (a) the parties to the Initial Lease LOIs existing as of May 5, 2008 do not enter into lease agreements on the same terms as those described in the Initial Lease LOIs or at all, (b) AerVenture Leasing fails to deliver one or more Initial Aircraft, (c) AerVenture Leasing delivers a Substitute Aircraft for one or more Initial Aircraft or delivers an Initial Aircraft that is, at the time of such delivery, subject to a Substitute Lease, (d) Aircraft are sold, (e) Additional Aircraft are acquired or (f) ALS re-leases the Aircraft to different lessees prior to the end of the Delivery Period. All percentages and averages are weighted by the Recent Appraised Value of the Initial Aircraft. The Recent Appraised Value is the average of three base value appraisals of the Aircraft that ALS obtained from Ascend, a division of Airclaims Limited ("Ascend"), BK Associates, Inc. and IBA Group Limited, and is calculated as of October 31, These appraisals were done on a desktop basis without physical inspection of the Initial Aircraft; they are subject to the qualifications set forth in the appraisals. The percentages throughout these listing particulars may not total due to rounding. Summary Statistics Recent Appraised Value... $1,372,134,715 Number of Aircraft Initial Aircraft subject to Existing Initial Leases Initial Aircraft subject to Initial Lease LOI... 8 Number of Lessees (1) Weighted average remaining Lease term (1) years Weighted average age... 0 years Airframe type A % A % Three Largest Lessees (1) TAP Portugal % Air Arabia % Air France % Total % (1) Based on the Existing Leasing Contracts as of May 5,

16 Type of Aircraft Number of Initial Aircraft % of Portfolio by Recent Appraised Value Aircraft Type Airbus A % A % Total % A % A % Year of Scheduled Delivery from Airbus Number of Initial Aircraft % of Portfolio by Recent Appraised Value Year % % % Total % Number of Aircraft % 22.87% 27.41%

17 Initial Lessees (1) Number of Initial Aircraft % of Portfolio by Recent Appraised Value Lessee Aegean Airlines S.A. ("Aegean") % Aer Lingus Limited ("Aer Lingus") % Air Arabia PJSC ("Air Arabia") % Compañia Mexicana de Avación S.A. de C.V. ("Mexicana") % Hemus Air J.S.C. ("Hemus Air") % J.S.C. Aeroflot Russian Airlines ("Aeroflot") % Juneyao Airlines Company Limited ("Juneyao") % Kuwait National Airways K.S.C. ("Wataniya Airways") % Nouvelair Tunisie ("Nouvelair") % Royal Jordanian Airlines ("Royal Jordanian") % Société Air France ("Air France") % Spring Airlines Incorporated ("Spring Airlines") % Transportes Aereos Portugueses ("TAP Portugal") % Total % Aegean 9.97% TAP Portugal 17.18% Aer Lingus 3.49% Spring Airlines 3.40% Air Arabia 13.87% Air France 13.79% Mexicana 5.83% Royal Jordanian 5.83% Hemus Air 2.87% Nouvelair 3.34% Wataniya Airways 3.49% Juneyao 3.51% Aeroflot 13.43% 9

18 (1) Based on the Existing Leasing Contracts as of May 5,

19 Region and Country (1) % of Portfolio by Recent Appraised Value Developed Regions Europe % France % Greece % Ireland % Portugal % Total Developed % % of Portfolio by Recent Appraised Value Emerging Regions Asia/Pacific % China % Europe % Bulgaria % Russia % Latin America and Caribbean % Mexico % Africa/Middle East Emerging % Jordan % Kuwait % Tunisia % United Arab Emirates % Total Emerging % Jordan 5.83% Russia 13.43% United Arab Emirates 13.87% Tunisia 3.34% Mexico 5.83% Bulgaria 2.87% Kuwait 3.49% France 13.79% China 6.91% Ireland 3.49% Portugal 17.18% Greece 9.97% (1) Based on the Existing Leasing Contracts as of May 5,

20 Remaining Lease Term (1) Number of Initial Aircraft % of Portfolio by Recent Appraised Value Year of Lease Expiration (1) % % % % % % % % % Total % Number of Aircraft Weighted average remaining lease term = 8.32 years Number of Leases (Year of Expiry) (1) A A Total (1) Based on the Existing Leasing Contracts as of May 5,

21 Summary Information Set forth below are certain details regarding the Initial Aircraft and Initial Lessees (based on the Existing Leasing Contracts) as of May 5, Aircraft Serial Type Engine Type (1) Number (2) Scheduled Delivery Date Recent Appraised Value (3) % of Portfolio by Recent Appraised Value Region Country Initial Lessee Europe Developed... Ireland (4) Aer Lingus (4) A CFM56-5B4/3 TBD Feb 10 $47,881, % France (4) Air France (4) A CFM56-5B4/ Mar 09 $46,725, % France (4) Air France (4) A CFM56-5B4/3 TBD Apr 09 $46,449, % France (4) Air France (4) A CFM56-5B4/3 TBD Mar 10 $47,901, % France (4) Air France (4) A CFM56-5B4/3 TBD Apr 10 $48,103, % Greece Aegean A IAE V2527-A Jan 08 $45,309, % Greece Aegean A IAE V2527-A Feb 08 $45,328, % Greece Aegean A IAE V2527-A Jan 09 $46,186, % Portugal TAP Portugal A CFM56-5B4/ Feb 09 $46,705, % Portugal TAP Portugal A CFM56-5B4/ May 09 $46,941, % Portugal TAP Portugal A CFM56-5B4/3 TBD Sep 09 $47,197, % Portugal TAP Portugal A CFM56-5B4/3 TBD Nov 09 $47,413, % Portugal TAP Portugal A CFM56-5B4/3 TBD Nov 09 $47,413, % Europe Emerging... Bulgaria (4) Hemus Air (4) A CFM56-5B6/ Jun 08 $39,420, % Russia Aeroflot A CFM56-5B4/ Jul 08 $45,864, % Russia Aeroflot A CFM56-5B4/ Aug 08 $45,884, % Russia Aeroflot A CFM56-5B4/ Dec 08 $46,128, % Russia Aeroflot A CFM56-5B4/ Feb 09 $46,410, % Asia/Pacific Emerging... China (4) Juneyao (4) A CFM56-5B4/3 TBD Apr 10 $48,103, % China Spring Airlines A CFM56-5B4/ Jan 09 $46,685, % Latin America and Caribbean Emerging... Mexico Mexicana A CFM56-5B6/3 TBD Dec 09 $39,822, % Mexico Mexicana A CFM56-5B6/3 TBD Mar 10 $40,217, % Africa/Middle East Emerging... Jordan Royal Jordanian A IAE V2524-A Feb 09 $39,969, % Jordan Royal Jordanian A IAE V2524-A Mar 09 $39,985, % Kuwait (4) Wataniya Airways (4) A CFM56-5B4/3 TBD Mar 10 $47,901, % Tunisia Nouvelair A CFM56-5B4/ Apr 08 $45,806, % United Arab Emirates Air Arabia A CFM56-5B4/3 TBD Jun 09 $46,961, % United Arab Emirates Air Arabia A CFM56-5B4/3 TBD Oct 09 $47,393, % United Arab Emirates Air Arabia A CFM56-5B4/3 TBD Mar 10 $47,901, % United Arab Emirates Air Arabia A CFM56-5B4/3 TBD May 10 $48,123, % Total $1,372,134, % (1) Engine manufacturer key: CFM CFM International IAE International Aero Engines (2) "TBD" indicates that as of May 5, 2008 the manufacturer has not yet assigned a serial number to this Initial Aircraft. (3) Based on Base Values as of October 31, Amounts may not total due to rounding. (4) As of May 5, 2008, subject to an Initial Lease LOI. 13

22 OVERVIEW OF PRIORITY OF PAYMENTS The following summarizes the priority of payments on the Notes and other obligations of ALS out of the funds received by the ALS Group other than security deposits and funds required by any Lease to be segregated and funds to be used to redeem any of the Notes. ALS may issue any amount of Additional Notes at any and all levels of payment priority if specified criteria are met. For further information about the priority of payments and changes in the order of priorities upon acceleration of the Notes, see "Description of Notes Payment of Principal and Interest Priority of Payments". (i) (ii) Required Expense Amount Liquidity Facility Non-Use Fees, if any (iii) Interest Amount on the Class A Notes, Class A-1 Commitment Fees and Senior Hedge Payments (iv) (v) (vi) replenishment of the Initial Primary Liquidity Reserve Account up to the Required Amount, payment of any Credit Facility Advance Obligations under any Eligible Credit Facility and replenishment of any Cash Collateral Account (other than the Initial Primary Liquidity Reserve Account) up to the Required Amount payments to accrue for Modification Payments and Refinancing Expenses Corporate Benefit Distribution (vii) Excess Sale Proceeds to the Holders of the Class E Notes (viii) Outstanding Principal Balance with respect to the Class A Notes (ix) (x) (xi) Special Indemnity Payments Subordinated Hedge Payments Interest Amount on the Class E Notes (xii) Outstanding Principal Balance with respect to the Class E Notes (xiii) all remaining amounts to the Holders of the Class E Notes 14

23 Ownership Structure (1) AerCap Holdings N.V. (2) Narrowbody Lease Management B.V. 100% 100% 100% AerCap International Isle of Man Limited AerCap AerVenture Holding B.V. NLM AerVenture Holding B.V. 100% 50% 50% AerCap Ireland Limited AerVenture Limited 100% AerVenture Leasing 1 Limited 5% Aircraft Lease Securitisation II Trust 95% 100% Irish Holding Company 100% 100% 100% 100% Aircraft Lease Securitisation II Limited 100% 13 Utah Owner Trusts 100% 2 Irish Companies Initial Notes UK Company Bermuda Company 5 Utah Owner Trusts 10 Irish Companies 13 Initial Aircraft 2 Initial Aircraft 5 Initial Aircraft 10 Initial Aircraft (1) Anticipated structure at the end of the Delivery Period. (2) A minority of the shares in AerCap Holdings N.V. is indirectly beneficially owned by funds and accounts managed by Cerberus Capital Management, L.P. and/or its affiliates and certain members of AerCap Holdings N.V.'s management, and the remainder of the shares are publicly traded and listed on the New York Stock Exchange. 15

24 The Transaction ALS... ALS is a special purpose company incorporated under the laws of Bermuda on May 22, See "The Parties ALS". ALS is resident in Ireland for tax purposes. ALS Group... ALS and each Subsidiary. See "The Parties ALS". Class A-1 Note Funding Agreement... On the Initial Closing Date, ALS, the Class A-1 Funding Agent, each Initial Class A-1 Commitment Holder, the Operating Bank and the Trustee entered into the Class A-1 Note Funding Agreement pursuant to which each Class A-1 Commitment Holder will, subject to the conditions therein, make Advances to ALS in an aggregate amount up to but not exceeding its Commitment during the Draw Period, in connection with the purchase of the Initial Aircraft from the Seller. The Class A-1 Commitments will not at any time exceed in the aggregate $1,000,000,000 (as such amount may be reduced from time to time). Pursuant to the Class A-1 Note Funding Agreement, ALS may request, prior to the Delivery Date of each Initial Aircraft, a Level 1 Advance by the Class A-1 Commitment Holders in an aggregate amount equal to the Level 1 Advance Amount for such Initial Aircraft on an Advance Date on or before such Delivery Date. Such Level 1 Advance Amount, subject to the conditions precedent set forth in the Class A-1 Note Funding Agreement, will be transferred from the Funding Account to the Aircraft Purchase Account on such Delivery Date. ALS is permitted to request a Level 1 Advance under the Class A-1 Note Funding Agreement in an aggregate amount equal to 71% of the Initial Appraised Value (as defined herein) of such Initial Aircraft. On each Delivery Date of each Initial Aircraft, the Level 1 Advance Amount on deposit in the Aircraft Purchase Account will be applied, together with the issuance of a portion of the Class E-1 Notes to AerVenture Leasing, to purchase the Initial Subsidiaries that own and/or lease the Initial Aircraft to be delivered on such Delivery Date. See "Description of the Purchase Agreement Payment for Initial Aircraft and Non-Delivery of Initial Aircraft". In addition, in connection with the delivery of the thirtieth Initial Aircraft to ALS pursuant to the Purchase Agreement, and subject to the conditions precedent set forth in the Class A-1 Note Funding Agreement, ALS will be permitted to request a Level 2 Advance under the Class A-1 Note Funding Agreement in respect of each Initial Aircraft delivered to ALS pursuant to the Purchase Agreement. Upon such request, the Class A-1 Commitment Holders will make a Level 2 Advance in respect of each Initial Aircraft in an amount equal to the Level 2 Advance Amount for such Initial Aircraft, which Level 2 Advance Amount will be transferred from the Funding Account to the Note Account for the Class E-1 Notes for payment to AerVenture Leasing. The Level 2 Advance Amount for each Initial Aircraft will be equal to (a) if on the Level 2 Advance Date, the ratings of the Initial Class A Notes are at least A: outlook stable by Standard & Poor's and A2: outlook stable by Moody's, 3% of the Initial Appraised Value of such Initial Aircraft or (b) otherwise, (x) the maximum percentage (not to exceed 3%) of the Initial Appraised Value of such Initial Aircraft that would allow the ratings of the Initial Class A Notes to be increased to A: outlook stable by Standard & Poor's and A2: outlook stable by 16

25 Moody's, as confirmed by a Rating Agency Confirmation or (y) if such confirmation referred to in clause (x) cannot be obtained from the Rating Agencies, zero; provided that the Level 2 Advance Amount will not exceed the sum of the Class A-1 Undrawn Commitments (as defined herein) on the Level 2 Advance Date. The term "outlook stable" in relation to the Class A-1 Notes and the Class A-2 Notes means all Class A-1 Notes and all Class A-2 Notes that are not (v) on negative watch, (w) on a negative outlook, (x) under review for possible downgrade, (y) under review for credit watch or (z) any term synonymous with the terms stated in clauses (v) through (y). The Initial Notes... ALS issued three subclasses of notes, the Class A-1 Notes, the Class A- 2 Notes and the Class E-1 Notes, on the Initial Closing Date pursuant to the Indenture as described below. On the Initial Closing Date, ALS issued Class A-1 Notes to each Initial Class A-1 Commitment Holder pursuant to the Indenture. Initially, each of the Class A-1 Notes issued to an Initial Class A-1 Commitment Holder has an outstanding principal balance equal to zero and a stated amount equal to the principal amount of such Class A-1 Commitment Holder's Commitment under the Class A-1 Note Funding Agreement. Upon each Class A-1 Commitment Holder advancing its portion of an Advance Amount on an Advance Date in accordance with the provisions of the Class A-1 Note Funding Agreement and as described above, the principal amount of the Class A-1 Notes held by such Class A-1 Commitment Holder will increase in an amount equal to such portion of such Advance Amount in accordance with the Indenture. The Class A-1 Notes will at all times rank pari passu with the Class A-2 Notes. On the Initial Closing Date, ALS also issued Class A-2 Notes. Initially, the Class A-2 Notes also have a zero outstanding principal balance until interests in funded Class A-1 Notes are exchanged for interests in the Class A-2 Notes as part of an offering of Initial Class A Notes to investors in accordance with the terms of the Resale Agreement, the Class A-1 Note Funding Agreement and the Indenture. The outstanding principal balance of the Class A-2 Notes will not increase as the result of Advances made by the Class A-1 Commitment Holders under the Note Funding Agreement. The aggregate amount of Advances may not at any time exceed $1,000,000,000. The Initial Class A Notes, together with any subsequently issued Additional Notes and any Refinancing Notes refinancing the Initial Class A Notes or Additional Notes issued as any subclass of Class A Notes, are referred to herein as the "Class A Notes". ALS will also issue an aggregate principal amount of up to $418,000,000 of Class E-1 Notes to AerVenture Leasing, AerCap and AerVenture pursuant the Indenture, including (i) $9,328,850 of Class E-1 Notes issued on the Initial Closing Date to AerVenture Leasing, (ii) up to an aggregate amount of $5,000,000 of Class E-1 Notes that may be issued to AerVenture Leasing between the Initial Closing Date and the Initial Delivery Date, (iii) each Class E-1 Note to be issued to AerVenture Leasing in connection with the delivery of each Initial Aircraft to ALS in an amount equal to the Initial Appraised Value of such Initial Aircraft minus the amount of the Level 1 Advance Amount related to such Initial Aircraft and (iv) an amount of Class E-1 17

26 Notes issued from time to time to each of AerCap and AerVenture equal to the amount of expenses paid by such person pursuant to the Resale Agreement. AerVenture Leasing will be the Seller of the Initial Subsidiaries to ALS. Each Holder of Class E-1 Notes may sell any portion of such Class E-1 Notes in the future subject to certain transfer restrictions set forth in the Indenture. With the prior written consent of the Liquidity Provider (unless the Liquidity Facility Non-Consent Event has occurred), the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing), the Trustee acting as trustee for the Class A-1 Notes (the "Class A-1 Trustee") (acting at the written direction of all of the Holders of the Class A-1 Notes) and the Holders of the Class A Notes and receipt of a Rating Agency Confirmation, ALS may issue additional notes pursuant to the terms and conditions contained in the Indenture, including Additional Notes and Refinancing Notes. Payments of certain expenses, senior hedge payments and interest relating to the Initial Class A Notes on each Payment Date, up to the amount available thereunder, is supported by a revolving liquidity facility (the "Liquidity Facility") issued by the Liquidity Provider. See "Description of the Liquidity Facility". Ratings of the Initial Class A Notes... It was a condition to the issuance of the Initial Class A Notes that on the Initial Closing Date the Initial Class A Notes receive ratings of at least A+ from Standard & Poor's Ratings Services, a division of The McGraw Hill Companies, Inc. ("Standard & Poor's") and A1 from Moody's Investors Service, Inc. ("Moody's" and, together with Standard & Poor's, the "Rating Agencies"). The ratings of the Initial Class A Notes are set forth in the table titled "The Initial Class A Notes" in the "Summary". The ratings of the Initial Class A Notes address the likelihood of the timely payment of interest on and the ultimate payment of principal of the Initial Class A Notes by the final legal maturity date (as indicated in the table titled "The Initial Class A Notes" in the "Summary", the "Final Maturity Date"), as described herein. ALS's ability to pay principal in full of the Initial Class A Notes on the expected final payment date (as indicated in the table titled "The Initial Class A Notes" in the "Summary", the "Expected Final Payment Date") or on any other date prior to the Final Maturity Date will not be rated by any of the Rating Agencies. In addition, the ratings will not address the payment of redemption premium, if any, or interest on unpaid redemption premiums, or LIBOR break costs, if any. The ratings assigned to the Initial Class A Notes also will not address the effect of an imposition of any withholding tax on any payments under the Initial Leases, any Additional Leases, any Future Leases, the Initial Class A Notes or otherwise. The reduction, suspension or withdrawal of the ratings of the Initial Class A Notes will not, in and of itself, constitute an Indenture Event of Default. See "Description of Notes Ratings" and "Risk Factors Risks Relating to Taxes". A rating is not a recommendation to buy, sell or hold Initial Class A Notes inasmuch as the Rating Agencies do not comment as to market price or suitability for a particular investor. In addition, a rating may be subject to revision, suspension or withdrawal at any time by the assigning Rating Agency. In the event that a rating initially assigned to the Initial 18

27 Class A Notes is subsequently lowered, suspended or withdrawn for any reason, no person or entity is obliged to provide any additional support or credit enhancement with respect to the Initial Class A Notes. Payment Dates... The "Payment Date" for the Notes and certain other obligations of ALS is the 15th day of each month or, if such day is not a Business Day, the next succeeding Business Day, with the first Payment Date after the date of these listing particulars occurring July 15, However, the first Payment Date upon which interest on the Initial Class A Notes is due will occur on the second Payment Date following the Initial Delivery Date. The "Calculation Date" with respect to each Payment Date is the fifth Business Day immediately preceding such Payment Date. The "Record Date" for each Payment Date is the 15th day immediately preceding such Payment Date. Interest Payments... Interest will be payable on the Outstanding Principal Balance of the Initial Class A Notes at the rate per annum set forth in the table titled "The Initial Class A Notes" in the "Summary" and described herein. Interest will be payable monthly on each Payment Date. Calculation of Interest... Interest based on LIBOR will be calculated on the basis of a year of 360 days and the actual number of days elapsed during each Interest Accrual Period. The "Interest Accrual Period" means, as to each subclass of Notes, each of the following periods: the period commencing on (and including) the relevant Delivery Date or relevant Advance Date (in the case of the Class A-1 Notes), as the case may be, and ending on (but excluding) the first Payment Date thereafter and each successive period beginning on (and including) a Payment Date and ending on (but excluding) the next succeeding Payment Date; provided that the Interest Accrual Period commencing on the Initial Delivery Date will end on but exclude the second Payment Date thereafter; provided further that the final Interest Accrual Period with respect to any subclass of Notes will end on but exclude the date such subclass of Notes is repaid in full. The portion of the principal amount of each Class A-1 Note equal to the amount of an Advance will begin to accrue interest commencing on the applicable Advance Date and each corresponding increase in the Class A-1 Notes. "LIBOR" is the U.S. dollar London interbank offered rate which, for each Interest Accrual Period, will be (a) with respect to each Interest Accrual Period beginning on an Advance Date, the Interpolated LIBOR Rate and (b) with respect to each other Interest Accrual Period, one-month U.S. dollar deposits, in each case determined pursuant to the Reference Agency Agreement. Expected Principal Payments... Principal payments will not be fixed in amount but rather will be determined monthly based on revenues collected and costs and other liabilities incurred prior to the relevant Payment Date and as calculated on the Calculation Date corresponding to such Payment Date. Effectively, all revenues collected during each monthly period will be, after payment of expenses and satisfaction of other liabilities, paid out or reserved in accordance with the priority of payments set out in the Indenture. ALS has, however, determined expected principal payments on the Initial Class A Notes based on assumptions regarding primarily (1) the timing and amount of payments under Initial Leases and any Future Leases, (2) the terms of Future Leases, (3) the amount of operating costs and other liabilities to be incurred in the ordinary course 19

28 of the ALS Group's business, (4) the expected delivery schedule of the Initial Aircraft and (5) other assumptions as further described in "Note Payment Assumptions". These expected principal payments are reflected in the "Expected Final Payment Date" line item in the table titled "The Initial Class A Notes" in the "Summary". It is unlikely, however, that the actual outcomes will correspond to those assumptions. The timing and amount of the principal payments on the Initial Class A Notes may, therefore, vary significantly from the expected principal payments thereon. For a more detailed explanation of the formulas underlying expected principal payments and the assumptions on which the expected final payment date is based, please see "Description of Notes Payments", "Description of Notes Payment of Principal and Interest Priority of Payments" and "Note Payment Assumptions". Subordination and Ranking... After the payment of amounts due and owing in respect of, among other things, operating expenses, insurance, repossession and remarketing costs, taxes and certain obligations to the Lessees, certain amounts due to any credit support providers (including Credit Facility expenses), hedge providers, trustees, directors and various service providers (including, without limitation, the Servicer, the Administrative Agent, the Trustee, the Security Trustee, the Cash Manager, the Operating Bank, Codan Trust Company Limited as trustee of the Charitable Trust (the "Charitable Trust Trustee"), the Class A-1 Funding Agent, the Class A-1 Commitment Holders, the Servicing Agent and the Reference Agent) and certain indemnity payments, the cash flows derived from the Leases and the Aircraft will be applied towards the payment of amounts due to Noteholders, Class A-1 Commitment Fees and certain other obligations of the ALS Group in the order of priority summarized under "Summary Overview of Priority of Payments" and described under "Description of Notes Payment of Principal and Interest Priority of Payments". Status of Notes; Security... The Notes constitute direct limited recourse obligations of ALS. The Class A-1 Notes will rank pari passu with the Class A-2 Notes. ALS entered into, and its Subsidiaries will enter into, a security trust agreement with the Trustee, the Cash Manager, the Operating Bank and Deutsche Bank Trust Company Americas, as security trustee (the "Security Trustee"), dated as of the Initial Closing Date (the "Security Trust Agreement"). Pursuant to the Security Trust Agreement, ALS has pledged its ownership interests in the Subsidiaries (subject to any Security Documents governed by the laws of non-u.s. jurisdictions as described below), any loans made by ALS to the Initial Subsidiaries under the Loan, Expenses Apportionment and Guarantee Agreement (the "Intercompany Loans"), and any funds in the accounts to be established and maintained in the name of the Security Trustee under the Indenture or pursuant to a resolution of the board of ALS (collectively, the "Accounts") to the Security Trustee to secure repayment of the Notes. In addition, there will be Security Documents governed by the laws of non- U.S. jurisdictions executed by ALS and the Holding Company in favor of the Security Trustee in respect of the shares of the Initial Aircraft Companies and the Initial Leasing Intermediaries and in respect of the Irish VAT Refund Account, and may in the future be local law mortgages in respect of Aircraft owned by members of the ALS Group not situated in Cape Town Contracting States (if any). A portion of the proceeds from the sale of the Initial Class A Notes will be used by ALS 20

29 to make the Intercompany Loans to the Initial Subsidiaries. Each Initial Subsidiary will pledge, among other things, its Lease to secure its Intercompany Loan and will guarantee all other Intercompany Loans. The Notes will not be secured by any lien or similar interest in any of the Aircraft. When any Aircraft is acquired by a member of the ALS Group, any existing mortgage or other security interest, if any, in the Aircraft will be released, and the member of the ALS Group owning such Aircraft will agree not to encumber the Aircraft with any other liens except the Leases and liens created or permitted thereunder or under the Security Trust Agreement or any other Security Document. The ALS Group also will agree not to incur any indebtedness, other than the Notes (including any Additional Notes issued in connection with the acquisition of Additional Aircraft), intercompany indebtedness, any permitted credit and liquidity enhancement facilities (including obligations under the Liquidity Facility) and obligations under the Class A-1 Note Funding Agreement. See "Description of Notes Indenture Covenants Limitation on Indebtedness". Initial Closing Date... The Initial Closing Date occurred on June 26, Use of Proceeds... The aggregate cash proceeds received by ALS from Advances made pursuant to the Class A-1 Note Funding Agreement (which are evidenced by Class A-1 Notes) will be used, together with the issuance of Class E-1 Notes to AerVenture Leasing, to (i) to purchase the Initial Aircraft indirectly through the acquisition of the Initial Aircraft-Owning Entities from the Seller under the Purchase Agreement, (ii) make the Intercompany Loans to the Initial Subsidiaries (other than the Initial Aircraft Owner Trusts), the proceeds of which will be used to repay in full the AerVenture Loans and (iii) pay the Level 2 Advance Amounts to AerVenture Leasing. In addition, ALS will use the cash proceeds received from Class E-1 Notes issued to AerVenture Leasing on the Initial Closing Date to pay for certain transaction expenses and make payments in respect of its obligations between the Initial Closing Date and the second Payment Date after the Initial Delivery Date. On each Advance Date related to the delivery of each Initial Aircraft, subject to certain conditions set forth in the Class A-1 Note Funding Agreement, the Class A-1 Commitment Holders will transfer the applicable Level 1 Advance Amount into the Funding Account in accordance with the Class A-1 Note Funding Agreement. Such Level 1 Advance Amount will be transferred to the Aircraft Purchase Account on the Delivery Date of such Initial Aircraft subject to certain conditions set forth in the Class A-1 Note Funding Agreement. If such conditions are not met within five Business Days of the Advance Date for a Level 1 Advance with respect to an Initial Aircraft, the Class A-1 Funding Agent may request that the Level 1 Advance Amount for such Initial Aircraft on deposit in the Funding Account be applied to repay the Class A-1 Notes held by the Class A-1 Commitment Holders who made such advances. Such Level 1 Advance Amount will be available during the remainder of the Draw Period for advances in respect of the later delivery of such Initial Aircraft (or a Substitute Aircraft therefor). On each Delivery Date for each Initial Aircraft, after transfer from the Funding Account to the Aircraft Purchase Account, the Level 1 Advance Amount on deposit in the Aircraft Purchase Account will be applied, together with the delivery of a portion of the Class E-1 Notes to AerVenture Leasing, to purchase the Initial Subsidiaries that own and/or lease the Initial Aircraft to be delivered on such Delivery Date. 21

30 On the Level 2 Advance Date, subject to certain conditions set forth in the Class A-1 Note Funding Agreement, the Class A-1 Commitment Holders will transfer the applicable Level 2 Advance Amounts into the Funding Account in accordance with the Class A-1 Note Funding Agreement. Such Level 2 Advance Amounts will then be transferred to the Note Account for the Class E-1 Notes, for payment to AerVenture Leasing. Source of Payments... The only sources of payments for the Notes and the other obligations of the ALS Group will consist of (i) the rent and other payments (including security deposits and maintenance reserves, other than to the extent required to be segregated from other funds pursuant to any lease) made by the Lessees under the Leases, (ii) proceeds from sales or dispositions, if any, of the Aircraft and other assets of the ALS Group, (iii) net payments, if any, under any Hedge Agreements described below, (iv) amounts on deposit in the Accounts (excluding the Funding Account), (v) insurance proceeds for Aircraft that have suffered an event of loss, (vi) earnings on investments of funds held in the Accounts, (vii) amounts drawn under an Eligible Credit Facility, including the Liquidity Facility (in the case of certain expenses, senior hedge payments and interest on the Initial Class A Notes only), (viii) any amounts received by a member of the ALS Group under the Purchase Agreement or any other acquisition agreement, (ix) any other amounts received by a member of the ALS Group pursuant to the terms of the Indenture and (x) net cash proceeds of any Refinancing Notes. The ability of the Noteholders and other Secured Parties (other than the Trustee and the Senior Trustee) to take proceedings against the ALS Group to recover obligations owed to them is limited by the Indenture except, in the case of the Noteholders only, if an Indenture Event of Default has occurred and is continuing and certain conditions set forth in the Indenture are met. In particular, the Indenture provides that Noteholders and other Secured Parties may not take any steps for the purpose of procuring the appointment of an administrative receiver, examiner, receiver or similar officer or the making of an administration order or for instituting any bankruptcy, reorganization, arrangement, insolvency, winding up, liquidation, composition, examination or any like proceedings under the laws of Bermuda or any other jurisdiction in respect of either ALS or any Subsidiary or in respect of any of their respective liabilities. Prior to the Initial Delivery Date, payments of obligations of ALS will be made from (i) the cash proceeds of a Class E-1 Note issued to AerVenture Leasing on the Initial Closing Date, which proceeds are no less than the amount of fees, expenses and other obligations (including Class A-1 Commitment Fees) expected to be due from ALS prior to the Initial Delivery Date, and which have been deposited in an account (the "Expense Reserve Account") drawn on in accordance with the Indenture as such fees, expenses and other obligations become due and (ii) any cash proceeds of Class E-1 Notes which ALS is permitted pursuant to the Indenture to issue to AerVenture Leasing from time to time between the Initial Closing Date and the Initial Delivery Date, in an aggregate amount not to exceed $5,000,000, which cash proceeds will be deposited in the Expense Reserve Account and applied to fees, expenses and other obligations in accordance with the Indenture. Required Expense Amount... The "Required Expense Amount" on any Payment Date determined as of the Calculation Date immediately preceding such Payment Date will consist of an amount equal to the Required Expenses due and payable on 22

31 such Payment Date and reserves for expenses reasonably anticipated by the Servicer to be incurred within the one-month period (and with respect to any maintenance expenditures or reimbursement amounts, within the three-month period) following such Payment Date, the accrual of a reserve for which would be prudent in light of the size and timing of such expenses. Funds in respect of certain fees, costs and expenses (collectively the "Required Expenses") incurred or to be incurred by any member of the ALS Group in the course of its permitted business activities under the Indenture will be paid to a separate account (the "Expense Account") on each Payment Date prior to any payments being made on the Notes. These include (i) operating expenses for each member of the ALS Group, including but not limited to maintenance and repair expenditures with respect to the Aircraft (i.e., integration costs in connection with re-leasing Aircraft, reimbursements and Lessor contributions to Lessees for the cost of covered maintenance for which Initial Aircraft-Owning Entities are liable as Lessors under Leases, maintenance and repair on any Lease termination, return condition adjustments payable to Lessees, repayment of security deposits, and compliance with maintenance and regulatory maintenance requirements), insurance costs, import/export fees and taxes and all repossession and remarketing costs, (ii) fees payable to, certain indemnification amounts (other than Special Indemnity Payments) of, or owing to and expenses incurred as of such Payment Date by any Service Provider, the Trustee, the Reference Agent, the Directors, the Security Trustee, the Operating Bank, the Charitable Trust Trustee, the Class A-1 Funding Agent, the Class A-1 Commitment Holders and the note custodian and any authorized paying agent for any subclass of Notes (provided that such indemnification amounts will not exceed $25 million in the aggregate (and if indemnification amounts which will cause the $25 million threshold to be exceeded are due and payable to more than one person, then the indemnification amounts which may be distributed as Required Expenses without causing the $25 million threshold to be exceeded will be allocated to such persons pro rata based upon the amount of indemnification amounts due and payable to each person) and provided further that the foregoing limitation will not apply following the delivery of a Default Notice or during the continuance of an acceleration default), (iii) premiums on liability insurance required for directors of ALS and on any other insurance maintained by the ALS Group as permitted under the Related Documents, (iv) certain taxes, (v) any Class A-1 Commitment Expenses, (vi) Liquidity Facility and other Credit Facility expenses, (vii) amounts payable by any member of the ALS Group to a Lessee pursuant to a Lease, including indemnity payments, (viii) the shortfall, if any, between Rental Payments received by a member of the ALS Group as a lessor and the amount payable by it to another member of the ALS Group as a head lessor, subject to a limit of 1% of the average monthly head lease rent for an Aircraft, (ix) capital expenditures made in the ordinary course of business in connection with a new lease of an aircraft and (x) out of pocket costs and expenses related to a permitted refinancing (the "Refinancing Expenses") of any subclass of Notes. Required Expenses will not include amounts payable under the Notes, any Hedge Agreement, Special Indemnity Payments, Class A-1 Commitment Fees, Credit Facility Advance Obligations or any cost or 23

32 expense relating to the acquisition of the Initial Aircraft under the Purchase Agreement. Hedge Agreements... ALS entered into certain agreements on the Initial Closing Date and intends to enter into additional agreements (collectively, the "Hedge Agreements") providing for interest rate caps, interest rate swaps or other interest rate hedging instruments with one or more counterparties (the "Hedge Providers") that would have credit ratings, or provide collateralization arrangements, consistent with maintaining the ratings on the Initial Class A Notes. See "Management's Discussion and Analysis of Financial Condition Interest Rate Risk and Management". Under the Hedge Agreements, which would be intended to mitigate the interest rate risks associated with the Notes bearing interest at floating rates and any Leases with fixed rate rents, depending on the hedging instrument used, ALS may be obligated to make a net payment (including any related breakage costs but excluding any net payments subordinated pursuant to a Hedge Agreement (a "Subordinated Hedge Payment")) (a "Senior Hedge Payment") on each Payment Date. Any payments made under a Hedge Agreement by a Hedge Provider would be included in Available Collections. Any Senior Hedge Payments due from ALS would be made after payments of the Required Expense Amount, pari passu with payments of interest on the Initial Class A Notes and payments of the Class A-1 Commitment Fees, and before any payments of principal or redemption premium, if any, on the Initial Class A Notes. Subordinated Hedge Payments will be payable only after the Initial Class A Notes have been paid in full. Available Collections and Payment Priorities... Payments of Class A-1 Commitment Fees and interest on and principal of the Notes and redemption premium, if any, will be made on each Payment Date only out of Available Collections on deposit in the Collections Account as of the close of business on the Calculation Date for such Payment Date after providing for payment of the Required Expense Amount and certain other senior ranking payments such as amounts owing to certain credit providers. In addition, amounts available under the Liquidity Facility will be drawn to make interest payments on the Initial Class A Notes and to pay Required Expenses, Class A-1 Commitment Fees and Senior Hedge Payments by covering any shortfalls to the extent that the sum of the Required Expenses, Class A-1 Commitment Fees, Senior Hedge Payments and accrued and unpaid interest on the Initial Class A Notes exceeds Available Collections; provided that no amounts will be available under the Liquidity Facility prior to the Initial Delivery Date. To the extent any other Eligible Credit Facility is established, drawings under such facility will supplement Available Collections as to the subclass of Notes for which it is established. Available Collections will be applied to, among other things, the payment of principal of and interest on each subclass of Notes, the payment of Class A-1 Commitment Fees and to reimburse any Credit Facility Advance Obligations, including in respect of the Liquidity Facility, in the manner described below, in each case in the order of priority specified in the Indenture. See "Description of Notes Payment of Principal and Interest Priority of Payments". Liquidity Facility... The Liquidity Provider will provide the Liquidity Facility to ALS with an original commitment amount of $55,000,000. Under the Liquidity Facility, if Available Collections in respect of any Payment Date after the Initial Delivery Date are insufficient to pay the sum of (1) the Required 24

33 Expense Amount, (2) Senior Hedge Payments, (3) Class A-1 Commitment Fees and (4) accrued and unpaid interest on the Initial Class A Notes, in each case as of the related Calculation Date, then the Liquidity Provider will make advances in an amount sufficient to cover such shortfall to the extent of available funds under the Liquidity Facility; provided that ALS will not be permitted to request any drawings under the Liquidity Facility prior to the Initial Delivery Date. The Liquidity Facility cannot be used to pay any other amount in respect of the Notes. See "Description of the Liquidity Facility". Upon each drawing under the Liquidity Facility as provided above, ALS will be required to reimburse the Liquidity Provider for the amount of such drawing in accordance with the order of priority specified in the Indenture. See "Description of Notes Payment of Principal and Interest Priority of Payments" and "Description of the Liquidity Facility". Cash Reserves with Liquidity... Upon the occurrence of certain events under the Liquidity Facility, the Liquidity Facility will be drawn in full and the proceeds will be deposited into the Initial Primary Liquidity Reserve Account. The amounts in the Initial Primary Liquidity Reserve Account will replace the Liquidity Facility and be available for the same purposes as drawings under the Liquidity Facility described under "Liquidity Facility" above. Upon any withdrawal from the Initial Primary Liquidity Reserve Account, ALS will be required to replenish such account up to the Required Amount therefor in the order of priority specified in the Indenture. After the occurrence of a Liquidity Event of Default, ALS will be required to reimburse the Liquidity Provider for all unreimbursed drawings plus accrued and unpaid interest thereon. See "Description of Notes Payment of Principal and Interest Priority of Payments". Refinancing Notes... ALS may redeem any subclass of Class A Notes in whole, but not in part, by issuing Refinancing Notes under the Indenture. Refinancing Notes will be issued only upon receipt of a Rating Agency Confirmation, the prior written consent of the Liquidity Provider (unless the Liquidity Facility Non-Consent Event has occurred or will occur in connection with such Refinancing) and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing or will occur in connection with such Refinancing). Refinancing Notes will be issued in the same Class or subclass as the Notes they refinance. Any subclass of Refinancing Notes will have the same payment priority as other Notes of the Class to which those Notes belong. The Holders of the Initial Class A Notes will not have any consent rights in connection with the issuance of the Refinancing Notes. See "Description of Notes Payment of Principal and Interest Optional Redemption with Premium Refinancing of Class A Notes". Additional Aircraft and Issuance of Additional Notes... ALS may acquire Additional Aircraft from various sellers either directly or indirectly through the acquisition of an ownership interest in additional companies or owner trusts. ALS may also acquire the Additional Leases with respect to the Additional Aircraft, as well as any Future Leases. Additional Aircraft may include, among other things, aircraft, engines and entities with an ownership or leasehold interest in aircraft or engines. To the extent Additional Aircraft are acquired, ALS will finance acquisitions of Additional Aircraft with external funds, including from the proceeds of issuing Additional Notes in multiple classes pursuant to 25

34 the Indenture. These Additional Notes, if any, will rank pari passu in right of payment of principal and interest with corresponding Classes of the Notes. Any acquisition of Additional Aircraft and the issuance of Additional Notes in connection therewith will be subject to various conditions under the Indenture, including receipt of a Rating Agency Confirmation and receipt of the prior written consent of the Liquidity Provider (unless the Liquidity Facility Non-Consent Event has occurred), the Class A-1 Funding Agent (unless a Class A-1 Commitment Non- Consent Event has occurred and is continuing), the Class A-1 Trustee (at the written direction of all of the Holders of the Class A-1 Notes) and the Holders of the Class E Notes. The Holders of the Class A-2 Notes will not have any consent rights in connection with the issuance of the Additional Notes. Certain actions or transactions contemplated by the ALS Group, such as the acquisition of Additional Aircraft and the related issuance of Additional Notes, will require the written confirmation in advance of such action or transaction from each of the Rating Agencies then rating any of the Notes (unless otherwise specified in the applicable Related Document) that such action or transaction in and of itself will not result in a lowering, qualification or withdrawal by them of their then current ratings on any subclass of Notes (each such written confirmation, a "Rating Agency Confirmation"). See "The Parties ALS" and "The Initial Aircraft and Leases Acquisition of Additional Aircraft" and "Risk Factors Risks Relating to the ALS Group and Its Business" and "Description of Notes Indenture Covenants Limitation on Aircraft Acquisitions". Aircraft Dispositions... Members of the ALS Group may sell any Aircraft to another member of the ALS Group if such sale does not materially adversely affect the Noteholders or the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing). In addition, the ALS Group may sell an Aircraft to a person outside of the ALS Group, provided that certain conditions are met, including conditions with respect to target prices for the Aircraft. See "Description of Notes Indenture Covenants Limitation on Aircraft Dispositions". Concentration Limits... The ALS Group may not (i) purchase an Initial Aircraft subject to an Initial Lease or (ii) enter into any Future Lease (other than a renewal, extension or restructuring of any Lease subject to certain restrictions) unless, subject to certain restrictions, after purchasing such Initial Aircraft or entering into such Future Lease, the ALS Group and the Portfolio is in compliance with certain criteria in respect of, among other things, geographic and other concentration limits; provided that the ALS Group may purchase an Initial Aircraft subject to an Initial Lease not meeting such criteria, or enter into a Future Lease not meeting such criteria, if the ALS Group provides prior written notification to the Rating Agencies and receives the prior written consent of the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred or is continuing) and the Class A-1 Trustee (acting at the written direction of Holders of a majority of the aggregate Outstanding Principal Balance of the Class A-1 Notes). The obligations with respect to the Concentration Limits will apply after the Delivery Expiry Date. Prior to such date, certain alternative concentration limits with respect to the Initial Lessees will apply. See "Description of Notes Operating Covenants Concentration Limits". 26

35 Optional Redemption of the Initial Class A Notes... ALS may, on any Business Day, redeem the Initial Class A Notes by giving the required notices and depositing the necessary funds with the Trustee. A redemption may only be for the whole of the entire aggregate Outstanding Principal Balance of the Initial Class A Notes. The redemption premiums with respect to the Initial Class A Notes will be as described herein. ALS may redeem Notes only from funds other than Available Collections. Except in a redemption to avoid material taxes or certain increased costs or after acceleration, ALS will pay the redemption premium applicable to the Initial Class A Notes being redeemed when it redeems any of the Initial Class A Notes in accordance with the terms of the Indenture. Redemption payments will not be subject to the order of payment priorities described in this summary. For more information about optional redemption of the Initial Class A Notes, including the applicable redemption premiums, see "Description of Notes Payment of Principal and Interest Optional Redemption with Premium" and "Description of Notes Payment of Principal and Interest Optional Redemption without Premium". Prepayments from Available Collections... Controlling Party... Indenture Defaults... To the extent Available Collections on any Payment Date exceed the amount necessary to: (i) pay Required Expenses, (ii) pay Liquidity Facility Non-Use Fees, (iii) pay interest on the Initial Class A Notes, (iv), pay all Class A-1 Commitment Fees and Senior Hedge Payments, (v) replenish the Cash Collateral Accounts (including the Initial Primary Liquidity Reserve Account), (vi) reimburse providers of Eligible Credit Facilities, (vii) pay Excess Sale Proceeds, to the extent applicable and (viii) subject to the conditions described in the Indenture, accrue amounts for Modification Payments and Refinancing Expenses, the excess will be used to pay principal of the Initial Class A Notes. See "Description of Notes Payment of Principal and Interest Priority of Payments". The Controlling Party will be the Class A-1 Funding Agent prior to the Initial Delivery Date and, thereafter, the Senior Trustee or, in certain circumstances, a provider of an Eligible Credit Facility (including the Liquidity Provider) as more fully described in the definition of "Controlling Party" in the Glossary. Upon the occurrence and during the continuance of an event of default under the Indenture (an "Indenture Event of Default") with respect to any Senior Class (other than an Indenture Event of Default arising by reason of bankruptcy, insolvency or like proceeding with respect to the ALS Group), the Controlling Party (in the event it is the provider of an Eligible Credit Facility) may and, if the Controlling Party is the Senior Trustee, upon the written direction of a majority of the Holders of the aggregate Outstanding Principal Balance of the Senior Class will, give a default notice (a "Default Notice") declaring the Outstanding Principal Balance of the Notes and all accrued and unpaid interest thereon to be immediately due and payable. If an Indenture Event of Default occurs and is continuing, the Trustee, as representative of the Controlling Party or any Senior Class (as representative of any Senior Class, the "Senior Trustee", as applicable), with limited exceptions, may pursue any available remedy by proceeding at law or in equity to collect any payments due on the Notes or to enforce the performance of any of the provisions of the Notes or the Indenture or the Security Trust Agreement. 27

36 No Holder of any Class of the Notes other than the Senior Class may give or direct the giving of a Default Notice or exercise or direct the exercise of any remedy in respect of an Indenture Event of Default, and no person other than the Senior Trustee or the Controlling Party may give a Default Notice or exercise any such remedy. If the Controlling Party is the provider of an Eligible Credit Facility, only such Controlling Party may give a Default Notice and, upon giving such Default Notice or upon acceleration, exercise rights and remedies with respect to the Notes. Listing and Admission to Trading... Application has been made to The Irish Stock Exchange Limited (the "Irish Stock Exchange") for the Class A-2 Notes to be admitted to the official list (the "Official List") of the Irish Stock Exchange and to trading on the Alternative Securities Market. No assurances can be given that such listing of the Class A-2 Notes will be granted or maintained. The Class A-1 Notes are not expected to be listed on any stock exchange. Form... Class A-1 Notes will be in definitive, fully registered form and registered in the name of the Holder of such Class A-1 Notes. An individual certificated note will be issued to each such Holder (which will initially be each Initial Class A-1 Commitment Holder) and represent the Class A-1 Notes held by such Class A-1 Noteholder from time to time as reflected in the register maintained by the Trustee in accordance with the Indenture. The Class A-1 Notes are currently not expected to clear through any clearing system. Class A-2 Notes to be offered and sold to U.S. investors in reliance on Rule 144A under the Securities Act ("Rule 144A") will be represented by one or more permanent global notes in registered form without interest coupons and with any applicable legend (the "Rule 144A Global Note") and will be registered in the name of Cede & Co. as nominee for the Depository Trust Company ("DTC") and cleared under their accepted CUSIP and International Securities Identification Number ("ISIN") through DTC. The Class A-2 Notes to be offered and sold to investors outside the United States in reliance on Regulation S under the Securities Act ("Regulation S") will be represented by one or more permanent global notes in registered form without interest coupons and with any applicable legend (the "Regulation S Global Note" and, together with the Rule 144A Global Notes, the "Global Notes") and will be registered in the name of Cede & Co. as nominee for DTC and cleared under their accepted CUSIP and ISIN through Euroclear Bank S.A., N.V., as operator of the Euroclear System ("Euroclear") and/or Clearstream Banking, sociéte anonyme ("Clearstream, Luxembourg"). The Class A-2 Notes to be offered and sold in the United States to Institutional Accredited Investors will be in definitive, fully registered form without interest coupons and with any applicable legend and registered in the name of the Holder of such Class A-2 Note. On the Initial Closing Date, a Class A-2 Note in the form of a Regulation S Global Note and a Class A-2 Note in the form of a Rule 144A Global Note were each be deposited with the Trustee and registered in the name of Cede & Co. as nominee of DTC and cleared under their accepted CUSIP and ISIN through DTC. 28

37 Denominations... The Initial Class A Notes will be issued and transferable in minimum denominations of $200,000. The Class E-1 Notes will be issued and transferable in minimum denominations of $1,000,000. Aircraft Appraised Value... The ALS Group has obtained appraisals from each of Ascend, a division of Airclaims Limited, BK Associates, Inc. and IBA Group Limited (collectively, the "Appraisers") of the value of all of the Initial Aircraft, calculated as of October 31, 2007 (the "Appraisals"). The average of the Appraisals of each Initial Aircraft by each of the Appraisers is referred to as the "Recent Appraised Value". The aggregate Recent Appraised Value of the Initial Aircraft is $1,372,134,715. The Appraisals were prepared without physical inspection of the Initial Aircraft but take into account technical information provided by AerVenture Leasing and, in some cases, are based on assumptions of usage, including assumptions regarding completion of maintenance work. The Appraisers ascertained the value of each Aircraft on the basis of an open, unrestricted, stable market environment with a reasonable balance of supply and demand and with full consideration of the Aircraft's "highest and best use", presuming an arm's-length, cash transaction between willing, able and knowledgeable parties, acting prudently, with an absence of duress and with a reasonable period of time available for marketing aircraft (each value as so ascertained for each Aircraft, a "Base Value"). None of the Appraisals attribute any value to the related Lease, the security deposits or the related collateral, if any, related to the particular Aircraft. The Initial Appraised Value of any Additional Aircraft will be the average of the Base Values of such Aircraft determined as of a date not more than six months prior to the closing date for the issue of the relevant Additional Notes. An Appraisal is only an estimate of value and should not be relied upon as a measure of realizable value. The proceeds received upon a sale or other disposition of any of the Aircraft may be less than, and may be significantly less than, the Initial Appraised Value thereof. See "Risk Factors Risks Relating to the Aircraft Risks Associated with Appraised Values". The determination of each Advance related to each Initial Aircraft will be calculated in part based on the Initial Appraised Value of such Initial Aircraft. The appraisals used to calculate such Initial Appraised Value will be based on appraisals of the Initial Aircraft that are dated as of a date no later than the applicable Delivery Date and no earlier than the six months prior the applicable Delivery Date (or, in the case of the Initial Delivery Date, no earlier than 45 days prior to the Initial Delivery Date), and subject to certain other conditions as further described in the definition of "Initial Appraised Value" in the Glossary. Leases... Each Initial Lease is or will be an operating lease for a fixed term pursuant to which a member of the ALS Group will retain title to the Aircraft and substantially all of the risks and rewards associated with ownership, including the residual value of the Initial Aircraft. As of May 5, 2008, 22 of the 30 Initial Aircraft are subject to Existing Initial Leases and eight are subject to Initial Lease LOIs. As of May 5, 2008, four of the Initial Leases, based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOIs, representing approximately 13.43% of the Recent Appraised Value of the Initial Aircraft, contain options in favor of the Lessees to extend their lease terms. See "The Initial Aircraft and Leases Initial Leases". As of May 29

38 5, 2008, the average remaining term of the Initial Leases, based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOIs, weighted by Recent Appraised Value of the Initial Aircraft, was approximately 8.32 years. All of the Initial Leases, based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOIs, will expire by their terms prior to May Therefore, the ALS Group must re-lease each of the Initial Aircraft one or more times prior to the Final Maturity Date, except to the extent that Initial Aircraft are sold prior to the Final Maturity Date. None of the Initial Leases, based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOIs contain an option for the Lessee to purchase the Aircraft. None of such Leases contain remarketing profit sharing clauses whereby a Lessee is entitled to share with the related Lessor, at the expiration of the related Lease, in any disposition proceeds (including rental income) earned above an agreed threshold. Lease provisions described in an Initial Lease LOI may be different from those included in a Lease entered into pursuant to such letter of intent, and such Lease may include additional provisions not referred to in such Initial Lease LOI. See "Risk Factors Risks Relating to the ALS Group and Its Business". Related Collateral... Under certain of the Leases, the relevant Lessees must provide cash security deposits, letters of credit, third party guarantees and/or bank guarantees or their cash equivalent required under the relevant Lease to secure such Lessee's obligations under the relevant Lease. The aggregate amount of such security deposits that were or will be due from the Initial Lessees under the Initial Leases on or before the applicable Delivery Date of each Initial Aircraft, based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOIs, is, as of May 5, 2008, expected to total approximately $26.33 million, approximately $23.70 million of which is, or is expected to be, in the form of cash and approximately $2.63 million of which is, or is expected to be, in the form of letters of credit and other non-cash security such as bank guarantees. Under the Purchase Agreement, upon the delivery of the applicable Initial Aircraft to ALS, AerVenture Leasing is required to transfer to the ALS Group the security deposits and cash maintenance reserves (from the inception of such Initial Lease, minus any amounts reimbursed to the applicable Lessee pursuant to the terms of such Initial Lease) held by the applicable lessor under each Initial Lease on the relevant Delivery Date. Lessees... As of May 5, 2008, based on the Existing Leasing Contracts, there were 13 Initial Lessees in 12 different countries. As of May 5, 2008, three of the Initial Lessees together accounted for approximately 44.84% of the Recent Appraised Value of the Initial Aircraft. Certain of the Initial Lessees are in weak financial condition, and some face or have recently faced serious financial difficulties. Under the Purchase Agreement, AerVenture Leasing cannot deliver an Initial Aircraft to ALS unless such Initial Aircraft is subject to an Initial Lease which satisfies certain conditions (including that the ALS Group will not be in violation of the Indenture covenants regarding concentration limits, as further described under "Description of Notes Operating Covenants Concentration Limits"). See "Risk Factors Risks Relating to the Lessees". Servicer... Under a servicing agreement among the Servicer, the Administrative Agent, the Subsidiaries, Calyon as the servicing agent (the "Servicing Agent") and ALS, dated as of the Initial Closing Date (the "Servicing Agreement"), AerCap Ireland Limited ("AerCap Ireland") will act as 30

39 the primary servicer (the "Primary Servicer") for the Aircraft Assets and AerCap Cash Manager II Limited will act as the insurance servicer (in such capacity, the "Insurance Servicer" and, collectively with the Primary Servicer, the "Servicer"). The Primary Servicer will perform certain aircraft related services with respect to the Aircraft including remarketing the Aircraft for lease or sale. In addition, the Primary Servicer will monitor Lessee compliance with Lease terms, including terms relating to payment and maintenance, and the Insurance Servicer monitors Lessee compliance with Lease terms relating to hull and liability insurances. The Primary Servicer will receive a retainer fee of 21.2 basis points per annum of the Initial Appraised Value, a monthly fee equal to 1% of the aggregate rent actually paid for the month, and a sales-based incentive fee of 1.25% times the Target Sales Price for the sale or loss of an Aircraft, net of transaction expenses. "Target Sales Price" means an amount initially equal to 90% of the Initial Appraised Value of the relevant Aircraft, such valuations, in accordance with the appraisals of the Aircraft, to be adjusted annually by ALS, subject to any restrictions imposed by the Indenture. The Insurance Servicer will receive an annual fee of $50,000. The fees paid to the Servicer will only be paid for periods during which the ALS Group owns one or more Aircraft. The Servicer has agreed to perform the services with reasonable care and diligence at all times as is customary in the international aircraft operating leasing industry but in any case with no less reasonable care and diligence as it would if the Servicer were the owner of the Aircraft Assets. The Servicer has agreed to perform its services pursuant to the Servicing Agreement with a view toward maximizing the risk adjusted present value of the cash flows over the life of the Aircraft, subject to certain conditions. The Servicing Agreement will expire on the later of (a) the date on which all amounts outstanding to be paid under the Notes are paid in full, the Class A-1 Commitment has been terminated, the Class A-1 Funding Agent Obligations have been paid in full and the obligations owed to the Liquidity Provider have been paid in full and (b) the date on which there ceases to be any Aircraft and any assets related thereto (collectively "Aircraft Assets"). See "Risk Factors Risks Relating to the ALS Group and Its Business". Administrative Agent... AerCap Administrative Services Limited will act as the primary administrative agent (the "Primary Administrative Agent") and AerCap Cash Manager II Limited will act as the financial administrative agent (in such capacity, the "Financial Administrative Agent" and, together with the Primary Administrative Agent, the "Administrative Agent") pursuant to an administrative agency agreement among the ALS Group, the Trustee, the Security Trustee and the Administrative Agent dated as of the Initial Closing Date (the "Administrative Agency Agreement"). The Administrative Agent will provide corporate, administrative and accounting services to the ALS Group. The Administrative Agent will receive a fee of $1,413 per month for each Aircraft owned by the ALS Group. Such fee will be subject to annual adjustments for inflation and a minimum of $200,000 per year. The fees paid to the Administrative Agent will only be paid for periods during which the ALS Group owns one or more Aircraft. See "Management of the ALS Group Company Management". Cash Manager... Pursuant to a cash management agreement among the Cash Manager, the ALS Group, the Trustee and the Security Trustee dated as of the Initial Closing Date (the "Cash Management Agreement"), the Cash Manager 31

40 will invest the funds held by the ALS Group in the Accounts in certain prescribed investments on permitted terms and will otherwise calculate and direct the transfer and withdrawal of funds. In addition, the Cash Manager will make certain calculations with respect to payments on the Initial Class A Notes. Reference Agent... For the purpose of calculating the rate of interest payable on the Notes bearing a floating rate of interest, Deutsche Bank Trust Company Americas, as reference agent (the "Reference Agent") (or, in the case of any Interest Accrual Period during the Draw Period beginning on an Advance Date, the Class A-1 Funding Agent) pursuant to a reference agency agreement among ALS, the Reference Agent, the Class A-1 Funding Agent and the Cash Manager dated as of the Initial Closing Date (the "Reference Agency Agreement"), will determine LIBOR for each Interest Accrual Period two Business Days prior to the commencement of such Interest Accrual Period. Management of ALS... A majority of ALS's directors are independent of AerCap and AerVenture Leasing. Under ALS's bye-laws, the unanimous approval of its directors is required in respect of certain important transactions. The ALS Group does not have and will not have any employees or executive management. Accordingly, the ALS Group will rely upon the Servicer, the Administrative Agent, the Cash Manager and other Service Providers for all asset servicing, treasury, corporate, administrative and accounting functions pursuant to the respective service provider agreements. See "Management of the ALS Group". Certain Taxation Matters... Except with respect to (1) Holders of Class A-1 Notes and (2) certain Holders of Class A-2 Notes that are banks or similar financial institutions (in the case of each of (1) and (2), which Holders are Qualifying Lenders), ALS will not make any additional payments to Noteholders for any withholding or deduction required to be made under applicable law on payments on the Initial Class A Notes. If any withholding or deduction is required with respect to the Initial Class A Notes and the Initial Class A Notes are not redeemed, the net amount of interest received by the Noteholders will be reduced by the amount of such withholding or deduction unless the Noteholder is entitled to additional payments from ALS as a result of the imposition of such withholding or deduction. See "Risk Factors Risks Relating to Taxes" and "Taxation". In certain circumstances following an adverse tax event, ALS may elect to redeem the Initial Class A Notes, in whole or in part. See "Description of Notes Payment of Principal and Interest Optional Redemption without Premium Redemption for Taxation or Increased Costs Purposes". Certain ERISA Matters... See "Certain ERISA Considerations". Transfer Restrictions... All Initial Class A Notes will be subject to the transfer provisions set forth in the Indenture, and the Class A-1 Commitments and the Class A-1 Notes held by the Class A-1 Commitment Holders will also be subject to the transfer restrictions set forth in the Class A-1 Note Funding Agreement. In addition, the Class A-1 Commitment Holders will only be permitted to offer Initial Class A Notes (other than pursuant to a Class A- 1 Non-U.S. Sale) to investors in accordance with the provisions set forth in the Resale Agreement. See "Transfer Restrictions". 32

41 Risk Factors You should carefully consider the risks and uncertainties described below in addition to the other information contained in these listing particulars before making a decision to purchase the Initial Class A Notes. The risks and uncertainties described below are not the only risks and uncertainties facing the ALS Group. Additional risks and uncertainties not presently known to the ALS Group or that the ALS Group currently deems immaterial may also materially adversely affect its business, financial condition or results of operations. Any of the following risks and uncertainties could materially impair the ability of the ALS Group to make timely and full payments of interest on and principal of the Initial Class A Notes in full at or before their Final Maturity Date. As a result, the trading price of the Initial Class A Notes could decline due to any of these risks, and you may lose all or part of your investment. RISKS RELATING TO THE AVIATION INDUSTRY Effects of a Deterioration in the Financial Condition of the Commercial Airline Industry The financial condition of the commercial airline industry is of particular importance to the ALS Group because the ALS Group leases most of its aircraft to commercial airline customers. ALS's ability to pay interest on and principal of the Initial Class A Notes in full or on a timely basis will depend on the financial condition and growth of the commercial airline industry. The risk factors that follow describe risks that affect the commercial airline industry generally and therefore have an impact on the ALS Group's business, financial condition and results of operations. These risks are generally not within the ALS Group's control. To the extent that the ALS Group's customers are adversely affected by these risk factors, the ALS Group may experience: downward pressure on demand for the aircraft in the ALS Group's fleet and reduced market lease rates and lease margins, as well as reduced aircraft values; a higher incidence of Lessee defaults, Lease restructurings, repossessions and airline bankruptcies and restructurings, resulting in lower lease margins and/or increased costs due to maintenance, insurance, storage and legal costs associated with the repossession, as well as lost revenue for the time the Aircraft are off-lease, increased aircraft transition costs to new Lessees (including refurbishment and modification of Aircraft to fit the specifications of new Lessees) and possibly lower lease rates from the new Lessees; and an inability to lease Aircraft on commercially acceptable terms, resulting in lower lease margins due to Aircraft not earning revenue and resulting in storage, insurance and maintenance costs. Any or all of the foregoing may have a material adverse effect on ALS's ability to pay interest on and principal of the Initial Class A Notes in full or on a timely basis. Effects of Fuel Costs Fuel costs represent a major expense to companies operating within the airline industry. Fuel prices fluctuate widely depending primarily on international market conditions, geopolitical and environmental events and currency exchange rates. Increasing global demand for fuel, particularly in China, continues to put pressure on the supply of fuel worldwide, contributing to rising fuel prices. In addition, unexpected events such as natural disasters can significantly affect fuel availability and prices. For example, in August and September 2005, Hurricanes Katrina and Rita inflicted widespread damage along the Gulf Coast of the United States, causing significant disruptions to oil production, refinery operations and pipeline capacity in the region and to oil production in the Gulf of Mexico. These disruptions resulted in decreased fuel availability and higher fuel prices. In December 2007, the Organization of the Petroleum Exporting Countries rejected proposals to increase oil supply and announced that its production targets would remain unchanged. This decision could result in or contribute to increases in the price of fuel. In April 2008, Russian oil companies reported that Russian oil production may have peaked and that they anticipate a reduction in oil production. If realized, a reduction in Russian oil production would result in or contribute to increases in fuel prices. As a result of these factors, fuel costs are not within the control of the Lessees and significant changes would materially and adversely affect their operating results. 33

42 Fuel prices have recently been at historically high levels. The continuing high cost of fuel has had, and sustained high costs in the future may continue to have, a material adverse impact on airlines' profitability (including the Lessees). Due to the competitive nature of the airline industry, airlines may not be able to pass on any increases in fuel prices to their customers by increasing fares. Airlines may pass on these higher costs, adversely affecting demand for air travel, which would likely reduce revenues of the Lessees. In addition, airlines may not be able to manage this risk by appropriately hedging their exposure to fuel price fluctuations. If fuel prices remain at historically high levels or become higher due to adverse supply and demand conditions, future terrorist attacks, acts of war, armed hostilities or natural disasters or for any other reason, they may cause the Lessees to incur higher costs and to generate lower net revenues, resulting in an adverse impact on their financial positions. Consequently, these conditions may (i) affect the Lessees' ability to make rental and other Lease payments, (ii) result in Lease restructurings and Aircraft repossessions, (iii) increase the ALS Group's costs of servicing and marketing the Aircraft, (iv) impair the ALS Group's ability to re-lease the Aircraft or re-lease or otherwise dispose of the Aircraft on a timely basis and/or at favorable rates and (v) reduce the proceeds receivable for the Aircraft upon any disposition. These results could have an adverse effect on ALS's ability to pay the interest on and principal of the Initial Class A Notes in full or on a timely basis. Effects of Terrorist Attacks and Geopolitical Conditions As a result of the September 11, 2001 terrorist attacks in the United States and subsequent terrorist attacks outside the United States, airlines and airports have increased security restrictions, airline costs for aircraft insurance and enhanced security measures have increased and airlines have faced and continue to face increased difficulties in acquiring war risk and other insurance at reasonable costs. The uncertain situation in Iraq and tension over Iran's nuclear program both continue, and either or both may lead to further instability in the Middle East or elsewhere. Future terrorist attacks, war or armed hostilities, or the fear of such events, could have a further adverse impact on the airline industry and on the financial condition of the Lessees, Aircraft values and rental rates and may lead to restructurings, all of which could adversely affect payment of the interest on and principal of the Initial Class A Notes in full or on a timely basis. The terrorist attacks and geopolitical conditions have negatively affected the airline industry and future terrorist attacks, war or armed hostilities, or the fear of such events, could have a further adverse impact on the airline industry and on the financial condition of the Lessees as a result of various factors which may include: (1) higher costs to airlines due to the increased security measures; (2) losses in passenger revenue due to the inconvenience of additional security measures or reduced air travel demand for routes most affected by the geopolitical conditions; (3) the price and availability of jet fuel and the practicability of obtaining fuel hedges under current market conditions; (4) higher financing costs and difficulty in raising financing; (5) significantly higher costs of aircraft insurance coverage for future claims caused by acts of war, terrorism, sabotage, hijacking and other similar perils, and the extent to which such insurance will continue to be available or may exclude events such as dirty bombs, biohazardous materials and electromagnetic pulsing, which may damage or destroy aircraft; (6) the ability of airlines to reduce their operating costs and conserve financial resources, taking into account the increased costs incurred as a consequence of the terrorist attacks and geopolitical conditions, including those referred to above; and (7) special charges recognized by some airlines, such as those related to the impairment of aircraft and other long lived assets stemming from the grounding of aircraft as a result of the terrorist attacks, the economic slowdown and airline reorganizations. Effects on the industry could include increased airline costs, depressed air travel demand, and depressed aircraft values and rental rates. If the airline industry should be adversely affected as described above due to recent or future terrorist attacks and geopolitical conditions, Lessees are likely to incur higher costs and to generate lower revenues, resulting in an adverse impact on their financial positions. Consequently, these conditions may affect the Lessees' ability to make rental and other lease payments or obtain the types and amounts of insurance required by the applicable Leases (which may in turn lead to Aircraft groundings), may result in additional Lease restructurings and Aircraft repossessions, may increase the ALS Group's cost of re-leasing or selling the Aircraft and may impair the ALS Group's ability to re-lease the Aircraft or lease the Aircraft on a timely basis and/or at favorable rates and may reduce the value received for the Aircraft upon any disposition. Any additional terrorist attacks, acts of war or armed hostilities may also cause certain aviation insurance to become available only at significantly increased premiums or for reduced amounts of coverage that are insufficient to comply with the levels of insurance coverage required by aircraft lenders and lessors or by applicable government regulations, or not be available at all. Although 34

43 the Aircraft Transportation Safety and System Stabilization Act (the "ATSA") adopted in the United States and similar programs instituted by the governments of some other countries provide for limited state coverage for certain aviation insurance, there can be no assurances that these programs will continue or that any such government will pay under these programs in a timely fashion. These results could have an adverse effect on ALS's ability to pay the interest on and principal of the Initial Class A Notes in full or on a timely basis. Effects of War or Armed Hostilities War or armed hostilities in the Middle East, North Korea or elsewhere, or the fear of such events, could reasonably be expected to further exacerbate many of the problems experienced by the aviation industry as a result of the terrorist attacks of September 11, The situation in Iraq continues to be uncertain and tension over Iran's nuclear program continues, and either or both may lead to further instability in the region. Potential problems include increased security restrictions on air travel in the United States and elsewhere, increased airline costs for, and restricted availability of, aircraft insurance and fuel, enhanced security measures, a decline in passenger demand for air travel, increased difficulties in acquiring war risk and other insurance at reasonable costs, and additional lessee restructurings. There can be no assurance that the government of the United States or any other country will take further action to assist the aviation industry in the manner provided pursuant to the ATSA or otherwise. These results could have an adverse effect on ALS's ability to pay the interest on and principal of the Initial Class A Notes in full or on a timely basis. Effects of Pandemic Diseases The 2003 outbreak of Severe Acute Respiratory Syndrome ("SARS") was linked to air travel early in its development and had a severe impact on the aviation industry which was evidenced by a sharp reduction in passenger bookings, cancellation of many flights and employee layoffs. In addition, since 2003, there have been several outbreaks of avian influenza, or bird flu, beginning in Asia and, most recently, spreading to certain parts of Africa and Europe. Although human cases of avian influenza so far have been limited in number, the World Health Organization has expressed serious concern that a human influenza pandemic could develop from the avian influenza virus. In such an event, numerous responses, including travel restrictions, might be necessary to combat the spread of the disease. Additional outbreaks of SARS or other epidemic diseases such as avian influenza, or the fear of such events, could negatively affect passenger demand for air travel or cause government-imposed travel restrictions and ultimately adversely affect ALS's ability to pay the interest on and principal of the Initial Class A Notes in full or on a timely basis. Effects of Recent Industry Economic Losses and Airline Reorganizations Although many airlines are profitable and have seen their financial condition improve with the improvement in the U.S. and global economy, the industry remains in a difficult financial state, made worse by the high price of fuel. The survival prospects of a number of airlines, therefore, are still unclear, particularly in the United States, where Delta Air Lines, Inc. ("Delta") and Northwest Airlines, Inc. ("Northwest") joined two other major airlines, United Air Lines, Inc. ("United") and US Airways, Inc. ("US Airways"), in Chapter 11 bankruptcy protection in September At that time, Delta, Northwest, US Airways and United accounted for nearly half the capacity of all U.S. airlines. In addition, several other smaller U.S. airlines filed for bankruptcy in the years after September 11, 2001, although many of such airlines had left Chapter 11 protection by 2007, including each of Delta, Northwest, United and US Airways. However, several smaller U.S. airlines filed for bankruptcy in 2008, including ATA Airlines, Inc. ("ATA Airlines"), Aloha Airlines, Inc. ("Aloha Airlines"), Frontier Airlines Holdings Inc. ("Frontier"), Skybus Airlines, Inc. ("Skybus") and Eos Airlines, Inc., and of these only Frontier has continued operations. Many airlines based outside of the United States with financial difficulties have also filed for protection under applicable bankruptcy laws in recent years, including Air Canada, Volare Airlines S.p.A., Varig Brazilian Airlines ("Varig"), Aerovías del Continente Americano ("Avianca") and Oasis Hong Kong Airlines Limited ("Oasis Hong Kong"), although some have since left such protection. Some airlines have merged in recent years, in part in order to respond to financial pressures. US Airways and America West Holdings Corporation (the parent company of America West Airlines) merged in September 2005 and, in April 2008, Delta and Northwest announced that they were planning to merge. Any further bankruptcies, liquidations or consolidations may result in large numbers of aircraft becoming available for lease or purchase at reduced lease values or acquisition prices and reduce the number of potential lessees and 35

44 operators of particular models of aircraft, either of which would result in inflated supply levels and consequently decreased aircraft values for any such models and lease rates in general. Historically, airlines involved in reorganizations have undertaken substantial fare discounting to maintain cash flows and to encourage continued customer loyalty. Such fare discounting has led to lower yields for all airlines, including certain of the Initial Lessees. The bankruptcies and reduced demand generally have led to the grounding of significant numbers of aircraft and negotiated reductions in aircraft lease rentals, with the effect of depressing aircraft market values. In addition, requests for additional labor concessions may result in significant labor disputes which could lead to strikes or slowdowns, or may otherwise adversely affect labor relations, thereby worsening the financial condition of the airline industry and further reducing aircraft values and lease rates. Additional reorganizations or liquidations by airlines under Chapter 11 or Chapter 7 of the U.S. Bankruptcy Code or other bankruptcy or reorganization laws or further rejection or abandonment of aircraft by airlines in a Chapter 11 proceeding under the U.S. Bankruptcy Code or equivalent laws in other countries would be expected to depress aircraft values and aircraft lease rentals. Additional grounded aircraft and lower market values would adversely affect the ALS Group's ability to sell certain of its Aircraft at a favorable price or re-lease other Aircraft at rates comparable to the Initial Leases, which collectively would have an adverse effect on ALS's ability to pay the interest on and principal of the Initial Class A Notes in full or on a timely basis. RISKS RELATING TO THE ALS GROUP AND ITS BUSINESS Special Purpose Entity Risk The sole sources of payment for the Notes and other obligations of ALS will be: in the case of the obligations of ALS due on or prior to the second Payment Date after the Initial Delivery Date, cash proceeds of the Class E-1 Notes issued prior to the Initial Delivery Date, with respect to Required Expenses, certain fees owed to the Liquidity Provider, Class A-1 Commitment Fees, interest on the Class A Notes and Senior Hedge Payments only; in the case of the obligation to pay for the Initial Aircraft, amounts received under the Class A-1 Note Funding Agreement and the issuance of Class E-1 Notes; after the Initial Delivery Date, rent and other receipts from the Lessees under the Leases (including security deposits and maintenance reserves, other than to the extent required to be segregated from other funds pursuant to any lease); proceeds from sales or dispositions, if any, of the Aircraft and other assets of the ALS Group; net receipts, if any, under any Hedge Agreements; amounts on deposit in the Accounts; insurance proceeds for Aircraft that have suffered an event of loss; investment earnings on investment of funds held in the Accounts; net cash proceeds from the sale of Refinancing Notes, if any; after the Initial Delivery Date, amounts drawn under the Liquidity Facility and any future Eligible Credit Facility; any amounts received by a member of the ALS Group under an acquisition agreement, including any non-delivery shortfall; and any other amounts received by a member of the ALS Group. It is unlikely that ALS would be able to obtain any alternative source of funds if the above mentioned sources of funds were insufficient to make payments on the Notes and other obligations of ALS. No Lien or Similar Interest in the Aircraft 36

45 The Notes will not generally be required to be secured by perfected liens on the Aircraft and as a result the Security Trustee is unlikely to have available the broader category of protection, such as priority over competing liens, and enforcement rights upon default, such as seizing the Aircraft, that would be available in most jurisdictions with a perfected lien on the Aircraft. Although the Leases and the ownership interest in the Initial Aircraft-Owning Entities and the Holding Company will be pledged to the Security Trustee for the benefit of the Noteholders, the amount recoverable as to the Aircraft may be less in the absence of a direct perfected lien on the Aircraft. Limited Operating History ALS was incorporated on May 22, 2008, and as of the date of these listing particulars ALS has no material operations or assets. The ALS Group will not own any Aircraft or Leases prior to the Initial Delivery Date, which is not expected to occur prior to April ALS is therefore subject to the risks generally associated with the formation of any new business, including risks associated with a failure to successfully implement business strategies. Due to the limited operating history and historical financial statements of the ALS Group, it is more difficult to evaluate the ALS Group's likely future performance based on past experience than it would be if such information were available for longer historical periods. As a result of the ALS Group's short operating history, it is also difficult for recipients of these listing particulars to assess the quality of the management of ALS. Limitations on Service of Process and Enforcement of Liabilities ALS is a special purpose company incorporated under the laws of Bermuda and tax resident in Ireland. The Directors of ALS and the directors of the Subsidiaries and some experts named in these listing particulars are or will be non-residents of the United States and all or a substantial portion of the assets of such persons and entities are located in jurisdictions outside the United States. As a result, although ALS will submit to the jurisdiction of the U.S. federal and New York State courts in the borough of Manhattan in the City of New York, it may be difficult or impossible to effect service of process within the United States upon ALS or such other persons to recover against them on judgments of U.S. courts, including judgments predicated upon civil liability provisions of the U.S. securities laws. Further, no claim may be brought in Bermuda against ALS or its Directors or such other persons in the first instance for violations of U.S. federal securities laws because these laws have no extraterritorial jurisdiction under Bermuda law and do not have the force of law in Bermuda. A Bermuda court may, however, impose civil liability, including the possibility of monetary damages, on ALS or its Directors or such other persons if the facts alleged in a complaint constitute or give rise to a cause of action under Bermuda Law. There is doubt as to whether courts in Bermuda would enforce judgments of U.S. courts obtained in actions against ALS or such other persons predicated upon the civil liability provisions of the U.S. federal securities laws or would entertain original actions brought in Bermuda against ALS or such other persons predicated solely upon U.S. federal securities laws. Further there is no treaty in effect between Bermuda and the United States providing for the reciprocal enforcement of judgments, and there are grounds upon which Bermuda courts may not enforce judgments of U.S. courts. Some remedies available under the laws of U.S. jurisdictions, including some remedies available under the U.S. federal securities laws, may not be allowed in Bermuda courts as contrary to Bermuda's public policy. Because judgments of U.S. courts are not automatically enforceable in Bermuda, it may be difficult for Holders of Notes to recover against ALS and its Directors or such other persons based upon such judgments. Delegation of Responsibilities ALS is dependent on service providers because neither ALS nor any Subsidiary will have any employees or executive managers of its own. Inadequate performance by or resignation of service providers may materially and adversely affect revenues and costs and thereby the timing of payments on the Initial Class A Notes and ultimate repayment. In the absence of an ownership stake, third party service providers may have no incentive to perform beyond the strict requirements of their contract. ALS will rely on contracts with AerCap Ireland as the Primary Servicer, AerCap Administrative Services Limited as the Primary Administrative Agent, AerCap Cash Manager II Limited as the Insurance Servicer and the Financial Administrative Agent, Deutsche Bank Trust Company Americas as the Reference Agent and the Cash Manager, Calyon as the Servicing Agent and other service providers for all asset servicing and administrative functions. Regarding these arrangements, it should be noted that: 37

46 any of these service providers may fail to perform its contractual obligations adequately or completely; any of these service providers may exercise contract termination rights; ALS may find it difficult to recover damages from any of these service providers for poor performance or failure to perform in light of contractual limitations on liability; ALS may not be able to terminate the contracts it enters into with these service providers because its rights to terminate these contracts are limited; therefore, ALS may be forced to remain party to contracts whose terms may not be the most favorable to ALS; and ALS may not be able to locate satisfactory replacements for these service providers on favorable terms. If any of the service providers fails to perform its contractual obligations to ALS, there could be a material adverse effect on the ALS Group's operations, which could adversely affect ALS's ability to pay the interest on and principal of the Initial Class A Notes in full or on a timely basis. If any of the foregoing service providers and any substitute or its back-up provider were to resign or be terminated pursuant to its contractual arrangements with or on behalf of the ALS Group, ALS might be unable to find a suitable replacement service provider, or to find one in a timely manner, and to engage it on terms acceptable to ALS, and as a result this could also materially and adversely affect ALS's ability to pay the interest on and principal of the Initial Class A Notes in full or on a timely basis. Absence of Separate Legal Representation for ALS AerVenture Leasing acting as the Seller and ALS acting as purchaser under the Purchase Agreement, and AerCap Ireland and its affiliates under the Servicing Agreement and Administrative Agency Agreement are represented by the same Bermuda, Irish and U.S. counsel and it is anticipated that such multiple representation will continue in the future. Accordingly, the absence of separate legal representation for ALS may result in the terms of the Purchase Agreement, or any other agreements or arrangements negotiated between AerCap Ireland, AerVenture Leasing or any of their affiliates (collectively, the "AerCap Group") and ALS being disproportionately favorable to AerVenture Leasing, AerCap Ireland or the AerCap Group. However, in the event a dispute should arise under the Purchase Agreement regarding the sale of the Initial Aircraft, ALS would obtain separate counsel, and anticipates that, in the event of a dispute under any other agreements or arrangements between the ALS Group and the AerCap Group, it would also obtain separate counsel in such situation. ALS's Directors May Have Conflicts of Interest From time to time, the Directors of ALS and the directors of the Subsidiaries may have conflicts of interest that arise as a result of their other relationships in the aviation industry. Two Directors have been appointed to ALS, and two directors of each Subsidiary (other than each trust) will be appointed or nominated, by the Holder or Holders of the majority in aggregate principal amount of the Class E Notes, which initially is AerVenture Leasing, and are not required to be independent of the AerCap Group. Each Holder of Class E Notes has the right to sell its Class E Notes at any time, subject to certain transfer restrictions. See "Management of the ALS Group Directors". Conflicts of Interest of the Primary Servicer AerCap Ireland may from time to time have conflicts of interest that may adversely affect its ability to perform its obligations as the Primary Servicer because it manages aircraft and other assets that are owned by persons other than ALS, including aircraft and other assets owned by the AerCap Group. AerCap Ireland is the servicer for third parties and owes these third parties a standard of care that is similar to the standard of care that it will owe to ALS and the Noteholders. These conflicts will arise when Aircraft are leased to entities that are also the lessees of other aircraft owned by the Primary Servicer or its affiliates or managed by the Primary Servicer for third parties and decisions affecting some Aircraft may be adverse to others. If the Primary Servicer makes a decision adverse to the interests of ALS, the revenues of ALS could suffer. AerCap Ireland also arranges aircraft financings and lease transactions and advises many airlines (including some Initial Lessees and airlines who may potentially be future Lessees). AerCap Ireland may also arrange the sale of its customers' aircraft to third parties. If AerCap Ireland cannot resolve a conflict of interest, the conflict could have an adverse effect on its ability to manage, re-lease or sell 38

47 the Aircraft, and as a result could have an adverse effect on ALS's ability to pay the interest on and principal of the Initial Class A Notes in full or on a timely basis. These conflicts may be particularly acute when a Lessee in financial distress needs to return its Aircraft or restructure its lease obligations. When a Lessee in financial distress seeks to return some of its Aircraft, AerCap Ireland may be required to decide which Aircraft to accept for return and may favor its or another managed entity's interest over ALS's interest. Conflicts may also arise when Aircraft are being marketed for re-lease or sale at a time when other aircraft owned by the AerCap Group or managed by AerCap Ireland are similarly being marketed. In addition, conflicts may arise when restrictions imposed by the Indenture limit AerCap Ireland's ability to enter into agreements that may otherwise be available to, or are subject to competition by, ALS (including to AerCap Ireland, AerCap or its affiliates or other managed entities). These circumstances may be especially sensitive where AerCap or AerCap Ireland is providing financing or other financial incentives for the marketed aircraft or where the Primary Servicer's contractual arrangements have the effect of requiring preferential treatment for other aircraft. The Primary Servicer will not be contractually responsible for: transferring Aircraft, Leases or other assets to any person within the ALS Group; determining the adequacy of the terms of any Lease, including rent payments, maintenance reserves or security deposits; determining the reliability or creditworthiness of any Lessee; complying with the terms of the Notes; or ALS complying with the terms of the Notes. The ALS Group has agreed to indemnify the Primary Servicer and its affiliates on an after-tax basis for broad categories of losses arising out of the performance of services for the Aircraft and Leases unless the losses arise from (i) the Primary Servicer's negligence, willful misconduct, recklessness or fraud in respect of its obligations to comply with the required standard of care or the conflicts standard or otherwise in respect of performing its obligations or (ii) certain representations or warranties by the Primary Servicer having proven to be false or arising out of any breach by the Servicer of the express terms and conditions of the Servicing Agreement. ALS's obligation under this indemnity will constitute a Required Expense, subject to certain limitations. The Servicing Agreement contains provisions to address potential conflicts of interest. Under the Servicing Agreement, AerCap Ireland has agreed to perform the services required thereby using such reasonable care and diligence at all times as is customary in the international aircraft operating leasing industry but in any case with no less reasonable care and diligence than it would use if it were the owner of the Aircraft. If a conflict of interest arises between the Servicer's management, servicing and marketing of a particular Aircraft Asset, on the one hand and another Aircraft Asset, on the other hand, or any Aircraft Asset on the one hand and any other asset that the Primary Servicer then manages, services or markets, on the other hand, the Primary Servicer will be required to notify ALS and the Class A-1 Funding Agent thereof and to perform its services under the Servicing Agreement in good faith without discrimination. If a conflict of interest exists that, in the good-faith opinion of the Primary Servicer, requires an arm's-length negotiation between the Primary Servicer or an affiliate of the Primary Servicer, on the one hand, and any person within the ALS Group, on the other hand, the Primary Servicer will give notice of such determination to the Board, the Servicing Agent and the Class A-1 Funding Agent. The Board, within five Business Days, may instruct the Primary Servicer to withdraw from acting as Primary Servicer for such Aircraft or Lease in connection with the issue giving rise to such conflict. If the Board has not given such instruction within five Business Days of such notice and the Primary Servicer believes it would not be appropriate for the Primary Servicer to act on behalf of such person within the ALS Group in connection with such negotiation, then the Primary Servicer will withdraw from acting as Primary Servicer with respect to such Aircraft Asset or Lease in connection with the negotiation of the issue giving rise to such conflict of interest. ALS will then appoint an independent representative to act on behalf of such person within the ALS Group to which such Aircraft Asset or Lease and conflict of interest relates. There is no assurance that an independent representative could be engaged. 39

48 Conflicts of Interest Relating to AerCap and its Affiliates The AerCap Group owns or manages other aircraft and may face conflicts of interest in managing and marketing Aircraft for re-lease or sale. As of the Initial Closing Date, the AerCap Group managed the aircraft owned directly or indirectly by AerCo Limited ("AerCo"), an aircraft portfolio securitization vehicle with a fleet of 51 aircraft as of May 5, 2008, and the aircraft owned directly or indirectly by Aircraft Lease Securitisation Limited ("ALS 2005"), an aircraft portfolio securitization vehicle with a fleet of 64 aircraft as of May 5, 2008, and other related and unrelated companies. Many of the aircraft in the AerCo and ALS 2005 fleets are of a type similar to the Initial Aircraft. AerCap Ireland is the owner of a minority of the class D notes and the majority of the class E notes issued by AerCo and all of the class E notes issued by ALS 2005, and, as the holder of such class E notes of AerCo and ALS 2005, it has the right to appoint two directors to AerCo's board and the right to appoint one director to ALS 2005's board. In addition, the AerCap Group provides administrative agency and cash management services to other companies, including AerCo, ALS 2005 and Airplanes Group, another aircraft securitization vehicle. Finally, AerCap AerVenture Holdings B.V., which is wholly owned by AerCap B.V., owns 50% of the shares in AerVenture. AerVenture Leasing is a wholly-owned subsidiary of AerVenture. AerVenture Leasing, as Seller under the Purchase Agreement, owns 5% of the shares in ALS and holds the majority of the Class E-1 Notes issued by ALS. See the chart in "Summary Ownership Structure". If the AerCap Group cannot resolve a conflict of interest, the conflict could have an adverse effect on ALS's ability to manage, re-lease or sell the Aircraft and as a result could have an adverse effect on ALS's ability to pay the interest on and principal of the Initial Class A Notes in full or on a timely basis. Limitation of Liability on the Part of the Servicer and the Administrative Agent The Servicing Agreement and the Administrative Agency Agreement limit the liability of the Servicer and of the Administrative Agent, respectively, to ALS and to the Noteholders. Pursuant to the Servicing Agreement, the Servicer will not be liable to ALS or any Noteholder for any liabilities (including strict liability), obligations, losses, damages, penalties, taxes, actions, suits, judgments, costs, fees, expenses (including reasonable legal fees, expenses and related charges and costs of investigation) and disbursements ("Losses", provided that "Losses" will not include management time or overhead expenses) arising: either (i) as a result of any Aircraft Asset being sold, leased or purchased on less favorable terms than might have been achieved at any time, provided that such transactions were entered into on the basis of a commercial decision or recommendation of the Servicer in accordance with the standard of care or (ii) in respect of the Servicer's obligations to apply the Servicer Conflicts Standard in connection with the performance of the Services, except, in the case of either (i) or (ii), when such Losses are caused directly by the negligence, willful misconduct, recklessness or fraud of the Servicer, any of its affiliates, or any officer, director, employee, partner, consultant, advisor or agent of the Servicer or any of its affiliates (each, a "Servicer Representative"); in respect of the ownership, operation, maintenance, acquisition, leasing, financing, refinancing or sale of any of the Aircraft Assets, or any action or failure to act on the part of any person at any time, prior to the effectiveness of the Servicing Agreement; as a result of any action taken, limited or terminated by the Servicer in accordance with the instructions of ALS pursuant to the Servicing Agreement, or as contemplated by the Servicing Agreement, the instruction of the Cash Manager or the Administrative Agent; as a result of a refusal by ALS or any of the Subsidiaries to take any action recommended by the Servicer; or as a result of the gross negligence, fraud or willful misconduct of any person within the ALS Group. Pursuant to the Administrative Agency Agreement, the Administrative Agent will not be liable to ALS or any Noteholder for any Losses unless: such Losses are the result of the Administrative Agent's own negligence, willful misconduct, recklessness or fraud or that of any of its directors, officers, agents or employees, as the case may be; or 40

49 such Losses are directly caused by certain representations or warranties by the Administrative Agent having proven to be false or any breach by the Administrative Agent (or its directors, officers, agents or employees) of the express terms and conditions of the Administrative Agency Agreement. In addition, the Servicing Agreement and the Administrative Agency Agreement require the ALS Group to indemnify, reimburse and hold harmless the Servicer (and each of its affiliates) or the Administrative Agent (and each of its directors, officers, employees and agents), as the case may be, on an after-tax basis for any Loss (other than certain taxes, in the case of the Administrative Agent) arising as a result of the performance of any obligations of the Servicer or of the Administrative Agent, as the case may be, or as a result of any action that ALS asks the Servicer or Administrative Agent to take or refrain from taking, unless: in the case of the Servicer, such Loss has arisen as a result of the willful misconduct, fraud, recklessness or negligence of the Servicer or any Servicer Representative in respect of its obligation to apply the Servicer Standard of Care or the Servicer Conflicts Standard or otherwise in respect of its performance of the Services, certain representations or warranties by the Servicer having proven to be false or any breach by the Servicer of the express terms and conditions of the Servicing Agreement; or in the case of the Administrative Agent, such Loss has arisen as a result of the willful misconduct, negligence, recklessness or fraud of the Administrative Agent or any of its directors, officers, employees or agents, as a result of any representation or warranty by the Administrative Agent having proven false or as a result of a breach by the Administrative Agent of an express term or condition of the Administrative Agency Agreement. The duties and obligations of the Servicer and Administrative Agent will be limited to those expressly set forth in the Servicing Agreement and the Administrative Agency Agreement, respectively. Neither the Servicer nor the Administrative Agent has or will have any fiduciary or other implied duties or obligations to ALS or any other person, including any Noteholder. Therefore, ALS's contractual rights to recover against the Servicer and the Administrative Agent for inadequate performance will be limited. RISKS RELATING TO THE AIRCRAFT Risks Relating to Possible Default under the Airbus Purchase Agreement The Initial Aircraft will each be acquired during the Delivery Period by assignees of AerVenture from Airbus pursuant to the Airbus Purchase Agreement, after which AerVenture Leasing will sell the Initial Aircraft (through the sale of companies or trusts) to ALS pursuant to the Purchase Agreement. As of May 5, 2008, three of the Initial Aircraft have been delivered to AerVenture (or its assignees) under the Airbus Purchase Agreement. Airbus may not deliver one or more Initial Aircraft to AerVenture or its assignees, or may not deliver to AerVenture or its assignees an aircraft that complies with the terms of the Airbus Purchase Agreement in a material way, due to (a) a breach by Airbus or AerVenture under the Airbus Purchase Agreement or (b) as otherwise provided under the Airbus Purchase Agreement. If Airbus does not deliver each of the Initial Aircraft to AerVenture or its assignees, AerVenture Leasing may not be able to sell to ALS a substitute aircraft of similar type, age or value, in a timely manner, or at all. Risks Relating to Possible Future Airbus Instability All of the Initial Aircraft have been or will be manufactured by Airbus. As a result, the ALS Group will depend on Airbus's success in remaining financially stable and its commitment to producing, and providing adequate customer support for, the two aircraft types that will initially be acquired by the ALS Group. If Airbus fails in these respects, the ALS Group may experience: higher rates to acquire parts for the Initial Aircraft, or an inability to acquire the Initial Aircraft or related parts; poor customer support from Airbus for the two aircraft types in the Portfolio, resulting in reduced demand for lease or purchase of the Aircraft in the Portfolio; and deep discounting by Airbus of the two Aircraft types, which may lead to reduced market lease rates or sale prices of the Aircraft in the Portfolio. 41

50 Cyclicality of Supply and Demand for Aircraft The commercial jet aircraft leasing and sales industry has periodically experienced cycles of aircraft oversupply and undersupply. The oversupply of a specific type of aircraft in the market is likely to depress aircraft lease rates and values of that type of aircraft. The supply and demand of aircraft is affected by various cyclical factors that are not under ALS's control, including: passenger air travel and air cargo demand; fuel costs and general economic conditions affecting the Lessees' operations; geopolitical events, including war, prolonged armed conflict and acts of terrorism; outbreaks of communicable, pandemic diseases and natural disasters; governmental regulation, including new Airworthiness Directives and environmental regulations; interest rates; airline restructurings and bankruptcies; cancellation of orders for aircraft; delays in delivery by manufacturers; the availability of credit; manufacturer production levels and technological innovation, including introduction of new generation aircraft types; retirement and obsolescence of aircraft models; manufacturers merging or exiting the industry or ceasing to produce aircraft types; accuracy of estimates relating to future supply and demand made by manufacturers and Lessees; re-introduction into service of aircraft previously in storage; and air traffic control infrastructure constraints. These factors may produce sharp decreases or increases in aircraft values and lease rates, and when Leases for Aircraft expire, industry conditions may result in lease defaults and may prevent the Aircraft from being re-leased or, where applicable, sold on satisfactory terms. This would have an adverse effect on ALS's operations and cash flow and could adversely affect its ability to make payments of interest on and principal of the Initial Class A Notes in full or on a timely basis. Risk of Decline in Aircraft Value and Lease Rates ALS's ability to re-lease aircraft will depend on general market and competitive conditions. Some of ALS's competitors may have greater access to financial resources and, as a result of restrictions on ALS contained in the terms of its indebtedness, may have greater operational flexibility. If ALS is not able to re-lease an aircraft or to do so on favorable terms, it may be required to attempt to sell the aircraft to provide funds for debt service or operating expenses. ALS's ability to re-lease or sell aircraft on favorable terms or without significant off-lease time could be adversely affected by depressed conditions in the airline and aircraft industries, airline bankruptcies, the effects of terrorism and war, the sale of other aircraft by financial institutions or other factors. In addition to factors linked to the aviation industry, other factors that may affect the value of an Aircraft include: 42

51 the particular maintenance and operating history of the airframe and engines; manufacture and type or model of aircraft or engine, including the number of operators using such type or model; whether the Aircraft is subject to a Lease and, if so, whether the Lease terms are favorable to the Lessor; the age of the Aircraft; any tax, customs, regulatory or legal requirements that must be satisfied when an Aircraft is purchased, sold or re-leased; compatibility of Aircraft configurations or specifications with other aircraft operated by operators of that type of aircraft; any renegotiation of a Lease on less favorable terms; decreases in creditworthiness of Lessees; and the availability of spare parts. Any decrease in values of and lease rates for used commercial aircraft which may result from the above factors or other unanticipated factors may have a material adverse effect on ALS's operations and cash flow and may adversely affect its ability to pay the interest on and principal of the Initial Class A Notes in full or on a timely basis. Risks Associated with Appraised Values The Base Values of the Initial Aircraft are based on varying assumptions and methodologies, which differ among the Appraisers, and were prepared without physical inspection of the Aircraft by the Appraisers. The Appraisals are also based on information available as of October 31, 2007 (the date as of which the Appraisers calculated the Base Values). The Appraisals do not reflect any subsequent depreciation of the Aircraft or the impact of industry economic losses, other industry changes, insolvencies and continued economic weakness that have occurred since October 31, Appraisals that are based on other assumptions and methodologies may result in valuations that are materially different from those contained in the Appraisals included as Appendix 7. In addition, the Base Values described in the Appraisals and any Base Values obtained in the future take into account historical and projected future trends and assume an "open, unrestricted stable market environment with a reasonable balance of supply and demand" and with full consideration of the Aircraft's "highest and best use", presuming an arm's-length, cash transaction between willing, able and knowledgeable parties, acting prudently, with an absence of duress and with a reasonable period of time available for marketing and other factors common for like Appraisals. None of the Appraisals attribute any value to the related Lease, the security deposits or the related collateral, if any, related to the particular Aircraft. At any point in the aircraft leasing cycle, market conditions will vary from the perceived trends and there will be imbalances of aircraft supply and demand which may be particularly pronounced for specific aircraft types. At a cyclical low, the market value of most aircraft types is likely to be less than, and in some cases significantly less than, the Base Values. Some of the Initial Aircraft may have current market values below the Base Values of such Aircraft as a result of such aircraft supply and demand imbalances, the condition of the aircraft, market and economic conditions and other factors. Given the cyclical nature of the airline and aircraft industries and the uncertain political and economic outlook, these adverse factors may prevail for a significant period of time. Accordingly, the Base Values should not be relied upon as a measure of current realizable value. If remedies are exercised with respect to an Aircraft, the realizable value will depend on various factors including the then current market and economic conditions, the supply of similar aircraft, the availability of buyers, the condition of the Aircraft and whether the Aircraft is sold separately or as part of a block. The determination of each Advance related to each Initial Aircraft will be calculated in part based on the Initial Appraised Value of such Initial Aircraft. The appraisals used to calculate such Initial Appraised Value will be based on appraisals of the Initial Aircraft that are dated as of a date no later than the applicable Delivery Date and no earlier than six months prior to the applicable Delivery Date (or, in the case of the Initial Delivery Date, no earlier 43

52 than 45 days prior to the Initial Delivery Date), and subject to certain other conditions as further described in the definition of "Initial Appraised Value" in the Glossary. Such appraisals will take into account the age of each Initial Aircraft. Technological Risks The availability for sale or lease of new, technologically advanced aircraft and the imposition of stringent noise, emissions or safety regulations may make the Aircraft less desirable in the marketplace and therefore may adversely affect ALS's ability to lease or sell the Aircraft. The technological risks are particularly significant for ALS because it will repay principal and interest on the Notes over a relatively long period of time. Consequently, ALS will have to lease or sell many of the Aircraft close to the end of their useful economic lives. ALS expects that its ability to manage these technological risks by modifying or selling Aircraft will be limited, particularly because its ability to sell any Aircraft will depend on its ability to satisfy the criteria set forth under "Description of Notes Indenture Covenants". Aircraft Type Concentrations The Initial Aircraft include only two aircraft types. A constitute 85.47% of the Initial Aircraft by Recent Appraised Value and A constitute 14.53% of the Initial Aircraft by Recent Appraised Value. See "The Initial Aircraft and Leases Appraisers' Reports". Should any of these aircraft types become obsolete or should Airbus encounter technical difficulties in respect of these aircraft types, or encounter financial or other difficulties, a diminution in value of such Aircraft, an inability to lease the Aircraft at market lease rates or a potential grounding of such aircraft could occur. The composition of the Portfolio may therefore adversely affect the expected cash flows. In addition, the abandonment or rejection of the lease of A or A aircraft by one or more large carriers in reorganization proceedings under Chapter 11 of the U.S. Bankruptcy Code or other applicable bankruptcy or similar proceedings may, for various reasons including those discussed above, also diminish the lease rates and the value of such Aircraft. As manufacturers introduce technological innovations and new types of aircraft, including potential replacements for the Airbus A320 family of aircraft, the aircraft types in the Portfolio may become less desirable to potential lessees. This could adversely affect the ALS Group's ability to re-lease or sell the Aircraft on favorable terms or at all, or the terms of any Initial Lease that has not yet been entered into. Any of the risks described above would be more acute if multiple Aircraft were to be re-leased at the same time, or sold or otherwise disposed of at the same time such as in the event of the exercise of remedies under the Indenture if an Indenture Event of Default has occurred and is continuing. Engine Type Concentrations The engines expected to be installed on the Initial Aircraft are each manufactured by either International Aero Engines or CFM International, and include a small number of the models and sub-models of engines manufactured by these manufacturers, each as listed in "The Initial Aircraft and Leases Appraisers' Reports". If either International Aero Engines or CFM International, or the specific engine models or sub-models expected to be installed on the Initial Aircraft, were to encounter the types of difficulties described above in " Aircraft Type Concentrations" with respect to the aircraft manufacturer and types, this could adversely affect the ALS Group's ability to re-lease or sell the Aircraft on favorable terms or at all, or the terms of any Initial Lease that has not yet been entered into. If ALS encounters such difficulties arising from a particular engine model or sub-model, ALS may in some cases be able to modify certain of its Aircraft to allow for the installation of a more desirable engine model or sub-model. However, there can be no assurance that such modification would be possible and any such modification would likely require a significant expenditure for each Aircraft required to be so modified. Any expenditures for such modifications would generally be considered Required Expenses paid prior to interest on the Initial Class A Notes. Risks Relating to Initial Aircraft ALS expects to indirectly acquire the Initial Aircraft within the Delivery Period. Each of these Initial Aircraft have been or will be delivered by Airbus to an owner trust that will be beneficially owned by AerVenture Leasing or its 44

53 subsidiary or a limited liability company that will be owned by AerVenture Leasing or its subsidiary. Under the Purchase Agreement, AerVenture Leasing is obligated to sell, directly or indirectly, the Initial Aircraft-Owning Entities owning the Initial Aircraft to ALS. ALS's ability to acquire the Initial Aircraft-Owning Entities owning the Initial Aircraft is subject to the Seller's performance under the Purchase Agreement and to the satisfaction of certain conditions set out in the Purchase Agreement within the Delivery Period, including the condition that the Aircraft owned by an Initial Aircraft-Owning Entity being delivered to ALS has not been damaged or suffered an event of loss. Failure to acquire any of the Initial Aircraft-Owning Entities owning the Initial Aircraft, or failure to substitute another aircraft with an equal or higher Initial Appraised Value for any aircraft expected at the Initial Closing Date to be delivered as an Initial Aircraft in accordance with the terms of the Purchase Agreement, will result in a lower aggregate outstanding principal amount of Initial Class A Notes. In addition, ALS's failure to acquire the Initial Aircraft-Owning Entities owning any Initial Aircraft, or the delivery to ALS of aircraft or leases in substitution for those expected to be acquired on the Initial Closing Date, could cause a significant variance in the original expected life of the Initial Class A Notes and may result in material changes to the concentrations of aircraft types and of lessees for the remaining portion of the Portfolio. Such repayment of principal could result in a shortening of the weighted average life of the Initial Class A Notes that could adversely affect an investor's anticipated yield to maturity on such investor's investment in the Initial Class A Notes. Possible Variation in Portfolio As of the date of these listing particulars, ALS expects to indirectly acquire the 30 Initial Aircraft between the Initial Delivery Date and the end of the Delivery Period. There can be no assurance that ALS will acquire directly or indirectly the Initial Aircraft-Owning Entities owning the 30 Initial Aircraft before the end of the Delivery Period. If the Seller fails to satisfy the conditions to sale of any Initial Aircraft-Owning Entity owning an Initial Aircraft within the specified period, ALS may in its sole discretion agree to accept a substitute aircraft proposed by the Seller subject to certain conditions (each, a "Substitute Aircraft"). The Substitute Aircraft must be one of the New Airbus Aircraft and conform to other specified criteria described elsewhere in these listing particulars. ALS may acquire Additional Aircraft and related Additional Leases. After the Initial Delivery Date, the cash flows derived from Additional Aircraft and Additional Leases are expected to be, together with the cash flows derived from the Initial Aircraft and the Initial Leases as well as any Future Leases, the principal source of payment of interest, principal and premium, if any, on the Notes including any related Additional Notes, and the principal source of payment of the Class A-1 Commitment Fees. Depending on the extent to which ALS exercises its ability to acquire Additional Aircraft under the Indenture, the cash flows derived from Additional Aircraft may become a more important source of payment on the Initial Class A Notes than the cash flows derived from the Initial Aircraft. However, because the Additional Aircraft, if any, have not been identified as of the date of these listing particulars, the statements contained under " Risks Relating to the Aircraft", " Risks Relating to the Leases" and " Risks Relating to the Lessees" are necessarily based primarily on risks associated with the Initial Aircraft, and the related Leases and the Lessees thereunder. Aircraft Liens In the normal course of business, liens that secure the payment of airport fees and taxes, customs duties, air navigation charges (including charges imposed by Eurocontrol), landing charges, crew wages, repairer's charges, salvage or other liens ("Aircraft Liens") are likely, depending on the jurisdiction in question, to attach to the Aircraft. The Aircraft Liens may secure substantial sums that may, in certain jurisdictions or for limited types of Aircraft Liens (particularly fleet liens), exceed the value of the particular Aircraft to which the Aircraft Liens have attached. Although the financial obligations relating to these Aircraft Liens are the responsibilities of the Lessees, if they fail to fulfill their obligations, Aircraft Liens may attach. In some jurisdictions, Aircraft Liens may give the holder thereof the right to detain or, in limited cases, sell or cause the forfeiture of the Aircraft. Until they are discharged, the Aircraft Liens described above could impair ALS's ability to repossess, re-lease or resell the Aircraft. ALS cannot assure potential investors that the Lessees will comply with their obligations under the Leases to discharge Aircraft Liens arising during the terms of the Leases. If they do not, ALS may, in some cases, find it necessary to pay the claims secured by such Aircraft Liens in order to repossess the Aircraft. Such payments would be a Required Expense of ALS and would be paid by ALS prior to payments on the Notes. See "Description of Notes Payment of Principal and Interest Priority of Payments". 45

54 Registration of Aircraft Pursuant to the respective Leases, all of the Aircraft are or will be required to be duly registered at all times after the commencement of such Lease with the appropriate governmental civil aviation authority. Generally, in jurisdictions outside the United States, failure to maintain the registration of any Aircraft that is on lease would be a default under the applicable Lease, entitling ALS to exercise its rights and remedies thereunder. If an Aircraft were to be operated without a valid registration, the Lessee operator or, in some cases, the owner or Lessor might be subject to penalties, which could constitute or result in an Aircraft Lien being placed on such Aircraft. Lack of registration could have other adverse effects, including inability to operate the Aircraft and loss of insurance, which in turn could have a material adverse effect on ALS's ability to pay interest on and principal of the Initial Class A Notes in full or on a timely basis. ALS cannot assure potential investors all Leases will contain such requirements or that Lessees will comply with those requirements. Effects of Various Environmental Regulations Governmental regulations regarding aircraft and engine noise and emissions levels apply based on where the relevant aircraft is registered and operated. For example, jurisdictions throughout the world have adopted noise regulations which require all aircraft to comply with noise level standards. In addition to the current requirements, the United States and the International Civil Aviation Organization ("ICAO") have adopted a new, more stringent set of standards for noise levels which applies to engines manufactured or certified on or after January 1, Currently, U.S. regulations would not require any phase-out of aircraft that qualify with the older standards applicable to engines manufactured or certified prior to January 1, 2006, but the European Union ("EU") has established a framework for the imposition of operating limitations on aircraft that do not comply with the new standards and the incorporation of aviation-related emissions into the EU's Emission Trading Scheme beginning in In addition to more stringent noise restrictions, the United States and other jurisdictions are beginning to impose more stringent limits on nitrogen oxide, carbon monoxide and carbon dioxide emissions from engines, consistent with current ICAO standards. Concerns over global warming could result in more stringent limitations in the future on the operation of aircraft powered by engines that are non-compliant with standards that were announced or incorporated after the manufacture of such engines. Although all of the engines associated with the Initial Aircraft were or will be delivered new upon the delivery of such Aircraft from Airbus, such limitations may impact ALS as the engines owned by the ALS Group age. These regulations could limit the economic life of the Aircraft and engines, reduce their value, limit the ALS Group's ability to lease or sell the non-compliant Aircraft and engines or, if engine modifications are permitted, require the ALS Group to make significant additional investments in the Aircraft and engines to make them compliant. European countries generally have relatively strict environmental regulations that can restrict operational flexibility and decrease aircraft productivity. The European Parliament has confirmed that aviation is to be included in the EU's Emissions Trading Scheme starting from This inclusion could possibly distort the European air transport market leading to higher ticket prices and ultimately a reduction in the number of airline passengers. As an answer to these concerns, European airlines have established the Committee for Environmentally Friendly Aviation to promote the positive environmental performance of airlines. The United Kingdom has doubled its air passenger duties, effective February 1, 2007, in recognition of the environmental costs of air travel. Similar measures may be implemented in other jurisdictions as a result of environmental concerns. Compliance with current or future regulations, taxes or duties imposed to deal with environmental concerns could cause the Lessees to incur higher costs and to generate lower net revenues, resulting in an adverse impact on their financial positions. Consequently, such compliance may affect the Lessees' ability to make rental and other lease payments and reduce the value received for the Aircraft upon any disposition, which could have an adverse effect on ALS's ability to pay the interest on and principal of the Initial Class A Notes in full or on a timely basis. Other Governmental Regulations In addition to the general aviation authority regulations and requirements regarding maintenance of the Aircraft, Aircraft may be subject to further maintenance or modification requirements imposed by airworthiness directives ("Airworthiness Directives") issued by aviation authorities. Airworthiness Directives and similar requirements typically set forth particular special maintenance actions or modifications to certain aircraft types or models that the owners or operators of aircraft must implement. 46

55 Each Lessee generally is responsible for complying with all or a substantial portion of Airworthiness Directives applicable to its Aircraft and required to maintain the Aircraft's airworthiness. If a Lessee fails to satisfy its obligations, or if a member of the ALS Group has obligations as to contributions towards the cost of compliance with Airworthiness Directives (or similar requirements) under a Lease or if the Aircraft is not subject to a Lease, the ALS Group may be forced to bear (or, to the extent required under the relevant Lease, to share) the cost of any Airworthiness Directives compliance. These payments would constitute a Required Expense and ALS will make these payments prior to making payments on the Notes and the Class A-1 Commitment Fees. The costs of compliance with unexpected Airworthiness Directives and other maintenance or modification requirements of aviation authorities could have a material adverse impact on the operations of a Lessee, including causing such Lessee to incur higher costs and to generate lower net revenues in connection with its efforts to comply with such unexpected Airworthiness Directive or other requirements, resulting in an adverse impact on the Lessee's financial position. For example, in the spring of 2008, the Federal Aviation Authority, the aviation authority of the United States, directed inspectors to confirm that U.S. airlines had fully complied with previous safety orders. In response, several U.S. airlines grounded aircraft over several days, canceling in aggregate thousands of flights, in an effort to determine or remedy their compliance status. The costs of compliance and cooperation with unexpected Airworthiness Directives, other requirements or compliance audits may affect the Lessees' ability to make rental and other lease payments, which could have an adverse effect on ALS's ability to pay the interest on and principal of the Initial Class A Notes in full or on a timely basis. Aircraft Age All of the Initial Aircraft have been or are expected to be acquired by the ALS Group promptly after delivery to an Initial Aircraft-Owning Entity from Airbus (other than certain of the Initial Aircraft which were delivered from Airbus beginning in January 2008 but will not be delivered to ALS until the Initial Delivery Date). As of May 5, 2008, the average age calculated from the date of delivery from Airbus weighted by the Recent Appraised Value of the Initial Aircraft was zero years. However, in general, the costs of operating an aircraft, including maintenance expenditures, will increase with the age of the aircraft. Also, older aircraft typically are less fuel-efficient than newer aircraft. Variable expenses like fuel, crew size or aging aircraft corrosion control programs and related Airworthiness Directives could make the operation of the Aircraft less economically feasible when the Aircraft age, and may in the future result in increased Lessee defaults and also cause ALS to incur some of these increased maintenance expenses and regulatory costs. When these expenses arise, ALS will pay them before making payments on the Notes. Any of these expenses or costs will reduce the amounts available to pay the Initial Class A Notes. The governments of some countries have considered regulations restricting or prohibiting the import of aircraft above a certain age. If passed, such regulations may in the future impact the ability of the ALS Group to re-lease some of the Aircraft on favorable lease terms or at all. RISKS RELATING TO THE LEASES Certain Initial Aircraft Not Yet Subject to Initial Leases Although it is a condition precedent that each Initial Aircraft be subject to a lease agreement on the relevant Delivery Date of such Aircraft, as of May 5, 2008, 22 of the Initial Aircraft, representing 72.85% of the Initial Aircraft by Recent Appraised Value, were subject to Existing Initial Leases and eight of the Initial Aircraft, representing approximately 27.15% of the Initial Aircraft by Recent Appraised Value, were subject to Initial Lease LOIs. Whether a letter of intent leads to a lease agreement in each case is subject to multiple conditions which may include obtaining the approval of the board of the relevant potential lessee, payment by such potential lessee of a commitment fee, and agreement on various lease terms. Thus, there can no be no assurance that lease agreements will be entered into pursuant to each of the Initial Lease LOIs, or that the terms of the lease agreements will be the same as the terms of the Initial Lease LOIs summarized in these listing particulars. Re-leasing ALS will need to re-lease Aircraft as the Initial Leases expire in order to continue to generate sufficient revenues to pay the Notes in full. The ability to re-lease Aircraft will depend on general market and competitive conditions. 47

56 Some of the competitors of ALS, including the AerCap Group, may have greater access to financial resources and, as a result of restrictions contained in the Indenture, may have greater operational flexibility. If ALS is not able to re-lease an Aircraft, it may need to attempt to sell the Aircraft to provide funds for Note payments. Further, ALS's ability to re-lease or sell Aircraft on favorable terms or without significant off-lease time is likely to be adversely impacted by the continuing high cost of fuel, the ongoing instability in Iraq, any deterioration in the financial condition of the airline industry, any major airline bankruptcies, any sale of large numbers of repossessed aircraft by financial institutions and continued political and economic uncertainties and would be further adversely impacted by any future terrorist attacks or armed hostilities in the Middle East, North Korea, Europe or elsewhere, or any future outbreaks of epidemic or pandemic diseases or occurrences of natural disasters. Two of the Existing Initial Leases and leases contemplated by the Initial Lease LOIs are scheduled to expire during or before the year 2014, and all of the Existing Initial Leases will expire during or before the year Funding of Maintenance; Maintenance Reserves The standards of maintenance observed by the various Lessees and the condition of the Aircraft at the time of sale or lease may affect the future values and lease rates for the Aircraft. Under the Existing Leasing Contracts, based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOIs, the relevant Lessee is or will be primarily responsible for maintaining the Aircraft and complying with all governmental requirements applicable to the Lessee and the Aircraft, including, without limitation, operational, maintenance and registration requirements and Airworthiness Directives (although in certain cases the lessor under the Lease will agree to share the cost of complying with certain Airworthiness Directives). Failure of a Lessee to perform required maintenance with respect to an Aircraft during the term of a Lease could result in a diminution in value of such Aircraft, an inability to lease the Aircraft at market lease rates or at all or a potential grounding of such Aircraft, and likely will require ALS to incur maintenance and modification costs upon the expiration or earlier termination of the applicable Lease, which could be substantial, to restore such Aircraft to an acceptable maintenance condition prior to sale or re-leasing. The incurrence of these costs would have an adverse effect on ALS's ability to make payments on the Initial Class A Notes because its maintenance obligations are a required expense that ranks senior to all payments on the Initial Class A Notes. Pursuant to 25 of the Existing Leasing Contracts, based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOIs in respect of approximately 82.72% of the Initial Aircraft by Recent Appraised Value, the related Lessee is or will be required to make monthly payments to the ALS Group in order to provide security for the payment of maintenance tied to the usage of the Aircraft. In these Initial Leases there is or will be an associated liability of the ALS Group to reimburse the Lessee for such scheduled maintenance performed on the related Aircraft, based on formulas tied to the extent of any of the Lessee's maintenance reserve payments. There can be no assurance that the ALS Group's operational cash flow and available liquidity reserves will be sufficient to fund maintenance requirements not paid for by the Lessees or to reimburse the Lessee for maintenance performed, particularly as the Aircraft age. Actual rental and maintenance payments by Lessees and other cash that ALS receives may be significantly less than projected as a result of numerous factors, including defaults by Lessees and ALS's inability, if any, to obtain satisfactory maintenance terms in Leases. Five of the Existing Leasing Contracts, based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOIs, in respect of approximately 17.28% of the Recent Appraised Value of the Initial Aircraft, do not provide for any maintenance reserve payments or letters of credit to be made or pledged, as the case may be, by Lessees as security for their maintenance obligations, and there can be no assurance that Future Leases, or Initial Leases that have not yet been entered into, will contain such requirements. In some cases, a Lessee may be entitled to substitute a letter of credit for maintenance reserve payments or vice versa. In respect of five of the Existing Initial Leases, representing approximately 17.18% of the Initial Aircraft by Recent Appraised Value, the related Lessee has provided or will provide a letter of credit to secure scheduled maintenance obligations at the end of the lease period. Maintenance reserves may not cover the entire expense of the scheduled maintenance they are intended to fund. In addition, maintenance reserves typically cover only certain scheduled maintenance requirements and do not cover all required maintenance and all scheduled maintenance and specifically do not cover unscheduled maintenance, repairs or modifications in respect of an aircraft or its engines. Furthermore, there can be no assurance that Lessees will meet their obligations to pay maintenance reserves or perform required scheduled maintenance, particularly since Lessees that are required to pay maintenance reserves usually are in relatively weak financial condition. 48

57 Any significant variations in such factors may materially adversely affect ALS's ability to make payments of interest on and principal of the Initial Class A Notes because ALS's maintenance obligations are a Required Expense that ranks senior to all payments on the Notes. Potential Additional Operating Costs As in the case of maintenance costs, ALS may incur other operational costs upon a Lessee default or where the terms of the Lease require ALS to pay a portion of those costs. Those costs include: the costs of casualty, liability and political risk insurance and the liability costs or losses when insurance coverage has not been or cannot be obtained as required or is insufficient in amount or scope; the costs of licensing, exporting or importing an Aircraft, storing or operating an Aircraft, airport taxes, customs duties, air navigation charges, landing fees and similar governmental or quasi-governmental impositions, which can be substantial; and penalties and costs associated with the failure of Lessees to keep the Aircraft registered under all appropriate local requirements or obtain required governmental licenses, consents and approvals. The failure to pay some of these costs can result in Aircraft Liens on the Aircraft and the failure to register the Aircraft can result in a loss of insurance. These matters could result in the grounding of the Aircraft and prevent the re-lease, sale or other use of the Aircraft until the problem is cured. Liabilities, Loss and Insurance While it is not anticipated that any member of the ALS Group will directly control the operation of the Initial Aircraft, by virtue of holding title to the Initial Aircraft, in certain jurisdictions aircraft lessors are held strictly liable for losses resulting from the operation of aircraft, and in other jurisdictions aircraft lessors may be deemed liable on other theories of liability. The Lessees are required under the Existing Initial Leases to indemnify the related lessor for, and insure against, liabilities arising out of use and operation of the Initial Aircraft, including third party claims for death or injury to persons and damage to property for which ALS may be deemed liable. In the absence of government indemnities, the Lessees are also required to maintain public liability, property damage and hull all risks insurance on the Aircraft at agreed upon levels. They are not, however, required to maintain political risk insurance. There may be circumstances under which the industry environment requires ALS to maintain "top-up" and/or political risk coverage at its expense, which would add to its operating costs. It is expected that similar terms will be included in Future Leases, and in the Initial Leases that have not yet been entered into. The hull insurance is typically subject to standard market hull deductibles based on aircraft type that generally range from $250,000 to $1,000,000 per aircraft. These deductibles may be higher in some Leases, and the Lessees usually have fleet-wide deductibles for liability insurance per occurrence or fleet-wide limits on war risk insurance. Any hull insurance proceeds received in respect of such claims will be paid first to the applicable Lessor in the event of loss of the Aircraft and then deposited into the Collections Account or in the absence of an event of loss of the Aircraft to the Lessee, to effect repairs or, in the case of proceeds of liability insurance, for indemnification of third party liabilities. Subject to the terms of the applicable Lease, the balance of any hull insurance proceeds, after deduction for all amounts due and payable by the Lessee to the applicable Lessor under such Lease, must be paid to the Lessee. Following the terrorist attacks of September 11, 2001, aviation insurers significantly reduced the amount of insurance coverage available to airlines for liability to persons other than airline employees or passengers for claims resulting from acts of terrorism, war or similar events. At the same time, they significantly increased the premiums for such third party war risk and terrorism liability insurance and coverage in general. As a result, the coverage and scope of such third party war risk and terrorism liability insurance that is currently commercially available may be below the coverage and scope required under the Initial Leases and required by the market in general. There can be no assurance that Lessees' insurance, including any available governmental supplemental coverage, will be sufficient to cover all types of claims that may be asserted against ALS. Any inadequate insurance coverage or default by Lessees in fulfilling their indemnification or insurance obligations or the lack of political risk, hull war 49

58 or third party war risk and terrorism liability insurance will reduce the proceeds that would be received upon an event of loss under the respective Leases or upon a claim under the relevant liability insurance and may leave ALS exposed for liability claims not covered by insurance. If liability claims were made against ALS and not covered by insurance, it could materially adversely affect ALS's ability to make payments of interest on and principal of the Initial Class A Notes because any payment made by ALS in respect of such claims would be a Required Expense that ranks senior to all payments on the Notes. Requirement for Certain Licenses and Approvals A number of Leases require specific licenses, consents or approvals for different aspects of the Leases. These include consents from governmental or regulatory authorities for certain payments under the Leases and for the import, re-export or deregistration of the Aircraft. Subsequent changes in applicable law or administrative practice may increase such requirements. In addition, a governmental consent, once given, might be withdrawn. Furthermore, consents needed in connection with future re-leasing or sale of an Aircraft may not be forthcoming. Any of these events could adversely affect ALS's ability to re-lease or sell Aircraft. Competing Aircraft Available for Lease The aircraft leasing industry may be divided into two leasing segments: (1) leasing of new aircraft acquired directly from manufacturers and (2) leasing or re-leasing of used aircraft. ALS will compete in both segments and ALS's competition is primarily comprised of four to eight major aircraft leasing companies including AerCap. In addition, in both segments ALS may encounter competition from other entities that selectively compete with ALS. Such entities include: airlines; aircraft manufacturers; financial institutions (including those seeking to dispose of re-possessed aircraft at distressed prices); aircraft brokers; special purpose vehicles formed for the purpose of acquiring, leasing and selling aircraft; public and private partnerships, investors and funds; and other aircraft leasing companies not currently considered amongst the four to eight major aircraft leasing companies. Some of ALS's direct competitors, including the AerCap Group, and many of its indirect competitors have significantly greater financial and other resources than ALS, and may have higher risk tolerances or different risk assessments which could allow them to consider a wider variety of investments. In addition, certain competing aircraft lessors may have a lower overall cost of capital and may be able to offer lower lease rates than ALS, or provide financial services or other inducements to potential lessees that ALS cannot provide. Further, given current market conditions and the poor financial condition of many airlines, many airlines have reduced their capacity by eliminating aircraft from their fleets. This has resulted in an increase in available aircraft, a decrease in the lease rates for these aircraft and a decrease in market values of aircraft. There can be no assurance that ALS will be able to compete effectively against present and future competitors or that the competitive pressures will not have an adverse effect on ALS's business or financial condition. Emerging Markets Risk Emerging markets often comprise countries that have under-developed legal systems and economies that are vulnerable to economic and political problems, such as significant fluctuations in gross domestic product, interest and currency exchange rates, civil disturbances, government instability, nationalization and expropriation of private assets and the imposition of taxes or other charges by governments. The resulting instability may adversely affect the ability of Lessees that operate in these markets to meet their Lease obligations and these Lessees may be more 50

59 likely to default than Lessees that operate in developed economies. For a description of regions, see "Description of Notes Operating Covenants Concentration Limits". As of May 5, 2008, based on the Existing Leasing Contracts, nine Initial Lessees of 17 Initial Aircraft representing approximately 55.58% of the Initial Aircraft by Recent Appraised Value operate in emerging markets. These numbers and percentages may increase or decrease depending upon the Initial Lessees of the Initial Leases that have not yet been entered into. See "The Initial Aircraft and Leases". RISKS RELATING TO THE LESSEES Lessee Defaults and Other Credit Problems The ability of each Lessee to perform its obligations under its Lease will depend primarily on the Lessee's financial condition which may be affected by factors beyond ALS's control, including: competition; fare levels; air cargo rates; passenger and air cargo demand; geopolitical events, including war, acts of terrorism and outbreaks of communicable diseases; natural disasters; operating costs (including the price and availability of jet fuel and labor costs); labor difficulties; air travel safety concerns; interest rates; economic conditions and currency fluctuations in the countries in which the Lessee operates; and governmental regulation of or affecting the air transportation business. As a general matter, airlines with weak capital structures are more likely than well-capitalized airlines to seek operating leases and, at any point in time, a varying number of Lessees may experience payment difficulties. As a result of their weak financial condition, a large portion of Lessees over time may consistently be significantly in arrears in their rental payments or maintenance payments. As of May 5, 2008, no rental payments or maintenance payments due under the three Existing Initial Leases which had commenced as of such date were past due for a period greater than 30 days. There can be no assurance that Lessees will be able to perform their financial and other obligations under the Leases in the future. A Lessee may experience periodic difficulties that are not financial in nature, which could impair its performance of its maintenance obligations under its Leases. These difficulties may include the failure to perform the required Aircraft maintenance program satisfactorily and labor difficulties. ALS will not be in possession of any Aircraft while the Aircraft are on lease to the Lessees. Consequently, ALS's ability to determine the condition of the Aircraft or whether the Lessees are properly maintaining the Aircraft will be limited to periodic inspections performed on behalf of ALS by third party service providers or aircraft inspectors. A continuous failure by a Lessee to meet its maintenance obligations under the relevant Lease: could result in a grounding of the Aircraft; 51

60 in the event of a re-lease of the Aircraft, would likely cause ALS to incur integration and other costs, which may be substantial, in restoring the Aircraft to an acceptable maintenance condition and to induce a subsequent lessee to lease the Aircraft; could result in ALS not being able to re-lease the Aircraft promptly or re-leasing for a lower rental rate or shorter term under any new Lease which ALS might enter into following repossession of the Aircraft; and would be likely to adversely affect the value of the Aircraft. There can be no assurance that, in the event a Lessee defaults under a Lease, any security deposit paid or any letter of credit provided by the Lessee will be sufficient to cover the Lessee's outstanding or unpaid Lease obligations and maintenance requirements. Lessee Financial Condition Various of the existing Lessees are in a weak financial position and suffer liquidity problems, and this is likely to be the case in the future and with future Lessees as well. In a portfolio the size of ALS's Portfolio, it should be expected that some Lessees from time to time, and possibly in the near future, will be slow in paying or will fail to make in full their payments under the Leases. Also, as a result of a variety of factors that may be specific to a Lessee or industry-wide, as discussed elsewhere in this section, the financial position of certain Lessees could be weakened, which in turn could cause an increase in delayed, missed or reduced Rental Payments. Any future terrorist attacks, continued or future armed hostilities in the Middle East, North Korea, Europe or elsewhere, another outbreak of a pandemic disease or the occurrence of other natural disasters could greatly exacerbate the weakened financial condition of various of the Lessees and further increase the risk of delayed, missed or reduced Rental Payments. A delayed or missed rental payment from a Lessee decreases the revenues of ALS and may adversely affect the timely or full repayment of the Notes. Some level of delinquency has been assumed for purposes of calculating the assumed net revenues for the Notes. Default levels may increase over time, particularly if current economic conditions deteriorate. Restructuring of Leases Under certain circumstances, including when a Lessee is late in making payments or fails to make payments in full under its Lease, ALS may be required to restructure such Lease. Restructuring may involve anything from a simple rescheduling of payments to the termination of a Lease without receiving all or any of the past due amounts. Lessees can be slow in making lease payments from time to time, and ALS cannot assure that Lessees will make timely payments under the Lease provisions. There are currently no restructurings of any Initial Leases underway. If any requests for restructurings are made and granted in the future, reduced or deferred Rental Payments could be payable over all or some part of the remaining term of the Lease, although no assurance can be given as to the terms of any revised payment schedules or that such payments will be made. ALS may be unable to agree upon acceptable terms for some or all of the requested restructurings and as a result may exercise its remedies under those Leases. If ALS, in the exercise of its remedies, repossesses the Aircraft, there can be no assurance that it will be able to release the Aircraft promptly or at favorable rates. The terms and conditions of possible Lease restructurings may result in significant reductions of Rental Payments. These reductions may adversely impair ALS's ability to make payments on the Initial Class A Notes in full or on a timely basis. Lease Defaults, Lease Terminations and Repossessions As of May 5, 2008, none of the Lessees under the three Initial Leases that had commenced prior to such date owed maintenance reserve payments or rental payments under their respective Leases that were past due for 30 days or more. As of May 5, 2008, none of the Lessees under the 22 Existing Initial Leases owed security deposit payments under their respective Leases that were past due for 30 days or more. Although the ALS Group will have the right to repossess the Aircraft and to exercise remedies upon a Lessee default, it may incur significant costs in the process in excess of those costs normally incurred in connection with an Aircraft returned at the end of a Lease. Those costs 52

61 include legal and other expenses of court or other governmental proceedings (including the cost of posting surety bonds or letters of credit necessary to effect repossession of the Aircraft), particularly if the Lessee is contesting the proceedings or is the subject of insolvency proceedings, to obtain possession and/or re-registration of the Aircraft and flight and export permissions. Delays resulting from any of these proceedings would also increase the period of time during which the relevant Aircraft are not generating revenue under the Lease. In addition, ALS may incur substantial maintenance or repair costs that a defaulting Lessee has failed to pay and may need to pay any debt secured by liens, taxes and governmental charges on the Aircraft to obtain clear possession and to remarket the Aircraft effectively. ALS may also incur costs in connection with the physical repossession of the Aircraft and the direct costs of storing the Aircraft and ultimately returning the Aircraft to an appropriate jurisdiction. These costs are in addition to the acceleration of costs of transitioning the Aircraft to a new lessee. Any of these costs or delays could adversely affect ALS's ability to make payments of interest on and principal of the Initial Class A Notes in full or on a timely basis. ALS may also suffer other adverse consequences as a result of a Lessee default and the related termination of the Lease and the repossession of the related Aircraft. The rights of ALS upon a Lessee default also may be subject to the limitations of applicable law, including the need to obtain a court order for repossession of the Aircraft and/or consents for deregistration or re-export of the Aircraft. When a defaulting Lessee is in bankruptcy, protective administration, insolvency or similar proceedings, additional limitations may apply. Certain jurisdictions will give rights to the trustee in bankruptcy or a similar officer to assume or reject the Lease or to assign it to a third party, or will entitle the Lessee or another third party to retain possession of the Aircraft (without paying Lease rentals or performing all or some of the obligations under the relevant Lease). In addition, certain of its Lessees are owned in whole, or in part, by government-related entities, which could complicate its efforts to repossess its Aircraft in that government's jurisdiction. Accordingly, ALS may be delayed in, or prevented from, enforcing certain of ALS's rights under a Lease and in re-leasing the affected Aircraft. If ALS repossesses an Aircraft, it will not necessarily be able to export or deregister and profitably redeploy the Aircraft. For instance, where a Lessee or other operator flies only domestic routes in the jurisdiction in which the Aircraft is registered, repossession may be more difficult, especially if the jurisdiction permits the Lessee or the other operator to resist deregistration. Significant costs may also be incurred in retrieving or recreating Aircraft records required for registration of the Aircraft and obtaining a certificate of airworthiness for the Aircraft. If ALS incurs significant costs repossessing its Aircraft, is delayed in repossessing its Aircraft or is unable to obtain possession of its Aircraft as a result of Lessee defaults, its ability to pay interest on and principal of the Initial Class A Notes may be materially and adversely affected. Concentration Limits ALS has agreed to comply with certain limitations with respect to the lessees to which ALS can lease and as to the geographic areas in which the lessees may be habitually based or domiciled. See "Description of Notes Operating Covenants Concentration Limits". These limitations may decrease the number of lessees ALS could lease Aircraft to, adversely affect its ability to re-lease the Aircraft and thus reduce monies available to pay the interest on and principal of the Initial Class A Notes. ALS's Operational and Financial Restrictions Restrictions contained in ALS's constituent documents and in the Indenture may impair its ability to operate and its ability to compete with its direct and indirect competitors. For instance, ALS will not be able to grant privileged rental rates to airlines in return for equity investments or loans in order to lease aircraft and minimize the number of aircraft on the ground. Certain competing aircraft lessors, however, may enter into such or similar arrangements with troubled lessees to restructure the obligations of those lessees while maximizing the number of aircraft remaining on viable leases to such lessees and minimizing the overall cost. Lessee Concentrations Local economic and political conditions can influence the performance of Lessees located in a particular region. The effect of these conditions on payments to ALS will be more or less pronounced depending on the concentration of the number of Lessees in that region. As of May 5, 2008, based on the Existing Leasing Contracts, the percentage of Lessees of the Initial Aircraft, determined by the Recent Appraised Value of the Initial Aircraft, was 53

62 approximately 6.91% in Asia, approximately 60.73% in Europe, approximately 26.53% in Africa/Middle East and approximately 5.83% in Latin America. These percentages may increase or decrease depending upon the Initial Lessees under the Initial Leases that have not yet been entered into. ALS's business is partially exposed to risks associated with adverse economic and political conditions in the above-mentioned markets. For a list of countries included in each region, see "Description of Notes Operating Covenants Concentration Limits". Asia/Pacific Concentration As of May 5, 2008, based on the Existing Leasing Contracts, two Lessees accounting for approximately 6.91% of the Initial Aircraft by Initial Appraised Value were based in China. The outbreak of SARS had the largest negative impact on Asia, particularly China, Hong Kong and Taiwan. See " Risks Relating to the Aviation Industry Effects of Pandemic Diseases". More recently, the Asian airline industry is demonstrating signs of recovery; however, a recurrence of SARS or the outbreak of another epidemic of a communicable disease such as avian influenza, which many experts think is likely to originate in Asia, could inhibit any recovery by the Asian airline industry from such impact. During 1998 and 1999, the economies of Thailand, Korea and Malaysia experienced particularly acute difficulties which adversely affected trading conditions in the Asian civil aviation industry, undermined business confidence, reduced demand for air travel and adversely affected the results of operations of certain of the Initial Lessees. Since 1999, there has been stabilization and recovery in the economy of the region; however, if another downturn were to occur, it could be expected to have a significant, adverse impact on global and regional aircraft demand in general and on the Lessees based in Asia in particular. In September 2006, the Royal Thai Army staged a coup against the government of Prime Minister Thaksin Shinawatra. While the current political situation in Thailand is generally stable, future disruptions in Thailand could adversely affect Lessees based in Asia. A conflict in North Korea, as well as any future armed hostilities, would likely adversely affect the prospects of the Lessees in Asia and their ability to meet their obligations. European Concentration As of May 5, 2008, based on the Existing Leasing Contracts, six Lessees in respect of approximately 60.73% of the Initial Aircraft by Recent Appraised Value were based in Europe. Commercial airlines in Europe face, and can be expected to continue to face, increased competitive pressures, in part as a result of the deregulation of the airline industry by the EU and the resulting development of low cost carriers. The growth in the number of low cost carriers can reasonably be expected to both increase the competition among such carriers and put additional competitive pressure on traditional carriers. Several large European tour operators that specialize in low cost package tours have merged to create greater operating efficiencies, and others have seen short-haul business eroded by low cost carrier competition. Increased competition driven by this consolidation and other factors could cause some airlines and aircraft operators to fail. This evolution in the European airline industry may have a material adverse effect on the ability of European Lessees to meet their financial and other obligations under the Leases. European countries generally have relatively strict environmental regulations that can restrict operational flexibility and decrease aircraft productivity. The effect of these restrictions is illustrated by the noise curfews and environmental slot controls for some of the larger European airports, as well as higher landing fees. Meeting these tougher standards could significantly increase aircraft operating costs of ALS's Aircraft. The airline industry in European countries, as in the rest of the world generally, is highly sensitive to general economic conditions. Since a substantial portion of airline travel is discretionary, the industry has tended to suffer severe financial difficulties during economic downturns. The financial prospects, accordingly, for European Lessees can be expected to depend largely on the level of economic activity in Europe generally and in the specific countries in which these Lessees operate. A recession or other worsening of economic conditions or a terrorist attack in one or more of these countries, particularly if combined with either or both high fuel prices and a weak local currency, may have a material adverse effect on the ability of European Lessees to meet their financial and other obligations under the Leases. The EU also maintains tight enforcement of safety standards for all carriers operating to, from or within the EU, and has suspended operating permits for a number of carriers, particularly in Eastern Europe, Russia, Asia and Africa, 54

63 for non-compliance. These suspensions have in some instances prompted retaliatory actions on the part of other foreign governments against EU carriers. Eurocontrol, which collects charges from air carriers for use of the air traffic control system, holds the aircraft owner or lessor responsible for use payments of the operator if the operator cannot make such payments. Thus, if a Lessee were to default in its payments to Eurocontrol, ALS may be required to make payments to Eurocontrol for its past usage charges. Latin American Concentration As of May 5, 2008, based on the Existing Leasing Contracts, one Lessee accounting for approximately 5.83% of the Initial Aircraft by Recent Appraised Value was based in Latin America, specifically Mexico. Mexico is perceived to demonstrate emerging market characteristics similar to those of many Latin American countries. Those characteristics have resulted in lower levels of foreign investment in Latin America when compared to industrialized countries. Any economic downturn in Latin America may adversely affect the economies of the region and, as a result, downturns in other parts of Latin America may adversely affect the operations of ALS's Lessees in this region. Africa/Middle East Concentrations As of May 5, 2008, based on the Existing Leasing Contracts, four Lessees accounting for approximately 26.53% of the Initial Aircraft by Recent Appraised Value were based in Africa or the Middle East, specifically Jordan, Tunisia, the United Arab Emirates and Kuwait. These countries are perceived to demonstrate emerging market characteristics. In addition, these Lessees are sensitive to that region's economic and political instability. See " Risks Relating to the Leases Emerging Markets Risk". RISKS RELATING TO THE CLASS A-1 NOTE FUNDING AGREEMENT ALS expects to obtain the cash portion of the purchase price required to purchase each of the Initial Aircraft from the Class A-1 Commitment Holders, pursuant to the terms and conditions of the Class A-1 Note Funding Agreement. The Class A-1 Note Funding Agreement sets forth certain conditions to funding on each Advance Date related to the delivery of an Initial Aircraft, and additional conditions to the transfer on each Delivery Date of each Level 1 Advance Amount from the Funding Account to the Aircraft Purchase Account, to be used to purchase the Initial Aircraft. These conditions, as further described in "Description of the Class A-1 Note Funding Agreement", include, among other things, the Class A-1 Funding Agent being satisfied that the Seller has met all the conditions required for it to deliver an Initial Aircraft under the Purchase Agreement. ALS will not be required to purchase any Initial Aircraft if (or at such time as) ALS has not met all of the conditions to making a Level 1 Advance or to transfer of the Level 1 Advance Amount to the Aircraft Purchase Account under the Class A-1 Note Funding Agreement, and such conditions are not waived by the Class A-1 Funding Agent. If ALS is unable to meet the conditions for obtaining or applying advances under the Class A-1 Note Funding Agreement, and/or if the Class A-1 Commitment Holders fail at any time to advance amounts in accordance with the terms of the Class A-1 Note Funding Agreement, in either case such that ALS is unable to purchase a significant aggregate number of the Initial Aircraft, ALS will likely have less diverse lease assets, less aggregate rental income and a smaller aggregate asset value than expected at the date of these listing particulars. In such case, the aggregate principal amount of Initial Class A Notes will also be less than if more or all of the Initial Aircraft were purchased. See "Description of the Class A-1 Note Funding Agreement". Furthermore, if the aggregate number of Initial Aircraft that have been delivered to ALS under the Purchase Agreement as of the Delivery Expiry Date is less than 22, it will constitute an Indenture Event of Default permitting the Senior Trustee (at the direction of the Controlling Party if the Senior Trustee is not the Controlling Party and at the written direction of Holders of a majority of the aggregate Outstanding Principal Balance of the Senior Class if the Controlling Party is the Senior Trustee) to exercise remedies under the Security Documents. 55

64 RISKS RELATING TO PAYMENTS ON THE INITIAL CLASS A NOTES Unpredictable Cash Flow ALS has estimated the expected repayment of the Initial Class A Notes described in these listing particulars based on the assumptions set forth in the section entitled "Note Payment Assumptions". It is highly unlikely that ALS's actual experience will be consistent with these assumptions for several reasons, and the differences may be material and adverse. ALS's potential inability to find financially able and willing lessees of the Aircraft at acceptable rental rates and other terms and conditions will affect the timing and amount of proceeds realized from the Aircraft. In addition, other economic and political factors, including prevailing interest rates and the availability of credit and market demand for aircraft, are difficult to predict. Rental payments, insurance recoveries, maintenance reserve payments, expenses and liabilities will often depend on the actions of third parties, which are difficult to predict and are generally not within the control of ALS. Accordingly, collections and other realizations with respect to certain Leases and Aircraft could occur at substantially different times and levels than expected and may not occur at all. There can be no assurance that ALS will be able to repay the Initial Class A Notes. Factors Affecting Cash Flow Since the amounts of collections and expenses of the ALS Group are not precisely predictable, monthly principal and interest payments on the Initial Class A Notes will also be unpredictable and will be particularly sensitive to variations in the collections and expenses for the previous month. Although ALS has determined an expected schedule of payments based on revenue assumptions, actual payments will be different, and may differ materially, from those assumed. Revenues and expenses are also affected by general economic conditions and factors such as: geopolitical events, including war and acts of terrorism; outbreaks of communicable, pandemic diseases and natural disasters; changes in the mix of the Portfolio that will change the mix of Lessees and the values of Aircraft as a result of the loss, substitution, non-delivery, sale or purchase of Aircraft; the possible unhedged mismatch between the mix of fixed and floating rates on the Notes and the mix of fixed and floating rates on the Leases; costs involved in terminating interest rate hedging arrangements; the availability of replacement or new hedging arrangements; reduced revenues from credit problems facing Lessees and Lease defaults as a result of factors including, without limitation, competition, weak financial condition, local economic conditions, fuel costs, geopolitical events and increased or unexpected costs of compliance with governmental orders and regulations; aging of the Portfolio or changes in the relative value or marketability of the Portfolio resulting in reduced values and Lease rates and the resulting need to lease to less creditworthy entities, and the inability to collect Lease payments; increased costs resulting from the enforcement of defaulted Leases or out-of-court or court approved restructuring of Leases with financially distressed Lessees; increased or unexpected maintenance, registration and other operating costs resulting from new governmental orders or regulations, the failure of a Lessee to perform its maintenance obligations or the aging of Aircraft; failure of Lessees to obtain and maintain adequate property and liability insurance; possible reduced Lease rates and lower sale proceeds than appraised values as the Initial Leases expire or terminate early; 56

65 non-reimbursed or non-reimbursable withholding and other taxes (including potential entity level taxation and taxes) or charges that reduce revenues; and the possible inability to re-lease or sell Aircraft that are currently off-lease or as the current Leases expire or terminate early. Effects on Cash Flow Due to Change in the Composition of Portfolio The assumptions regarding the expected cash flow of ALS are subject not only to a variety of economic factors, some of which have been discussed in these listing particulars, but also to any substantial change in the composition of the Portfolio from that initially contemplated. Any substantial changes in that composition could significantly change expected cash flows and the nature and degree of risks affecting cash flow. Four principal factors could affect the fleet composition: The non-delivery or substitution of Initial Aircraft. ALS cannot predict the effect on its cash flows and ability to repay the Initial Class A Notes in the event that fewer than 30 Aircraft or any Substitute Aircraft are delivered to ALS under the Purchase Agreement. None of the Initial Aircraft will be delivered to ALS until the Initial Delivery Date. The loss of Aircraft through casualty or governmental taking. The proceeds of insurance and taking awards may not be sufficient to compensate for the loss of the revenue of the affected Aircraft. The purchase of Additional Aircraft. The ALS Group may acquire other Aircraft in the future. Although any Additional Aircraft may add to the cash flow of ALS and such acquisition is subject to the prior written consent of each of the Liquidity Provider (unless the Liquidity Facility Non-Consent Event has occurred), the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing), the Class A- 1 Trustee (acting at the written direction of all of the Holders of the Class A-1 Notes), and the Holders of the Class E Notes and receipt of a Rating Agency Confirmation, ALS cannot predict the effect of the acquisition of any Additional Aircraft, or the issuance of any related Additional Notes, on its cash flows and ability to repay the Initial Class A Notes. Upon each acquisition of any Additional Aircraft, the pool factors (as set forth in Appendix 4) and expected target principal balances (as set forth in Appendix 3) for any subclass of Notes may be adjusted to take into account such acquisition, provided that the Expected Final Payment Date for the Initial Class A Notes may not be extended by more than 12 months (as determined as of the date of such acquisition). The Holders of the Class A-2 Notes will not have consent rights with respect to the issuance of Additional Notes and there can be no assurance that the Expected Final Payment Date will not be extended. The sale of Aircraft. Members of the ALS Group may sell Aircraft to persons outside the ALS Group pursuant to an Aircraft Agreement subject to certain conditions under the Indenture. See "Description of Notes Indenture Covenants Limitation on Aircraft Dispositions". Proceeds from the sale of any Aircraft will be applied in accordance with the payment priorities as set forth under "Description of Notes Payment of Principal and Interest Priority of Payments". Subordination Provisions The payment of Required Expenses and certain other payments will be senior in priority of payment to payments on the Notes and will be paid out of funds on deposit in the Collections Account before any payments are made on the Notes, as more fully described below. Upon the occurrence of an Indenture Event of Default, the Trustee, in its capacity as Security Trustee, acting on behalf of the Noteholders and each other secured creditor under the Security Trust Agreement, will, with limited exceptions, have the exclusive right to exercise remedies. The Security Trustee in its exercise and enforcement of all remedies with respect to the Collateral will be subject to the instructions of the Controlling Party. The Notes are Subordinated to Indebtedness and Other Liabilities of the Initial Aircraft-Owning Entities Because ALS will, directly or indirectly, hold shares or other beneficial interests in the Initial Aircraft-Owning Entities rather than owning the Aircraft directly, and because there is no direct security interest in the Aircraft, the 57

66 claims of the Noteholders to the Aircraft will be effectively subordinated to any indebtedness and other liabilities and commitments of the Initial Aircraft-Owning Entities. There will be, however, a direct security interest in the Lease of each Aircraft. Effect of Unknown Contingent Liabilities There is a risk that the Initial Subsidiaries could have material contingent liabilities that are unknown to ALS. For example, the Initial Subsidiaries could incur liabilities to third parties from operating and leasing the Aircraft before ALS acquires them. Pursuant to the Purchase Agreement, the Seller will indemnify ALS for, among other things, losses arising from breaches of the representations and warranties relating to: (1) the existence of a valid and final transfer of the shares of the Direct Aircraft Companies and the Holding Company and the beneficial interests in the Direct Aircraft Owner Trusts which are sold to ALS by the Seller; (2) the title of an Initial Aircraft-Owning Entity to the applicable Aircraft; (3) the indirect title of the Seller to the shares in the Indirect Aircraft Companies and the Initial Leasing Intermediaries and the indirect beneficial interests of the Seller in the Indirect Aircraft Owner Trusts; and (4) the lack of additional liabilities of the Initial Subsidiaries or liens on the Aircraft other than as disclosed to ALS prior to acquisition. The indemnity provided by the Seller under the Purchase Agreement is subject (in respect of the assets sold pursuant thereto) to an aggregate financial limit of $175 million (including all claims arising under related tax indemnities and aircraft purchase agreements), a per claim deductible of $500,000 and a time limit to make claims of, in the case of tax claims, seven years from the closing date of the sale of the shares or beneficial interest in the relevant Initial Subsidiary, in the case of other claims, three years from the closing date of the sale of the shares or beneficial interest in the relevant Initial Subsidiary. However, there is not under the Purchase Agreement a financial limit or time limit if the claim relates to a misrepresentation by the Seller of any of the representations or warranties described in clause (1), (2) and (3) above. If any contingent liability arises and ALS is called on to pay it, it may be unable to make the required payments on the Initial Class A Notes. ALS may also not be able to recover these losses from the Seller under such indemnity. Interest Rate Risk The Initial Class A Notes are floating rate notes, and ALS will be subject to the risk of any increase in interest rates and to the risk that cash flow would be insufficient to pay the increased interest rate costs. ALS intends to limit this risk by entering into Hedge Agreements under which ALS will purchase instruments to hedge against interest rate increases. Any senior payment by ALS under these Hedge Agreements will have the same priority of payment as the Initial Class A Notes. ALS will not enter into these transactions with Hedge Providers unless such Hedge Providers have credit ratings, or provide collateralization arrangements, consistent with maintaining the ratings of the Initial Class A Notes. If a Hedge Provider were to default on its obligations, or ALS is unable to enter into these transactions with eligible Hedge Providers, then a mismatch in the floating rate interest obligations and fixed and floating rate lease payments may arise, which could harm ALS's ability to make payments of interest on and principal of the Initial Class A Notes in full or on a timely basis. In addition, the ALS Group's hedging strategy may need to be rebalanced with any acquisition of Additional Aircraft and issuance of Additional Notes to reflect the adjusted mix of fixed and floating interest obligations and of fixed and floating rate Lease payments, any issuance of Refinancing Notes, any termination of existing Leases or upon entering into new Leases in each case. There can be no assurance, however, that the ALS Group's interest rate risk management strategies will be effective in this regard. Any change to the ALS Group's policy with regard to its dealing in interest rate hedging products will be subject to periodic review by the Rating Agencies. Further, ALS may not terminate the Hedge Agreements (except as provided in such Hedge Agreements) without the prior written consent of the Class A-1 Funding Agent or enter into new Hedge Agreements without the prior written consent of the Class A-1 Funding Agent unless such Hedge Agreements contain certain terms that are no less favorable to ALS or the Subsidiaries than those contained in the Initial Hedge Agreements. 58

67 Currency Risk The ALS Group may enter into Additional Leases the related rental and other payments of which are denominated in euros or other currencies subject to Rating Agency Confirmation. In the event that the value of the euro, or such other currency, decreases relative to the U.S. dollar, the U.S. dollar proceeds resulting from the conversion of such euro, or such other currency, payments into U.S. dollars may not be sufficient to discharge the related amount owing under the Notes. ALS does not intend to enter into any transaction to hedge this currency mismatch. CERTAIN BANKRUPTCY AND OTHER CONSIDERATIONS Bankruptcy Risks Steps have been taken to structure the ALS Group, and the acquisition of the Subsidiaries, to ensure that its assets are not consolidated with the assets of AerVenture or any of its subsidiaries (the "AerVenture Group") and/or the assets of the AerCap Group and are not available to the AerVenture Group's or the AerCap Group's creditors in any bankruptcy or insolvency proceeding involving the AerVenture Group or the AerCap Group, as applicable. If AerVenture or any of its subsidiaries becomes bankrupt or insolvent, there is a legal risk that a court or other authority could decide that these steps were not effective to insulate the assets of the ALS Group from the assets of the AerVenture Group or that the AerVenture Group's transfer of Aircraft to the ALS Group was improper. As a result, because the Noteholders have no lien on the Aircraft, the Aircraft and other assets could become available to repay both creditors of the AerVenture Group and creditors of the ALS Group, including any Noteholder. The ALS Group could also lose all of its rights in the Aircraft and its other assets. In either case, ALS may have insufficient funds to repay amounts outstanding under the Initial Class A Notes. The Seller and ALS will take steps to transfer the shares of the Initial Aircraft Companies and Initial Leasing Intermediaries and beneficial interests in the Initial Aircraft Owner Trusts from the Seller to ALS. However, a liquidator, receiver, examiner, creditor or shareholder of the Seller or any relevant affiliate of the Seller could seek to recharacterize the transfer of the shares or beneficial interests of the Initial Subsidiaries as a pledge of collateral as security for a financing of the Seller. A successful recharacterization of the share transfers as a pledge or granting of security could: in certain circumstances result in the complete forfeiture of the rights of the ALS Group in the transferred Aircraft, the shares of the Holding Company, the Initial Aircraft Companies and the Initial Leasing Intermediaries and the beneficial interests in the Initial Aircraft Owner Trusts, possibly resulting in the ALS Group being considered a general unsecured creditor of the Seller with a claim in an amount equal to the purchase price paid for such Aircraft or such shares; or in other circumstances result in the ALS Group being a secured creditor of the Seller or the applicable seller of Aircraft or of the relevant affiliate. However, it is expected that ALS will in the future receive in connection with the delivery of each Initial Aircraft- Owning Entity an opinion of McCann FitzGerald (the "Opinions"), subject to no change in law occurring between the date of these listing particulars and the issuance of each Opinion, concluding that, notwithstanding the uncertainty resulting from the lack of substantive Irish case law on the issue of recharacterization, and subject to the qualifications and reservations, including as to difference of treatment of the sales for accounting purposes, and based on the assumptions set forth in each Opinion, the sales of the shares of the Holding Company, the Direct Aircraft Companies and the Initial Leasing Intermediaries and the sales of the beneficial interests in the Direct Aircraft Owner Trusts once completed would not, as a matter of Irish law, be recharacterized as a pledge of such assets to secure a loan from ALS to the Seller. The assumptions to each Opinion are expected to include, in addition to the assumption as to the adequacy of consideration, the assumption that both the Seller and ALS will, so far as permissible in accordance with current accounting standards, act in a manner consistent with the shares and beneficial interests having been sold. 59

68 There can be no assurance, however, that there will be no change of law and that the circumstances and assumptions upon which counsel will base the Opinions will not change, that a court of competent jurisdiction would not decide differently from the views expressed in each Opinion or that each Opinion will prove to be correct. Each Opinion will represent only the best judgment of counsel at the applicable date of the issuance thereof, and each such Opinion will not be binding on the courts. In particular, the Opinions will depend on certain factual assumptions and the occurrence of different facts could lead a court to reach a different conclusion. Further, the issues discussed in this subsection could arise in other jurisdictions in which ALS has not received similar legal opinions. There can be no assurance that courts in these jurisdictions will not decide these issues in a manner that could be adverse to the interests of the Holders of the Initial Class A Notes. RISKS RELATING TO TAXES Withholding Taxes Except with respect to (1) Holders of the Class A-1 Notes and (2) certain Holders of the Class A-2 Notes that are banks or similar financial institutions (in the case of each of (1) and (2), which Holders are Qualifying Lenders), ALS will not make any additional payments to Noteholders for any withholding or deduction that is required under applicable law on payments on the Initial Class A Notes. If ALS is required to make a withholding or deduction on the Initial Class A Notes, it will use reasonable efforts to avoid the application of withholding taxes. If ALS cannot avoid the withholding taxes, ALS may redeem the Initial Class A Notes. If withholding taxes are imposed on the Initial Class A Notes and ALS does not redeem them, the withholding taxes will reduce the amount of interest that a Noteholder will receive by the amount of the withholding taxes unless the Noteholder is entitled to additional payments from ALS as a result of the imposition of such withholding tax. ALS will receive opinions from its tax advisors that, subject to the assumptions and limitations therein, including that for Irish withholding tax purposes the Class A-1 Notes will be held by Qualifying Lenders and that the Class A-2 Notes will be admitted to the Official List of the Irish Stock Exchange and to trading on the Alternative Securities Market, payments on the Initial Class A Notes will not be subject to Bermuda withholding tax or Irish withholding tax. However, these opinions represent only the best judgment of counsel at the time such opinions are given and are not binding on the applicable tax authorities or the courts. The opinions depend upon certain factual assumptions including that the Class A-2 Notes maintain their listing on the Irish Stock Exchange and the existence of different facts could lead to circumstances not anticipated by counsel. Certain of the Holders of the Initial Class A Notes will be indemnified for increased costs, certain taxes and breakage costs as set forth in "Description of the Class A-1 Note Funding Agreement Indemnities". In certain circumstances, if ALS has defaulted on certain obligations under the Initial Class A Notes, the Security Trustee could exercise remedial rights that could result in Noteholders holding or receiving payments under the Assigned Leases for tax purposes. See "Description of the Security Trust Agreement". The Noteholders could be subject to tax on such payments or as a result of such ownership of the Assigned Leases in the jurisdictions in which the underlying Aircraft are operated or in which the Lessees or payors under the Leases are located, and the tax treatment of holding such leases in the jurisdictions in which the Noteholders are resident for tax purposes could be significantly less favorable than the tax treatment of holding Initial Class A Notes. Ownership of the Initial Class A Notes entails certain risks regarding the application of the tax laws of Ireland, the United States, Bermuda and the jurisdictions in which the members of the ALS Group and the Lessees are organized, reside or operate. See "Taxation" for a more detailed discussion of the possible tax consequences of owning the Initial Class A Notes. In addition, see "Risk Factors Risks Relating to Taxes" for additional discussion of risks that should be considered. ALS and the Initial Aircraft Companies May Not Be Carrying on a Trade for Irish Tax Purposes It is anticipated that ALS and the other Irish tax-resident members of the ALS Group will be subject to Irish corporate income tax on their net trading income, which would include leasing income. Under current Irish tax law, net trading income is taxed at a 12.5% rate. Under current Irish tax law, non-trading income is taxed at a 25% rate (20% in the case of capital gains). ALS and the Initial Aircraft Companies incorporated in Ireland intend to carry on sufficient activity in Ireland, directly or indirectly through the Servicer and the Administrative Agent, so as to ensure that they are carrying on a trade in Ireland for purposes of Irish tax law. In calculating net trading income, ALS and 60

69 these Subsidiaries will, in addition to all related expenses, deduct tax depreciation on the Aircraft. Whether ALS and these Subsidiaries are carrying on a trade for the purposes of Irish tax is a question of facts and circumstances depending on factors including, but not limited to, the identity of the Holders of the Class E Notes, where the Servicer's and Administrative Agent's employees are located and the levels of activity of the Servicer and the Administrative Agent in Ireland. There can be no assurance that ALS or the Irish tax resident Subsidiaries will qualify, or will be considered by the relevant taxing authorities as qualifying, for treatment as carrying on a trade in Ireland and will be dependent on the Irish Revenue authorities accepting that ALS is engaged in an active business in Ireland and that ALS has full beneficial ownership of the Aircraft. If ALS or any other Irish tax resident member of the ALS Group were not considered to be carrying on a trade in Ireland, it may be subject to additional Irish tax liabilities and the application of a higher rate of tax (under current Irish tax rates, 25% and, in the case of capital gains, 20% instead of 12.5%) on taxable income that would reduce the cash flow available to make payments on the Initial Class A Notes. A tax opinion will be provided by KPMG with respect to the matters above. There can be no assurance that the 12.5% tax rate applicable to trading income, the 20% tax rate applicable to capital gains or the 25% tax rate applicable to non-trading income will not be changed in the future. ALS's Operations May Become Subject to Income Taxes in Other Jurisdictions, Which Would Reduce the Cash Flow Available to Make Payments on the Initial Class A Notes. ALS Group members are subject to the income tax laws of Ireland, Bermuda, the United States and other jurisdictions in which they may be incorporated or formed and may be subject to the income tax laws of the United States and other jurisdictions by reason of the activities and operations of the ALS Group, the Service Providers, the Lessees or others in possession of the Aircraft. Although ALS and the Servicer have adopted operating procedures to reduce the exposure to such taxation, no assurances can be given that ALS or the Initial Aircraft-Owning Entities will not be subject to such taxes in the future. The cash flows available to make payments on the Initial Class A Notes will be reduced by any income taxes payable by the members of the ALS Group. In addition, because Ireland does not have tax treaties with all jurisdictions, ALS may establish subsidiaries in other jurisdictions to lease or sublease Aircraft to certain customers. Such subsidiaries may be subject to taxation in the jurisdictions in which they are organized, which would reduce ALS's net income and have an adverse impact on its cash flow available to make payments on the Initial Class A Notes. Upon delivery of a Default Notice pursuant to the Indenture or if any Acceleration Default under the Indenture has occurred and is continuing, the Security Trustee may exercise certain remedies that could result in Noteholders holding or receiving payments under the Assigned Leases for tax purposes. See "Description of the Security Trust Agreement". Effect of Loss of Benefit from U.S. Income Tax Treaty ALS and the Initial Aircraft-Owning Entities do not expect to have any material U.S. federal income tax liability by reason of leases of Aircraft to Lessees that operate the Aircraft in the United States. However, this conclusion depends in part on qualification for the benefits of the income tax treaty between the United States and Ireland. That, in turn, may depend on the level of activities in Ireland and the United States of the Servicer and the Administrative Agent and common direct or indirect ownership of the beneficial equity interests in ALS, the Servicer and the Administrative Agent. There can be no assurance that the Servicer and the Administrative Agent will conduct their activities in such a manner, or as to the common ownership of the noted equity investors, such that ALS and the Initial Aircraft-Owning Entities will qualify for the benefits of the U.S.-Ireland income tax treaty. It is a condition to each Level 1 Advance that U.S. tax counsel to ALS provide advice indicating that, as of the date of such advice, ALS should be entitled to claim benefits under the tax treaty between the United States and Ireland with respect to certain U.S. source rental income received by ALS. This advice will be based on facts and law (including regulations, rulings and other guidance) as of the time the advice is given. Any changes in the facts or law (including the interpretation thereof) from the date of such advice could impact the analysis and conclusions of counsel. In addition, the advice to be provided by ALS's tax counsel will represent the best judgment of such counsel at the time the advice is given and will not be binding on the applicable tax authorities or the courts. There can be no assurance that the members of the ALS Group will be entitled to benefits under the tax treaty between the United States and Ireland. Failure to so 61

70 qualify could subject rent from Aircraft used in the United States to U.S. federal income tax, which would reduce the cash flow available to make payments on the Initial Class A Notes. In addition, there can be no assurance that the Double Taxation Agreement between Ireland and the United States would not be re-negotiated in the future and, in such case, the current treaty benefits may no longer be available. Certain ERISA Considerations See "Certain ERISA Considerations". RISKS RELATING TO RIGHTS OF HOLDERS OF INITIAL CLASS A NOTES The Class A-1 Trustee (at the direction of the Holders of the Class A-1 Notes) will have specified consent rights not available to the Holders of the Class A-2 Notes. The Holders of the Class A-1 Notes may take actions without taking the interests of the Class A-2 Notes into consideration. In particular, the Holders of the Class A-1 Notes will have the right to consent to sales of Aircraft below certain threshold limits, to waive non-compliance by ALS with the Concentration Limits and to certain other actions, all as more fully described in "Description of Notes Indenture Covenants", "Description of Notes Operating Covenants" and "Management of the ALS Group The Servicer". Each Holder of Class A-1 Notes will be permitted, under certain conditions, to exchange its Class A-1 Notes for Class A-2 Notes pursuant to the terms of the Indenture as set forth in "Description of Notes General". In the event that a Holder of Class A-1 Notes exchanges all of its Class A-1 Notes for Class A-2 Notes, the consent rights originally available to such Holder when it was a Holder of Class A-1 Notes will no longer be available to such Holder as a Holder of Class A-2 Notes. In addition, upon payment in full of the Class A-1 Notes, such consent rights will cease to exist. No Class A-2 Notes may be exchanged for Class A-1 Notes. RISKS RELATING TO ABSENCE OF MARKET AND MARKET CONDITIONS Absence of Public Market The Class A-1 Commitments will represent obligations for which there is currently no existing market. ALS cannot assure the liquidity of any markets that may develop for the Class A-1 Commitments or the ability to transfer Class A-1 Commitments or the prices at which the Class A-1 Commitments may be transferred. The Initial Class A Notes will be a new issue of securities for which there is currently no existing market. ALS cannot assure the liquidity of any markets that may develop for the Initial Class A Notes or the ability to sell Initial Class A Notes or the prices at which the Initial Class A Notes may be sold. Future trading prices of the Initial Class A Notes will depend on many factors, such as prevailing interest rates, ALS's operating results and the market for similar securities and the liquidity of any market that may develop for the Initial Class A Notes. The Initial Class A Notes will not be registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"), and ALS has no obligation or intention to subsequently register or exchange registered securities for the Initial Class A Notes. Accordingly, the Initial Class A Notes can only be offered or sold pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. Therefore, a Holder of the Initial Class A Notes may be required to bear the risk of its investment for an indefinite period. The Class A-2 Notes are expected to be admitted to the Official List of the Irish Stock Exchange and to trading on the Alternative Securities Market, but there can be no assurance that such listing will be obtained or maintained. The Class A-1 Notes are not, and are not expected to be, listed on any stock exchange. Because the Initial Class A Notes are being sold pursuant to an exemption from registration under applicable securities laws and, consequently, may not be publicly offered, sold or otherwise transferred in any jurisdiction where a registration may be required, no public market for the Initial Class A Notes is expected to develop. For a discussion of certain restrictions on transfer, see "Transfer Restrictions". Unfavorable Liquidity Conditions for Asset-Backed Securities in the Secondary Markets 62

71 Since the summer of 2007, a severe liquidity crisis in the global credit markets has stalled the primary market for asset-backed securities such as the Initial Class A Notes. As the liquidity crisis has developed, this has affected, and may continue to affect, various other markets and types of assets in negative and unforeseen ways. These changes could create additional volatility in the market value of Initial Class A Notes and greater illiquidity, which could substantially impair the ability of Holders of Class A-1 Notes or Class A-2 Notes to subsequently offer or resell their Notes to other investors in the secondary market. In addition, the market value of the Initial Class A Notes could be adversely affected by events wholly unrelated to the underlying credit quality of ALS and its ability to repay the Initial Class A Notes. Although the Class A-1 Notes are, subject to certain conditions, permitted to be exchanged for Class A-2 Notes which are traded through clearing systems, there can be no assurance that a secondary market will ever develop for Class A-2 Notes, and investors may be required to hold their Class A-1 Notes until their maturity. RISKS RELATING TO RATINGS OF THE INITIAL CLASS A NOTES It was a condition to the issuance of the Initial Class A Notes that they receive ratings from Standard & Poor's and Moody's, in each case as set forth in the table in the "Summary", entitled "The Initial Class A Notes". A rating is not a recommendation to buy, sell or hold securities and may be revised or withdrawn at any time by the assigning Rating Agency. There can be no assurance that a rating will not be lowered or withdrawn if, in the sole judgment of the Rating Agency, circumstances in the future so warrant. ALS cannot predict with certainty what effect any revision or withdrawal of a rating may have on the liquidity or market values of the Initial Class A Notes. The ratings of the Initial Class A Notes are intended to address the likelihood of the timely payment of interest on and the ultimate payment of principal of the Initial Class A Notes by the Final Maturity Date. 63

72 The Parties ALS ALS is a special purpose company incorporated under the laws of Bermuda on May 22, 2008 for an unlimited duration for certain limited purposes, including to acquire and own aircraft assets and related leases, either directly or indirectly through its ownership interest in entities that own aircraft assets or related leases, and to finance, refinance, lease, re-lease, maintain and modify aircraft. In addition, within the limits set forth in the Indenture, the ALS Group may acquire Additional Aircraft and may also sell Aircraft. ALS may also enter into certain hedging contracts as described under "Management's Discussion and Analysis of Financial Condition Interest Rate Risk and Management", and establish and provide loans or guarantees to, or in respect of, its Subsidiaries, including any entities that may be established or acquired in the future in connection with future leasing arrangements or future acquisitions of Additional Aircraft. Upon the sale of the Holding Company and each Initial Aircraft Company from the Seller to ALS, ALS will make a direct or indirect Intercompany Loan to the Holding Company or such Initial Aircraft Company (as applicable), the proceeds of which will be utilized by the Holding Company or such Initial Aircraft Company (as applicable) to repay in full an AerVenture Loan. Each Initial Aircraft Company will guarantee the repayment of all such Intercompany Loans. ALS commenced business operations on the Initial Closing Date when it issued the Initial Class A Notes to the Initial Class A-1 Commitment Holders and a portion of the Class E-1 Notes to AerVenture Leasing. The principal amount of the Initial Class A Notes will be increased up to an aggregate amount of $1,000,000,000. ALS expects to own all of the shares or beneficial interest in the 15 Direct Aircraft-Owning Entities and all of the shares in the Holding Company, which ALS expects will own all of the shares or beneficial interest in the 15 Indirect Aircraft-Owning Entities. Each of the Initial Aircraft-Owning Entities will be grantor trusts organized under the laws of the State of Utah or private limited liability companies incorporated under the laws of Ireland. The Holding Company is a private limited liability company incorporated under the laws of Ireland. In addition, ALS expects the Holding Company will hold all of the shares in the two Initial Leasing Intermediaries, each of which will be private limited liability companies incorporated under the laws of the United Kingdom or Bermuda. ALS expects to operate the business of the ALS Group principally through these Subsidiaries. ALS's own business therefore principally consists of, and its own revenues will be derived principally from, the activities of its Subsidiaries. ALS and its Subsidiaries will also be permitted to lease Aircraft to or from, or sell Aircraft to or buy Aircraft from, other members of the ALS Group. ALS has an authorized share capital of $100 consisting of 100 common shares, $1 par value per share, all of which have been issued. Of the issued share capital of ALS, 95 shares have been issued to and are held by the Charitable Trust Trustee for the benefit of the Charitable Trust and five shares have been issued to and are held by AerVenture Leasing. See "Management of the ALS Group Beneficial Ownership of ALS" for a description of the restrictions on transfer of the shares of ALS. ALS is registered in the Register of Companies of Bermuda with number ALS has a Board of Directors (the "Board") but has and will have no employees or executive officers. Accordingly, the Board relies upon the Servicer, the Administrative Agent, the Cash Manager and the other service providers for all asset servicing, treasury, corporate, administrative and accounting functions pursuant to the respective service provider agreements. The Board consists of five members (the "Directors"), two of whom (the "Class E Note Directors") are appointed by the Holder or Holders of a majority in aggregate principal amount of the Class E Notes (the "Class E Noteholder") or nominated by the Class E Noteholder for appointment by the shareholders of ALS, as the case may be, and three of whom are directors who are independent of AerCap, AerVenture Leasing, any Holder of the Class E Notes or any affiliate of those persons (the "Independent Directors"). The quorum necessary for the transaction of business at a meeting of the Board is two Independent Directors and any resolution will require the affirmative vote of a majority of the Independent Directors present except that the quorum necessary for the approval of certain significant actions or proceedings of ALS that may only be approved by a unanimous vote of all the Directors is all of the Directors, and any written resolution requires the signature of all of the Directors. If at any time there is only one Independent Director holding office, pending the appointment of a second Independent Director the quorum consists of the sole Independent Director and a Class E Note Director and in such circumstances the sole Independent Director has a casting vote at any Board meeting. Actions and proceedings that require the unanimous approval of all of the Directors principally relate to certain insolvency proceedings, 64

73 dissolution or winding up of ALS, amendments to ALS's Memorandum of Association or Bye-Laws, the acquisition of Additional Aircraft, amalgamation, mergers or, subject to certain exceptions, sale of all or substantially all of ALS's assets. In each of the Servicing Agreement and the Administrative Agency Agreement, ALS has agreed that certain actions must be taken by ALS only by a special board resolution. A special board resolution requires the affirmative vote of the majority of the Independent Directors and at any time at which AerVenture Leasing and its affiliates hold the majority of ALS's Class E Notes, the Class E Note Directors will not have the right to vote in respect of a special board resolution. See "Management of the ALS Group Directors" for a description of the process for selecting successor Directors. Management of the Holding Company and the Initial Aircraft Companies incorporated under the laws of Ireland will be modeled on the management of ALS, except that the Directors of ALS will have the right to select the three independent directors of each Irish Subsidiary, the Class E Note Directors will have the right to appoint two directors of each Irish Subsidiary, and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) will have the right to consent to the appointment of independent directors. The Initial Leasing Intermediaries organized under the laws of the United Kingdom and Bermuda each will have five directors, including three independent directors that will be appointed by ALS as its shareholder and two directors that will be nominated or appointed by the Holder or Holders of a majority in aggregate principal amount of the Class E Notes (which will initially be AerVenture Leasing). ALS is not involved in or subject to, and has not been involved in or subject to, any governmental, legal or arbitration proceedings relating to claims against ALS or amounts which are material nor is ALS aware that any such proceedings are pending or threatened. AerCap Ireland has represented and warranted in the Purchase Agreement that there are no liabilities, actual or contingent, of a company being transferred thereunder that existed at the time of transfer but were not disclosed in the financial statements of the relevant company or otherwise disclosed to the ALS Group, other than liabilities incurred in the ordinary course of business since the date of the financial statements of the relevant company which are consistent with the past practice of that company and which do not have a material adverse effect and which would not be prohibited by the Indenture. ALS's registered office is located at Clarendon House, 2 Church Street, Hamilton, HM11, Bermuda, telephone number +1 (441) ALS's auditors are KPMG, Chartered Accountants, 1 Harbourmaster Place, IFSC, Dublin 1, Ireland, who are members of the Institute of Chartered Accountants in Ireland. ALS is resident in Ireland for tax purposes. AERCAP AerCap is an integrated global aviation company with a leading market position in aircraft and engine leasing, trading and parts sales. It is engaged in the leasing and management of commercial jet and cargo aircraft and aircraft engines under operating leases and is one of the largest lessors worldwide. AerCap possesses extensive aviation expertise that permits it to extract value from every stage of an aircraft's lifecycle across a broad range of aircraft and engine types. AerCap's business strategy is to acquire aviation assets at attractive prices, lease the assets to suitable lessees, and manage the funding and other lease-related costs efficiently. It also provides aircraft management services and performs aircraft and engine maintenance, repair and overhaul services and aircraft disassemblies through its certified repair stations. On June 30, 2005, funds and accounts managed by Cerberus Capital Management, L.P. and/or its affiliates (Cerberus Capital Management, L.P. along with its affiliates, "Cerberus") indirectly acquired through AerCap Holdings C.V. ("AerCap C.V.") all the share capital and certain debt of AerCap B.V. from certain affiliates of DaimlerChrysler Aerospace AG and a consortium of European banks (the "Acquisition"). In addition, Cerberus invested approximately $370 million in AerCap C.V. on the closing of the Acquisition. The equity interests of AerCap C.V. were indirectly owned by funds and accounts managed by Cerberus. On October 27, 2006, AerCap acquired all of the assets and liabilities of AerCap C.V. On November 27, 2006, AerCap and certain shareholders each sold a portion of the ordinary shares in AerCap in a public offering listed on the New York Stock Exchange. AerCap's website is Information contained on this website is not a part of, and is not incorporated into, these listing particulars. Established in 1992, Cerberus is one of the world's leading private investment firms with approximately $27 billion under management in funds and accounts. Through its team of more than 275 investment and operations professionals, Cerberus specializes in providing both financial resources and operational expertise to help transform undervalued companies into industry leaders for long-term success and 65

74 value creation. Cerberus is headquartered in New York City, with affiliate and/or advisory offices in Atlanta, Chicago, Los Angeles, London, Baarn, Frankfurt, Hong Kong, Beijing, Tokyo, Osaka and Taipei. As of March 31, 2008, the AerCap Group, including AerCap Ireland, owned and managed a total of 200 aircraft and had an additional 66 new aircraft on order (excluding the Initial Aircraft) as shown in the table below. In addition, as of March 31, 2008, AerCap owned 69 engines and had an additional two new engines on order. As of March 31, 2008, the AerCap Group's owned and managed portfolio of aircraft were on lease to 80 lessees in 40 countries worldwide. AerCap Group Owned and Managed Aircraft Portfolio as of March 31, 2008 Managed Aircraft Portfolio (1) Owned Aircraft Portfolio (2) Total Owned Aircraft, Managed Aircraft and Aircraft on Order (4) Aircraft on Aircraft Type Order (3) Initial Aircraft Airbus A Airbus A Airbus A Airbus A Airbus A Airbus A Boeing Boeing Boeing Fokker McDonnell Douglas MD McDonnell Douglas MD McDonnell Douglas MD Total (1) Excludes the aircraft owned by the AerCap Group and the Initial Aircraft. (2) Excludes the Initial Aircraft. (3) Includes the New Airbus Aircraft (excluding the Initial Aircraft) that had not as of March 31, 2008 been delivered under the Airbus Purchase Agreement. (4) Includes the Initial Aircraft. AerCap B.V. (formerly known as debis AirFinance B.V.), now wholly owned by AerCap, commenced operations with the purchase of a Fokker leasing portfolio (35 aircraft) in late AerCap B.V. initially diversified its fleet through the acquisition of aircraft through sale and leaseback transactions. In mid-1999, AerCap B.V. acquired a 15-aircraft lease portfolio from Airbus Industrie Financial Services and signed a purchase commitment with Airbus Industrie for 32 new narrowbody A320 family aircraft for delivery between 2002 and The acquisition of AerFi Group plc in 2000 provided fleet diversification through the addition of additional Boeing and McDonnell Douglas equipment. In January 2006, AerCap's consolidated joint venture, AerVenture, placed an order with Airbus for the purchase of 70 A320 family aircraft, including the 30 Initial Aircraft, scheduled for delivery between 2007 and In December 2006 and May 2007, AerCap Ireland signed purchase commitments with Airbus for a total of 30 new A330 aircraft for delivery in 2009 and As of March 31, 2008, AerCap had a fleet mix (by net book value) of 83% Airbus, 15% Boeing and 2% McDonnell Douglas. The average age of its owned fleet is 7.5 years. While AerCap mainly purchases narrowbody jets, its fleet as of March 31, 2008 also contained nine widebody and freighter aircraft, with an additional 30 A330 widebody aircraft under forward order with Airbus. Headquartered at Amsterdam's Schiphol airport with offices in Ireland, Florida, Arizona, Texas, Beijing, the United Kingdom, AerCap had 424 employees as of March 31, 2008 that handle aircraft and engine leasing, management and re-marketing relationships, aircraft and engine maintenance, repair and overhaul services and aircraft 66

75 disassemblies through its certified repair stations. AerCap's management services include collecting rental payments, arranging and monitoring aircraft maintenance performed by others, technical inspection of aircraft, arranging and monitoring insurance, arranging for aircraft valuations, registration and de-registration of aircraft, monitoring compliance with lease arrangements and enforcement of lease provisions against lessees, confirming compliance with applicable Airworthiness Directives and facilitating delivery and redelivery of aircraft. Each member of AerCap's management team has extensive experience in the aviation industry. Klaus Heinemann, the Chief Executive Officer of AerCap since 2003, has over 25 years of experience in the aviation industry, and previously held various positions in aviation finance and banking, most recently as a Member of the Executive Board of DVB Bank. Keith Helming has been AerCap's Chief Financial Officer since August Formerly, he was a long-standing executive at GE Capital Corporation, including serving recently for five years as Chief Financial Officer at aircraft lessor GE Commercial Aviation Services. Heinrich Loechteken, the Chief Investment Officer of AerCap since August 2006, served as AerCap's Chief Financial Officer between September 2002 and August Prior to his employment with AerCap, Mr. Loechteken served as the Chief Financial Officer of DaimlerChrysler Capital Services. SELLER AerVenture Leasing is a limited liability company incorporated in Ireland on February 13, AerVenture Leasing is a wholly-owned subsidiary of AerVenture, a limited liability company incorporated in Ireland on November 7, AerCap AerVenture Holding B.V., a wholly-owned subsidiary of AerCap incorporated under the laws of the Netherlands, owns 50% of the shares of AerVenture. The remaining 50% of the shares in AerVenture are owned by NLM AerVenture B.V., a wholly-owned subsidiary of Narrowbody Lease Management B.V., ("NLM") each incorporated under the laws of the Netherlands. NLM is jointly owned by the Kuwaiti companies Al Fawares Construction & Development KSC and International Cargo Airlines KSC (known as LoadAir). Under the agreement between the shareholders of AerVenture, the shareholders have contributed equal amounts of capital to AerVenture and share control over certain significant decisions. The AerCap Group provides management and marketing services to the AerVenture Group and AerCap consolidates the financial results of AerVenture and its subsidiaries in AerCap's financial statements. In January 2006, AerVenture entered into the Airbus Purchase Agreement dated as of December 30, 2005 for a total of 70 aircraft, including 16 A319 aircraft, 51 A320 aircraft and three A321 aircraft (as amended as of May 5, 2008 to reflect conversion options exercised by AerVenture), which includes the 30 Initial Aircraft, scheduled for delivery between 2007 and AerVenture has entered into a credit facility for a total amount of $207.5 million that will finance the pre-delivery payments on the first 30 aircraft to be delivered under the Airbus Purchase Agreement. In addition, in April 2008, AerVenture closed a second credit facility for a total amount of $269.2 million to finance the pre-delivery payments of 37 aircraft under the forward order. SERVICER AerCap Ireland acts as the Primary Servicer of the Portfolio and AerCap Cash Manager II Limited acts as the Insurance Servicer, pursuant to the Servicing Agreement. As the Primary Servicer, AerCap Ireland will collect rents and other amounts due from Lessees, monitor the maintenance and certain other obligations under the Leases, enforce rights against Lessees, remarket Aircraft for re-lease or sale and performs other specified aircraft related services. See "Management of the ALS Group The Servicer". AerCap Ireland is the entity within the AerCap Group that will provide aircraft management services. As of March 31, 2008, the portfolio of aircraft managed by AerCap Ireland or its subsidiaries, or for which AerCap Ireland or its subsidiaries provided fleet management services, comprised 244 aircraft (including the Initial Aircraft), of which AerCap Ireland and its subsidiaries owned 22 and the AerCap Group owned a further 72 (excluding the Initial Aircraft), which were leased to 68 airlines in 36 countries worldwide. In addition, AerCap Ireland is engaged in the remarketing of commercial jets for its own account, for airlines and for third party lessors. AerCap Ireland acts as servicer for AerCo and ALS 2005 (each aircraft portfolio securitization vehicles) and various other aircraft-owning entities. AerCap Ireland or its subsidiaries also own or manage eight engines. The table below shows the aircraft owned and managed, as of March 31, 2008, AerCap Ireland (together with certain of its subsidiaries), including the Initial Aircraft and aircraft on order. 67

76 AerCap Ireland Owned and Managed Aircraft Portfolio as of March 31, 2008 Managed Aircraft Portfolio (2) Total Owned Aircraft, Managed Aircraft and Aircraft on Order (4) Aircraft Type Owned Aircraft Portfolio (1) Aircraft on Order (3) Initial Aircraft Airbus A Airbus A Airbus A Airbus A Airbus A Airbus A Boeing Boeing Boeing Fokker McDonnell Douglas MD McDonnell Douglas MD McDonnell Douglas MD Total (1) Excludes the Initial Aircraft. (2) Excludes the aircraft owned by AerCap Ireland and the Initial Aircraft. (3) Includes the New Airbus Aircraft (excluding the Initial Aircraft) that had not as of March 31, 2008 been delivered under the Airbus Purchase Agreement. (4) Includes the Initial Aircraft. AerCap Ireland is headquartered in Shannon, Ireland, where its staff of 43 full-time employees (as of May 5, 2008) handles aircraft leasing, management and remarketing relationships. AerCap Ireland's management services include collecting rental payments, administration of lease agreements and, where deemed appropriate, enforcement of lease provisions against lessees and facilitating delivery and redelivery of aircraft. AerCap Ireland has a history of prompt re-leasing of aircraft in its portfolio, either through contract extensions or the entering into of leases with new lessees and, when required in default situations, has successfully repossessed aircraft in a variety of countries around the world. See "Risk Factors Risks Relating to the ALS Group and Its Business Conflicts of Interest of the Primary Servicer" for a discussion of conflicts of interest that may arise because AerCap Ireland manages aircraft and other assets owned by persons other than ALS. The table below shows the different aircraft by aircraft type comprising the portfolio owned by AerCap Ireland or its subsidiaries as of March 31, 2008 and the portfolio of Initial Aircraft expected to be acquired by the ALS Group. AerCap Ireland Fleet as of March 31, 2008 Versus Anticipated ALS Group Fleet Aircraft Type AerCap Ireland Fleet (1) ALS Group Fleet Airbus A Airbus A Airbus A McDonnell Douglas MD McDonnell Douglas MD McDonnell Douglas MD Total (1) Includes the aircraft owned by AerCap Ireland and/or its subsidiaries. The Insurance Servicer, AerCap Cash Manager II Limited, is a limited liability company incorporated under Irish law and a wholly-owned subsidiary of AerCap Ireland. AerCap Cash Manager II Limited also will provide cash 68

77 management and insurance services for other aircraft-owning entities and is regulated by the Irish Financial Services Regulatory Authority. The Insurance Servicer will monitor the insurance obligations under the Leases and provide other information and assistance with respect to negotiating and procuring insurance, settlement offers and insurance levels. The Insurance Servicer may engage insurance advisors and brokers on behalf of, and for the benefit of any member of, the ALS Group. The Insurance Servicer will provide ALS with reports regarding insurance matters at least annually. The Servicer will provide the services in accordance with the express terms of the Servicing Agreement with the ALS Group which, among other things, provides that the Servicer will act in accordance with applicable law and with directions given by the ALS Group from time to time in accordance with the Servicing Agreement. See "Management of the ALS Group The Servicer". ADMINISTRATIVE AGENT AerCap Administrative Services Limited acts as the Primary Administrative Agent pursuant to the Administrative Agency Agreement, and will provide treasury, corporate, administrative and accounting services to the ALS Group. AerCap Administrative Services Limited is a limited liability company incorporated under Irish law and a wholly owned subsidiary of AerCap Ireland. AerCap Administrative Services Limited also will provide administrative services to other aircraft-owning entities. AerCap Cash Manager II Limited acts as the Financial Administrative Agent pursuant to the Administrative Agency Agreement, and will provide information and other assistance to the ALS Group with respect to the interest rate management strategy (including hedging strategy), amendments to insurance coverage and responsibilities of the Cash Manager pursuant to the Indenture. The Financial Administrative Agent also will act as agent for the Trustee and the Security Trustee in respect of certain basic account management, calculation and other services. CASH MANAGER Deutsche Bank Trust Company Americas, a direct subsidiary of Deutsche Bank AG, acts as the Cash Manager under the Cash Management Agreement. Subject to certain limitations and at the direction of the ALS Group, the Cash Manager will be authorized to invest the funds held by the ALS Group in the Collections Account and the Lessee Funded Accounts in certain prescribed investments. The Cash Manager also will make calculations related to payments and directs the transfer of funds among the Accounts. The Cash Management Agreement permits the Cash Manager to resign or ALS (under certain circumstances), the Trustee (at the written direction of the Controlling Party, or if the Controlling Party is the Trustee, at the written direction of Holders of a majority of the aggregate outstanding principal balance of the Senior Class) or the Security Trustee (at the written direction of the Controlling Party, or if the Controlling Party is the Trustee, at the written direction of Holders of a majority of the aggregate outstanding principal balance of the Senior Class) to remove the Cash Manager at any time during the term of the Cash Management Agreement; provided that such resignation or removal will not become effective until a replacement Cash Manager has been appointed in accordance with the Cash Management Agreement. TRUSTEE, CLASS A-1 TRUSTEE, SECURITY TRUSTEE, OPERATING BANK AND REFERENCE AGENT Deutsche Bank Trust Company Americas acts as the Trustee and Class A-1 Trustee under the Indenture, as the Security Trustee and Operating Bank under the Security Trust Agreement, and as the Reference Agent under the Reference Agency Agreement. Deutsche Bank Trust Company Americas also acts as the Cash Manager, as described above. LIQUIDITY PROVIDER, CLASS A-1 FUNDING AGENT AND SERVICING AGENT Calyon provides a revolving liquidity facility to ALS which may be drawn upon, subject to certain conditions, to pay certain expenses, Senior Hedge Payments, Class A-1 Commitment Fees and interest on the Initial Class A Notes. See "Description of the Liquidity Facility". In addition, Calyon acts as the initial Class A-1 Funding Agent under the Class A-1 Note Funding Agreement, in which capacity Calyon will act as the agent for the Class A-1 Commitment Holders, and acts as the initial Servicing 69

78 Agent under the Servicing Agreement, in which capacity Calyon will be responsible for facilitating the appointment of a replacement servicer in the event that the Servicer is terminated pursuant to the Servicing Agreement. Calyon is also an Initial Class A-1 Commitment Holder. Calyon is the corporate and investment banking subsidiary of the Crédit Agricole Group, one of France's largest banking groups with 588 billion euros in assets and 12.1 billion euros of shareholders' equity as of December 31, Calyon was formed on April 30, 2004 by the consolidation of Crédit Agricole Indosuez and the corporate and investment banking division of Crédit Lyonnais. With over 13,000 staff in 58 countries, Calyon specializes in capital markets, investment banking and financing. Calyon's long-term unsecured debt is rated Aa1 by Moody's and AA- by Standard & Poor's, and its short-term unsecured debt is rated P-1 by Moody's and A-1+ by Standard & Poor's. Calyon's address is 9, quai du Président Paul Doumer, Paris La Défense Cedex, France. 70

79 Use of Proceeds ALS intends to use the cash proceeds received from Advances made pursuant to the Class A-1 Note Funding Agreement (which will be up to a maximum of $1,000,000,000 and will be evidenced by the Class A-1 Notes) together with the cash proceeds from the issuance of Class E-1 Notes received to: fund the Aircraft Purchase Account with the proceeds of each applicable Level 1 Advance on each Delivery Date in the required amounts to purchase the Initial Subsidiaries and the Initial Aircraft, including making direct or indirect Intercompany Loans to the Initial Subsidiaries (other than the Initial Aircraft Owner Trusts) the proceeds of which will be used to pay in full the AerVenture Loans owed by such Subsidiaries; pay to the Seller the proceeds of the Level 2 Advances on the Level 2 Advance Date; and pay certain transaction expenses, including the cost of additional interest rate hedging instruments and expenses of ALS through the Initial Delivery Date. The following table sets forth the approximate estimated sources and uses of funds and other considerations in connection with the transactions contemplated by these listing particulars, assuming that (1) the maximum principal amount of Advances permitted under the Class A-1 Note Funding Agreement are made and (2) all 30 Initial Aircraft are purchased under the Purchase Agreement using the Initial Closing Date Appraised Value for each Initial Aircraft to determine the purchase price for such Initial Aircraft. Actual amounts may differ from those set forth below, as further described in these listing particulars, including under "Description of the Class A-1 Note Funding Agreement" and "Description of Notes". Sources (in millions) Cash: Advances pursuant to Class A-1 Note Funding Agreement... $ 1,000 Issuance of Class E-1 Notes on the Initial Closing Date... $ 9 Total... $ 1,009 Uses (in millions) Cash: Purchase of Initial Aircraft (including funding of the Aircraft Purchase Account and the Intercompany Loans and payments to the Seller on the Level 2 Advance Date)... $ 1,000 Certain transaction expenses and expenses of ALS through the Initial Delivery Date... $ 9 Total... $ 1,009 71

80 The Initial Aircraft and Leases ALS'S OWNERSHIP OF THE AIRCRAFT After acquiring the Initial Aircraft, ALS expects to indirectly own 30 Initial Aircraft and related Leases. ALS has the right through the acquisition of aircraft-owning entities to acquire the 30 Initial Aircraft and the rights under the Initial Leases related to such Aircraft from AerVenture Leasing under the Purchase Agreement. The Initial Aircraft have a Recent Appraised Value of $1,372,134,715. The Recent Appraised Value of each Initial Aircraft is equal to the average of the Base Values of such Initial Aircraft as of October 31, 2007, in each case without taking into account the value of the related Initial Lease, and any maintenance reserves or security deposits. Each of 18 of the Initial Aircraft is or will be owned by one of the 18 Initial Aircraft Owner Trusts and each of 12 of the Initial Aircraft is or will be owned by one of 12 Initial Aircraft Companies. For transaction structuring reasons related to registration of the Aircraft, tax implications or other reasons, certain of the Initial Aircraft are or will be leased from an Initial Aircraft-Owning Entity to an Initial Leasing Intermediary, which leases or will lease such Aircraft to another Subsidiary or an Initial Lessee. Under the Existing Leasing Contracts, in order to register four of the Initial Aircraft on lease to Aeroflot in Bermuda, such Initial Aircraft will be leased from an Initial Aircraft Company to an Initial Leasing Intermediary incorporated under the laws of Bermuda, which leases or will lease such Aircraft back to the Initial Aircraft Company, which leases the Aircraft to Aeroflot. Under the Existing Leasing Contracts, three of the Initial Aircraft will be leased from an Initial Aircraft Owner Trust to an Initial Leasing Intermediary incorporated under the laws of the United Kingdom, which leases or will lease such Aircraft to Aegean. APPRAISERS' REPORTS The Appraisers have provided Appraisals of the value of each Initial Aircraft at normal utilization rates in an open, unrestricted and stable market with a reasonable balance of supply and demand and other factors common for like appraisals. At any point in the aircraft leasing cycle, however, there will be imbalances of aircraft supply and demand and there may be particularly pronounced imbalances for specific aircraft types. Some of the Initial Aircraft may have current market values below the Recent Appraised Values for such Aircraft. At a cyclical low, the market value of most aircraft types is likely to be less than, and in some cases significantly less than, the appraised value. In addition, the appraised values of the Initial Aircraft will likely decline over time due to aging, increasing maintenance expenses and similar factors. Appraised base values obtained upon delivery of the Initial Aircraft by the Seller may be less than the Recent Appraised Values, which were determined as of October 31, The information contained in the Appraisals may not reflect the impact of recent industry economic losses, insolvencies and continued economic weakness. Accordingly, investors should not place undue reliance on the Recent Appraised Values as an accurate depiction of current market or realizable values at any one point in time, and investors should realize that actual current market or realizable values at any point in time (such as currently exist) may be substantially less than the Recent Appraised Values. The Appraisals were carried out on a desktop basis without physical inspections of the Aircraft. Each Appraisal explains the methodology used to determine the values assigned to the Initial Aircraft by the Appraiser. See "Risk Factors Risks Relating to the Aircraft Risks Associated with Appraised Values". As set forth in the Appraisals, the aggregate Base Values calculated by each of the Appraisers for the Initial Aircraft are as follows: approximately $1,352,922,144 in the case of Ascend, a division of Airclaims Limited; approximately $1,376,180,000 in the case of BK Associates, Inc.; and approximately $1,387,302,000 in the case of IBA Group Limited. The Recent Appraised Values for the Initial Aircraft by type and class, using the average of the three Appraisals, are set out in the following table. See "Risk Factors Risks Relating to the Aircraft Risks Associated with Appraised Values". 72

81 Serial Number (1) Aircraft Type Engine Type (2) Scheduled Delivery From Manufacturer (3) Ascend Adjusted Base Value (in millions) BK Associates, Inc. IBA Group Limited Recent Appraised Value (4) 3365 A IAE V2527-A5 Jan-2008 $45.35 $44.90 $45.68 $ A IAE V2527-A5 Feb-2008 $45.35 $44.90 $45.74 $ A CFM56-5B4/3 Apr-2008 $45.60 $45.09 $46.73 $ A CFM56-5B6/3 Jun-2008 $40.37 $38.50 $39.39 $ A CFM56-5B4/3 Jul-2008 $45.60 $45.09 $46.91 $ A CFM56-5B4/3 Aug-2008 $45.60 $45.09 $46.96 $ A CFM56-5B4/3 Dec-2008 $45.60 $45.59 $47.20 $ A CFM56-5B4/3 Jan-2009 $46.01 $46.53 $47.51 $ A IAE V2527-A5 Jan-2009 $45.56 $46.10 $46.90 $ A IAE V2524-A5 Feb-2009 $40.51 $39.70 $39.70 $ A CFM56-5B4/3 Feb-2009 $45.81 $46.11 $47.31 $ A CFM56-5B4/3 Feb-2009 $46.01 $46.53 $47.57 $ A IAE V2524-A5 Mar-2009 $40.51 $39.70 $39.75 $ A CFM56-5B4/3 Mar-2009 $46.01 $46.53 $47.63 $46.73 TBD A CFM56-5B4/3 Apr-2009 $45.81 $46.11 $47.43 $ A CFM56-5B4/3 May-2009 $46.01 $47.06 $47.75 $46.94 TBD A CFM56-5B4/3 Jun-2009 $46.01 $47.06 $47.81 $46.96 TBD A CFM56-5B4/3 Sep-2009 $46.01 $47.59 $47.99 $47.20 TBD A CFM56-5B4/3 Oct-2009 $46.01 $48.12 $48.05 $47.39 TBD A CFM56-5B4/3 Nov-2009 $46.01 $48.12 $48.11 $47.41 TBD A CFM56-5B4/3 Nov-2009 $46.01 $48.12 $48.11 $47.41 TBD A CFM56-5B6/3 Dec-2009 $39.81 $40.45 $39.21 $39.82 TBD A CFM56-5B4/3 Feb-2010 $46.70 $48.67 $48.28 $47.88 TBD A CFM56-5B6/3 Mar-2010 $40.40 $40.90 $39.36 $40.22 TBD A CFM56-5B4/3 Mar-2010 $46.70 $48.67 $48.34 $47.90 TBD A CFM56-5B4/3 Mar-2010 $46.70 $48.67 $48.34 $47.90 TBD A CFM56-5B4/3 Mar-2010 $46.70 $48.67 $48.34 $47.90 TBD A CFM56-5B4/3 Apr-2010 $46.70 $49.21 $48.40 $48.10 TBD A CFM56-5B4/3 Apr-2010 $46.70 $49.21 $48.40 $48.10 TBD A CFM56-5B4/3 May-2010 $46.70 $49.21 $48.46 $48.12 Total $1, $1, $1, $ (1) "TBD" indicates that as of May 5, 2008 the manufacturer had not yet assigned a serial number to this Initial Aircraft. (2) Engine manufacturer key: CFM CFM International IAE International Aero Engines (3) As of May 5, 2008, the Scheduled Delivery Date of the Initial Aircraft, which, in the case of Aircraft that have already been delivered from Airbus, reflects the actual date of delivery from Airbus. (4) As of October 31, The following table sets forth the exposure to the Initial Aircraft by type of aircraft calculated by reference to their Recent Appraised Value and percentage of the aggregate Recent Appraised Value of the Initial Aircraft. % of Portfolio Aircraft Type Body Type Engine Stage Number of Initial Aircraft by Recent Appraised Value Airbus A Narrow % Airbus A Narrow % Total % 73

82 The following table sets forth the exposure to the Initial Lessees, based on the Existing Leasing Contracts, calculated by reference to the Recent Appraised Value and percentage of the aggregate Recent Appraised Value of the Initial Aircraft. Number of Initial Aircraft % of Portfolio by Recent Appraised Value Lessee Aegean % Aer Lingus % Aeroflot % Air Arabia % Air France % Hemus Air % Juneyao % Wataniya Airways % Mexicana % Nouvelair % Royal Jordanian % Spring Airlines % TAP Portugal % Total % The following table sets forth country exposure of the Initial Lessees, based on the Existing Leasing Contracts, and their percentage of the aggregate Recent Appraised Value of the Initial Aircraft. Number of Initial Aircraft % of Portfolio by Recent Appraised Value Lessee Bulgaria % China % France % Greece % Ireland % Jordan % Kuwait % Mexico % Portugal % Russia % Tunisia % United Arab Emirates % Total % 74

83 The following table sets forth regional exposure of the Initial Lessees, based on the Existing Leasing Contracts, and their percentage of the aggregate Recent Appraised Value of the Initial Aircraft. For a description of each region, see "Description of Notes Operating Covenants". Number of Initial Aircraft % of Portfolio by Recent Appraised Value Region Developed Markets Europe % North America % Asia/Pacific % Total Developed Markets % Emerging Markets Europe % Asia/Pacific % Indian Subcontinent % Latin America/Caribbean % Africa/Middle East % Total Emerging Markets % Total % The following table sets forth the seating categories of the Initial Aircraft by number of Initial Aircraft and their percentage of the aggregate Recent Appraised Value of the Initial Aircraft. Number of Initial Aircraft % of Portfolio by Recent Appraised Value Seating Category Aircraft Type A % A % Total % The following table sets forth the exposure of the Initial Aircraft by year of delivery or, in the case of the Initial Aircraft not yet delivered from Airbus, expected delivery from the manufacturer calculated by reference to the percentage of the aggregate Recent Appraised Value of the Initial Aircraft. The weighted average age of the Portfolio as of May 5, 2008 was approximately zero years. Number of Initial Aircraft % of Portfolio by Recent Appraised Value Year of Delivery From Manufacturer % % % Total % The following table sets forth certain publicly available information with respect to the demographics of the airframe/engine combinations of the Initial Aircraft, with respect to body type, seat capacity, number of engines, production years, current fleet, orders and number of operators. Number of Engines Number of Operators Initial Aircraft Body Type Seat Capacity Production Years Current Fleet Orders Airbus A Narrow Airbus A Narrow Source: Airclaims CASE database 75

84 ACQUISITION OF ADDITIONAL AIRCRAFT The ALS Group may acquire additional commercial passenger or freighter aircraft or engines from various sellers with the net proceeds of the issuance of Additional Notes. Cash flows derived from the Additional Aircraft, if any, and the related Leases will be available to satisfy ALS's payment of principal of the Notes, including the Initial Notes. See "Risk Factors Risks Relating to the Aircraft". There is no limit on the aggregate value of Additional Aircraft that may be acquired or on the period in which such Additional Aircraft must be acquired. Any acquisition of Additional Aircraft and related issuance of Additional Notes will be subject to certain conditions under the Indenture and any Additional Notes will only be issued with the prior written consent of the Liquidity Provider (unless the Liquidity Facility Non-Consent Event has occurred), the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing), the Class A-1 Trustee (acting at the written direction of all of the Holders of the Class A-1 Notes), and the Holder or Holders of the Class E Notes and receipt of a Rating Agency Confirmation. The consent of the Holders of the Class A-2 Notes is not required. See "Description of Notes Indenture Covenants Limitation on Indebtedness" and " Limitation on Aircraft Acquisitions". INITIAL LEASES General All Leases of the Initial Aircraft will be managed by the Servicer pursuant to the Servicing Agreement. The following description relates only to the Existing Leasing Contracts. Initial Leases in respect of Initial Aircraft that were as of May 5, 2008 subject to an Initial Lease LOI may have terms materially different from those described in the Initial Lease LOI. Any Additional Leases acquired in connection with the acquisition of Additional Aircraft and any Future Leases entered into in connection with the re-lease of any Aircraft or leases of Substitute Aircraft may differ from the description of the Existing Leasing Contracts set forth below. However, any Initial Leases, Additional Leases or Future Leases will be required to comply with the operating covenants set forth under "Description of Notes Indenture Covenants" and " Operating Covenants". Under the Existing Leasing Contracts there are 13 Lessees based in 12 countries in Europe, Asia, Latin America, Africa and the Middle East. For a description of the countries included in each region, see "Description of Notes Operating Covenants Concentration Limits". The Existing Initial Leases are all, and the Initial Leases not yet entered into are all expected to be, operating leases under which the ALS Group generally will retain the benefit, and bear the risk, of the residual value of the Initial Aircraft upon expiry or early termination of the Initial Lease. Under the Initial Leases, the Lessees have agreed or will agree to lease the Initial Aircraft for a fixed term, although four of the Existing Leasing Contracts, in respect of approximately 13.43% of the Initial Aircraft by Recent Appraised Value, contain options in favor of the Lessees to extend their terms. All of the Existing Initial Leases and the Leases to be entered into based on the Initial Lease LOIs are scheduled to expire before the end of Significant variations in the terms and provisions of the Leases exist as a result of Lessee negotiation. Each of the Initial Aircraft are or will be leased directly from an Initial Aircraft-Owning Entity to an Initial Lessee, except for the following aircraft which are or will be subject to sublease arrangements for withholding tax or aircraft registration reasons. Four of the Initial Aircraft on lease to Aeroflot are or will be leased from the relevant Initial Aircraft Company to the Initial Leasing Intermediary incorporated under the laws of Bermuda, which leases or will lease each such Aircraft back to the relevant Initial Aircraft Company, which in turn leases or will lease such Aircraft to Aeroflot; and three of the Initial Aircraft on lease to Aegean are or will be leased from the relevant Initial Aircraft Owning Company to the Initial Leasing Intermediary incorporated under the laws of the United Kingdom, which leases or will lease each such Aircraft to Aegean. Lease payments and security Each Existing Initial Lease requires or will require the Lessee to pay periodic rentals during the Lease term. Based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, 25 of the Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, require the Lessee to pay periodic amounts of maintenance reserves or similar payments. See " Maintenance and Maintenance Reserves" below. Rentals under all of the Existing Leasing Contracts based on the Existing Initial 76

85 Leases and the lease provisions described in the Initial Lease LOI are or will be payable monthly in advance. Under 13 of the Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, representing approximately 43.78% of the Recent Appraised Value of the Initial Aircraft, the rental payments are or will be payable on a fixed rate basis for the initial terms of the Lease. In addition, under 12 of the Existing Leasing Contracts, based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, representing approximately 39.30% of the Recent Appraised Value of the Initial Aircraft, will have fixed rental payments, but such rental payments will be fixed on or about the date of delivery of the relevant Initial Aircraft to the Lessee pursuant to the relevant Lease, calculated by reference in part to a U.S. dollar swap rate prevailing at such date. Under five of the Existing Leasing Contracts, based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, representing approximately 16.92% of the Recent Appraised Value of the Initial Aircraft, the Lessee may elect, on or about the date of delivery of the relevant Initial Aircraft to the Lessee pursuant to the relevant Lease, whether the rental payments will be payable on a fixed rate basis (calculated by reference in part to a U.S. dollar swap rate prevailing at such date) or will be floating based on a swap rate or LIBOR for the duration of the Lease. Lease payments under all of the Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, are payable in U.S. dollars. The Lessees generally are or will be required to make payments to the Lessor without setoff or counterclaim, and many of the Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, include an obligation of the Lessee to gross-up payments under the Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, in cases in which payments are subject to certain withholding and other taxes. The Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, also contain indemnification obligations of the Lessee in favor of the Lessor for certain tax liabilities (including, in some Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, value added tax and stamp duties, but generally excluding income tax or its equivalent imposed on the Lessor). The Lessees also are or will be obliged to pay default interest or fees on overdue amounts. In some cases, the Lessee may exercise certain remedies, including setoff against Lease payments, if the Lessor, or any person claiming by or through the Lessor, breaches the Lessor's covenant of quiet enjoyment. Under the Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, the Lessees are liable through various operational indemnities for operating costs and expenses accrued or payable during the term of the respective Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, which would normally include costs and expenses associated with the maintenance and operation of the Aircraft, airport and navigation charges, certain taxes, licenses, consents and approvals, aircraft registration and hull all risks and public liability insurance premiums. The Lessees are obliged to remove liens on the Aircraft other than certain liens permitted under the Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI. Under all of the Existing Leasing Contracts, based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, the Lessee has provided or will provide collateral for its obligations either in the nature of a cash security deposit or a letter of credit or both. In the case of 26 of such Existing Leasing Contracts, in respect of approximately 86.57% of the Initial Aircraft by Recent Appraised Value, the Lessee has provided or will provide cash security deposits, and in the case of four Leases, in respect of approximately 13.43% of the Initial Aircraft by Recent Appraised Value, the Lessee has provided or will provide a letter of credit in lieu of cash security. Under 13 of the Existing Leasing Contracts, based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, in respect of approximately 43.79% of the Initial Aircraft by Recent Appraised Value, the Lessee has provided or will provide cash security deposits but will have an option to provide a letter of credit in lieu of cash security after the applicable Aircraft is delivered to such Lessee under the applicable Lease (in which case, the applicable Lessor will be required to return the amount of such cash security to such Lessee). Under one of the Existing Leasing Contracts, based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, in respect of approximately 3.34% of the Initial Aircraft by Recent Appraised Value, the Lessee has provided or will provide collateral for its obligations both in the form of a cash security deposit and a letter of credit. Lessee early termination options 77

86 Based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, seven Existing Leasing Contracts, representing approximately 23.81% of the Initial Aircraft by Recent Appraised Value, permit the Lessee to terminate a Lease prior to the scheduled lease expiry date. Lessee purchase options None of the Existing Leasing Contracts, based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, grant Purchase Options to the Lessee. Operation of the Initial Aircraft Each Existing Leasing Contract based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, requires or will require the Lessee to operate the Aircraft in compliance with all laws and regulations applicable to the Aircraft and the Lessee. The Aircraft generally must remain in the possession of the Lessees, and any subleases of the Aircraft generally must be approved by the Lessor unless, in some Leases, certain conditions are met. Under most of the Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, the Lessees may enter into charter or "wet lease" arrangements in respect of the Aircraft (i.e., a lease with crew and services provided by the lessor under the wet lease), provided the Lessee does not part with operational control of the Aircraft. Under some Existing Leasing Contracts, the Lessee is permitted to enter into subleases with specified operators or types of operators without the Lessor's consent, provided certain conditions are met. All of the Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, permit or will permit the Lessees to subject the equipment or components to removal or replacement and, in certain cases, to pooling arrangements (temporary borrowing of equipment), in some cases with permitted entities (that may include certain manufacturers, suppliers, other airlines or aircraft operators), without the Lessor's consent but subject to conditions and criteria set forth in the Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI. Under all of the Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, the Lessees may deliver possession of the Aircraft, engines and other equipment or components to the manufacturer thereof for testing or similar purposes, or to a third party for service, maintenance, repair or other work required or permitted under the Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI. The Lessor's ability to repossess the Aircraft or engines, equipment or components from any such sublessee, transferee, manufacturer or other person may be restricted by liens or similar rights of retention, by applicable bankruptcy and insolvency laws and by laws that may "merge" the Lessor's rights to engines, equipment or components into those of another person owning the airframe on which they are placed. Maintenance and maintenance reserves The Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, contain detailed provisions specifying maintenance standards and the required condition of the Aircraft upon redelivery. In addition, under certain of the Leases, depending upon the specific maintenance condition of the Aircraft or specified items (airframe, engines, certain components, auxiliary power unit or landing gear) at redelivery, the Lessee or the Lessor may be required to make specified adjustment payments to the other, depending on whether such items have less or more time remaining, respectively, until their next overhaul and redelivery compared to delivery under the related Initial Lease or compared to certain specified requirements. During the term of each Lease, the Lessee is required to ensure that the Aircraft is maintained in accordance with a maintenance program approved by the applicable aviation authority and designed to ensure that the Aircraft meets applicable airworthiness and other regulatory requirements in the jurisdiction in which the Aircraft is registered. Under the Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, the maintenance program is generally performed by the Lessee or, in some cases, by a third party maintenance provider retained by the Lessee and approved by the Lessor. Where there is a sublease, the sublessee may maintain the Aircraft. Under 25 of the Existing Leasing Contracts, based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, the Lessee is required to make monthly supplemental rent payments as maintenance reserves. In cases where the Lessee has paid supplemental rent payments as maintenance reserves, the Lessor is 78

87 obligated to reimburse the Lessee up to the amount of such payments for certain significant scheduled maintenance charges, including major airframe and engine overhauls. Under the balance of the Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, there is no provision for the payment of maintenance reserves. In these cases the Lessor must rely on the creditworthiness of the Lessee or, if available, any credit support, and the ability of the Lessee to perform scheduled maintenance throughout the Lease term, to return the Aircraft in the condition required by the Lease upon termination and to make any required payments based on the Aircraft's return condition upon termination of the related Lease. The Lessees are required under the Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, to comply with Airworthiness Directives of the applicable aviation authorities and the Lessees bear most of the cost of compliance. However, under eight of the Existing Leasing Contracts based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, the Lessor may be required to contribute to the cost of certain Airworthiness Directives, or to the cost above a specified threshold. INDEMNIFICATION AND INSURANCE OF THE AIRCRAFT General The Lessees are required under the Existing Leasing Contracts, based on the Existing Initial Leases and the lease provisions described in the Initial Lease LOI, to bear responsibility (through an operational indemnity subject to customary exclusions) and to carry insurance for any liabilities arising out of the operation of the Aircraft, including any liabilities for death or injury to persons and damage to property that ordinarily would attach to the operator of the Aircraft. In addition, the Lessees are or will be required to carry other types of insurance that are customary in the air transportation industry, including hull all risks and hull war risks insurance (in each case at a value stipulated in the relevant Lease, subject to adjustment in certain circumstances) and aircraft spares insurance, in each case subject to customary deductibles. The Insurance Servicer is required to monitor the compliance by the Lessees with the insurance provisions of the Initial Leases by securing confirmation of coverage from the insurance brokers. Also, the Insurance Servicer, or ALS, as applicable, will purchase insurance covering the ALS Group when an Aircraft is not subject to a Lease or where a Lessee's policy lapses for any reason, the cost of which will be reimbursed to the Insurance Servicer by ALS in the event the Insurance Servicer purchases such insurance. In the event that any of the existing insurance policies are canceled or terminated and in the case of the re-lease of an Aircraft, the ALS Group may from time to time engage insurance experts to advise and recommend to AerCap Cash Manager II Limited, as the Insurance Servicer, the appropriate amount of insurance coverage the ALS Group should procure. Liability Insurance Third party liability insurance is or will be required under the Initial Leases for a combined single limit for bodily injury and property damage in minimum amounts ranging typically between $350 million and $1,000 million for each Initial Aircraft, depending in part on whether such Aircraft is narrowbody or widebody, or passenger or freighter. In general, liability coverage on each Initial Aircraft includes third party legal liability, passenger legal liability, baggage legal liability, cargo legal liability, mail and aviation general third party (including product liability) and legal liability. In some jurisdictions, liabilities for risks insured against by the Lessees also may attach to the ALS Group as owner of the Initial Aircraft irrespective of whether it is in any way responsible for the loss for which liability is asserted. In addition, claimants may assert claims against the ALS Group on the basis of alleged responsibility for a loss, even if such claim is not ultimately sustained. Under the Initial Leases, the Lessees are currently obligated to indemnify the Lessors against claims, including the costs of defending against such claims, by third parties against the Lessors for such liabilities while the Initial Aircraft are owned by ALS and under lease to the Lessees. The ALS Group will cause the Lessees to name the Lessor and the Security Trustee as additional insureds under their respective liability insurance policies. 79

88 The indemnified losses include both operating costs relating to the actual operation of the Initial Aircraft, as well as losses to persons and property resulting from the operation of the Initial Aircraft. The latter types of losses are generally covered by the Lessees' liability insurance subject to applicable customary deductibles. Hull Insurance and Aircraft Spares Insurance The Lessees are or will be obligated under the Initial Leases to carry hull all risks and hull war risks insurance (in each case at a value stipulated in the relevant Lease, subject to adjustment in certain circumstances) and aircraft spares insurance (on a replacement cost basis), in each case subject to customary deductibles. Permitted deductibles typically range from $250,000 to $1,000,000; however, the deductible generally applies only in the case of a partial loss. In some cases, the Lessees are or will be required to obtain additional insurance to cover part of this deductible amount. In the case of a total loss of an Initial Aircraft, no deductible would be applied against the insurance proceeds received. The Initial Leases include or will include provisions defining an event of loss or a casualty occurrence such that when a total loss of the airframe occurs, with or without loss of the engines installed on the airframe, the agreed or stipulated loss value is payable by the Lessee. This payment is generally funded with insurance proceeds. However, if the insurance proceeds do not cover the entire loss, the Lessee would be responsible for the payment of the difference between the insurance proceeds and the agreed or stipulated loss value. Typically, insurance coverage contains a breach of warranty endorsement so that the additional insureds continue to be protected even if the Lessee violates one or more of the terms, conditions or warranties of the insurance policies, provided that such additional insured has not caused, contributed to or knowingly condoned such breach. The ALS Group has caused or will cause the Lessees to name (subject to customary insurance practice) the Security Trustee and the applicable Lessor as additional insureds under the aircraft property insurance policies described above. The Administrative Agent generally will confirm to the ALS Group, or cause a third party insurance broker to confirm to the ALS Group, among other things, that the insurance detailed in the insurance certificates meets the requirements of the respective Leases and customary practices. The Leases require the Lessee to maintain, as part of its hull, war and allied perils insurance, coverage for confiscation or requisition of the applicable Initial Aircraft (including, in some leases, confiscation or requisition by the relevant state of registration), although in certain countries such insurance may not be obtainable. THE LESSEES Payment History As a general matter, thinly capitalized airlines are more likely than well-capitalized airlines to seek operating leases of used aircraft. Many of the Lessees are in weak financial positions and, at any point in time, investors should expect varying numbers of the Lessees to be experiencing payment difficulties. As of May 5, 2008, of the three Existing Initial Leases that had commenced as of May 5, 2008, no Lessee had rental payments outstanding for a period of 30 days or more and no Lessee owed maintenance reserve payments under its Lease that were past due for 30 days or more. See "Risk Factors Risks Relating to the Lessees". In certain cases, the ALS Group may respond to the needs of Lessees in financial difficulty in certain instances by restructuring the applicable Leases. Such restructurings may involve reduced or deferred rental payments for a specified period (that may be several years or the remainder of the Lease term). In addition, certain restructurings may involve the voluntary termination of a Lease prior to its expiration. Upon an early termination of a Lease, there can be no assurance that the relevant Aircraft can be timely re-leased, that favorable rates can be achieved in any releasing or that the performance of any replacement lease will be satisfactory. 80

89 Description of the Initial Lessees The table below sets forth certain publicly available information as of May 5, 2008 with respect to the country of domicile, commencement of operation, service type, structure of Lessee ownership and operating fleet and composition of each Initial Lessee. See "The Initial Aircraft and Leases" above for additional tables setting forth the exposure of the Initial Aircraft (as a percentage of Recent Appraised Value of the Initial Aircraft) to each Initial Lessee and country. Lessee Domicile Began Operation Service Type Ownership (1) Operating Fleet Aegean... Greece 1999 (2) Full service/ Regional Vassiliks group of companies 45.2%; Laskaridis group of companies 25.3% 3 A B Aer Lingus... Ireland 1936 Scheduled/ Low cost Aeroflot... Russia 1923 (3) Full service network/ Flag carrier Air Arabia... United Arab Emirates 2003 Low cost/ Regional Air France... France 1933 (4) Full service network/ Flag carrier Juneyao... China 2006 Full service domestic Wataniya Airways... Kuwait 2009 (5) Full service/ Regional Hemus Air... Bulgaria 1987 Full service/ Regional Government of Republic of Ireland 28.29%; Ryanair 25.22% Russian government 51%; National Reserve Corporation 27% Department of Civil Aviation 12% AirFrance-KLM 100% (French government 19%; Employees 15%) 6 Avro RJ A A A A A A A B ER 6 Ilyushin Tupolev 134A 26 Tupolev 154M 10 A A A A A A A A B B Combi 25 B ER 23 B ER Multiple private investors 2 Airbus A Airbus A Multiple private investors 9 A (6) Bulgarian Aviation Group 100% 4 BAe BAe Boeing Mexicana... Mexico 1921 (7) Full service/ Regional Nouvelair... Tunisia 1990 (8) Charter/ Regional Grupo Posada 100% 10 A A A A A B ER Tunisian Travel Service 100% 10 A A

90 Lessee Domicile Began Operation Service Type Ownership (1) Operating Fleet Royal Jordanian... Jordan 1963 Full service Government of Jordan 29%; MI Group 19%; Jordan Social Security Corporation 10% 3 A A A A Bombardier DHC Q Embraer 195 Spring Airlines... China 2005 Low cost/ Spring International Travel 8 A Domestic Service 100% TAP Portugal... Portugal 1946 Full service Portuguese government 100% 6 A A A A A A Source: ATI (Air Transport Intelligence), CASE Airclaims database and official websites of the Lessees. (1) Identified ownership by equity owners of 10% or more. (2) Started scheduled passenger service in 1994, but founded in (3) Took on name of Aeroflot in 1932 after consolidation of airline activity. (4) Formed as a result of the merger of several constituent airlines. (5) Wataniya Airways expects to begin operations in January (6) Fleet expected to be delivered to Wataniya Airways by end of (7) Took name of Compañia Mexicana de Aviacion in 1924 following a merger. (8) Established with name of Air Liberte Tunisie. Additional Available Information Concerning Certain Initial Lessees Aeroflot voluntarily files reports and other information with the U.S. Securities and Exchange Commission (the "Commission"). Such reports and other information filed with the Commission can be inspected without charge and copied, at prescribed rates, at the Public Reference Section of the Commission at 100 F Street, NE, Room 1580, Washington, D.C and the Regional Offices of the Commission at 175 West Jackson Boulevard, Suite 900, Chicago, Illinois and Woolworth Building, 223 Broadway, New York, New York These filings are also available to the public from commercial document retrieval services and at the Commission's web site on the Internet at Air France-KLM first became subject to reporting obligations under Section 13(a) or Section 15(d) of the Exchange Act of 1934 (the "Exchange Act") on April 30, 2004, the date on which its registration statement on Form F-4 (file no ) became effective. As required by Rule 12h-6(h) of the Exchange Act, Air France-KLM disclosed its intent to voluntarily terminate the registration of the securities that were listed on the New York Stock Exchange in a press release dated January 18, Air France-KLM applied to delist its securities from the New York Stock Exchange on January 28, 2008, and on February 7, 2008 Air France-KLM's delisting from the New York Stock Exchange became effective. Air France-KLM's shares are listed on Euronext Paris and Euronext Amsterdam. Air France-KLM's filings are available to the public at Air France-KLM's website on the Internet at Air Arabia's shares are listed on the Dubai Financial Market. Air Arabia's filings are available to the public at the Dubai Financial Market's website on the Internet at and are also available at Air Arabia's website on the Internet at The documents of Aeroflot filed with the Commission, of Air Arabia filed with the Dubai Financial Market and available at Air Arabia's website, and of Air France-KLM available to the public at Air France-KLM's website, are not incorporated by reference in these listing particulars. 82

91 The Commercial Aircraft Industry INTRODUCTION Simat, Helliesen & Eichner, Inc. ("SH&E"), an international air transport consulting firm and an expert in air transportation, has prepared this description of the commercial aircraft industry for ALS. Although ALS believes the description to be reliable, it has not independently verified the information contained herein. This commercial aircraft industry section examines the market for large commercial jet aircraft, with a particular emphasis on the prospects of the single-aisle aircraft market and the leasing industry, providing a framework for understanding the factors that influence the values and lease rates of commercial passenger and cargo jet aircraft. The report addresses both the demand side of the market, composed of passenger and cargo airlines, and the supply side of the market, dominated by The Boeing Company ("Boeing"), Airbus and aircraft lessors ranging from large corporations to small private partnerships. Growing demand for air travel, combined with economic and technical developments, favors the long-term expansion of aircraft leasing. Key conclusions include: Demand for commercial jet aircraft is stable, driven by global economic growth, low-cost carrier ("LCC") growth and on-going market liberalization. Technological development, rising fuel prices and environmental concerns are expected to drive substantial demand for replacement of the current operating fleet of commercial jet aircraft over the next decade. Manufacturer production is increasing due to the high level of aircraft orders in recent years, but modern fuel efficient aircraft remain in tight supply. The commercial aircraft leasing market now accounts for approximately 32.0% of the world aircraft fleet and an even higher percentage of the fast-growing LCC fleet. Operating leases are a particularly important means of single-aisle aircraft financing. The operating leasing industry has taken advantage of the strong demand for aircraft over the past several years and demand for leased aircraft is expected to continue to grow over the next decade. Limited access by many airlines to cost-effective capital, together with the operational flexibility that operating leases provide, are the two principal drivers for the continued development and growth of the operating lease industry. AIR TRANSPORT INDUSTRY Global Trends & Events Aircraft demand is derived from the demand for passenger and cargo air transport. The demand for air transport is closely tied to economic activity and has historically grown at around 1.5 to 2.0 times the trend long-term growth rate in gross domestic product ("GDP"). The translation of passenger and cargo traffic demand into demand for aircraft units is impacted by a number of factors as airlines attempt to optimize their fleets for given network structures and demand patterns. This section outlines some of the key trends that are expected to contribute to the continued demand for aircraft over the coming years. According to data from ICAO, the airline industry generated eight consecutive profitable years, with operating profits of $91 billion and net profits of $34 billion, between 1993 and Starting in 2000, an economic recession and a series of external shocks, including the terrorist attacks in the United States of September 11, 2001, military actions in the Middle East, the SARS epidemic, surging fuel costs and several natural disasters combined to cause an unprecedented decline in air travel demand. As a result, was the worst three-year period in the history of the airline industry in terms of cumulative airline operating and net losses, which totaled $18 billion and $32 billion respectively. Despite these challenges, the global economy has expanded rapidly since 2002, driving sustained 83

92 growth in worldwide travel demand. While 2007 was profitable for airlines with a net profit of $5.6 billion, the outlook for 2008 is mixed. The International Air Transport Association's ("IATA") March 2008 forecast predicts airline industry operating profits of $12.1 billion in 2008, a decrease from $16.3 billion in IATA has recently downgraded its 2008 forecast from $15.3 billion, due to higher than expected oil prices and may further adjust net profitability forecasts should the credit market difficulties persist. Indexed Historical World Traffic (RPKs) and GDP Growth (1970=100) Index, 1970 = 100 1, World GDP Growth (Right Axis) Indexed RPKs (Left Axis) Oil Crises Recession First Gulf War Asian Crises SARS, Second Gulf War Source: Airline Monitor, July 2007, Boeing and International Monetary Fund ("IMF") World Economic Outlook, April 2007 According to the Airline Monitor, a respected industry forecaster, between 1991 and 2006, global passenger traffic measured in revenue passenger kilometers ("RPK"), a measure of passenger demand representing each kilometer that a passenger is carried, increased by nearly 134.0%, or an average rate of 5.8% per year, reaching 4,225 billion RPKs in Available seat kilometers ("ASK"), a measure of capacity, representing each kilometer that a seat is carried (whether the seat is occupied or not), grew at an average rate of 4.8% per year for the same period, amounting to 5,565 billion ASKs in The Airline Monitor projects 5.2% annual average growth in global passenger traffic and 5.0% annual average growth in seat capacity for the next 10 years. This forecast is consistent with other industry forecasts. The Airbus 2007 Global Market Forecast predicts that air travel demand will continue to grow an average of 4.9% per year through 2027 and the Boeing 2007 Commercial Market Outlook projects 5.0% annual growth in traffic for the next 20 years. Air cargo demand globally is expected to grow even faster than passenger demand, forecasts by Airbus and Boeing predicting annual growth during the next 20 years of 5.8% and 6.1%, respectively. Globally, there are several key trends and developments that are influencing the evolution of the air transport industry. Globalization continues to drive geographic diversification of the industry. The ongoing liberalization of domestic airline regulation in many large emerging markets, and the continuing loosening of international air service restrictions, are allowing increased service opportunities and facilitating the development of new airline business models and start-up ventures. These factors are reasonably expected to increase competition and, as a result, global industry consolidation is on the radar for many airline managers. High oil prices continue to be a major strain on airline finances. This factor, in conjunction with increasing global concern over the environmental impact of aviation, is not only compelling the world's airline operators to become much more fuel efficient, but is threatening sustained airline profitability. Sep % 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% GDP Growth 84

93 Regional Overview Historical Passenger Traffic Growth by Carrier Region (RPK) Indexed Growth (1998 = 100) Historical Passenger Growth Africa / Middle East Asia / Pacific Europe North America Latin America IATA Forecast Average Annual Growth Rates Region Africa Asia / Pacific China India Europe Latin America Middle East North America Passenger Growth +5.6% +5.9% +8.8% +8.6% +5.0% +4.4% +6.8% +4.2% Global +5.1% Source: Airline Business, IATA 2007 results and Forecast The above chart shows that passenger traffic growth in Europe, North America and Latin America rebounded strongly from 2001 lows, while passenger traffic growth in Asia, Africa and the Middle East, regions that are less dependent than Europe or Latin America on the U.S. market, have experienced steady passenger traffic growth since Today, air travel is rapidly becoming a more accessible alternative to land transportation for a growing proportion of the world's population, especially in high-growth emerging markets. Similarly, freight traffic has shown strong growth due to the recovery in the global economy and the continuing growth of international trade. While much of the freight traffic growth over the last decade has been concentrated in the economy segment, the last several years have been characterized by an increase in business travel in many important global long-haul markets. IATA data indicates that premium traffic volumes have increased sharply in Europe and Asia and steadily in the North Atlantic and North Pacific markets over the last two years. This trend is expected to continue, and recent indications from both British Airways Plc. ("British Airways") and Virgin Atlantic Airways Ltd. ("Virgin Atlantic") that plans are afoot for an all-premium Trans-Atlantic service provide further evidence that market liberalization will increase opportunities for expansion of the premium passenger market. As shown in the table below, the world aircraft fleet has more than doubled over the last 20 years and its composition is gradually shifting from North American dominance to a more balanced distribution among regions, with Europe and Asia taking an increasingly larger share. Of the aircraft in the year-end 2007 world fleet, approximately 23.0% were twin-aisle, 60.0% were single-aisle and 17.0% were regional jets. Historically, North America and Europe have accounted for the bulk of global aircraft demand, and represented 74.0% of the in-service fleet in In North America and Europe, fleet growth rates are expected to slow slightly relative to prior decades, while Asia/Pacific and Latin America are expected to generate much faster demand growth over the coming decade. Specifically, the Asia/Pacific region has shown the fastest fleet growth, with a total growth of 7.7% per year since 1987, averaging 9.7% for single-aisle aircraft. Of the single aisle fleet, the Asia/Pacific region currently accounts for 18.5% of the fleet, up from 6.5% in 1987, and is forecast by Boeing to grow to 26.0% of the fleet by

94 Historical and Expected Fleet Growth by Region Single-aisle Fleet Development Twin-aisle Fleet Development 25,000 10,000 Number of Aircraft 20,000 15,000 10,000 Middle East / Africa S. America Asia / Pacific Europe N. America 877 1,119 2,227 1,060 1,920 6,030 6,290 Number of Aircraft 8,000 6,000 4,000 Middle East / Africa S. America Asia / Pacific Europe N. America 547 1, , ,630 2,070 5, ,108 3, ,181 4,662 7, , ,060 1,416 2, Source: ACAS, March 2008; Boeing Current Market Outlook, 2007 Asia/Pacific. Despite health scares and natural disasters, Asian passenger traffic has experienced continued growth over the last five years, with the latest figures released by IATA showing passenger traffic increasing 9.5% between August 2006 and August As for economic growth generally, the Chinese market presents the primary growth in the region. Chinese passenger traffic growth has been very strong, with the number of passengers handled by China's airports reaching nearly 332 million in 2006 for both domestic and international routes, an increase of 16.7% from the prior year. Although medium-term growth in the Chinese market may be temporarily constrained by infrastructure and capacity limits, according to Airline Business (April 2006), the Civil Aviation Administration of China plans to invest over $17.4 billion in airport development and build more than 40 airports to address these needs over the next five years. Total passenger numbers are predicted to reach 560 million by the end of the decade, representing an average annual growth rate of 11.0% between 2006 and Airbus estimates long-term growth for Chinese traffic will average 7.2% over the next 20 years. Recently announced international and domestic liberalization efforts by the Chinese government and the gradual removal of regulatory constraints will assist in facilitating capacity expansion in the market. A U.S.-China aviation agreement will more than double the number of daily passenger flights between the two countries by In addition, from 2010 the Chinese government will no longer require that private airlines seek approval to launch domestic services to the country's top 10 airports, which will likely increase competition and expand opportunities for private airlines within China. Chinese operators currently have nearly 700 single-aisle aircraft on order, of which 58.0% are Airbus A320 family aircraft. India, a country with over one billion people, representing 15.0% of the global population, experienced very limited air service growth in recent decades. This changed dramatically in 2003, following moves by the government to liberalize the air transport sector. The present strong traffic growth is expected to continue, with India's GDP growing at 9.2% in 2007 and forecasted to be 7.9% in 2008, according to the International Monetary Fund's 2008 World Economic Outlook. In its 2007 traffic forecast, Airbus estimated that domestic traffic growth in India would average 11.5% annually over the next 20 years. Indian carriers took delivery of 77 aircraft in the last 12 months and account for a current backlog of 392 aircraft, of which 281 are single-aisle types. In 2008, approximately 63 further aircraft are due to be delivered, taking the active fleet from 342 to just above 400 by the end of the year. The Centre for Asia Pacific Aviation estimates that India's fleet will reach by the end of Of the 281 single-aisle aircraft currently on order, 77.0% are Airbus A320 family aircraft. 86

95 Despite the growing demand, Indian carriers are in danger of growing their capacities too quickly and many carriers are presently operating at substantial losses. Over time, consolidation and infrastructure development may help alleviate some of the competitive pressure on the major domestic Indian routes. Current Indian regulations state that only airlines that have operated successfully for the last five years on a domestic basis are allowed to open international routes. However, the Indian government confirmed recently that it is planning to relax these regulations, and intends to examine applications for overseas service on a case-by-case basis, thereby helping the Indian industry to reach parity with the foreign competition for routes to and from India. It is expected that carriers such as Kingfisher Airlines Ltd. and SpiceJet Limited will launch international services in In order to accommodate the associated fleet increase, India is expected to continue to invest in airport and passenger handling infrastructure to enable carriers to diversify route networks, which, along with trained personnel availability, is the primary constraint to further growth. In addition to the projected substantial growth in India and China's passenger traffic, economic recovery in Japan, continued growth in Korea and Southeast Asia and the competitive evolution of the aviation industry in Australia and New Zealand, are expected to contribute to continued demand and the development of new airlines. The export market and emerging domestic express market are also expected to drive strong demand for both shorthaul and larger payload long-haul freighters. Boeing expects the largest incremental growth in the widebody freighter fleet to occur in the Asia/Pacific region over the next 20 years. Overall, the Asia/Pacific region is expected to generate strong demand for both twin-aisle and single-aisle aircraft. Furthermore, given the substantial need for long-haul twin-aisle aircraft, the value of the Asian fleet over the next 20 years will likely exceed that of the North American fleet. Europe. Demand across the region remains stable. As a group, Europe's airlines have been profitable throughout the past few years, with the legacy carriers undergoing extensive restructuring of their business models to meet the challenges presented by high fuel prices and the increasing penetration and short-haul dominance of the LCCs. IATA reported operating profits for European carriers of $6.1 billion in 2007, with net profits of $2.1 billion. Air travel growth prospects for Eastern Europe are positive. This passenger growth is being partially driven by the increase in the European Union, which has bolstered the region's economic growth, promoted liberalization in the aviation market, and encouraged the establishment of several LCCs. Despite the LCC dominance over the European narrowbody order book, major European carriers such as Deutsche Lufthansa Aktiengeesellschaft ("Lufthansa"), Air France and British Airways continue to place orders for new long-haul aircraft. In Russia, air travel demand is hampered by the difficulties Russian airlines have in accessing the market for efficient, Western-built aircraft. This is beginning to change, as carriers become more active in ordering Airbus and Boeing aircraft for long-term fleet replacement and growth needs. North America. Despite high fuel prices, 2007 proved to be a turnaround year for many North American carriers. Years of progress in reducing costs were finally matched by a strong revenue environment fuelled partially by the domestic capacity cuts of carriers under bankruptcy protection, and deferral of deliveries by some LCC carriers. In March 2008, IATA reported that the operating profits of North American carriers had risen to $9.9 billion in 2007, as compared to an operating profit of $7.3 billion in 2006 and an operating loss of $300 million in This profit trend has not continued into 2008, with major U.S. carriers posting losses in the first quarter, primarily as a result of rising fuel costs. As there are no longer any major U.S. carriers under creditor protection, the period of continuous industry cost reduction has ended and airlines will have to work hard to avoid non-fuel unit cost increases in coming years. Some carriers hope to achieve this through consolidation, with Delta and Northwest announcing merger plans in April, and other mergers continue to be subject to speculation. A number of smaller U.S. carriers have been forced to enter bankruptcy or cease operations due to rising fuel prices, lack of affordable capital, and the general downturn of the U.S. economy. Frontier, ATA Airlines, Aloha Airlines and Skybus, have all declared bankruptcy in 2008, and only Frontier is planning to continue operations. There is continued speculation that other regional or niche carriers may be forced to file for bankruptcy in With fuel prices at record highs, the aging, less efficient, U.S. fleet has begun to negatively impact airline profitability, leading to an increased need for fleet renewal. US Airways confirmed a substantial fleet renewal order 87

96 in , while other major airlines such as American Airlines, Inc. ("American"), United, Delta and Northwest have yet to announce any substantial fleet replacement plans. While new aircraft deliveries and fleet growth may lag behind the rest of the world in coming years, the sheer size of the current fleet combined with replacement requirements is likely to drive the largest market for narrowbody aircraft globally. Middle East/Africa. Air traffic in the Middle East and Africa has grown rapidly in the last 10 years. Governments in Persian Gulf states such as the United Arab Emirates and Qatar have supported the development of airlines, including Emirates Airlines, Etihad Airways and Qatar Airways, resulting in the rapid expansion of these airlines into long-haul markets. Africa is also experiencing growing demand for air travel, and major European carriers have started to add capacity to the continent to serve lucrative routes that are often governed by restrictive bilateral air service agreements. Latin America. According to the International Monetary Fund's 2008 World Economic Outlook, since 2001, most Latin American economies have experienced an economic upturn. Several airlines in the region ceased operations in recent years, but the increased liberalization of domestic and international air transport markets has spurred renewed investment, reorganization and consolidation in the airline sector. Challenges associated with the air traffic management and airport infrastructure are becoming apparent as demand continues to grow and continued investment will be required in coming years. DRIVERS OF AIRCRAFT DEMAND The world fleet is expected to grow steadily as airlines continue to develop service offerings to accommodate the world's rapidly growing travel demand. Key elements that are currently driving growth in demand for both new and used aircraft include: high rates of economic growth in emerging markets and increasing propensity to travel in these regions; increasing LCC penetration globally, which continues to drive traffic growth rates upward and drive demand for increased seat capacity; relaxation of regulatory constraints on air service between countries and on new carrier development within countries; and stable growth in traffic demand in mature markets such as North America and Europe. While the above factors drive demand for all aircraft and are expected to lead to the doubling of the global fleet over the next two decades, a significant element of new aircraft demand is determined by the need to replace existing aircraft. Replacement demand is driven by a number of factors including: relative operating economics and environmental considerations; technological advancement; and freighter conversion demand. Market Growth In the table below, Airbus's 2007 Global Market Outlook provides insight into the future development and regional allocation of traffic demand. Long-term air travel demand is expected to remain healthy and the emerging market economies are expected to continue to drive the highest growth rates. The Indian domestic market is expected to generate the highest growth as airport infrastructure continues to catch up with demand and the travel market continues to mature. 88

97 Expected Average Annual Traffic Growth (RPK) by Regional Flow, Year Regional Traffic Forecast (CAGR) Current & Forecast Regional Traffic Domestic India Emerging Regions 11.5% Domestic India Emerging Regions Domestic China 8.4% Domestic China Middle East 6.8% Middle East Asia / Pacific 6.1% Asia/Pacific Latin America 5.7% Latin America CIS 5.6% CIS Africa 5.3% Africa Developed Regions Developed Regions Europe 4.5% Europe North America 3.5% North America 0% 5% 10% Source: Airbus Global Market Outlook, "CAGR" means compound annualized growth rate. 0 2,000 4,000 6,000 8,000 RPKs (Billions) Emerging markets, especially those with large populations distributed over a broad geographic area, tend to have very small commercial passenger jet aircraft fleets relative to total population size. Their low aircraft-to-population ratios, which are generally less than one-tenth the ratio of the United States, highlight the growth potential in these markets. Ratio of Aircraft Fleet Size to Million of Population Backlog Current Fleet Aircraft/Population Ratio North America Western Europe Middle East Asia Pacif ic (Exc. China/India) Latin America (Exc. Brazil) Eastern Europe (Exc. Russia) Brazil Russia China India Source: ACAS March 2008, IMF, July 2008 estimates, SH&E Analysis 89

98 According to Aircraft Analytical System ("ACAS") fleet data and IMF population figures, for every million people in North America, there are approximately 26 aircraft in the current fleet. In contrast, India and China have less than one aircraft per million of population. If per capita incomes in the emerging economies continue to rise and if regulatory restrictions continue to be relaxed, it is reasonable to expect the fleet size of these markets to increase substantially in the next decade. While infrastructure issues remain a short-term constraint, countries such as China, India, Russia and Brazil will require a substantial number of single-aisle aircraft over the next two decades to serve the growing domestic and intra-regional demand. In addition to emerging market growth, the mature intra-european and intra-north American markets will likely exhibit lower growth rates but the absolute demand for aircraft units is expected to remain high given the large existing traffic base in these regions. Market Liberalization Continued liberalization of air travel is also expected to fuel demand for additional aircraft. Many countries are entering into new bilateral agreements, or "open skies" accords that will further liberalize international air travel and continue to create opportunities for new flights, new routes and new operators. In March 2007, the U.S. and European Union governments agreed to an open skies accord that commenced in March 2008 and is expected to create significant new transatlantic route service opportunities. The primary element of the open skies accord allows carriers based in the 27 European Union member states to fly from any European Union city to any U.S. city, while U.S. carriers will have rights to fly to any European Union airport, including London's Heathrow airport. Anticipation of open skies is already facilitating competition between carriers vying for presence at slot-constrained airports such as London's Heathrow airport, which should ultimately lead to a more efficient allocation of services to and from the airport. SH&E expects open skies to result in a substantial increase in the number of transatlantic routes served, with more direct services reducing the pressure at the main hubs. As described above, opportunities will also be created for airlines with smaller aircraft configured with all-premium seating operating between key business centers. The second phase of open skies, which is expected to relax the foreign ownership restrictions that apply to U.S. airlines, may further stimulate network growth as well as providing much needed capital to the struggling major U.S. airlines. Further liberalization, combined with the fragmenting of international travel between major global regions is expected to drive demand for long-range mid-size aircraft. Aircraft such as the Boeing 777 ("777"), the Boeing 767 ("767"), the Airbus A330 ("A330"), and eventually the Boeing 787 ("787") and the Airbus A350 ("A350"), are best positioned to take advantage of fragmenting long-haul markets. In addition, as bilateral restrictions on flights between India and China and the United States and Europe continue to loosen, ultra long-haul aircraft will be utilized to increasingly connect these continents with additional non-stop frequencies. In addition to international liberalization, many countries have deregulated the airline sector domestically, creating a substantial boom in demand for narrowbody equipment. An example of this is India, which has witnessed the launch of numerous privately owned carriers in the last two years, creating a substantial increase in the number of Airbus A320 ("A320") and Boeing 737 ("737") aircraft serving the domestic and regional markets. The chart below illustrates the dramatic growth in the single-aisle fleet since 2004 and highlights expectations that such growth will continue through

99 Single-Aisle Aircraft Fleet Development in India Expected Deliveries Active Fleet Aicraft in Fleet Carrier Count Source: ACAS March 2008, SH&E Analysis; OAG Low-Cost Carriers The increasing presence of LCCs across the world is generating additional demand for aircraft by creating new markets and stimulating traffic demand with low fares. Given the importance of high asset utilization and service frequency, LCC fleet growth has predominantly focused on efficient and reliable narrowbody aircraft such as the Airbus A320 and the Boeing 737. LCCs have existed since the early 1970s, when Southwest Airlines Co. began service in the United States. Although much of the early growth was in North America, the LCC presence has strengthened in other world markets, particularly Europe. In Great Britain, Ireland and parts of Western Europe, LCCs now represent a larger proportion of intra-regional capacity than their peers in North America. According to the Official Airline Guide ("OAG"), in Europe as a whole, LCCs accounted for 25.4% of intra-regional seat departures in 2006, while 28.9% of U.S. domestic seat departures were accounted for by U.S. based LCCs. Led by major airlines Ryanair Ltd. ("Ryanair"), easyjet Airline Company Limited ("easyjet")and Air Berlin, European LCC traffic has been growing at consistently high rates over the last several years. According to recent data from the European Low Fare Airline Association ("ELFAA"), the number of passengers carried on European LCCs increased from 18 million in 2000 to 140 million in 2006, an average annual growth rate of 41.0%. The current global LCC fleet is fairly evenly split between Boeing and Airbus single-aisle aircraft. As shown in the table below, the A320 family currently accounts for 56.0% of the total single-aisle LCC backlog, marginally leading the backlog of the Boeing 737NG ("737NG"). However, in the Asia/Pacific region, which is currently seeing the largest growth rates, Airbus aircraft represent a significantly larger portion of the backlog. 91

100 Low Cost Carrier Single-Aisle Backlog Airbus Boeing % 46% % 54% 32% 26% 52% 74% 100% Asia/Pacific Europe North America South America Middle East Source: ACAS March 2008, SH&E Analysis Despite the fact that European LCCs have indicated recently that load factors are down slightly in 2007 and yields are softening, these carriers still plan significant growth in the next five years. Approximately 50.0% of the European order backlog is represented by LCCs such as Ryanair, easyjet, SkyEurope Airlines, a.s. ("Sky Europe") and Air Berlin. Ryanair has stated that it intends to grow its fleet from 135 to 262 jets by 2012, using the additional capacity to link destinations already served or to increase capacity on existing routes. easyjet is expected to retire its remaining 30 Boeing s over the next five years as it continues to take delivery of Airbus A319 ("A319") aircraft. easyjet's current fleet contains 97 A319s, with 118 more on firm order and options on a further 88. Air Berlin, the third largest LCC in Europe, operates a mixed fleet of 737s and A319s and A320s, which reflects its evolving operating model of low fare scheduled and holiday charter flights. The airline is also growing rapidly both organically and through acquisition as indicated by outstanding orders for 36 A320 family aircraft and s, and its acquisitions of dba Fluggesellshaft mbh Munich, LTU Lufttransport Unternehmen GmbH and Condor Flugdienst GmbH. The continued expansion of the European Union is extending the fully liberalized European marketplace and opening new markets to LCC expansion. As a result, LCCs such as Wizz Air Hungary Airlines Ltd., Sky Europe and Centralwings Airlines Ltd. are exerting competitive pressure on state-owned legacy carriers, particularly in Central and Eastern Europe. Despite the continued growth of LCC penetration in Europe, charter carriers and tour companies still account for a substantial portion of the leisure market in this region. Previously dominant in the United Kingdom and Germany, these companies have been forced to adapt as the competitive landscape has evolved over the last decade. Most tour operators have increased product flexibility and have moved into seat-only sales and scheduled air services, while leveraging their cost structures to compete effectively. With greater competition from LCCs on short-haul flying, carriers are increasingly looking to the long-haul market, as evidenced by the orders for 787 aircraft by First Choice Holiday's PLC and TUI Group. Highlighting the importance of geographical scale in the competitive landscape, Thomas Cook AG and MyTravel Group, and TUI Group and First Choice, recently announced mergers, both of which have been approved by the European Commission. 92

101 As the chart below illustrates, the LCC model has been spreading to other parts of the world over the last five years, most notably the Far East, Australia and Latin America. Low Cost Carrier Routes 2000 and 2005 North America Flights per week: 28, 213 Miles/Flight: 710 Seats per Flight: 128 Europe Flights per week: 3,495 Miles/Flight: 609 Seats per Flight: 115 North America Flights per week: 35,027 Miles/Flight: 688 Seats per flight: 133 Europe Flights per week: 23,767 Miles/Flight: 650 Seats per flight:143 Far East Flights per week: 6,941 Miles/Flight: 469 Seats per flight: 112 Source: OAG, SH&E Analysis Latin America Flights per week: 3,238 Miles/Flight: 601 Seats per flight:136 Middle East & Africa Flights per week: 826 Miles/Flight: 1,063 Seats per flight: 151 Oceania Flights per week: 5,727 Miles/Flight: 675 Seats per flight: 137 The table below shows the growth in LCC capacity by region during North American LCC growth has slowed while Europe continued to grow strongly and Asia and Latin America exhibited the most dramatic increases. LCC Capacity Growth by Region, LCC Yearly Departing Seats (millions) % pa North America +26% pa +35% pa Europe Asia/Pacific Latin America % pa +63% pa Middle East/Africa Source: OAG, SH&E Analysis While still far behind the levels seen in North America and Europe, LCC penetration in other regions is also growing significantly. LCC capacity share in Latin America has risen due to the success of Gol Transportes Aéreos S.A. in Brazil, as well as the expansion of Mexican carriers. Meanwhile, Southeast Asia and Australia have seen significant penetration by LCCs including Air Asia Bhd., Tiger Airways Pte Ltd., Virgin Blue Airlines Pty Ltd. ("Virgin Blue") and Jetstar Airways Pty Ltd. ("Jetstar"), several of which are expanding in Asia and Australia. In addition to the successful entry of LCCs into the Southeast Asian and Australian markets, the new frontiers for LCC expansion in Asia are likely to be India and China. SH&E believes that India, with its very large population and high number of urban population centers, is poised for growth. As the Indian economy grows, it is expected that the country's accompanying air traffic expansion will be met by increased capacity on the part of existing and new start- 93

102 up LCCs. Recently, LCCs are expanding into the long-haul air service market, as reflected by long-haul aircraft orders by Jetstar, Air Asia X Sdn Bhd and V Australia Airlines. This long-haul model still remains unproven, however, with operations of Oasis Hong Kong recently ceasing. These emerging markets are today the primary growth areas for LCCs, who are facilitating cost effective air travel and thus broadening the pool of demand. This trend is likely to be among the most significant drivers of global air travel in the future. According to Airbus, as Asian liberalization continues, LCC traffic in the region is forecast to grow at 11.0% per annum over the next 10 years. Airbus predicts this will be primarily driven by new intra-regional routes which are currently prohibited by regulatory restrictions. As discussed above, the huge population of the region (around 3.5 billion) represents a unique market opportunity for existing and new carriers. Industry Restructuring & Consolidation Between April 2007 and April 2008, total global seat departures increased by 92.5 million. Non-LCC carriers in mature economies decreased capacity (-22.5 million) while LCCs in mature economies (+48.9 million), non-lccs in emerging economies (+28.7 million) and LCCs in emerging economies (+37.4 million) accounted for all the capacity growth. While the emerging market airlines and the LCCs have accounted for the aircraft demand growth in the recent years, network airlines from the mature regions such as North America and Europe have recovered and are likely to remain an important source of ongoing demand in coming years. In North America, the legal protection provided by Chapter 11 of the United States Bankruptcy Code and similar provisions in Canada, allowed carriers to restructure their operations, including reorganization of schedules, restructuring of debt, rationalization of fleets, reduction of labor costs and lowering of pension liabilities. The ability of carriers in bankruptcy to shed inefficient capacity has greatly contributed to the overall yield improvement evident in the U.S. market during 2006 and The major U.S. airlines have started slowly in 2008, and with fuel prices at record highs, these carriers must eventually replace their existing fleets with more modern, fuel-efficient aircraft in coming years. Large European network carriers, particularly Lufthansa, Air France/KLM Royal Dutch Airlines (which merged in 2004) and British Airways, have achieved significant cost savings and material revenue growth improvements by concentrating on more lucrative long-haul operations rather than marginally profitable short-haul flights. All three carriers have recently expanded operations to India and East Asia, especially China, and all have recently placed substantial new orders for long-haul aircraft. Despite some recent failed attempts, many industry observers are predicting significant global consolidation in coming years. While the rate of fleet growth of the North American and European carriers will be lower than that of regions such as Asia and Latin America, the approaching need for fleet replacement and the substantial absolute size of these fleets will likely continue to translate into a substantial share of long-term deliveries for carriers in these regions. AIRCRAFT REPLACEMENT DEMAND Airline fleet planners must not only evaluate aircraft choices to cover an airline's growth requirement, but must also assess the economic and strategic feasibility of fleet renewal. Replacement demand derives from the need to remove aircraft with unattractive operating economics and poor reliability from carrier fleets. Replacement can be achieved through the new aircraft market by ordering aircraft from manufacturers or operating lessors, or can take place via the used market through buying or leasing five- to ten-year old newer generation equipment. Several developments in the industry indicate a growing need for replacement aircraft over the course of the next decade. Relative Operating Economics As a result of the sustained high level of oil prices in recent years, the operating cost differential between new generation and older generation aircraft has widened. Expectations that fuel prices will remain high in coming years are spurring plans for accelerated fleet replacement, particularly for the oldest aircraft in the global fleet. An additional consideration in future aircraft selection decisions is the impact of the growing international movement toward regulating and reducing levels of greenhouse gas emissions. The aviation industry, particularly in Europe, is being closely scrutinized and will be increasingly required to limit its contribution to climate change. While the industry continues to explore and deliver technological solutions to the problem, the imposition of carbon taxes and 94

103 the inclusion of airlines in carbon trading schemes is a short-term reality. For airlines, the operation of modern and efficient aircraft and engines will become of critical importance over the coming years. Increased energy prices have largely hidden the effects of the efficiency gains and cost-cutting efforts undertaken by airlines since The U.S. Department of Energy reports that New York jet fuel prices increased by 365.0% between November 2003 and March 2008 in U.S. dollar terms and by 272.0% in euro terms. The sustained high price of fuel may have significant ramifications for the health of the air transport industry. IATA reports that the industry fuel bill increased from $44 billion (14.0% of cost) in 2003 to $136 billion (29.0% of cost) in IATA forecasts total fuel costs to increase to $156 billion (32.0% of costs) in IATA expects jet fuel prices to average $123 per barrel for the year and notes that, with profitable fuel hedges coming to an end for many carriers, the jet fuel bill is expected to remain a large proportion of operating costs for the foreseeable future. In 2006, Northwest, which operates the world's largest fleet of 1970s-era McDonnell Douglas DC-9 ("DC-9") aircraft, introduced a plan to replace some of these units with new regional jets. In Europe, British Airways ordered four 777s in February 2007, and announced an order for 24 Boeing 787 and 12 Airbus A380 ("A380") aircraft in September In Asia, Japan Airlines Corporation ("Japan Airlines") and All Nippon Airways Co., Ltd. ("All Nippon Airways") ordered 50 of Boeing's newest 787 aircraft to replace older generation twin-aisle types. In February 2007, Japan Airlines announced that it was retiring its entire fleet of eight McDonnell Douglas MD-87s and 10 older-generation Boeing 747s. Despite the desire to replace certain aircraft, some carriers simply cannot access newer equipment given the lack of supply in the market. Replacement may consequently be deferred for several more years. For example, several smaller carriers, such as Spirit Airlines, Inc. and Alaska Airlines, Inc., recently replaced McDonnell Douglas MD-80 family aircraft with more fuel-efficient next-generation single-aisle aircraft, while larger carriers such as American and Delta, who together operate over 400 McDonnell Douglas MD- 80s ("MD-80") have yet to place orders to replace these fleets, despite their poor operating economics. As these replacement efforts continue, interim incremental efficiency improvements are being introduced by both manufacturers on existing A320 and 737NG aircraft. For example, Airbus has recently introduced a new, lighter interior as part of a major overall product improvement package intended to produce a 100% improvement in fuel burn for new aircraft from 2009 onwards. Further gains for the A320 family are expected through engine performance upgrades, drag reduction modifications and, potentially, through a winglet upgrade program that could ultimately result in the package offering a 5.0% improvement in current cruise fuel burn. New engine developments for Airbus A320 family aircraft are also available in the short-term, with CFM International's improved CFM56-5B/3 "Tech Insertion" package which reduces fuel burn by up to 1.0% now available, and International Aero Engines's "V2500Select" upgrade offering designed to offer similar fuel burn reductions and reduced maintenance costs, expected to be available in late 2008 or early Technological Advancement While incremental upgrades to existing technology can lengthen aircraft production runs, aircraft replacement is eventually driven by significant technological advancements. Aircraft manufacturers must balance the development and introduction of new technology with existing resource constraints and current product-line considerations. The development cycles for new aircraft are long and subject to uncertainty in the design and development process. While twin-aisle replacement technology is on the immediate horizon, replacements for the current generation of single aisle aircraft are still some years away. The relatively high levels of technology and efficiency currently incorporated in the latest generation Airbus A320 and Boeing 737 series aircraft and their unparalleled order backlogs are expected to ensure production for many years to come, despite projected increases in production rates. Boeing is understood to have formally established a 737 RS ("Replacement Study") production team in 2006 to begin initial development work on a successor to its 737 line as an outcome of Yellowstone 1 ("Y1"), one of the three Yellowstone new-generation studies. Y1 is believed to cover the passenger range and incorporates various concepts in single-aisle and twin-aisle configuration. The Y1 concept is believed to be based around an allcomposite 787-like structure, "fly-by-wire" controls, more-electric system architecture, a 787 flight deck incorporating enhanced vision systems ("EVS"), integrated avionics and radical fuselage and wing aerodynamic improvements. Airbus is reported to have initiated an A320 replacement study dubbed NSR, or New Short Range aircraft. Overall design concepts, like those of Boeing, are said to involve composite primary fuselage and wing structures and advanced aerodynamics, more-electric systems and integrated avionics incorporating EVS, and several fuselage cross-section options. 95

104 Early study outcomes from both manufacturers suggest current maximum efficiency improvements of only around % compared to current A320 and 737 models. Given development costs estimated at more than $5 billion, and current backlogs, both manufacturers believe service entry for a new generation is unlikely to occur prior to 2015 and in some estimates as late as 2020, and then only with the emergence in new engine technology offering up to 20.0% improvements with respect to fuel burn, maintenance costs, noise and emissions. Engine manufacturers are also researching and developing new technologies, but there is not yet a consensus regarding the optimal path forward for the next generation of engines. SH&E believes that neither Airbus nor Boeing will be in a position to produce a new single-aisle aircraft for entry into service ("EIS") before 2013 to Furthermore, given the scale of the 737NG and A320 family fleets that are expected to be in service by 2015, it will take Boeing and Airbus many years to produce enough replacement aircraft to supplant the current generation. Boeing 787. The 787 "Dreamliner" program was launched in April 2004 and was billed primarily as a replacement for the 767. Boeing estimates that the 787 will be up to 20.0% more fuel efficient than current comparable aircraft. The aircraft is to be a mid-sized, twin-aisle, twin engine passenger airliner originally scheduled to enter service in mid-2008, with most initial deliveries going to Japanese carriers All Nippon Airways and Japan Airlines. Boeing recently announced a pair of six month delays to the delivery of this aircraft due to challenges in the supply chain. Despite the substantial demand for this aircraft, even once deliveries do start, it is expected to take several years before the 767 market is adversely impacted. Airbus A The A380 is designed to replace the fleet of older Boeing 747 ("747") aircraft and fill a market niche requiring high capacity, low frequency service between large hubs. The aircraft entered service in late 2007 after several production delays. Despite the delays and other problems related to the introduction of the aircraft, the A380 has a niche in the global aviation industry. Most air traffic is between large cities with congested airports and using larger aircraft should allow airlines to fly more passengers from hubs at peak travel times. Minimizing perseat operating costs is an important goal for most airlines, and larger aircraft tend to have lower per-seat operating costs than smaller aircraft. This is an advantage provided the seats can be filled with sufficiently high yield passengers. Freighter Conversions Demand for freighter fleet renewal is also a driver of replacement demand for the global passenger fleet. In general, passenger aircraft become conversion candidates around the age of 15 years, when the value has depreciated sufficiently to allow purchase and conversion by a secondary user or investor. Consensus cargo aircraft forecasts predict that substantial numbers of the current passenger fleet will be converted to freighters over the next 20 years to meet the demand of freight carriers for fleet renewal. In the short-haul, small-payload cargo market, the demand for freighter aircraft will be almost exclusively met through passenger-to-freighter ("PTF") conversions of existing single-aisle types. Market interest is expected to favor the Boeing 757 ("757"), the A320 family, and the and variants. Converted 737 and 757 freighters have already entered service but the relative youth and burgeoning passenger demand for the A320 and Airbus A321 ("A321") has severely limited the availability of potential conversion aircraft at viable prices. Nevertheless, Airbus, EADS Elbe Flugzeugwerke ("EFW") and Russian aerospace firm Irkut, plan to cooperate on a civil freighter conversion business which will concentrate on the modification of Airbus singleaisle aircraft. The European and Russian partners will design, certify and manufacture the conversion kits, perform the modification work, and market the services. EFW estimates that around 30 Airbus single-aisle types will be converted annually and the joint venture expects to convert 400 aircraft between 2010 and The A320 and A321 freighters will carry 10 and 13 upper deck containers, respectively, thus lying advantageously in capacity between the and Unlike other similar aircraft the two Airbus aircraft will also be able to load between eight and 10 containers on their lower decks as well as bulk cargo. Current conversion costs are estimated at between $4 million and $5 million per aircraft. The demand for PTF conversions is likely to help push passenger carriers to execute their own fleet renewal programs over the next several years, although the present demand for narrowbody aircraft is temporarily restraining some of this renewal activity. 96

105 DRIVERS OF AIRCRAFT SUPPLY The supply of aircraft is determined by the number of new aircraft the manufacturers are able to deliver, as well as the fleet retirement and freighter conversion decisions of airlines, which are based on assessments of the interaction between relative aircraft economics and the levels of passenger traffic and yield. Manufacturer Production & Deliveries The airline industry's financial challenges in the period from 2001 through 2003 impacted aircraft and engine manufacturers. Airbus, Boeing, Pratt & Whitney, General Electric and Rolls-Royce implemented production cutbacks during that period. While neither Boeing nor Airbus experienced a high number of outright cancellations during the downturn, they deferred deliveries and adapted to much lower levels of new orders. However, by 2005 the economic recovery and rising demand for travel pushed aircraft orders to record highs. New aircraft orders increased dramatically again in 2006 and, despite expanded production capability since 2003, the manufacturers are reported to be largely sold out through The current order backlog provides the best indication of the allocation of deliveries expected in the coming years. More than 7,900 aircraft are currently on order and most are due to be delivered over the next five years. The following chart indicates that of the 6,672 orders with specified customers, 39.0% have been ordered by Asia/Pacific carriers, another 24.0% are destined for Europe and 19.0% for North America. Furthermore, 1,921 aircraft (24.0% of the backlog) are on order by LCCs. As of March 2008, 263 of the widebody order backlog consisted of freighters ordered by cargo carriers and lessors, including orders for the LRF, F, ERF, 747-8F, ERF, A F and A F, but excluding recently cancelled orders for the A380F by FedEx Corporation, United Parcel Service Inc. and International Lease Finance Corporation ("ILFC"). Production freighters on the market include the F, ERF, LRF and the newly launched 747-8F and A F. Mainline Jet Order Backlog Share by Region and Type 3,000 Narrowbody North America 19% Middle East / Africa 11% South America 7% Asia / Pacific 39% Eur ope 24% Backlog 2,500 2,000 1,500 1, Midsize widebody Large widebody A320 Family 737NG 767/777/787 A330/340/ A380 Other Source: ACAS March 2008 Note: Backlog share excludes 921 lessor orders that have no disclosed customer and 346 orders by undisclosed customers Boeing is expected to maintain production discipline despite the temptation to invest in new production capacity to satisfy short-term demand. Boeing expects that it will deliver approximately 480 aircraft in 2008 despite the recent 787 production delays and is expecting to deliver up to 505 aircraft in The 787 delivery stream will likely mitigate a potential downturn in cyclical demand that may occur in coming years, as the initial several years of deliveries reflect significant pent-up demand for the mid-sized long-haul market segment. Having outperformed Boeing for years, Airbus faced a difficult year in 2006 and prospects for coming years will continue to bring significant challenges. Delays to the A380 delivery stream, several attempts to launch a commercially successful competitor to the 787 and 777, and political and management upheaval continue to place the manufacturer in a difficult cash position. The recent introduction of the Power8 restructuring program is expected to help Airbus address these problems by reducing overhead, increasing the speed of aircraft development, 97

106 relying more heavily on the supply chain and increasing the efficiency of its manufacturing process. It is expected that Airbus will leverage its popular A320 family and A330 production lines while restructuring takes place. In line with this expectation, Airbus recently announced intentions to bring A320 family production to 36 per month by the end of 2008 and 40 per month by the end of By the end of 2009, Airbus intends to produce two of the 40 A320 family aircraft per month in China. The chart below, which is based on potential build rates and planning from Boeing and Airbus, illustrates SH&E's view as to the expected level of new aircraft deliveries from the two manufacturers over the next five years. It is possible, however, that constraints in the supply chain (such as access to titanium and carbon fiber material) may prevent Airbus and Boeing from fully meeting their production goals. World Aircraft Orders and Deliveries ( ) and Delivery Forecast Number of Aircraft 1,600 1,400 1,200 1, Boeing Order Airbus Orders Boeing Deliveries Airbus Deliveries Total Deliveries Previous Cycle Start of new upturn Source: ACAS, March 2007, Forecast: SH&E F 2009F 2010F 2011F 2012F In addition to Boeing and Airbus production, Embraer and Bombardier are also beginning to make inroads into the mainline jet segment. The Embraer E-Jets are becoming increasingly popular in Europe, Asia and Latin America as evidenced by recent orders from Lufthansa, Japan Airlines, Aerovías de México, S.A. and TACA. Bombardier's next generation of Canadian Regional Jet aircraft are also beginning to gain support, particularly in North America, and the commercial launch of the C-series program is expected within the next year. Aircraft Retirement Outlook Airlines must make fleet decisions based on a variety of economic and strategic factors. If carriers are able to execute their fleet replacement plans and there is no demand for additional use of an aircraft by another operator, the aircraft will be permanently retired. The average age of the global commercial jet fleet is 13.4 years, the distribution of which can be analyzed by dividing the fleet into three broad generational subsets: "Generation 1" means aircraft types predominantly produced in the late 1960s and 1970s, such as Boeing 727s ("727"), 747 Classics, McDonnell Douglas DC-9s, McDonnell Douglas DC-10s ("DC-10") and Lockheed L-1011s ("L-1011"). Some of these aircraft are in service as freighters but are becoming increasingly unviable from an economic standpoint and are expected to make up a substantial portion of retirements in coming years. "Generation 2" means aircraft that saw peak production in the 1980s and early 1990s. These aircraft form a substantial portion of the global fleet and remain essential to meet current passenger and freighter aircraft demand. 98

107 This group includes types such as the 737 Classics, 757s, 767s, s, McDonnell Douglas MD-11s and Airbus A300s that will continue to maintain large passenger operator bases but also are expected to fulfill a substantial amount of demand for the next generation of freighter conversions. "Generation 3" means all the aircraft types that are currently in production such as 737NGs, A320s, A330/A340s and 777s. These types are available both from the manufacturers and on the used aircraft market and are expected to form the core of passenger airline fleets as well as demand for new production freighters. A review of the age distribution of the global fleet highlights the need for long-haul fleet renewal in North America, Europe, Africa and Latin America. Commercial Jets Average Fleet Age, ,000 Average Active: 12.4 yrs Parked: 28.3 yrs 8,000 Parked Less than 11 years 11 to 20 years Greater than 21 years 1,033 7,000 6,000 Average Active: 10.9 yrs Parked: 21.3 yrs Commercial Jets 5,000 4, ,914 Average Active: 9.5 yrs Parked: 24.5 yrs 235 4,378 3,000 2,000 1,000 - Average Active: 15.5 yrs Parked: 30.8 yrs 331 1, Europe Africa and Middle East 2,374 1, Asia and Pacific Rim 1,913 1,281 North America Average Active: 15.3 yrs Parked: 33.3 yrs South America Source: ACAS, March 2008 Many Generation 1 aircraft have been unofficially retired. According to ACAS, more than 2,100 aircraft were parked in temporary or permanent storage as of June Based on SH&E's observations, approximately 1,600 of these aircraft are obsolete and are highly unlikely to ever re-enter operational service. Based on historically derived curves, SH&E expects the need for aircraft retirement to increase over the next few years as the fleet ages and marginal aircraft are removed from service. As mentioned above, the ultimate retirement of some of the in-service freighter fleet will depend on how quickly replacement aircraft can be converted and placed into service. While some of the oldest aircraft will likely have to be retired for safety and economic reasons, there is a degree of flexibility available to airlines operating mid-age aircraft. As described earlier, the demand for aircraft has increased substantially in the last several years, creating supply shortages in key aircraft markets. Since manufacturers cannot adjust production to meet fluctuations in demand in the short-term, the rate of fleet retirement becomes the 99

108 balancing mechanism. While the Generation 1 equipment will likely be retired regardless of replacement availability, Generation 2 types will become the swing factor and few will be retired until excess demand is alleviated. USED AIRCRAFT MARKET The supply shortage filters directly down into the used aircraft market, which also exhibits signs of imbalance. As indicated in the table below, in line with the cyclical demand recovery, the number of available used aircraft has declined steadily since The percentage of the world fleet that was available for sale or lease at the end of 2005 fell below 3.0% and dropped to just 2.2% at the end of 2007, below the lows experienced in In addition, the vast majority of the aircraft types available are Generation 1 aircraft such as DC-9s, DC-10s and 727s that simply do not have good enough reliability or operating economics to warrant service re-entry. Aircraft Available for Sale and Lease Fleet Size (Aircraft) 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Total Fleet Total % New % Old % % 8% 7% 6% 5% 4% 3% 2% 1% 0% % of Fleet Available Source: Airline Monitor, Jan/Feb 2008 Notes: (1) New aircraft include: to 900, 757, MD-80/90, A-319/320/321, BAe 146, F-70/100, CL-600, EMB, /400, 767,777, MD-11, A , A-310 & 330/340; (2) Old aircraft include:707, DC-8, DC-9, 727, /200, F-28, BAC-1-11, Caravelle, L-1011, DC-10, /200, A-300B4-100/200. The few Generation 3 aircraft that are available on the used market are typically marketed in advance and not actually available until 9-12 months in the future. These aircraft have large user bases that are continuing to expand and supply is severely limited. These supply shortages of the newer aircraft types have led to substantial increases in lease rates and values for a number of Generation 3 aircraft types, particularly the A320 family and 737NG family, which are highly favored by LCCs and start-up carriers, but which also form the backbone of major network carrier short-haul operations. Supply of efficient twin-aisle aircraft is also severely constrained, particularly since deliveries of new ERs fell substantially once the 787 order book gained momentum. As described earlier, increasing liberalization is fragmenting long-haul markets and this has led to a high degree of pent-up demand for mid-size long-haul aircraft. Supply is very limited and during 2006 it was clear that manufacturers were not able to satisfy demand. This demand filters directly down into the Generation 2 used aircraft market which also exhibits supply shortages. Aircraft such as ERs, s and 737 Classics are experiencing strong demand and will largely remain in service despite that fact that earlier built examples of these types are nearing retirement age. Current market trading conditions for the A320 and 737NG alike are particularly robust. The A320 market in particular has rebounded significantly from that in 2004 and is expected to remain strong in the medium-term. According to AvSoft ACAS Aircraft Analytical System in March 2008, there are an estimated 1,828 A320 series aircraft in service today with more than 164 operators with an average fleet age of 7.9 years. Today there are only 21 aircraft in storage compared with 45 three years ago. Current aircraft availability stands at 25, only slightly up from 21 at this time last year. According to OAGback JetMart Commercial Jet Transport Aircraft Transactions and Availability in April 2008, six of these 25 aircraft are available on wet lease terms only, and only two are available on dry lease immediately, with most availability stretching into

109 The expected production rates at both major manufacturers will only partially alleviate the supply shortfall and, as a consequence, 737 Classics, 757s, early-vintage A320 and ER aircraft are likely to remain in demand for a number of years to come, even with modest traffic growth. The relative efficiency of these types is sufficient to pass the operating cost differential test described above and airlines continue to operate such aircraft profitably. In essence, the lower ownership costs of this category of equipment offsets the fuel savings of the latest generation of aircraft. This indicates that excess demand and high lease rates for new equipment is helping to extend passenger service operating lives of such aircraft. Once the market nears equilibrium and sufficient aircraft supply exists to satisfy passenger demand, many of the aforementioned aircraft type fleets will likely be partially transitioned to freighter service. In conclusion, over the next several years, it is expected that supply shortages will continue in key aircraft markets. Over the long-term, however, markets can be expected to reach equilibrium. The following section summarizes the long-term industry forecasts for the global passenger and cargo fleets. LONG-TERM FLEET OUTLOOK Passenger Fleet The size of the global commercial jet fleet is expected to double over the next two decades. The table below compares the global jet fleet forecasts of Boeing, Airbus and the Airline Monitor. Boeing, in its 2007 Current Market Outlook forecast, indicates that the world fleet will reach 36,420 aircraft in 2026, of which 28,260 will be mainline passenger jets. Boeing defines mainline passenger jets as those of more than 90 seats. Airbus, in its 2007 Global Market Forecast, forecasts growth to 37,774 total aircraft by 2026, of which 28,534 will be mainline passenger jets. Airbus defines mainline passenger aircraft as those of 100 seats or more. While the two manufacturers have similar forecasts of global traffic growth, their views of the market for "very large aircraft" such as the Airbus A380 are substantially different. Airbus expects congestion at major airports and low per-seat operating costs to draw airlines to the largest possible aircraft. Boeing expects passengers, and therefore airlines, to favor point-to-point service in smaller, fuel-efficient aircraft, including the 787 and A350 XWB. Projected Commercial Aircraft Fleet Growth Airline Monitor Airbus Boeing Projected Total Fleet... 41,038 37,774 36,420 Additions-Growth... 22,235 17,680 17,060 Additions-Replacement... 6,337 11,858 10,410 Total Additions... 28,572 29,538 28,600 Additions per Year... 1,428 1,477 1,430 Source: Airbus Global Market Forecast, 2007; Boeing Market Outlook, 2007; the Airline Monitor, Jan/Feb 2008 Although North American and European traffic growth rates are expected to slow relative to the past, the sheer size of the current fleets will result in large requirements for additional aircraft. Large intra-regional travel demand will mean that the core fleet growth in these regions will be in narrowbody aircraft types. The Asia/Pacific region will require substantial numbers of additional twin-aisle aircraft to meet growing long-haul travel demand and this market is expected to generate the largest share of deliveries by value over the next 20 years. Overall, single-aisle aircraft will continue to be the basis for the bulk of the global fleet as illustrated by Boeing's expectation that 65.0% of global incremental fleet growth between 2006 and 2026 will be concentrated in single-aisle aircraft types. 101

110 Fleet Development ,000 20,000 22, Fleet in Service 15,000 10,000 10,920 8,070 5,000 3,080 4,180 3, ,370 Source: Boeing Current Market Outlook, 2007 Cargo Fleet Outlook - Regional Jets Single-aisle Twin-aisle 747 and larger World air cargo traffic is expected to continue to grow as global trade expands. Boeing and Airbus forecast average annual growth rates of 6.1% and 5.8%, respectively, over the next 20 years. To accommodate this growth, the world freighter fleet is expected to more than double over the next 20 years. Boeing predicts a freighter fleet size of 3,980 by 2026 and Airbus predicts the fleet to total 4,249 by Both manufacturers expect passenger aircraft conversions to account for approximately three-quarters of new freighter fleet additions. AIRCRAFT LEASING INDUSTRY OUTLOOK Overview of Aircraft Leasing Aircraft leasing has evolved over the last 40 years to become a highly sophisticated market. In effect, leasing has become a source of capital that carriers use along with debt and equity to finance their equipment acquisitions. Regardless of whether the purchased aircraft are new or used, very few airlines have the internal cash available to self-finance aircraft acquisitions. Thus, most airlines seek financing from several sources, including traditional bank debt, export credit guarantees, tax leases, capital market transactions and operating leases. Over the past 20 years, the airlines have turned to operating leases for an increasing share of aircraft financing requirements. Ascend data indicates that the proportion of the global fleet under operating lease has increased from 17.0% in 1990 to 32.0% in SH&E believes that operating leases will continue to become more popular and that 40.0% of the overall global fleet will be subject to operating leases within the next 10 years. Fifteen leasing companies currently account for an order backlog of 1,164 aircraft and a significant number of new orders are likely to come under lease ultimately as a result of sale/leaseback transactions. 102

111 Evolution of Fleet under Operating Lease, % 30% 20% 10% Regional Single-aisle Twin-aisle Total 0% Source: Ascend as of March 2008 Airlines are attracted to operating leasing for a variety of reasons, including low capital outlay requirements, fleet planning flexibility and residual value risk avoidance. Furthermore, operating leasing is often the preferred choice for start-up carriers because it lowers the capital requirements for entering the market. Though active again in recent years, many banks significantly reduced their airline exposure between 2002 and 2004, and it became more difficult for airlines to obtain financing through the capital markets. Operating lessors effectively acted as the lenders of last resort to the industry during that period, maintaining vital liquidity in an otherwise challenging market environment. In addition, many lessors now have the scale to provide airlines with effective fleet and asset management solutions involving multiple aircraft, assistance with fleet transitions and help locating short-term fleet needs. There are several means by which leasing companies can acquire aircraft in order to grow a portfolio organically, including: used aircraft purchases through sale-leasebacks; used aircraft acquisition through purchase of existing lease agreements; used aircraft purchases without a lease attached; new aircraft orders from original equipment manufacturers; and new aircraft acquisition through sale-leaseback transactions prior to delivery. The life cycle of an aircraft creates an approximate 25 year investment horizon characterized by varying risks and rewards over time. This dynamism allows the leasing market to be segmented as lessors look to meet varying strategic objectives by finding market niches and areas of competitive advantage. For example, some lessors focus almost entirely on ownership of new equipment and frequently sell assets after five to seven years, others purchase aircraft new, used or through sale-leasebacks and manage them throughout the aircraft lifecycle, while others focus primarily on purchasing used equipment at depreciated levels and placing them with higher yielding, albeit higher risk, carriers. While some leasing companies focus entirely on passenger aircraft, a number of others are increasingly drawn to freighter aircraft, looking at the long-term prospects of new production freighters or facilitating conversion by investing in appropriate passenger aircraft candidates. While many of the largest lessors acquire and sell aircraft in a variety of ways and participate in several leasing market segments, most 103

112 have a core thesis regarding the optimal point for entry and exit during the course of an aircraft life cycle and the airline business cycle. Competitive Landscape of the Operating Lease Industry According to recent estimates, the aircraft leasing industry represents assets worth over $150 billion. Among the major players in the modern jet operating lease segment, the top two together account for over half the global portfolio: General Electric Capital Aviation Services ("GECAS")owns and manages approximately 1,737 aircraft and ILFC owns and manages 983 aircraft. Other key operating lessors are significantly smaller but form the core of a competitive and dynamic leasing industry. Top 10 Mainline Jet Operating Lessors (Owned & Managed Fleet) Single-aisle Operating Lessor A320 Other Twin-aisle Regional Total GECAS ,737 ILFC AWAS / Pegasus Babcock & Brown Boeing Capital Corp CIT Aerospace AerCap Aviation Capital Group RBS Aviation Capital Macquarie Aviation Capital Total... 1,302 2, ,567 Source: Ascend AIR, 11 March 2008 Note: The data above reflects aircraft either owned and/or managed by major operating lessors. Following the recovery in the aircraft leasing market that started in 2004, there has been significant activity and interest in lessor acquisitions by strategic and financial buyers. In June 2005, Cerberus Capital Management purchased AerCap, which has since acquired part-out specialist AeroTurbine Inc. and continues to grow its portfolio through new orders and lease acquisitions. Earlier in 2005, Aviation Capital Group Corp. ("Aviation Capital Group") increased its size and global reach with the acquisition of Boullioun Aviation Services Inc. In May 2006, the British private equity firm, Terra Firma Capital Partners Limited acquired AWAS Aviation Holdings LLC and in June 2007 acquired Pegasus Aviation Finance Company. Another major player, RBS Aviation Capital, has grown organically through sale-leaseback transactions and portfolio purchases, and recently committed to new aircraft orders from Airbus and Boeing. In December 2006, Bank of China acquired full ownership of Singapore Aircraft Leasing Enterprise ("SALE") for $965 million from Singapore Airlines Limited, WestLB AG and two Singapore government investment arms and, in July 2007 re-named the company to BOC Aviation. In late 2006, GATX Corporation sold its remaining aircraft leasing interests to Macquarie Air Finance Ltd. Aircastle Limited, set up by Fortress Investment Group in 2004, materially increased the size of its fleet during 2006 and 2007, in part through the purchase of 38 passenger and freighter aircraft from Guggenheim Aviation Partners, which was announced in January As of March 11, 2008, ILFC and GECAS together accounted for 431 aircraft on order, but other key lessors such as CIT Aerospace, AerCap, Aviation Capital Group, BOC Aviation, Aviation Lease and Finance Company ("ALFACO") and RBS Aviation Capital placed significant orders over the last two years. 104

113 Top 10 Aircraft Operating Lessor Order Backlogs Single-aisle Operating Lessor A320 Other Twin-aisle Regional Total GECAS ILFC AWAS CIT Aerospace AerCap DAE Aviation Capital Group ALAFCO BOC Aviation Intrepid Total ,094 Source: Ascend AIR, 11 March 2008 Regional Penetration of Operating Leasing Today, the leading operating lessors have truly global reach. Despite the fact that 60.0% of the global fleet under operating leases are with airlines in North America and Europe, the leading operating lessors have regionally diverse portfolios. As a percentage of its total fleet, South America has the highest percentage of aircraft under lease, followed by Europe, Asia and the Middle East. Europe has experienced the biggest increase in operating lease penetration, due in large part to the boom of the LCC carriers entering service. Compared to 1990, Europe's penetration has gone up by 30.0% through 2007 and is expected to continue to increase as the markets of Eastern Europe, Russia and the Commonwealth of Independent States ("CIS"), grow and increase opportunities for LCCs and other start-up carriers. While North America has not witnessed a rapid increase in the proportion of operating leases over the last two decades, this trend is expected to change. Major carriers are no longer able to rely on the leverage leasing market and capital market financing has become comparatively difficult to secure. It is expected that both major U.S. airlines and LCCs will increase reliance on operating leasing as a key source of financing in coming years. Given that the United States is expected to represent the largest narrowbody market globally, the major operating lessors are well placed to help finance these requirements. 105

114 Historical Operating Lease Penetration by Region 60% 50% 40% 30% Asia / Oceania Africa Europe Middle East North America South America Total 20% 10% 0% Source: Ascend CASE March 2008 Operating leasing in the Asia/Pacific region will also continue its upward trajectory as the market fragments and new carriers continue to evolve. The major Asian airlines have access to very cheap bank financing and will be unlikely to be major users of operating leasing, but the growing set of LCC and short-haul airlines in this region operating primarily narrowbody aircraft will continue to generate opportunities for leasing companies. Lessors are already very active in both China and India, where domestic fleet requirements, both leased and owned, will continue to grow. In recent years, operating lease penetration has increased in the Middle East due to rapid fleet growth and bridge lift requirements by several carriers. Aside from the LCC sector, however, major carriers in the region have relatively easy access to capital and are not expected to be heavy users of the operating lease market in the future. Latin America has long had the highest proportion of operating leasing, primarily a result of carriers in the region having limited access to capital. ASSET SELECTION AND ASSET MANAGEMENT As described, operating lessors employ varying strategies in the attempt to earn economic returns from their aircraft investments. Ultimately, the ability of aircraft leasing companies to earn stable returns is dependent on asset value performance, lessee performance and asset management capability. A lessor generally earns profits when the present value of the lease revenues and future aircraft sale value exceeds the original purchase price of the aircraft and the expenses involved in managing the leases (including the period between leases). The entry price is dependent on prevailing market conditions and the relative bargaining power between buyer and seller. Maximizing residual value and rental revenue requires appropriate asset selection in line with the lessor's strategic objectives, an understanding of the current market for specific aircraft types, anticipation of trends that may impact aircraft values over a given investment horizon and the ability to execute asset monetization and disposition strategies. Such strategies vary according to the age and the relative desirability of the asset, but include re-leasing, selling (with or without a lease attached) or dismantling to obtain the constituent components. 106

115 Leasing is a cash flow business and key objectives include: management of lease revenue stream, assessment and oversight of lessee credit quality, managing the lease termination profile across the portfolio, smoothly transitioning aircraft between lessees in order to minimize off-lease time, minimizing refurbishment or reconfiguration costs by keeping assets relatively standardized and minimizing risk by predicting the impact of maintenance exposures and expected lease return conditions. Lessors can mitigate exposures to aircraft market risk and asset-specific risk by working to select appropriate assets for purchase. In addition to expectations relating to the future value and lease rate behavior of a specific aircraft type, when selecting assets to purchase, lessors often focus on those aircraft with the highest market liquidity. As depicted in the chart below, aircraft types with a high degree of breadth (number of operators) and depth (number of aircraft) in the market include single-aisle aircraft such as the A320, and and twin-aisle aircraft such as the ER and A Operating Lease Depth and Breadth by Model A Aircraft on Operating Lease A A Operators Source: ACAS, March 2008 AIRCRAFT LEASE RATES AND TRENDS Aircraft operating lease rates generally represent market-clearing prices that reflect current supply and demand. Lease rates depend upon the type of lease, interest rates, tax liabilities, lease term, value of the aircraft at lease inception, the forecasted residual value of the aircraft at lease termination and the credit quality of the lessee. During the air transport demand downturn of 2002 and 2003, lessors showed considerable pricing flexibility and often entered into short-term leases at reduced rates in order to keep assets deployed. Now that global passenger traffic has recovered, lease rates have firmed substantially, and lessors are able to realize lease rates above pre-2001 levels on most aircraft types. Although lease rates closely correlate to global economic conditions, rates for a particular aircraft generally hold steady in nominal terms for a long period, then fall quickly once the aircraft type faces large scale replacement. Once replacement technology for the aircraft in question is established in the market, the aircraft's lease rates typically decline quickly and permanently. As a summary measure, aircraft lessors and traders typically measure the effect of interest rates and residual value risk by looking at the ratio of lease rates to purchase prices, known as the "lease rate factor." Lease rate factors tend to rise as aircraft age, and they also vary with lease term length. Lease rate factors for newer aircraft are lower than those for older aircraft, due to the increased risk associated with older aircraft. Older aircraft tend to be operated by 107

116 less credit-worthy airlines and residual value performance is a much more important component of overall return. Moreover, lease rental volatility tends to be greater for older aircraft and they exhibit a wider percentage change in lease rates from cycle peak to cycle trough. Trading values normally lag behind lease rate movement, and it is expected that some aircraft will see a limited increase in trading values over the short to medium-term. Whereas rentals for many used aircraft models fully recovered following the recent air transport demand downturn in the period from 2001 through 2003, lease rates of certain older aircraft appear to have suffered a permanent reduction in value that suggests accelerated obsolescence. The attraction of the superior operating economics of the latest generation of narrowbody transports is compelling, especially in light of current high fuel costs. For a number of Generation 3 aircraft types, particularly the A320 and 737, which are highly favored by LCCs, supply remains tight. Lease rates for newer narrowbody aircraft are expected to remain stable over the next few years, even in the face of any potential air travel demand downturn. Historical Trends in Aircraft Values & Lease Rates, Constant Vintage Aircraft Historical Aircraft Lease Rates Index: 2000= A , 5-Years A , New A , New Source: SH&E Analysis Demand for mid-size twin-aisle aircraft types, such as the ER and A , remains exceptionally strong and cannot be met by current aircraft availability. These aircraft may generate very high returns in coming years, but face greater risk of low lease rates and residual value performance during the next market trough. Lease rate and value trends for three aircraft types are presented above. AIRCRAFT VALUES AND TRENDS Overview Aircraft generally depreciate over time as they age and experience the wear and tear of operation. Eventually, an aircraft will reach the end of its useful life (usually 25 to 30 years unless extended by cargo conversion) and will retain a marginal value that represents the market worth of its various components and materials. Values for new aircraft are determined to some extent by aircraft manufacturers' published list prices for new aircraft each year. Most prices are listed as a range to encompass different configurations and varying amounts of optional, buyer-furnished equipment such as in-flight entertainment, seating and cockpit avionics. Starting in the early 1980s, 108

117 as competition between Airbus, Boeing and McDonnell Douglas intensified, manufacturers began to sell their aircraft at substantial discounts to the list price. From a fundamentally economic standpoint, the value of the aircraft should be equal to the net present value of the operating profit that the asset can generate over its economic life. For instance, if an aircraft has the capability to generate $200,000 each month in operating profits in today's dollars for 30 years, assuming 2.5% annual inflation and an 8.0% discount rate, the value of the profit stream, attributable to the aircraft, would be approximately $35 million. In practice, the value of an aircraft to the operator is influenced by several factors which ultimately determine the lease rate the carrier is willing to pay. Primary factors include: revenue generating capacity (passenger and freight payload); range and operating economics (fuel burn, maintenance costs, landing and handling costs, flight and cabin crewing costs, insurance, etc.); and expected economic life and spot-market supply and demand (which is a function of the number of same-model and competing aircraft available, industry growth demand, etc.). In reality, various market participants take differing views as to the future economics of given aircraft types and market values do not always behave rationally. Secondary factors that impact aircraft value include fleet commonality for flight crews, tooling and spare parts, the number of aircraft in service and the number of operators, acceptance by operating lessors, support from the manufacturer, third-party service provision and the environmental efficiency of the aircraft. Used Aircraft Market The health of the airline industry during the late 1990s supported a general strengthening of the prevailing prices for used aircraft. Many banks and financial institutions were attracted to the aircraft financing sector and began to compete aggressively for available transactions. As a result, prices for used aircraft remained relatively strong. During , following a sharp drop in airline demand for aircraft capacity, many surplus aircraft were parked, deliveries were deferred and some aircraft financiers with little asset management capability or asset diversification suffered substantial losses. Many banks and tax equity participants exited the market altogether and capital market transactions came to a halt. The concurrent slide in aircraft values, particularly for older and mid-life aircraft types, exacerbated the situation and trading of used aircraft slowed. Aircraft that have suffered a deep and lasting reduction in both trading price and inherent value are older, less fuelefficient Generation 1 aircraft types that no longer meet the current noise and emission standards in place in most of the developed world. Examples of these include aging models with disappearing operator bases such as the L-1011 (81.0% of total fleet is retired or parked) and the DC-10 (58.0% of total fleet is retired or parked) and DC-9 (60.0% of total fleet is retired or parked). Given the high fuel and maintenance expenses generated by these aircraft types, it is increasingly likely that many of those that remain will exit service once in need of heavy maintenance. Though still relatively young and considered Generation 2, values for the fuel inefficient MD-80 (1,122 in active service) variants also appear to be facing a permanent decline. Following the rapid decline in values for most aircraft types during the period from 2002 through 2004, used trading prices and rentals for most aircraft types stabilized in 2005 and generally gained upward momentum during 2006 and Values for popular new and used A320s and 737NGs continue to remain strong but will likely begin to level off over the next several years. Meanwhile, pricing for used aircraft such as the 757 and ER has increased slightly following large declines in 2002 and are expected to remain reasonably healthy for the next several years as demand in longer haul markets will likely remain strong. Aircraft types such as the Classics are expected to show signs of weakening in price as these are the most at risk for being removed from service in large numbers once the current supply shortage abates, particularly if fuel prices remain at record levels. CONCLUSION 109

118 This section has described the short-term outlook for aircraft supply and demand generally, and single-aisle aircraft market dynamics specifically. Operating lessors currently have market opportunities for strong lease rates and improved values. While the air transport market is beginning to show some signs of regional weakening, the next downward cycle is generally forecasted to be much less severe than those in recent history due to significant structural changes in the industry described herein such as liberalization, growth in emerging markets, the advance of LCCs, the continuing restructuring of established airlines in the developed countries and new technology aircraft. Single-aisle aircraft compose the core of the global fleet today and are expected to remain of vital importance to domestic and regional economic growth across the world during coming decades. As a result, a diverse group of airlines will continue to require large numbers of single-aisle types for growth and for replacement of existing aging fleets and will increasingly look to operating lessors to assist with accessing and financing the required capacity. 110

119 Management of the ALS Group Except to the limited extent described in these listing particulars, particularly upon an Indenture Event of Default, neither the Trustee nor any Noteholder has any right to participate in the management or affairs of ALS. In particular, such parties cannot supervise the functions relating to the Leases or the re-lease of the Aircraft, which functions generally are delegated to the Servicer under the Servicing Agreement. DIRECTORS The Board will generally, as provided below, be composed of no more than five Directors. The Class E Noteholder has the right (while the Class E Notes are outstanding) to appoint two Class E Note Directors for such time as the Class E Noteholder is a shareholder of ALS. For such time as the Class E Noteholder is not a shareholder of ALS, the Class E Noteholder has the right (while the Class E Notes are outstanding) to nominate two Class E Note Directors to be appointed by the shareholder or shareholders of ALS. The remaining three Directors must be Independent Directors. If a vacancy arises in the office of an Independent Director, and if there are one or more Independent Directors holding office at such time, a replacement will be appointed by the Directors holding office at such time. If at the time such vacancy arises there are two Independent Directors holding office, such appointment will require the positive vote of a majority of the Directors. If at the time such vacancy arises there are two Independent Directors but no Class E Note Directors holding office, such appointment will require the positive vote of the two Independent Directors. If at the time such vacancy arises there is one Independent Director holding office, such appointment will require the positive vote of a majority of the remaining Directors, which majority must include the remaining Independent Director (and, if only two Directors are holding office at such time, the Independent Director will have a casting vote). No person may be appointed as an Independent Director unless that person has been approved by the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing), such approval not to be unreasonably withheld; provided that such consent shall be deemed to have been provided if the Class A-1 Funding Agent does not respond to a request for such approval within 30 days after receipt of such request. The quorum necessary for the transaction of business at a meeting of the Board is two Independent Directors and any resolution requires the affirmative vote of a majority of the Independent Directors, provided that in the case of matters requiring the unanimous resolution of the Directors, the quorum necessary is all of the Directors. Written resolutions of the Board require the signature of all of the Directors. If at any time there is only one Independent Director holding office, pending the appointment of a second Independent Director the quorum will consist of the sole Independent Director and a Class E Note Director and in such circumstances the sole Independent Director will have a casting vote at any Board meeting. Certain significant actions or proceedings of ALS, such as certain insolvency proceedings, the winding up or dissolution of ALS, amendments to ALS's Memorandum of Association or Bye-Laws, mergers, amalgamations or the sale of all or substantially all of ALS's assets, may only be approved by a unanimous vote of all Directors. The Servicing Agreement and Administrative Agency Agreement provide that, at any time at which the Primary Servicer and/or its affiliates hold the majority of the Class E Notes, certain actions will be taken by ALS by a special board resolution. A special board resolution requires the affirmative vote of a majority of the Independent Directors and the Class E Note Directors are entitled to participate in such meeting are not be entitled to vote thereon. Actions which require a special board resolution include (1) terminating the Servicing Agreement or the Administrative Agency Agreement, (2) directing the Servicer not to take actions determined to be not in the best interest of the ALS Group, (3) dealing with conflicts of interest involving the Servicer or the Administrative Agent and (4) appointing third parties to monitor the Administrative Agent or the Servicer. The Directors, their respective ages and principal activities are as follows: Name Age Offices Held with ALS Michael Walsh Independent Director and Chairman Margaret Clandillon Independent Director Frank Dowling Independent Director Wouter den Dikken Class E Note Director Ritchie Skelding Class E Note Director 111

120 Michael Walsh. Mr. Walsh is currently an independent non-executive director of a number of companies, including Genesis Funding Limited, an aircraft securitization vehicle, and is a non-executive director of Astra Worldwide, the aircraft-owning and financing unit of Gruppo Marsans of Spain. Mr. Walsh previously worked as a diplomat in the Irish Diplomatic Service. Mr. Walsh joined GPA Group plc ("GPA") in 1989, and held a number of senior management positions, including General Counsel. In addition, from 1996 to 2002, Mr. Walsh was General Counsel and a director of the administrative agent to both Airplanes Group and AerCo, and also acted as a director of AerCo. Following the acquisition of GPA by debis AirFinance in 2000, Mr. Walsh was appointed General Counsel of debis AirFinance and held that position until From 2003 to 2005, he served as Chief Legal Officer of Bord Gais Eireann, the Irish Gas Board. Margaret Clandillon. Ms. Clandillon provides consultancy and non-executive director services to a number of aviation companies, including acting as independent director on the board of directors of Systems 2001 Asset Trust. She has over 20 years of experience as a commercial lawyer practicing exclusively in the area of aircraft operating leasing and finance. Ms. Clandillon worked at GPA from 1985 to 1993 in a number of positions including as Group General Counsel. In 1993, Ms. Clandillon co-founded the aircraft leasing company Pembroke Capital Limited ("Pembroke"), and was responsible for all Pembroke's legal functions and was a member of its executive management team. In 2002, Ms. Clandillon set up MC Advisory Services as an independent aerospace consultancy specializing in aviation legal and commercial issues. Ms. Clandillon holds a law degree from Trinity College Dublin. Frank Dowling. Mr. Dowling is currently the managing director of Orion Corporate Services Limited, a company which provides management services to Irish resident companies in the areas of financial systems and processes, company domiciliation, accountancy and taxation compliance. Mr. Dowling previously worked with Airbus Financial Services in a number of positions, including as Chief Financial Officer and Director, and is currently an independent member of the board of Airbus Financial Services. Mr. Dowling has worked with a number of corporations within the financial and accountancy industry as an accountant and financial controller. Ritchie Skelding. Mr. Skelding is Chief Financial Officer of Al Fawares Holding KSC (c) ("Al Fawares"), a Kuwaiti investment company with an international portfolio of interests in aviation, publishing, telecommunications, investment banking and real estate. Prior to joining Al Fawares, Mr. Skelding was director and senior vice president of Spectrum Capital ("Spectrum"), where his clients included British Airways, easyjet, Ryanair and Virgin Atlantic. Mr. Skelding began his career at Hill Samuel Merchant Bank. Mr. Skelding is currently a director of a number of companies, including AerVenture, and is Chairman of Affinity Mobile LLC. Mr. Skelding holds a Geography degree from the University of Durham, a City Financial Diploma (Honours) and The Securities Institute Certificate of Corporate Finance. Wouter den Dikken. Mr. den Dikken was appointed as AerCap's Chief Legal Officer in 2005 and has served as the Head of the Group Legal Services department since He joined AerCap's legal department in In 2007 Mr. den Dikken was appointed as Chief Executive Officer of AerCap Ireland, AerCap's Irish operations, in addition to his role as Chief Legal Officer of AerCap. Prior to joining AerCap, Mr. den Dikken worked for an international packaging company in Germany as Senior Legal Counsel where he focused on mergers and acquisitions. Mr. den Dikken holds a law degree from Utrecht University. The Directors of ALS may be contacted at the registered office of ALS. The Directors of ALS are non-executive directors. Further, as is common with many other special purpose companies, ALS and the Subsidiaries do not, and will not, have any employees or executive officers. Accordingly, the Board and the board of directors of the other ALS Group members rely, and will continue to rely, upon the Servicer, the Administrative Agent, the Cash Manager and the other Service Providers for all asset servicing, treasury, corporate, administrative and accounting functions pursuant to the respective service provider agreements. See "Risk Factors Risks Relating to the ALS Group and Its Business". The Board of ALS will establish an audit committee of the Board consisting of the three Independent Directors, which will meet on a regular basis and typically in advance of each scheduled quarterly Board meeting. The duties of the audit committee include the following: 112

121 to consider the appointment of the external auditors (for recommendation to the shareholders of ALS), the audit fee and any questions of resignation or dismissal of the external auditors; to discuss and agree with the external auditors before the audit commences the nature and scope of the audit; to pre-approve all non audit services performed by the external auditors (audit services include the statutory audit of group and subsidiary companies, the review of annual reports and other related work). Pre-approval is delegated to any member to deal with matters arising between meetings, however, the full committee must approve at the next scheduled meeting; to review from time to time the cost effectiveness of the audit and the independence and objectivity of the external auditors; to review the submission to the Board in relation to any audited accounts, focusing particularly on: any changes in accounting policies and practice; all alternative treatments of financial information presented under accounting principles under which ALS is required to produce its financial statements from time to time that have been or are to be discussed with the Board and the treatment preferred by the external auditors; major judgmental areas; significant adjustments resulting from the audit; any unadjusted audit differences; the going concern assumption; compliance with accounting standards (and in particular accounting standards adopted in the financial year for the first time); and compliance with legal requirements; to discuss problems and reservations arising from the interim and final audits and any matters the external auditors may wish to discuss; to review the external auditors' management letter and management's response; to review, on behalf of the Board, ALS's system of internal control (including financial, operational compliance and risk management) and make recommendations to the Board; to review adequacy of financial and non financial information provided to the Board by the third party Service Providers; to consider the major findings of internal investigations and management's response; to review ALS's operating, financial and accounting policies and practices; to consider other matters as defined by the Board; and to report on all of the above matters to the Board. The Directors and/or other individuals may act as directors of Subsidiaries (other than trusts). ALS will pay each Independent Director an aggregate fee of 50,000 per annum, beginning on the Initial Closing Date, for his or her services in such capacity. Each Independent Director will receive 1,000 in respect of each day, or portion thereof, which he or she is required to devote to the activities of ALS and the Subsidiaries (excluding quarterly Board meetings of ALS and audit committee meetings). The aggregate annual compensation for each 113

122 director in respect of ALS and the Subsidiaries will not exceed the equivalent in euros of $125,000, calculated as of the day each payment is made, based on the exchange rate at such time. All Directors, as well as directors of the Subsidiaries, will be compensated for travel and other expenses incurred by them in the performance of their duties. ALS also will pay premiums for directors' and officers' liability insurance on their behalf. ALS knows of no arrangement, the exercise of which could result in a change in control of ALS after the Initial Closing Date. The secretary of ALS is Codan Services Limited, a Bermuda company, whose registered office is at Clarendon House, 2 Church Street, Hamilton, HM 11, Bermuda. BENEFICIAL OWNERSHIP OF ALS Title of Class Common Shares Common Shares Name and Address Number of Shares Percent of Class Codan Trust Company Limited, as trustee of the Aircraft Lease Securitisation II Purpose Trust 95 95% AerVenture Leasing 1 Limited, AerCap House, Shannon, County Clare, Ireland 5 5% The Charitable Trust Trustee granted a security interest in its shares in ALS to the Security Trustee pursuant to a Bermuda law share charge (the "ALS Share Charge") dated as of the Initial Closing Date. Furthermore, pursuant to a Deed of Undertaking entered into as of the Initial Closing Date, by the Charitable Trust Trustee, AerVenture Leasing, ALS, the Trustee and the Class A-1 Funding Agent (the "Shareholders Undertaking"), the Charitable Trust Trustee and AerVenture Leasing have agreed that, as long as the Notes are outstanding, they will not, without the prior written approval of the Security Trustee and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) and all the Directors, transfer any part of the common shares held by them or any interest therein unless the transferee (a) in the case of the common shares held by the Charitable Trust Trustee, is a trustee of a trust formed for charitable purposes substantially similar to those for which the Charitable Trust is established and (b) enters into an agreement substantially similar to the Shareholders Undertaking in favor of the Trustee and the Security Trustee. In addition, the Charitable Trust Trustee has agreed in the Shareholder's Undertaking that a certificate given by the Directors to the Charitable Trust Trustee that its voting of the common shares in a specified manner is in the best commercial interests of ALS will for the purposes of the exercise of the Charitable Trust Trustee's discretion, be conclusive that any such action is in ALS's best commercial interests. THE SERVICER The Servicer and its affiliates have not assumed and are not responsible for, or guarantors of, and will not assume or be responsible for, or guarantors of, any liabilities of the ALS Group, including, without limitation, any payments due with respect to the Initial Class A Notes, any Additional Notes and any Refinancing Notes. Pursuant to the terms of the Servicing Agreement dated as of the Initial Closing Date, among the ALS Group, the Primary Administrative Agent, the Servicer and the Servicing Agent, the Servicer will provide services on behalf of the ALS Group with respect to the Aircraft. The Servicing Agreement sets forth (i) the various duties of the Servicer with respect to the management and administration of the Aircraft and the Leases, (ii) certain Aircraft marketing activities to be performed by the Servicer and (iii) certain Aircraft management related obligations of the Servicer in connection with offers and sales by ALS of the Initial Class A Notes, Refinancing Notes or Additional Notes. The Servicer will provide the services in accordance with the express terms of the Servicing Agreement, which, among other things, provides that the Servicer will act in accordance with laws applicable to the Servicer and with directions given by ALS (or, in the event a Default Notice is delivered pursuant to the Indenture or if any Acceleration Default under the Indenture has occurred and is continuing, by the Security Trustee on behalf of the Controlling Party) from time to time in accordance with the Servicing Agreement. 114

123 Pursuant to the terms of the Servicing Agreement, the Servicer has agreed to perform the services required thereby with reasonable care and diligence at all times as is customary in the international aircraft operating leasing industry but in any case no less reasonable care and diligence as it would use if it were the owner of the Aircraft Assets (the "Servicer Standard of Care"). The Servicer Standard of Care will be implemented in a manner which is at least consistent with the reasonable commercial practices of prudent international operating lessors involved in the management, servicing and marketing of commercial jet aircraft and related assets. Subject to the following sentence, the Servicer will not discriminate against the Aircraft or Leases as compared to the aircraft and leases in the Servicer's fleet. If a conflict of interest arises regarding the Servicer's management, servicing and marketing of (i) a particular Aircraft Asset, on the one hand, and another Aircraft Asset, on the other hand or (ii) any Aircraft Asset, on the one hand, and any other asset that the Servicer then manages, services or markets, on the other hand, the Servicer is required to notify ALS, the Servicing Agent and the Class A-1 Funding Agent thereof and to perform the services in good faith and to the extent that (x) such Aircraft Assets or (y) such Aircraft Asset and such other asset are substantially similar in terms of objectively identifiable characteristics relevant for purposes of the particular services to be performed, the Servicer will not discriminate among such Aircraft Assets or between such Aircraft Asset and such other asset, respectively (the "Servicer Conflicts Standard"). The duties and obligations of the Servicer are limited to those expressly set forth in the Servicing Agreement and the Servicer does not have any fiduciary or other implied duties or obligations to the ALS Group or any other person, including any Noteholder. Therefore, ALS's contractual rights to recover against the Servicer for inadequate performance are limited. In addition to managing, servicing and marketing the Aircraft, the Servicer also participates in the management of certain aircraft assets owned by the AerCap Group (including the AerVenture Group), its affiliates and third parties. See "The Parties Servicer". In the course of conducting such activities, the Servicer may from time to time have conflicts of interest in performing its obligations on behalf of the ALS Group and other entities to which it provides management, servicing and marketing services and with respect to the aircraft for which it provides such services. Under certain circumstances, including a determination by the Servicer, in its good faith opinion, that it could not continue to perform a required service under the Servicing Agreement, the Servicer will withdraw from the performance of its duties pursuant to the Servicing Agreement in relation to all the Aircraft generally or, in certain circumstances, one or more Aircraft individually, or may be removed by ALS from the performance of its duties pursuant to the Servicing Agreement in relation to one or more Aircraft individually, provided that a replacement servicer has been appointed that complies with certain criteria. With respect to the negotiation of certain limited conflicts of interest, where the Servicer believes that it would not be appropriate for the Servicer to act on behalf of a member of the ALS Group in connection with such negotiation, the Servicer will withdraw from representing the ALS Group, and the Board will be required to appoint an independent representative to represent the ALS Group as to such negotiation, and the Servicer will be entitled to act on behalf of itself or any of its affiliates with respect to such negotiation. See "Risk Factors Risks Relating to the ALS Group and Its Business Conflicts of Interest of the Primary Servicer". Pursuant to the Servicing Agreement, the Servicer will not be liable or accountable to any person (including any Subsidiary or affiliate of ALS), under any circumstances, for any Losses directly or indirectly arising out of, in connection with or related to, the management by the Servicer of the Aircraft or other aircraft assets, including, without limitation, as a result of (i) any Aircraft being sold, leased or purchased on less favorable terms than might have been achieved at any time, provided that such transactions were entered into on the basis of a commercial decision or recommendation of the Servicer in accordance with the Servicer Standard of Care; or (ii) in respect of the Servicer's obligation to apply the Servicer Conflicts Standard in connection with the performance of its services, except, in either of case (i) or (ii), where such Losses are caused directly by the willful misconduct, negligence, recklessness or fraud on the part of the Servicer or an affiliate or Servicer Representative. In addition, the Servicing Agreement requires the ALS Group to indemnify the Servicer and its affiliates on an after-tax basis for any Losses, unless such Losses have resulted directly from the Servicer's negligence, fraud, recklessness or willful misconduct in respect of its obligation to apply the Servicer Standard of Care or the Servicer Conflicts Standard or otherwise in respect of its performance of the Services, certain representations or warranties by the Servicer under the Servicing Agreement having proven to be false or any breach by the Servicer of the express terms and conditions of the Servicing Agreement. The ALS Group's obligations in respect of the foregoing indemnities will constitute Required Expenses and will be payable prior to any payments on the Notes. The ALS Group has also agreed to indemnify the Servicer and its affiliates as to Losses arising out of the syndication of the Class A-1 Commitments and the 115

124 disclosures in these listing particulars, except as to information provided by the Servicer for inclusion herein regarding itself and the Services. The ALS Group's obligation under this indemnity will constitute a Special Indemnity Payment. Notwithstanding anything to the contrary stated above, the Servicer will not be obligated to take or refrain from taking any action that it believes is reasonably likely to (i) violate any applicable law with respect to the Servicer or its affiliates or (ii) based on the written advice of reputable counsel, lead to the Servicer or its affiliates becoming the subject of an investigation by any governmental authority in connection with its performance of the Services. Pursuant to the Servicing Agreement, the Servicer will indemnify ALS and the Subsidiaries on an after-tax basis for any Losses arising as a result of the performance of any of the Services where such Losses have resulted directly from (i) the negligence, recklessness, fraud or willful misconduct of the Servicer or any of its affiliates or any Servicer Representative in respect of its obligations to apply the Servicer Standard of Care or the Servicer Conflicts Standard or otherwise in respect of the performance of the Services or (ii) certain representations or warranties by the Servicer having proven to be false or any breach by the Servicer or any of its affiliates of the express terms and conditions of the Servicing Agreement. Aircraft Services Pursuant to the Servicing Agreement, the Servicer will, among other things, undertake: subject to, in the case of the Class A-1 Funding Agent and the Servicing Agent, a limit of four times per year in the aggregate unless an Indenture Event of Default has occurred and is continuing, (i) to grant the ALS Group, the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing), the Servicing Agent and their respective advisors and agents, including the Administrative Agent and the Cash Manager, access to the documents and other records related to the Aircraft Assets and ALS Group's business and (ii) to make available to ALS, the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing), the Servicing Agent and their advisors and agents certain officers and employees of the Servicer, subject to their reasonable availability, in each case to enable the ALS Group, the Class A-1 Funding Agent, the Servicing Agent and their advisors and agents to monitor the performance by the Servicer under the Servicing Agreement; to promptly provide to ALS any documents, records or other information reasonably requested by ALS in order for ALS to comply with its audit and inspection requirements under the Class A-1 Note Funding Agreement; to comply in all material respects with all laws, rules and regulations applicable to the Servicer and, at all times that the Servicer has (direct or indirect) possession or is otherwise in control of Aircraft Assets, with all laws, rules and regulations applicable thereto; not to commingle with its own funds (or the funds of any other persons for which it acts as lease servicer or manager) any funds of the ALS Group; not to institute against ALS or any other person in the ALS Group any bankruptcy, reorganization, arrangement, insolvency, winding up, examinership, liquidation, composition or any similar proceeding under any bankruptcy or similar law and will not collude in such a filing by any other party; and to perform the services provided under the Servicing Agreement with a view towards maximizing the risk-adjusted present value of the cash flows over the life of the Aircraft Assets from the leasing, and re-leasing or selling or otherwise disposing of Aircraft Assets taking into account the then existing and anticipated market conditions affecting the operating lease of new and used aircraft and the commercial aviation industry generally and any restrictions within the Indenture and/or the Servicing Agreement. The main categories of services being provided by the Primary Servicer pursuant to the Servicing Agreement in respect of the Aircraft (the "Services") are: 116

125 (1) lease marketing services, including, subject to the terms of the Indenture and the Servicing Agreement, remarketing Aircraft, Lease negotiation and execution (including, without limitation, negotiating final Lease terms, re-leasing of Aircraft on lease expiration or repossession from each of the Lessees); (2) Aircraft asset management services, including collecting Rental Payments and other amounts due from Lessees under the Leases, monitoring Aircraft maintenance, monitoring and enforcing contract compliance of Lessees and accepting delivery and redelivery of Aircraft; (3) sales services and Aircraft acquisition as, when and to the extent directed by the Administrative Agent on behalf of and at the direction of the ALS Group; (4) maintenance and provision of records and information with respect to the Aircraft, including records relating to Aircraft maintenance and payments under the Leases; (5) subject to availability of adequate funding, keeping the ALS Group in compliance with certain obligations and covenants under the Indenture and certain other documents provided to the Servicer directly relating to the Services; (6) providing to the ALS Group market research and certain data and information relating to the Aircraft and Lessees; (7) certain limited Aircraft related assistance in connection with the private offering of Initial Class A Notes and any Additional Notes and Refinancing Notes, including participating in preparing and providing certain information relating to the Primary Servicer and its affiliates for inclusion in any offering memorandum or prospectus or other offering materials and any supplements thereto, certain limited Aircraft related participation in marketing activities solely with respect to the Aircraft and the Primary Servicer and the Services, and providing the underwriters, ALS and its affiliates, any Class A-1 Commitment Holders selling Initial Class A Notes to investors pursuant to the Resale Agreement, the Rating Agencies and/or other advisors with the reasonable opportunity to conduct legal and business due diligence with respect to the Primary Servicer as it relates to the Aircraft and otherwise coordinating with the Class A-1 Commitment Holders in connection with the sale of Initial Class A Notes pursuant to the Resale Agreement; (8) legal and other professional services with respect to the lease, sale or financing of the Aircraft, any amendment or modification of any Lease, the enforcement of the rights of any person within the ALS Group under any Lease, any disputes that arise with respect to the Aircraft or for any other purpose that the Primary Servicer reasonably determines is necessary in connection with the performance of the Services; and (9) periodic reporting of operational information relating to the Aircraft. The main categories of services provided by the Insurance Servicer pursuant to the Servicing Agreement in respect of the Aircraft (the "Insurance Services") are: (1) lease negotiation of insurance provisions; (2) monitoring and procuring insurance (including the review of, and rendering of advice regarding, insurance levels); (3) arranging a group aviation insurance program; and (4) providing advice and services regarding insurance settlement offers. Operating Guidelines Pursuant to the terms of the Servicing Agreement, the Servicer is required to comply with the Servicer Standard of Care and the Servicer Conflicts Standard in the performance of the Services. All transactions to be entered into by the Servicer on behalf of the ALS Group (other than with other persons within the ALS Group) are required to be at arm's length and on fair market value terms unless otherwise agreed or directed by the Administrative Agent on behalf of the ALS Group. The following transactions or matters with respect to Aircraft require the specific approval 117

126 of (x) ALS and (y) in the case of clauses (2) and (6) below, the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing), and subject always to the relevant provisions of the Indenture, provided that in no event shall the Servicer do any of the actions set forth below in clause (3) or (7) if such actions would violate the Indenture: (1) sales of (or agreements to sell) Aircraft (other than as required by a Lease or the Purchase Agreement), each such sale or disposition to be always in accordance with the terms of and subject to the restrictions contained in the Indenture; (2) terminating any Lease or Leases (without substitution of, or replacement by, another substantially similar lease or leases) with respect to more than five Aircraft in any year, provided that the Liquidity Provider has also consented to the termination of any such Leases (that have not been substituted or replaced by another substantially similar Lease or Leases with respect to such Aircraft Assets) with respect to more than five Aircraft Assets in any fiscal year of ALS, which consent will not be unreasonably withheld or delayed; (3) unless provided for in the applicable annual budget, entering into any contract for the modification and/or maintenance of Aircraft where the costs to be incurred by the ALS Group member would exceed the sum of (a) 105% of the estimated aggregate cost of a heavy maintenance check for similar aircraft and total refurbishment of the related engines and (b) available maintenance reserves or other collateral under the related Lease; provided, however, in no event shall the costs incurred as described in this clause (3) exceed those contemplated in the Indenture; (4) issuing any guarantee on behalf of, or otherwise pledging the credit of (other than with respect to trade payables in the ordinary course of the ALS Group's business), any person within the ALS Group; (5) on behalf of any person within the ALS Group entering into, amending or granting a waiver with respect to, any transaction with the Servicer or any of its affiliates; (6) incurring or causing to be incurred on behalf of any person within the ALS Group any liability (actual or contingent), unless (i) contemplated in the applicable annual budget; provided that the Servicing Agent and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) shall have approved in writing the occurrence of such liability, (ii) pursuant to a transaction of a type for which ALS's specific approval is otherwise required and is in fact so approved, (iii) incurred in the ordinary course of the ALS Group's business, provided that the incurrence of such liability may not be in violation of the Indenture or (iv) incurred in entering into a Lease or performing any obligations of the Lessor thereunder; (7) entering into on behalf of any person within the ALS Group any order or commitment to acquire, or acquire on behalf of the ALS Group, aircraft or, except as otherwise provided in the Servicing Agreement, aircraft engines unless (i) provided for in a Lease or (ii) such order or commitment to acquire a replacement engine for an Aircraft has been provided for in the applicable annual budget, each such order or commitment to acquire always in accordance with the terms of the Indenture; and (8) entering into any agreement or commitment which is inconsistent with any express direction issued by ALS. The Servicing Agreement provides that if the Board, by special board resolution, determines that an action being taken by the Servicer is not in the best interests of the ALS Group, then ALS may deliver a notice to the Servicer directing the Servicer to limit or terminate such action or to take other action specified in such notice and, upon receipt of such notice, the Servicer will be obligated to comply with the terms thereof. Budgets The Primary Administrative Agent will prepare on behalf of the ALS Group (subject to review by the Servicer, Primary Administrative Agent and Cash Manager and subject to adjustments they deem appropriate), for consideration and approval by ALS annually by October 31 of each year, an Initial Aircraft acquisition lease operating and aircraft asset expenses budget with respect to the acquisition of the Initial Aircraft, the lease operations of all Aircraft Assets and the expenses related to all Aircraft Assets. If ALS does not adopt a budget for any year or if, after adopting a budget, ALS determines that a material event, circumstance or condition has occurred 118

127 which is reasonably likely to result in the current cash flow projection in any year being materially less favorable than the forecast which is the most current at the time the budget was proposed or finalized for that year (a "Changed Circumstance"), then ALS will instruct the Primary Servicer, the Cash Manager and the Primary Administrative Agent, on behalf of the ALS Group, to review and, to the extent possible, revise the lease operating budget and aircraft asset expenses budget in such a manner as to adequately address the concerns of ALS and/or such Changed Circumstance. Servicing Fees ALS is obligated to pay to the Servicer, pursuant to the Servicing Agreement, a retainer fee equal to 21.2 basis points per annum of the Initial Appraised Value of the Initial Aircraft (taking into account sales of Aircraft but for purposes of calculating the retainer fee, the Initial Appraised Value will not be reduced below $250 million) payable monthly in arrears and a rent-based fee, payable monthly in arrears, equal to 1% of the aggregate amount of rents actually paid by each Lessee for such month. The Servicer also will receive a sales based incentive fee with respect to each sale or total loss of an Aircraft in the amount of 1.25% times the Target Sales Price, net of transaction expenses. The Insurance Servicer will receive an annual fee of $50,000. Fees for the Services and the Insurance Services will only be paid in respect of periods in which the ALS Group owns one or more Aircraft. The Servicer will also be reimbursed for certain expenses incurred in connection with the Servicer's performance of the Services. These expenses include, among other expenses, Aircraft maintenance costs and insurance, outside professional advisory fees (including legal fees) and other out of pocket expenses, all of which in the aggregate may constitute a significant additional component of the ALS Group's total overhead costs. All fees, expenses and indemnity payments will be paid in accordance with the priority of payments provided for in the Indenture. Term and Termination The Servicing Agreement is for a term that commenced on the Initial Closing Date and will expire on the later of (i) the first date on which payment in full of all amounts outstanding are paid under the Notes, the Class A-1 Commitments have been terminated and the Class A-1 Funding Agent Obligations have been paid in full and (ii) the date on which there ceases to be any Aircraft Assets. ALS has the right to terminate the Servicing Agreement upon payment in full of the Notes and all amounts outstanding under the Liquidity Facility and the occurrence of the date of the final offering of the Initial Class A Notes pursuant to the Resale Agreement. The Servicer has the right to terminate the Servicing Agreement (subject to certain cure rights of ALS, the Senior Trustee, the Servicing Agent and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing)) if, among other things: (1) ALS fails to pay in full when due (i) any servicing fees within five Business Days of notice of such failure or (ii) any other amount payable by ALS to the Servicer within ten Business Days of notice of such failure (other than any amounts that constitute Special Indemnity Payments, unless funds are available to pay such amounts in accordance with the Indenture); (2) any person within the ALS Group fails to perform or observe or violates in any material respect any material term, covenant, condition or agreement to be performed or observed by it under the Servicing Agreement or other related documents; (3) any material representation or warranty made by any person within the ALS Group under the Servicing Agreement proves to have been false or misleading in any material respect when made; (4) there ceases to be any Aircraft Assets; or (5) the Indenture ceases to be in full force and effect unless the Indenture is terminated in accordance with its terms. ALS, by a special board resolution, the Senior Trustee, the Servicing Agent (provided that (x) to the extent reasonably practicable, the Servicing Agent will have consulted with the Board prior to exercising its rights to terminate the Servicing Agreement, (y) the Servicing Agent will not be entitled to terminate the Servicing 119

128 Agreement if ALS by resolution of the Board has determined not to exercise its rights to terminate the Servicing Agreement and (z) if after the date the Servicing Agent has exercised its rights to terminate the Servicing Agreement but prior to the date the Servicing Agreement has actually been terminated in accordance with its terms, if ALS by resolution of the Board has determined that it will not exercise its rights to terminate the Servicing Agreement, then any termination of the Servicing Agreement by the Servicing Agent will be withdrawn, the Servicing Agreement will remain in full force and effect and the Servicer will remain unchanged) and the Class A-1 Funding Agent (unless the Class A-1 Commitment Non-Consent Event has occurred and is continuing) will each have the right to terminate the Servicing Agreement (subject to certain cure rights of the Servicer) with respect to one or more Aircraft Assets upon, among other things: (1) the Servicer fails in any material respect to perform any material services required pursuant to the Servicing Agreement in accordance with the Servicer Standard of Care or the Servicer Conflicts Standard under the Servicing Agreement or otherwise breaching the express terms, conditions or obligations of the Servicing Agreement in any material respect; (2) any material representation or warranty made by the Servicer proves to have been false or misleading in any material respect when made; (3) commencement of an involuntary proceeding in respect of the Servicer under bankruptcy, insolvency, receivership or similar law, if such proceeding continues undismissed for 60 days or the Servicer goes into liquidation, suffers a receiver or mortgagee to take possession of all or substantially all of its assets or commencement of a voluntary proceeding in respect of the Servicer under bankruptcy, insolvency, receivership or similar law or the Servicer makes a general assignment for the benefit of its creditors; (4) the occurrence and continuance of an Indenture Event of Default described in clause (a) under "Description of Notes Indenture Events of Default and Remedies" in respect of the payment of interest on any Initial Class A Note due to an insufficiency of funds in the Collections Account on the relevant date, which Indenture Event of Default continues unremedied for 60 days; (5) the occurrence of an Indenture Event of Default and the issuance of a Default Notice, provided that (a) at the time of such Indenture Event of Default at least 12 Aircraft are not subject to Leases and each such Aircraft has been off-lease and reasonably available for re-lease (including in the possession of the Servicer) during the three month period ending on the date of such Indenture Event of Default or (b) such Indenture Event of Default arises as a result of the failure by the Servicer in any material respect to perform any of the negative or operating covenants in the Indenture and such failure affects more than ten percent of the Aircraft (determined by reference to the most recent Adjusted Base Values of the Aircraft); (6) the Servicer ceases, or the Servicer gives notice that it intends to cease, to be actively involved in the aircraft advisory and management business; or (7) the aggregate number of Initial Aircraft that have been delivered to ALS under the Purchase Agreement as of the Delivery Expiry Date is less than 22. The Servicer may resign from performing the Services pursuant to the Servicing Agreement with respect to all Aircraft, or at its election, any affected Aircraft if it reasonably determines that directions given, or services required, would, if carried out (i) be unlawful under applicable law, (ii) based on the written advice of reputable counsel be likely to lead to the Servicer or any of its affiliates becoming the subject of an investigation by any governmental authority in connection with its performances of the Services, (iii) expose the Servicer to liabilities for which, in the Servicer's good faith opinion, adequate bond or indemnity has not been provided or (iv) place the Servicer in a conflict of interest with respect to which, in the Servicer's good faith opinion, the Servicer cannot continue to perform its obligations under the Servicing Agreement in accordance with its terms. The Servicer may also resign in the event it becomes subject to certain taxes for which it is not indemnified by ALS. ALS may remove the Servicer for any affected Aircraft in the event that the Servicer reasonably determines that directions given, or services required, would, if carried out, place the Servicer in a conflict of interest with respect to which, in the Servicer's good faith opinion, the Servicer could not continue to perform its obligations under the Servicing Agreement in accordance with its terms. 120

129 The Servicer may not resign from its obligations under the Servicing Agreement or be removed nor may the Servicing Agreement be terminated, except upon expiration of the Servicing Agreement at the end of the term thereof, unless a replacement servicer has been appointed by ALS (or (x) if ALS does not appoint a replacement servicer within 15 Business Days after the expiration of any applicable cure period related to a termination notice that was delivered pursuant to the terms of the Servicing Agreement by the Servicing Agent (provided that the Servicing Agent will, to the extent reasonably practicable, consult with the Board prior to appointing a replacement servicer) and (y) after an Indenture Event of Default has occurred and is continuing, by the Servicing Agent or the Class A-1 Trustee (acting at the direction of Holders of a majority of the aggregate Outstanding Principal Balance of the Class A-1 Notes)) and has accepted such appointment and ALS has obtained a Rating Agency Confirmation and the prior written consent of the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) and the Servicing Agent with respect to such appointment. In the event that a replacement servicer has not been appointed within 90 days after any termination of the Servicing Agreement or resignation or removal of the Servicer, the Servicer may petition any court of competent jurisdiction for the appointment of a replacement servicer. Assignment of Servicing Agreement The Servicing Agreement and the rights and obligations of the Servicer, on the one hand, and of ALS, on the other hand, are not assignable by either party other than with the prior consent of all other parties to the Servicing Agreement, the Class A-1 Trustee (acting at the direction of Holders of a majority of the aggregate Outstanding Principal Balance of the Class A-1 Notes) and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non- Consent Event has occurred and is continuing), except for the assignment of the Servicing Agreement under the Security Trust Agreement. However, the Servicer may contract with any person including any of its affiliates for services in respect of the Aircraft Assets. Priority Payment of Servicing Fees and Reimbursable Expenditures The fees and expenses of the Servicer rank senior in priority of payment to all payments of interest on and principal of the Notes. COMPANY MANAGEMENT With regard to the corporate affairs of the ALS Group, management services are provided by two entities: the Administrative Agent and the Cash Manager. Administrative Agent AerCap Administrative Services Limited acts as the Primary Administrative Agent of the ALS Group. AerCap Cash Manager II Limited acts as the Financial Administrative Agent of the ALS Group. Individually and collectively, the Primary Administrative Agent and the Financial Administrative Agent are the Administrative Agent. The Administrative Agent is responsible for providing administrative, accounting and other services to the ALS Group. The Primary Administrative Agent's duties include the following (the "Primary Administrative Services"): (1) preparing board papers and minutes for each member of the ALS Group and maintaining books and records for each member of the ALS Group; (2) procuring and supervising, in accordance with instructions from the ALS Group, outside counsel and other professional advisers and coordinating legal and other professional advice received by the ALS Group; (3) arranging for Appraisals to be made and providing such Appraisals to the relevant Service Providers; (4) monitoring and reviewing information and reports provided by the Cash Manager and providing advice to the ALS Group with respect to such information and reports; (5) monitoring the performance of the Service Providers (other than the Servicer) and reporting such performance to the Board; 121

130 (6) acting as liaison with various rating agencies to assess the impact of management decisions on the ratings of the Notes; (7) coordinating with ALS to provide responses to questions and requests, and certain notices required under the Indenture and other Related Documents, to the Rating Agencies, the Class A-1 Funding Agent and the Servicing Agent; (8) establishing and maintaining a website and arranging for publication thereon of all reports and other documents required or recommended to be distributed to investors; (9) providing information and other assistance to enable ALS to make aircraft lease, sale and capital investment decisions to the extent it is not contemplated to be provided by the Servicer; (10) preparing and coordinating reports to investors, including preparing press releases and managing investor relations with the assistance of outside counsel and auditors, if appropriate; (11) to the extent required by ALS or the parties thereto, coordinating any amendments to the transaction agreements, subject to the approval of ALS; (12) informing the Board if it believes that net revenues will be insufficient to satisfy the payment obligations of the ALS Group and if an Indenture Event of Default would result, advising the Board of appropriate action and causing actions directed by the Board to be implemented to avoid an Indenture Event of Default if possible; (13) advising ALS as to the appropriate levels of any Reserved Cash for each Class and subclass of Notes; (14) preparing annual budgets and presenting them to the Board for approval; (15) maintaining, on behalf of the ALS Group, accounting ledgers and providing, on a quarterly and annual basis, draft accounts on a combined basis for the ALS Group as well as, to the extent required by applicable law, on a quarterly and annual basis, draft accounts on an individual company basis for certain companies; (16) preparing or arranging for the preparation for the approval of ALS and filing all required tax returns with the assistance of outside counsel and auditors, if appropriate; (17) providing administrative support to the ALS Group and coordinating with the Class A-1 Commitment Holders in connection with the resale of Initial Class A Notes pursuant to the Resale Agreement; and (18) upon the request of any Holder of a Class A-1 Note, requesting from each Rating Agency the then-current rating for the Class A-1 Notes and upon receipt from each Rating Agency of the then-current rating for the Class A-1 Notes, providing such current rating to such Holder of a Class A-1 Note that requested such current rating. The Financial Administrative Agent's duties will include the following (the "Financial Administrative Services" and, together with the Primary Administrative Services, the "Administrative Services"): (1) implementing and assisting in development of the interest rate hedging policy adopted by the ALS Group; (2) subject to the insurance requirements of the Indenture, directing the Servicer to amend minimum hull and liability insurance and notifying the Insurance Servicer of the same; (3) providing all information necessary under the Indenture to the Cash Manager; (4) providing administrative support to the ALS Group in connection with the preparation of offering materials or otherwise in connection with a resale of Initial Class A Notes pursuant to the Resale Agreement; and (5) directing the Servicer as to whether certain settlement offers with respect to claims above a specified threshold under a Lease are acceptable. 122

131 The Administrative Agent may delegate to a third party any of the above Administrative Services it is responsible for providing to the ALS Group with the consent of the other parties to the Administrative Agency Agreement and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing); provided, however, the Administrative Agent will remain primarily liable under the Administrative Agreement. The Administrative Agent will receive a fee of $1,413 per month for each Aircraft owned by the ALS Group, payable monthly in arrears in equal installments from ALS in respect of its services to the ALS Group, subject to an annual adjustment for inflation and a minimum amount of $200,000 per annum, and is reimbursed for expenses incurred in performing its obligations, as limited by and pursuant to the terms of the Administrative Agency Agreement. However, the fee for the Administrative Services will only be paid in respect of years in which the ALS Group owns one or more Aircraft. Under the Administrative Agency Agreement, the Administrative Agent is obligated to devote the same amount of time and attention to and is required to exercise the same level of skill, care and diligence in the performance of the Administrative Services as it would if it were administering such services on its own behalf (the "Standard of Performance"). The Administrative Agent will not be liable for any Losses or taxes directly or indirectly arising out of or in connection with or related to the performance by the Administrative Agent of the Administrative Agency Agreement unless (i) such Losses or taxes are the result of the Administrative Agent's own negligence, willful misconduct, recklessness or fraud or that of any of its directors, officers, agents or employees, as the case may be, or (ii) such Losses or taxes are directly caused by any representation or warranty by the Administrative Agent having proven to be false or any breach by the Administrative Agent or its directors, officers, agents or employees of the express terms and conditions of the Administrative Agency Agreement. The Administrative Agent is entitled to indemnification on an after-tax basis by the ALS Group for, and will be held harmless against, any Loss (other than certain taxes on net income) or liability incurred by the Administrative Agent arising out of or in connection with its provision of administrative services to the ALS Group (other than through its own negligence, willful misconduct, recklessness or fraud or that of its officers, directors, agents or employees) or as a result of a breach by the Administrative Agent of an express term or condition of the Administrative Agency Agreement. The ALS Group's obligations in respect of the foregoing indemnities will constitute Required Expenses and will be payable prior to any payments on the Notes. The Administrative Agent will indemnify on an after-tax basis the members of the ALS Group and their respective directors, officers and agents for any Losses whatsoever which they or any of them may incur or be subject to in consequence of the performance of the Administrative Services or any breach of the terms of the Administrative Agency Agreement by the Administrative Agent, but only to the extent such Losses arise due to the willful misconduct, recklessness, negligence or fraud of the Administrative Agent or any of its directors, officers or employees, as the case may be, or arise from any representation or warranty by the Administrative Agent having proven to be false or any breach by the Administrative Agent of the express terms and conditions of the Administrative Agency Agreement (other than any Losses arising from the willful misconduct, gross negligence, or fraud of any member of the ALS Group or their respective directors, officers or agents, any action that the ALS Group requires the Administrative Agent to take pursuant to a direction but only to the extent that the Administrative Agent takes such action in accordance with such direction or a refusal by the ALS Group to take action upon a recommendation made in good faith by the Administrative Agent). The Controlling Party, the Servicing Agent, the Class A-1 Funding Agent (unless a Class A-1 Commitment Non- Consent Event has occurred and is continuing) or the ALS Group by a special resolution of the Board, for which only the Independent Directors may vote, may remove the Administrative Agent at any time on 120 days' written notice to the Administrative Agent, the Trustee and the Security Trustee if (i) the Administrative Agent fails in any respect to perform any of the Administrative Services and such failure has a material adverse effect on the ALS Group as a whole, (ii) there is an involuntary or voluntary bankruptcy, insolvency or other similar proceedings of the Administrative Agent, (iii) (A) the Administrative Agent fails in any material respect to perform any Administrative Services in accordance with the Standard of Performance or the Servicer Conflicts Standard or (B) breaches the Administrative Agency Agreement in any respect and, in either case, such failure or breach has a material adverse effect on the ALS Group as a whole or (iv) any representation or warranty made by it was proved to be false and misleading when made in any respect and having a material adverse effect on the ALS Group as a whole. The Administrative Agent may resign on 120 days' written notice as long as the ALS Group has engaged another person or entity to perform the services that were being provided by the Administrative Agent. The Administrative Agency 123

132 Agreement commenced on the Initial Closing Date and will expire on the date of payment in full of all amounts outstanding to be paid on the Notes, the termination of the Class A-1 Commitments and the payment in full of all Class A-1 Funding Agent Obligations. Cash Manager Deutsche Bank Trust Company Americas acts as the Cash Manager pursuant to the terms of the Cash Management Agreement. Subject to certain limitations and at the direction of the ALS Group, the Cash Manager is authorized to invest the funds held by the ALS Group in the Accounts in certain prescribed investments (the "Permitted Account Investments"), including U.S. government securities and financial instruments which meet or exceed, or are issued by issuers which meet or exceed, certain credit rating thresholds, on permitted terms. The Cash Manager also makes certain calculations related to payments and directs deposits to, withdrawals from and transfers of funds among the Accounts, provides such information to the Administrative Agent as it may reasonably request in connection with its reporting obligations under the Indenture, monitors the performance of the Servicer (including the Servicer's compliance with the Servicing Agreement) and reports on such performance to the Board, reviews annual budgets and makes a recommendation regarding their approval to the Board, authorizes payment of certain bills and expenses and determines the Required Expense Amount and the amount of Permitted Accruals, subject to and in accordance with the terms of the Indenture. The Cash Manager is required to devote the same amount of time and attention to and is required to exercise the same level of skill, care and diligence in the performance of its services as it would if it were administering such services on its own behalf. The Cash Manager receives customary fees for performing the services provided by it under the Cash Management Agreement. The Cash Manager is entitled to indemnification on an after-tax basis by the ALS Group for, and will be held harmless against, any loss or liability incurred by the Cash Manager (other than through its own deceit, fraud, willful misconduct or gross negligence or simple negligence in the handling of funds or that of its officers, directors, agents and employees). The ALS Group's obligations in respect of the foregoing indemnities will constitute Required Expenses and is payable prior to any payments on the Notes. The Cash Manager may, with the consent of the Servicer, delegate to the Servicer the performance of any of the services provided by the Cash Manager under the Cash Management Agreement. The Trustee (at the direction of the Controlling Party) or the Security Trustee (at the direction of the Controlling Party) may remove the Cash Manager at any time on 30 days' written notice. ALS may remove the Cash Manager on 30 days' written notice to the other parties to the Cash Management Agreement if (i) the Cash Manager fails in any material respect to perform any services and such failure has a material adverse effect on the ALS Group as a whole or (ii) there is an involuntary or voluntary bankruptcy, insolvency or other similar proceedings of the Cash Manager. The Cash Manager may resign on 30 days' written notice as long as the ALS Group has engaged another person or entity to perform the services that were being provided by the Cash Manager. The Cash Management Agreement commenced on the Initial Closing Date and, except as provided above, will expire on the date the Indenture terminates. 124

133 Management's Discussion and Analysis of Financial Condition The discussion below contains forward looking statements that are based upon the current expectations of the ALS Group and are subject to uncertainty and changes of circumstances. See "Risk Factors". OVERVIEW ALS is a special purpose company incorporated under the laws of Bermuda on May 22, ALS did not conduct business operations until it issued the Initial Class A Notes and a portion of the Class E-1 Notes on the Initial Closing Date. ALS expects to acquire 15 or more of the Initial Aircraft-Owning Entities on the Initial Delivery Date, prior to which ALS will not own, directly or indirectly, any aircraft or leases. The Initial Delivery Date is not expected to occur prior to April The ALS Group will not engage in any business activity other than in connection with the transactions described in these listing particulars. Substantially all of the ALS Group's future business is expected to consist of aircraft operating lease activities. From time to time, the ALS Group may also engage in sales and other dispositions of Aircraft and acquisition of Additional Aircraft subject to specified limitations and guidelines. Cash flows generated from these activities will be used to service payments of interest on and principal of the outstanding debt of ALS, but only after various expenses of the ALS Group will have been paid. On the Initial Closing Date, ALS did not have any indebtedness other than the Initial Class A Notes, the Class E-1 Notes issued on the Initial Closing Date and any Senior Hedge Payments or Subordinated Hedge Payments due under the Hedge Agreements. On the Initial Delivery Date, the ALS Group does not expect to have any indebtedness other than the Initial Notes issued on or prior to such date, any Senior Hedge Payments or Subordinated Hedge Payments due under the Hedge Agreements and any indebtedness under the Loan, Expenses Apportionment and Guarantee Agreement. ALS's ability to generate sufficient cash from its Aircraft assets to service its debt will depend primarily on (i) the rental rates it can achieve on the Leases and the Lessees' ability to perform according to the terms of those Leases and (ii) the amount of proceeds it can obtain from the sale or other disposition of any Aircraft. ALS's ability to service its debt will also depend on the level of its operating expenses, including taxes, obligations to the Lessees, including maintenance obligations which will increase as the Aircraft age, fees and expenses of the service providers and on any unforeseen contingent liabilities including liabilities arising from Lessees' defaults on maintenance, rental and insurance payments. There can be no assurance that cash flows generated from the Aircraft after the payment of operating expenses will be sufficient to service payments of interest on and principal of its debt. See "Risk Factors Risks Relating to the ALS Group and Its Business". The Seller will be required pursuant to the Purchase Agreement to pay to ALS the reserve balance it holds on the applicable Delivery Date with respect to maintenance reserve payments, if any, made by the Lessees in respect of the Initial Aircraft prior to the applicable Delivery Date. There can be no assurance that cash flows generated from the Initial Aircraft, including drawing on the reserve balance transferred by the Seller on the Delivery Date, will be sufficient to reimburse the Lessors for maintenance expenses incurred by the Lessors and to service payments of interest on and principal of the Initial Class A Notes. See "Risk Factors Risks Relating to the Leases Funding of Maintenance; Maintenance Reserves" and " Risks Relating to the Lessees". ALS will not use operational cash flow to pay the purchase price for any Additional Aircraft but, instead, will issue Additional Notes to fund such purchase price. In addition, ALS may fund, by issuing Additional Notes, any conversion of Aircraft from passenger to freighter or mixed use configuration. Any such Additional Notes will be issued in compliance with the limitations set forth under "Description of Notes Indenture Covenants Limitation on Indebtedness", and issuance thereof will require the approval of the Liquidity Provider, the Class A-1 Funding Agent, the Class A-1 Trustee (acting at the written direction of all of the Holders of the Class A-1 Notes) and the Holder or Holders of the Class E Notes. AUDITED FINANCIAL STATEMENTS The ALS Group has retained KPMG as its independent auditors to audit its year-ended consolidated financial statements. Such audited financial statements will be included in the Annual Reports made available by the Trustee to the Noteholders. 125

134 LIQUIDITY Expected Liquidity The primary source of liquidity of the ALS Group expected during the period from the Initial Closing Date to the Initial Delivery Date will be the cash proceeds of the Class E-1 Notes expected to be issued to AerVenture Leasing on the Initial Closing Date. The principal use of the cash will be expenses related to fees owed to the Class A-1 Commitment Holders, the Liquidity Provider and service providers and corporate expenses. ALS intends to use the cash proceeds received from Advances made pursuant to the Class A-1 Note Funding Agreement (which will be up to a maximum of $1,000,000,000 and will be evidenced by the Class A-1 Notes) together with the cash proceeds from the issuance of Class E-1 Notes on the Initial Closing Date to: fund the Aircraft Purchase Account with the proceeds of each applicable Level 1 Advance on each Delivery Date in the required amounts to purchase the Initial Subsidiaries and the Initial Aircraft, including making direct or indirect Intercompany Loans to the Initial Subsidiaries (other than the Initial Aircraft Owner Trusts) the proceeds of which will be used to pay in full the AerVenture Loans owed by such Subsidiaries; pay to the Seller the proceeds of the Level 2 Advances on the Level 2 Advance Date; and pay certain transaction expenses, including the cost of additional interest rate hedging instruments. Under the terms of the Indenture, the ALS Group is required, to the extent of available cash flows, to maintain cash balances in an amount equal to the Required Expense Amount, which will be an amount determined in respect of each Payment Date based on expected expenses. Liquidity Reserve Amounts Funds held in the Collections Account (if any) and funds available under any Eligible Credit Facilities (including the Liquidity Facility) and any Cash Collateral Accounts are intended to serve as a source of liquidity for the ALS Group's repair and maintenance obligations, operating expenses and interest obligations. Under the Indenture, payments having a lower priority than interest on the Initial Class A Notes may not be made except to the extent that all drawings owing under any Eligible Credit Facilities (including the Liquidity Facility) and any Cash Collateral Accounts have been reimbursed or replenished. Liquidity Facility Calyon provides a liquidity facility to ALS. The aggregate amount available under the Liquidity Facility on the Initial Closing Date was $55,000,000. Under the Liquidity Facility, if the amount of Available Collections in respect of any Payment Date after the Initial Delivery Date (prior to any drawings under the Liquidity Facility and /or withdrawals, if any, from the Initial Primary Liquidity Reserve Account) is insufficient to pay the sum of (1) the Required Expense Amount, (2) Senior Hedge Payments, (3) Class A-1 Commitment Fees and (4) accrued and unpaid interest on the Initial Class A Notes, in each case as of such Payment Date, then the Liquidity Provider will make advances in an amount sufficient to cover such shortfall to the extent of available funds under the Liquidity Facility, provided that ALS will not be permitted to request any drawings under the Liquidity Facility prior to the Initial Delivery Date. The Liquidity Facility cannot be used to pay any other amount in respect of the Notes. Upon each drawing under the Liquidity Facility as provided above, ALS will be required to reimburse the Liquidity Provider for the amount of such drawing in the order of priority specified in the Indenture. See "Description of Notes Payment of Principal and Interest Priority of Payments" and "Description of the Liquidity Facility". The size of the Liquidity Facility was determined largely based on an analysis of historical experience, assumptions regarding the future performance of the ALS Group and the frequency and cost of certain contingencies in respect of the Initial Aircraft. The Liquidity Facility is intended to provide liquidity for meeting the cost of maintenance obligations and non-maintenance, aircraft related contingencies such as removing regulatory liens, compliance with Airworthiness Directives and repossessing and re-leasing Initial Aircraft. For more information regarding the Liquidity Facility, see "Description of the Liquidity Facility". 126

135 Future Expenses In the future, the ALS Group may have to incur unusually high cash expenditures for the purpose of airframe and engine overhauls and complying with new regulatory requirements for Aircraft operating in Europe and North America. Following the Initial Delivery Date, depending on the timing and amounts of such payments, this could also adversely affect the ability of ALS to make payments on the Initial Class A Notes or of amounts owed to the Class A-1 Commitment Holders, since these payments would rank ahead of payments on the Initial Class A Notes or payments owed to the Class A-1 Commitment Holders. INTEREST RATE RISK AND MANAGEMENT The quantitative disclosure and other statements in this section are forward looking statements that involve risks and uncertainties. Although the ALS Group's policy will be to limit exposure to changes in interest rates, the ALS Group could suffer higher cash flow losses than described above as a result of actual future changes in interest rates. The future exposure of the ALS Group to interest rate movements will change as the composition of the lease portfolio changes and because the aggregate principal of Initial Class A Notes actually issued may be lower than $1,000,000,000 if (1) the Initial Appraised Value of any Initial Aircraft is less than the Initial Closing Date Appraised Value for such Aircraft, (2) the ratings of the Initial Class A Notes on the Level 2 Advance Date are lower than A2: outlook stable, by Moody's, and A: outlook stable, by Standard & Poor's (as further described herein), (3) AerVenture Leasing delivers one or more Substitute Aircraft, (4) AerVenture Leasing delivers fewer than all of the Initial Aircraft or (5) one or more Initial Aircraft are delivered with a Substitute Lease in the place of the lease of such Aircraft expected as of the Initial Closing Date. You should also refer to "Risk Factors" for more information about risks, especially Lessee credit risk, that could intensify the exposure of the ALS Group to changes in interest rates. Interest Rate Risk and Management The leasing revenues of the ALS Group will be generated primarily from rental payments, which will be based on either fixed or floating rate calculations. In some cases, Leases will carry fixed and floating rental payments for different rental periods. In the case of floating rate Leases, an element of the rental will vary in line with changes in LIBOR, generally six-month LIBOR. In general, interest rate exposure will arise to the extent that ALS's floating rate interest obligations in respect of the Initial Class A Notes differ from the fixed and floating rental payments and do not correlate to the mix of fixed and floating rental payments for different rental periods. This interest rate exposure can be managed through the use of Hedge Agreements, including interest rate caps, interest rate swaps and other derivative instruments. The counterparties will consist primarily of affiliates of major U.S. and European financial institutions and special purpose derivative vehicles that will have credit ratings, or will provide collateralization arrangements, consistent with maintaining the ratings of the Initial Class A Notes. Counterparty risk will be monitored on an ongoing basis. Counterparties will be subject to the prior approval of the Directors. The Directors, with the assistance of the Financial Administrative Agent, will be responsible for reviewing and approving the overall interest rate management policies and transaction authority limits. As described below, the Financial Administrative Agent, acting within the overall policies and limits, will enter into specific hedging instruments. In implementing its interest rate management policy, ALS will seek to manage its exposure to adverse changes in interest rates based on regular reviews of its interest rate risk. Typically, before each Payment Date, the Financial Administrative Agent, on behalf of ALS, will estimate future principal payments on the Initial Class A Notes based on a model of the cashflows of ALS. The fixed and floating rate components of the Leases then existing in respect of the Aircraft will then be estimated. The Financial Administrative Agent will review this estimate whenever Lease rentals (whether fixed or floating rate) are reset under the terms of such Leases. This analysis will invariably indicate that ALS is "short" floating rate revenues and thus is adversely exposed to increases in LIBOR, the benchmark interest rate for the Initial Class A Notes and the floating rate Leases. After taking into account the available cash balance of ALS and ALS's portfolio of caps and swaps, the Financial Administrative Agent will then enter into additional interest rate caps or interest rate swaps on behalf of ALS to hedge against the estimated amount of this shortfall in order to rebalance the floating interest obligations and the fixed and floating rental payments. This portfolio of caps and swaps will be reviewed regularly on the basis described above. 127

136 On the Initial Closing Date, ALS entered into agreements with two Hedge Providers to hedge interest rates (the "Initial Hedge Agreements"), under which ALS will purchase hedging instruments from the Hedge Providers which will amortize on the basis of the expected paydown schedule of the Initial Notes, the expiry dates of the Leases in respect of the Initial Aircraft under which Lessees are contracted to make fixed rate rental payments and the LIBOR reset dates under the floating rate Leases in respect of the Initial Aircraft. In addition to the Initial Hedge Agreements, on or about each Delivery Date, ALS intends to enter into one or more contracts to acquire interest rate caps or swaps (the "Future Hedge Agreements") with eligible Hedge Providers. These Future Hedge Agreements, together with the Initial Hedge Agreements, will amortize on the basis of the expected paydown schedule of the Initial Notes together with terms of the fixed rate Leases. Through the use of interest rate caps, interest rate swaps, and other interest rate hedging products, it is the ALS Group's policy not to be adversely exposed to material movements in interest rates. The ALS Group's hedging strategy may need to be rebalanced with any acquisition of Additional Aircraft and issuance of Additional Notes to reflect the adjusted mix of fixed and floating interest obligations and of fixed and floating rate rental payments, any issuance of Refinancing Notes, the expiry or termination of existing Leases or upon entering into new Leases in each case. There can be no assurance, however, that the ALS Group's interest rate risk management strategies will be effective in this regard. Any change to the ALS Group's policy with regard to its dealing in interest rate hedging products will be subject to periodic review by the Rating Agencies and ALS will deliver notice to the Class A-1 Funding Agent and the Liquidity Provider of any such change. 128

137 Note Payment Assumptions The assumptions and tables set forth below are designed to illustrate certain payment characteristics of the Initial Class A Notes and are not intended to be projections, estimates, forecasts or forward looking statements. The tables have been developed by fixing certain assumptions and by varying other assumptions and factors that affect the ALS Group's revenues and expenses. The assumptions are not a complete list of factors that may affect the revenues and expenses of the ALS Group. Rather, they reflect those factors that are likely to affect significantly the performance of the ALS Group in future years. More severe stresses may lead to payments of principal of the Initial Class A Notes being delayed or decreased or, in certain cases, may lead to a default under the Indenture. The following information only illustrates some of the payment sensitivities of the Initial Class A Notes to market and economic stresses. It is highly likely that actual outcomes will vary from the assumptions and the scenarios examined below. Additional factors that could cause ALS's performance to differ materially from such scenarios include the risks set forth under "Risk Factors". REVENUE ASSUMPTIONS ALS used assumptions (1) to (20) to determine its assumed gross monthly revenue after the Initial Delivery Date, before interest payments, principal payments, liquidity provider fees and general and administrative expenses. 1. Aircraft that are currently subject to any Existing Lease Contracts are delivered in accordance with the terms of such lease contracts. For Leases that will have fixed rental payments, but for which such rental payments will be fixed on or about the date of delivery of the relevant Aircraft to the Lessee pursuant to the relevant Lease, the rental payment estimates have been calculated by reference to a U.S. dollar swap rate prevailing at such date, using the forward U.S. dollar swap curves as of April 15, For Leases whereby the Lessee may elect, on or about the date of delivery of the relevant Aircraft to the applicable Lessee pursuant to the relevant Lease, whether the rental payments will be payable on a fixed rate basis (calculated by reference in part to a U.S. dollar swap rate prevailing at such date) or will be floating based on a swap rate or LIBOR for the duration of the Lease, it has been assumed that all the Lessees would elect for a fixed rental payment, calculated by reference to a U.S. dollar swap rate prevailing at such date, using the forward U.S. dollar swap curves as of April 15, Aircraft coming off lease in the future are assumed to have a two-month off-lease period and then to be released afterward at a monthly rate that is a function of (a) the relevant Lease Rate Factor (as set forth in Appendix 5 as determined by the age of the Aircraft) and (b) the Depreciated Aircraft Value. 3. Each Initial Aircraft is assumed to have an expected useful life of 25 years. 4. All contracted and assumed future payments in respect of the Leases are received in a timely fashion by ALS on the first of every month and five days of investment income is earned at a constant rate of one-month LIBOR minus 0.25% per annum on those amounts. 5. Future lease terms are assumed to be five years, except that Aircraft are disposed of at the end of their useful life. 6. No new Purchase Options with respect to the Aircraft are granted to Lessees by ALS, and no existing Purchase Options are exercised. 7. No new lease termination or extension options with respect to the Aircraft are granted to Lessees by ALS, and no existing termination options are exercised. 8. All of the Initial Aircraft are delivered to ALS on their Scheduled Delivery Date. 9. ALS acquires no Additional Aircraft and issues no Additional Notes. 10. There are no Modification Payments or Maintenance Reserves. 129

138 11. Distributions on the Notes are made on the fifth day of each month, commencing May 2009; the Calculation Date is assumed to be the 30th day of each month commencing April No Indenture Event of Default occurs. 13. No Optional Redemption occurs. 14. No Substitute Aircraft are delivered. 15. One-month LIBOR rate is assumed to be 4.5% per annum and any other interest rates with respect to the floating rate leases are assumed to be 4.5% per annum. 16. The Initial Closing Date is in June The Final Maturity Date is in June Security deposits are assumed to be zero. 19. Funds on deposit in the Collections Account other than lease payments (see assumption (4)) earn interest each month at a fixed rate of one-month LIBOR minus 0.25% per annum and are applied in accordance with the payment priorities set forth under "Description of Notes Payment of Principal and Interest Priority of Payments", calculated on an actual/360-day count convention. 20. Remarketing costs are $200,000 for each Initial Aircraft per each remarketing event. OTHER ASSUMPTIONS 21. The Notes will, by the Delivery Expiry Date, be issued in aggregate principal amounts and with coupons as set forth in the following table and payments are made in accordance with the payment priorities set forth under "Description of Notes Payment of Principal and Interest Priority of Payments". Class of Notes Amount Monthly Coupon A $ 1,000,000,000 LIBOR % per annum E-1... $ 418,000,000 Fixed Rate of 20% per annum 22. The Servicer's fees are paid in the amounts described under "The Transaction Servicer". 23. The Administrative Agent's fees are paid in the amounts described under "The Transaction Administrative Agent". 24. ALS enters into Hedge Agreements in connection with the acquisition of the Initial Aircraft. 25. Interest on any unpaid Liquidity Drawings or on the Final Drawing accrues at one-month LIBOR plus 1.50% per annum and the commitment fee on any unused portion liquidity is 0.75% per annum. 26. Other expenses of the ALS Group are $12,000 per annum paid monthly. PRINCIPAL REPAYMENTS UNDER THE BASE CASE The table below shows, for each Payment Date presented, the amount of the initial Outstanding Principal Balance of the Initial Class A Notes expected to be outstanding on that Payment Date based on the assumptions (1) through (26) set out above (the "Note Payment Assumptions"). 130

139 Amount of initial principal balance of the Initial Class A Notes based on the base case Payment Date Occurring In June Initial Class A Notes, in $ Initial Closing Date ,951, ,081, ,016, ,590, ,208, ,785, ,543, ,197, ,063, ,304, ,267, Average Life years Expected Maturity years Five scenarios are presented below that measure the impact upon various characteristics of the Initial Class A Notes depending on different levels of haircut to the gross revenues. Base case indicates the impact on the Initial Class A Notes of the Note Payment Assumptions. Scenario 1 indicates the impact on the Initial Class A Notes due to a change in the future lease term assumption from 60 months to 36 months. Scenario 2 indicates the impact on the Initial Class A Notes due to a change in the time off-lease assumption in all future re-leases from two months to four months. Scenario 3 indicates the impact on the Initial Class A Notes due to an assumed aircraft market cycle. It is assumed that starting from month 25 and then every 96 months that a recession of 36 months duration has a negative impact on the lease rates. During recessionary periods, the lease rates are reduced from the assumed lease rates in the base case in accordance with the haircut factors listed in Appendix 6. Scenario 4 indicates the impact on the Initial Class A Notes due to a change in the depreciation assumption of the Aircraft. The depreciated value of each Aircraft is assumed to be the minimum of (a) Depreciated Aircraft Value and (b) value 2. For value 2, each Aircraft is assumed to be depreciated by multiplying (i) initial appraised value of each Aircraft by (ii) m^n where m = 0.95 and n= periods since the Initial Closing Date divided by 12. Scenario 5 indicates the impact on the Initial Class A Notes due to a combination of the assumptions in Scenarios 1 through 4. For every scenario, the table below indicates, assuming the actual revenue received is of the indicated percentage of gross revenue starting in the first month after the Initial Closing Date: the minimum percentage of gross revenue that will be necessary to repay all interest and principal by the Final Maturity Date, weighted average life and final maturity month. 131

140 Base case: Initial Class A Notes Minimum percentage required for repayment of Initial Class A Notes in full: 55.3% Gross revenue reduction (%) Weighted Average Life (year) Expected Maturity... Mar 2020 Dec 2020 Oct 2021 Sep 2022 Scenario 1: Initial Class A Notes Minimum percentage required for repayment of Initial Class A Notes in full: 56.0% Gross revenue reduction (%) Weighted Average Life (year) Expected Maturity... Apr 2020 Dec 2020 Nov 2021 Nov 2022 Scenario 2: Initial Class A Notes Minimum percentage required for repayment of Initial Class A Notes in full: 56.4% Gross revenue reduction (%) Weighted Average Life (year) Expected Maturity... May 2020 Mar 2021 Jan 2022 Jan 2023 Scenario 3: Initial Class A Notes Minimum percentage required for repayment of Initial Class A Notes in full: 57.2% Gross revenue reduction (%) Weighted Average Life (year) Expected Maturity... Apr 2020 Jan 2021 Dec 2021 Jan 2023 Scenario 4: Initial Class A Notes Minimum percentage required for repayment of Initial Class A Notes in full: 67.0% Gross revenue reduction (%) Weighted Average Life (year) Expected Maturity... Apr 2021 May 2022 Oct 2023 Jun 2025 Scenario 5: Initial Class A Notes Minimum percentage required for repayment of Initial Class A Notes in full: 71.8% Gross revenue reduction (%) Weighted Average Life (year) Expected Maturity... Feb 2022 Aug 2023 Apr 2025 Aug

141 Description of the Purchase Agreement The following description is a summary of the material terms of the Purchase Agreement. The description does not purport to be complete, does not restate the Purchase Agreement and is qualified in its entirety by reference to the Purchase Agreement and the Indenture. PURCHASE OF THE AIRCRAFT Each of the 30 Initial Aircraft-Owning Entities will purchase an Initial Aircraft from AerVenture Leasing, its affiliates or a third party pursuant to an aircraft sale agreement or a purchase agreement assignment. In the case of an acquisition by an Initial Aircraft Company, the purchase price will be financed by an AerVenture Loan. On the Initial Closing Date, ALS agreed, under the Purchase Agreement, to purchase 30 Initial Aircraft by purchasing, directly or indirectly through the purchase of the shares in the Holding Company, the beneficial interest in each of the 18 Initial Aircraft Owner Trusts or the shares in each of the 12 Initial Aircraft Companies from the Seller. The Purchase Agreement allows the Seller to deliver indirectly the Initial Aircraft (or propose Substitute Aircraft meeting the criteria specified in the Purchase Agreement and the Indenture) on or after the date such Initial Aircraft is delivered to the relevant Initial Aircraft-Owning Entity from Airbus, but only during the Delivery Period ending on September 30, The Seller is required to use commercially reasonable efforts to deliver the Initial Aircraft. On the Initial Delivery Date, 15 or more of the Initial Aircraft will be delivered to ALS. The cash purchase price of each Initial Aircraft, together with the issuance by ALS of Class E-1 Notes to AerVenture Leasing in amounts allocated to such Initial Aircraft, as calculated pursuant to the terms of the Purchase Agreement, will be due and payable on the relevant Delivery Date. In addition, on each relevant Delivery Date, ALS will make an Intercompany Loan, pursuant to the Loan, Expenses Apportionment and Guarantee Agreement, to the applicable Initial Subsidiary (other than the Initial Aircraft Owner Trusts), the proceeds of which will be utilized to repay in full the related AerVenture Loan. ALS expects to acquire the Initial Aircraft and their related Leases within the Delivery Period. To fund the acquisition of such Initial Aircraft, on the Advance Date related to each relevant Delivery Date, pursuant to the Class A-1 Note Funding Agreement, the Class A-1 Commitment Holders will deposit the applicable Level 1 Advance Amount necessary to purchase the Initial Aircraft into the Funding Account, to be transferred to the Aircraft Purchase Account on the Delivery Date subject to conditions set forth in the Class A-1 Note Funding Agreement, which will be established by the Operating Bank at the direction of the Cash Manager prior to the Initial Closing Date for such purpose. See "Description of Notes Accounts Aircraft Purchase Account; Funding Account". On the date of purchase of each Initial Subsidiary, the Seller will represent that the respective Initial Aircraft- Owning Entity has, in the case of an Initial Aircraft Company, full legal and beneficial title to the relevant Initial Aircraft and, in the case of an Initial Aircraft Owner Trust, full legal title to the relevant Initial Aircraft, free and clear of all liens (including the full discharge of any indebtedness with respect to any of the Initial Aircraft-Owning Entities), charges and encumbrances other than those created by or through the applicable Lessee or the ALS Group. In addition, various other conditions to the transfer of (i) the ownership in the shares in the Holding Company or in an Initial Aircraft Company or (ii) the beneficial interest in an Initial Aircraft Owner Trust (each such ownership or beneficial interest, an "Aircraft Interest") must be satisfied by both the Seller and ALS. Such conditions include that on the applicable Delivery Date no (i) "Event of Default" (as defined in the related Lease) involving the failure of the Lessee to make payments (including any default cured by debiting a security deposit account, through a restructuring of such Lease or by waiver) or (ii) other material default known to the Seller has occurred and is continuing under the Lease related to such Initial Aircraft, unless in any such case such Event of Default or other material default has been disclosed to and waived by ALS prior to such Delivery Date. All conditions are subject to waiver by ALS with the prior written consent of the Class A-1 Funding Agent and the prior written notification to the Rating Agencies. Under the Class A-1 Note Funding Agreement, the Class A-1 Funding Agent will instruct the Trustee and the Operating Bank to transfer the Level 1 Advance Amount to the Aircraft Purchase Account with respect to an Initial Aircraft, for payment to the Seller, if certain conditions set forth in the Class A-1 Note Funding Agreement are met, including that the conditions to delivery of such Aircraft under the Purchase Agreement are met to the satisfaction of the Class A-1 Funding Agent. See "Description of the Class A-1 Note Funding Agreement". 133

142 Under the Purchase Agreement, the Seller indemnifies ALS for, among other things, losses arising from breaches of the representations and warranties relating to: (1) the existence of a valid and final transfer of the beneficial interests in the Direct Aircraft Owner Trusts and the shares in the Holding Company and the Direct Aircraft Companies which are sold to ALS by the Seller; (2) the title of the Initial Aircraft Owner Trusts and the Initial Aircraft Companies to the applicable Aircraft; and (3) the lack of additional liabilities of the Initial Aircraft Owner Trusts and the Initial Aircraft Companies other than disclosed to ALS prior to acquisition. The indemnity provided by the Seller in the Purchase Agreement is subject to an aggregate financial limit of $175 million (including all claims arising under related tax indemnities and aircraft purchase agreements), a per claim deductible of $500,000 and a time limit to make claims of, in the case of tax claims, seven years from the closing date of the sale of the relevant Aircraft Interest and, in the case of other claims, three years from the closing date of the sale of the relevant Aircraft Interest; however, there will be no financial limit or time limit if the claim relates to a misrepresentation by the Seller of any of the representations or warranties described in clauses (1) and (2) above. The aggregate cash purchase price (including the aggregate principal amount of Intercompany Loans made directly or indirectly by ALS to the Initial Subsidiaries (other than the Initial Aircraft Owner Trusts) pursuant to the Loan, Expenses Apportionment and Guarantee Agreement), the proceeds of which will be utilized to repay in full the AerVenture Loans) of the Initial Aircraft will be approximately $1,000,000,000 but may be lower depending on (a) the Initial Appraised Value of each Aircraft when such Aircraft is delivered, (b) whether any Substitute Aircraft is delivered in the place of any aircraft identified in the Purchase Agreement as an Initial Aircraft and (c) whether all 30 Initial Aircraft are delivered. See " Payment for Initial Aircraft and Non-Delivery of Initial Aircraft". Under the Purchase Agreement, on each Delivery Date the Seller will transfer to ALS (i) all maintenance reserves and (ii) all security deposits, letters of credit and guarantees or other credit support, in the case of each of (i) and (ii) held by the relevant Initial Aircraft-Owning Entity on such Delivery Date (provided that, in the case of such amount held in cash, an amount equal to such amount will be transferred from the Aircraft Purchase Account to the Collections Account, or a Lessee Funded Account if applicable, thereby reducing the amount of the cash purchase price the Seller receives). In connection with the purchase of an Initial Aircraft-Owning Entity, the Seller has agreed to indemnify ALS against certain losses arising in respect of the related Aircraft from events occurring prior to the relevant Delivery Date, and ALS has agreed to indemnify the Seller against certain losses in respect of an Initial Aircraft-Owning Entity from events occurring after the relevant Delivery Date. SUBSTITUTE AIRCRAFT If the Seller is unable to effect the sale of any Initial Aircraft at any time before the expiry of the Delivery Period for any reason (including, without limitation, the failure of one or more conditions precedent to the sale, as set forth in the Purchase Agreement), the Seller must promptly inform ALS and explain why the Initial Aircraft cannot be delivered. The Seller may designate a Substitute Aircraft for any one Initial Aircraft if such Substitute Aircraft (a) is one of the New Airbus Aircraft identified in the Purchase Agreement as a potential Substitute Aircraft, (b) is subject to an operating lease contract or a letter of intent for an operating lease contract that states that the parties intend to enter into such operating lease contract within 90 days of signing of such letter of intent and (c) complies with the concentration limits set forth in the Indenture (unless consent of the Class A-1 Funding Agent and prior notice is provided to the Rating Agencies). In addition, each Substitute Aircraft must comply with conditions applicable to all Aircraft, set forth in the Purchase Agreement and the Indenture. The Aircraft purchase price of a Substitute Aircraft is described below in " Payment for Initial Aircraft and Non-Delivery of Initial Aircraft". No more than a total of six Substitute Aircraft and/or Substitute Leases may be substituted by the Seller, and no more than a total of three Substitute Aircraft may be subject to a Substitute Lease the term of which is less than seven years. 134

143 PAYMENT FOR INITIAL AIRCRAFT AND NON-DELIVERY OF INITIAL AIRCRAFT On each Advance Date related to the Delivery Date of an Initial Aircraft, after satisfaction of the conditions to funding set forth in the Class A-1 Note Funding Agreement, the Class A-1 Commitment Holders will deposit into the Funding Account the Level 1 Advance Amount with respect to such Aircraft which will be equal to the cash portion of the purchase price for such Aircraft, as calculated pursuant to the Purchase Agreement (the "Aircraft Allocation Amount"). The amounts so deposited will be applied as described below. On the Delivery Date of any Aircraft Interest, upon receipt of written instruction from the Class A-1 Funding Agent to release the Level 1 Advance Amount with respect to such Aircraft, the Cash Manager may make, or direct the Operating Bank to make, the following deposits, withdrawals and transfers to and from the Accounts, in each case as specified in a written notice from the Cash Manager to the Trustee, the Security Trustee and the Operating Bank (which written notice from the Cash Manager will, as a condition to any such deposit, withdrawal and transfer, be accompanied by a written notice from the Administrative Agent (a) stating that the conditions to payment for such Aircraft (or related Aircraft Interest) specified in the Purchase Agreement have been fulfilled and (b) setting forth the amounts of such deposit, withdrawal or transfer): (1) transfer from the Funding Account and deposit into the Aircraft Purchase Account an amount equal to the Level 1 Advance Amount for the related Aircraft; (2) transfer from the Aircraft Purchase Account into the Substitute Holdback Account an amount equal to the Substitute Holdback Deposit Amount, if any; (3) transfer from the Funding Account and deposit into the Collections Account the amount of any investment earnings on such Level 1 Advance Amount; (4) transfer from the Collections Account and deposit into the relevant Lessee Funded Account, the amount of any segregated funds received in respect of such Aircraft under the Purchase Agreement; (5) transfer from the Aircraft Purchase Account to the Collections Account the amount of security deposits and maintenance reserves that are not segregated funds held by the Subsidiary that is the lessor under the Lease with respect to such Aircraft and the amount of any rental payments paid pursuant to such Lease relating to the period commencing on such Delivery Date; (6) transfer from the Aircraft Purchase Account to the Expense Account an amount equal to the cost of the premium for the interest rate cap related to the Lease of such Aircraft (if such Aircraft is subject to a Lease pursuant to which the rental amount is fixed on or shortly prior to such Delivery Date); (7) pay out of the Aircraft Purchase Account to the Seller the amount of the Aircraft Allocation Amount minus the sum of (a) the Substitute Holdback Deposit Amount (if any), (b) the amount of security deposits and maintenance reserves held by the Subsidiary that is the lessor under the Lease with respect to such Aircraft, (c) the amount of any rental payments paid pursuant to such Lease relating to the period commencing on such Delivery Date and (d) the amount equal to any interest rate cap premium referred to in (6) above; and (8) transfer from the Substitute Holdback Account to the Note Account for the Class E-1 Notes (for payment to AerVenture Leasing) an amount equal to the Substitute Holdback Distribution Amount, if any. On the Delivery Expiry Date, after the deposits, withdrawals and transfers described above if such date is also the Delivery Date for any Aircraft Interest, the Cash Manager will transfer from the Substitute Holdback Account to the Collections Account any remaining amounts on deposit in the Substitute Holdback Account. In addition, on each Delivery Date for any Aircraft Interest, ALS will issue Class E-1 Notes to AerVenture Leasing in respect of the remainder of the purchase price for such Aircraft Interest. Each such Class E-1 Note will have a principal amount equal to the difference between the Initial Appraised Value of the related Aircraft and the Level 1 Advance Amount for such Aircraft (which Level 1 Advance Amount is equal to the cash portion of the purchase price for the aircraft, including any amounts related to rent, security deposits, maintenance reserves, cap premium and adjustments for a substitute aircraft or lease that are retained by ALS, as further described above). 135

144 Upon written notice from the Administrative Agent to the Cash Manager, the Trustee, the Security Trustee and the Operating Bank that ALS is no longer required, pursuant to the Purchase Agreement, to purchase any Initial Aircraft after the Level 1 Advance Amount related to such Aircraft has been deposited in the Funding Account (whether by reason of the passing of the Delivery Expiry Date, the occurrence of a Non-Delivery Event (as defined below), the exercise by ALS of any termination right under the Purchase Agreement or otherwise), or if the delivery of such Initial Aircraft has been postponed beyond five Business Days from the Advance Date, the Cash Manager will direct the Operating Bank to return from the Funding Account to the Class A-1 Commitment Holders an amount equal to the Level 1 Advance Amount related to each Initial Aircraft so affected, and transfer to the Collections Account the investment earnings in the Funding Account allocable to such Level 1 Advance Amount. If a Level 1 Advance is returned to the Class A-1 Commitment Holders due to the postponement of the delivery of an Initial Aircraft, ALS may request such Level 1 Advance again in connection with the later delivery of such Initial Aircraft or a Substitute Aircraft therefor. A "Non-Delivery Event" will occur (a) with respect to a particular Initial Aircraft, upon delivery of written notice from the Seller to ALS that the Seller, using its reasonable commercial efforts, will be unable to effect a transfer of such Aircraft and will be unable to provide a Substitute Aircraft acceptable to ALS; (b) with respect to all Initial Aircraft, upon the earliest to occur of (i) the Seller becoming or being declared insolvent, or an examiner or receiver or liquidator or similar officer being appointed over the Seller or over all or a substantial part of its assets, or the Seller making an arrangement for the benefit of its creditors generally or taking steps (or steps being taken and not discharged within 21 days) for the winding up or dissolution of the Seller or for the appointment of an examiner to it; (ii) an event or condition which results in the acceleration of the maturity of indebtedness of the Seller exceeding in the aggregate $10 million; (iii) failure by the Seller to comply with any of the covenants, obligations, conditions or provisions binding on it under the Purchase Agreement (other than as described in (i) above) if such failure materially adversely affects the ability of ALS to make payments on the Notes and continues for a period of 30 days or more after written notice thereof has been given to the Seller by ALS; and (iv) September 30, 2010; and (c) with respect to all Initial Aircraft, upon the failure of the Seller to make certain payments due under the Purchase Agreement within the time period set forth therein. Provisions essentially similar to those described above would become applicable in the case of any Additional Aircraft not acquired on the closing date for any Additional Notes issued to acquire such Additional Aircraft. 136

145 Description of the Liquidity Facility The following summary describes the material terms of the Liquidity Facility and certain provisions of the Indenture relating to the Liquidity Facility. The summary does not purport to be complete and is qualified in its entirety by reference to all of the provisions of the Liquidity Facility and the Indenture. GENERAL On the Initial Closing Date, the Liquidity Provider entered into the Liquidity Facility, a revolving credit agreement with ALS and the Cash Manager. Under the Liquidity Facility, the Liquidity Provider will, if necessary, make one or more advances ("Liquidity Drawings") to ALS to the extent Available Collections are insufficient to pay the Required Expense Amount, Senior Hedge Payments, Class A-1 Commitment Fees and accrued and unpaid interest on the Initial Class A Notes as of any Payment Date to the extent of available funds thereunder, provided that ALS will not be permitted to request any Liquidity Drawings prior to the Initial Delivery Date. The Liquidity Provider may be replaced by one or more other entities under certain circumstances described below. Once any payment under the Liquidity Facility is paid to the Cash Manager, the Liquidity Provider will have no further obligations in respect of those payments. The Liquidity Provider will not be required or entitled to make any payment under the Liquidity Facility except at the times and in the amounts and under the circumstances expressly set forth in the Liquidity Facility. To the extent the Liquidity Provider's consent or approval is required under the Indenture or other Related Documents, such consent will not be required in the event that no Initial Class A Notes are outstanding and no Credit Facility Advance Obligations are due and owing to the Liquidity Provider, and such consent is not required in some cases if an Initial Liquidity Facility Non-Consent Event has occurred. The "Initial Liquidity Facility Non- Consent Event" means the occurrence of (i) the payment of the Initial Class A Notes in full (other than any Refinancing Notes that are Initial Class A Notes so long as the Initial Class A Notes covered by the Liquidity Facility have been paid in full with the proceeds of the issuance of such Refinancing Notes, such Refinancing Notes are not covered by the Liquidity Facility and the Liquidity Facility has been terminated in connection with such refinancing), (ii) the termination of the Liquidity Facility and (iii) the payment of all Credit Facility Obligations owed to the Liquidity Provider in full. DRAWINGS The aggregate amount available under the Liquidity Facility is $55,000,000 (as the same may be adjusted from time to time, the "Maximum Commitment"). Liquidity Drawings. If the Cash Manager determines that on any Payment Date occurring after the Initial Delivery Date, after making all withdrawals and transfers to be made with respect to such Payment Date prior to any drawings under the Liquidity Facility, and withdrawals from the Initial Primary Liquidity Reserve Account, there will be an Expenses Shortfall, a Senior Hedge Payment Shortfall, a Class A Interest Shortfall or a Class A-1 Commitment Fee Shortfall, the Cash Manager will so notify the Trustee in writing and will, no later than three Business Days prior to such Payment Date, request a drawing under the Liquidity Facility, to be paid on such Payment Date, in an amount equal to the lesser of the aggregate shortfall and the Available Amount, provided that ALS will not be permitted to request any Liquidity Drawings prior to the Initial Delivery Date. The "Available Amount" at any time is an amount equal to the then Maximum Commitment less the aggregate amount of each Liquidity Drawing outstanding under the Liquidity Facility at such time, provided that following a Downgrade Drawing, a Non-Extension Drawing or a Final Drawing, the Available Amount will be zero. "Class A Interest Shortfall" means, on any Payment Date, an amount equal to the excess of the Interest Amount due on the Initial Class A Notes over the amount of funds available in the Collections Account on such Payment Date to pay such Interest Amount (prior to application of any drawings under the Liquidity Facility). "Class A-1 Commitment Fee Shortfall" means, on any Payment Date, an amount equal to the excess of the Class A-1 Commitment Fees due over the amount of funds available in the Collections Account on such Payment Date to pay such Class A-1 Commitment Fees (prior to application of any drawings under the Liquidity Facility). 137

146 "Expenses Shortfall" means, on any Payment Date, an amount equal to the excess of the Required Expense Amount for such Payment Date over the amount of funds available in the Collections Account on such Payment Date to pay such Required Expense Amount (prior to application of any drawings under the Liquidity Facility); provided that, in the event that ALS or any member of the ALS Group is required under the terms of a Lease to reimburse a Lessee for maintenance reserves, security deposits or similar payments, ALS will first withdraw funds (to the extent it is entitled under the applicable Lease to do so) from the applicable Lessee Funded Account (if any) prior to making any withdrawal from the Expense Account. "Senior Hedge Payment Shortfall" means, on any Payment Date, an amount equal to the excess of the Senior Hedge Payment owed to each applicable Hedge Provider as provided in the Indenture for such Payment Date over the amount of funds available in the Collections Account on such Payment Date to pay such Senior Hedge Payment (prior to application of any drawings under the Liquidity Facility). The Liquidity Facility does not provide for drawings thereunder to pay for principal of, redemption premium on, breakage costs or any other amounts due with respect to the Class A Notes. Each payment by the Liquidity Provider will reduce by the same amount the Available Amount under the Liquidity Facility, subject to reinstatement as hereinafter described. With respect to any Liquidity Drawing, upon reimbursement of the Liquidity Provider in full or in part for the amount of such Liquidity Drawing plus interest thereon, the Available Amount under the Liquidity Facility will be reinstated by an amount equal to the amount of such Liquidity Drawing so reimbursed to an amount not to exceed the then Maximum Commitment. However, the Liquidity Facility will not be so reinstated at any time if (i) a Liquidity Event of Default has occurred and is continuing or (ii) a Downgrade Drawing, a Non-Extension Drawing or a Final Drawing has been made. Downgrade Drawing. If at any time the short-term or long-term (as the case may be) issuer credit rating or shortterm or long-term (as the case may be) unsecured debt rating of the Liquidity Provider then issued by any Rating Agency is lower than the applicable Threshold Rating (unless each Rating Agency confirms in writing within 10 Business Days of such downgrade that such downgrading of the Liquidity Provider will not result in the downgrading, withdrawal or suspension of its ratings of the Initial Class A Notes and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) consents to the retention of such Liquidity Provider and confirms in writing that such downgrading will not constitute a "downgrade event"), and the Liquidity Facility is not replaced with a Replacement Facility within ten days after notice of such downgrading and as otherwise provided in the Indenture, the Liquidity Facility will be drawn in full up to the then Available Amount (the "Downgrade Drawing"). The proceeds of a Downgrade Drawing will be deposited into a liquidity reserve account (the "Initial Primary Liquidity Reserve Account") and used for the same purposes and under the same circumstances and subject to the same conditions as cash payments of Liquidity Drawings under the Liquidity Facility would be used. Non-Extension Drawing. The Liquidity Facility was entered into on the Initial Closing Date and provides that it may be extended for additional 364-day periods at the Liquidity Provider's discretion. The Liquidity Facility will expire 364 days after the Initial Closing Date, if not extended. If the Liquidity Facility is not extended or replaced by the tenth day prior to its then scheduled expiration date, the Liquidity Facility will be drawn in full up to the then Available Amount (the "Non-Extension Drawing"). The proceeds of the Non-Extension Drawing will be deposited in the Initial Primary Liquidity Reserve Account as cash collateral to be used for the same purposes and under the same circumstances, and subject to the same conditions, as cash payments of Liquidity Drawings under the Liquidity Facility would be used. Replacement Facility. If the Liquidity Provider determines not to extend the Liquidity Facility, then (i) the Liquidity Provider or ALS may, at its option, arrange for a Replacement Facility to replace the Liquidity Facility during the period no earlier than 35 days and no later than ten days prior to the then scheduled expiration date of the Liquidity Facility and (ii) the Liquidity Provider may, at its option, arrange for a Replacement Facility to replace the Liquidity Facility at any time after such scheduled expiration date has been extended for a period in excess of a 364 day period. The Liquidity Provider may also arrange for a Replacement Facility at any time after a Downgrade Drawing so long as ALS has not already arranged for a Replacement Facility and the funds in the Initial Primary Liquidity Reserve Account have not been returned to the Liquidity Provider. If any Replacement Facility is provided at any time after a Downgrade Drawing or a Non-Extension Drawing, the funds on deposit in the Initial 138

147 Primary Liquidity Reserve Account will be returned to the Liquidity Provider being replaced. Any Replacement Facility arranged by the Liquidity Provider being replaced must be acceptable to ALS. A "Replacement Facility" means an irrevocable revolving credit agreement (or agreements) complying with the requirements of the Indenture in substantially the form of the replaced Liquidity Facility, including reinstatement provisions, or in such other form or forms (which may include a letter of credit, surety bond, swap, financial insurance policy or guaranty) as will permit the Rating Agencies to confirm in writing their respective ratings then in effect for the Class A Notes (before downgrading of such ratings, if any, as a result of the downgrading of the Liquidity Provider) and, if not in form and substance substantially the same as the replaced Liquidity Facility, in a face amount (or in an aggregate face amount) equal to the then Maximum Commitment for the replaced Liquidity Facility and issued by a person (or persons) having an unsecured short-term or long-term (as the case may be) debt rating and a short-term or long-term (as the case may be) issuer credit rating, as the case may be, issued by each Rating Agency which is equal to or higher than the Threshold Rating or, subject to the written consent of the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing), such other ratings and qualifications as will permit the Rating Agencies to confirm in writing their respective ratings then in effect for the Initial Class A Notes (before downgrading of such ratings, if any, as a result of the downgrading of the Liquidity Provider). The provider of any Replacement Facility will have the same rights under the Indenture and Security Trust Agreement as the replaced Liquidity Provider. "Threshold Rating" means the short-term issuer credit rating of A-1 by Standard & Poor's (or, in the absence of a short-term issuer credit rating by Standard & Poor's, a long-term issuer credit rating of AA- by Standard & Poor's) and a short-term unsecured debt rating of P-1 by Moody's (or, in the absence of a short-term unsecured debt rating by Moody's, a long-term unsecured debt rating of A1 by Moody's). Final Drawing. The Liquidity Facility provides that the Liquidity Provider's obligations thereunder will terminate on the earliest of: 364 days after the Initial Closing Date or the most recent expiry date, or any date to which the expiry date is extended pursuant to the terms of the Liquidity Facility; the date on which the Cash Manager delivers to the Liquidity Provider a certification that all of the Initial Class A Notes have been paid in full, the Indenture has been terminated with respect to all of the Notes issued thereunder or the Initial Class A Notes are otherwise no longer entitled to the benefit of the Liquidity Facility; the date on which the Cash Manager delivers to the Liquidity Provider a certification that a Replacement Facility has been substituted for the Liquidity Facility in accordance with the Indenture; the close of business on the fifth Business Day following receipt by the Cash Manager of a Termination Notice from the Liquidity Provider (see " Liquidity Events of Default"); the date on which no amount is or may (including by reason of reinstatement) become available for drawing under the Liquidity Facility; and the date that is 15 days after the Final Maturity Date. Upon receipt by the Cash Manager of a Termination Notice from the Liquidity Provider, the Cash Manager will request a final drawing (a "Final Drawing") under the Liquidity Facility in an amount equal to the then Available Amount thereunder. The proceeds of the Final Drawing will be deposited in the Initial Primary Liquidity Reserve Account as cash collateral to be used for the same purposes and under the same circumstances, and subject to the same conditions, as cash payments of Liquidity Drawings under the Liquidity Facility would be used. Drawings. Drawings under the Liquidity Facility will be made by delivery by the Cash Manager on behalf of ALS of a certificate in the form required by the Liquidity Facility. Upon receipt of such a certificate, the Liquidity Provider will be obligated to make payment of the drawing requested thereby in U.S. dollars and immediately available funds. Upon payment by the Liquidity Provider of the amount specified in any drawing under the Liquidity Facility, the Liquidity Provider will be fully discharged of its obligations under the Liquidity Facility with 139

148 respect to such drawing and will not thereafter be obligated to make any further payments under the Liquidity Facility in respect of such drawing to ALS or any other person. REIMBURSEMENT OF DRAWINGS ALS is required to reimburse amounts drawn under the Liquidity Facility by reason of a Liquidity Drawing, Final Drawing, Downgrade Drawing or Non-Extension Drawing and interest thereon, but only to the extent described below and to the extent that Available Collections are sufficient to pay such amounts in the order of priority specified in the Indenture. See "Description of Notes Payment of Principal and Interest Priority of Payments". Interest on Liquidity Drawings and Final Drawings Amounts drawn by reason of a Liquidity Drawing or Final Drawing under the Liquidity Facility will be immediately due and payable, together with interest on the amount of such drawing. Interest will accrue on Liquidity Drawings and on the Final Drawing at LIBOR plus 1.5% per annum. Downgrade Drawings and Non-Extension Drawings. The amount drawn under the Liquidity Facility by reason of a Downgrade Drawing or a Non-Extension Drawing will be held in the Initial Primary Liquidity Reserve Account and treated as follows: Any portion of such amount withdrawn from the Initial Primary Liquidity Reserve Account to pay any Class A Interest Shortfall, Class A-1 Commitment Fee Shortfall, Senior Hedge Payment Shortfall or Expenses Shortfall will be treated as a Liquidity Drawing. Such amount will be released on any Payment Date to the Liquidity Provider to the extent that such amount exceeds the Required Amount. Except as described above, Downgrade Drawings and Non-Extension Drawings will not be due and payable by ALS until a Replacement Facility is delivered to the Cash Manager, the payment in full of the principal and interest of the Initial Class A Notes, or the date that is 15 days after the Final Maturity Date. No interest will accrue on and be payable in respect of unreimbursed Downgrade Drawings or Non-Extension Drawings; provided, however, that while there are unreimbursed Downgrade Drawings or Non-Extension Drawings the Liquidity Provider will have the right to direct the investment of funds on deposit in the Initial Primary Liquidity Reserve Account and will have the right to receive the investment income thereon on each Payment Date in satisfaction of ALS's interest payment obligations to the Liquidity Provider, if any. LIQUIDITY EVENTS OF DEFAULT If any Liquidity Event of Default has occurred and is continuing or certain insolvency proceedings involving ALS have occurred, the Liquidity Provider will have the option, in its discretion, to give a notice of termination of the Liquidity Facility (a "Termination Notice"). The Termination Notice will have the following consequences: The Liquidity Facility will expire at the close of business on the fifth Business Day after the earlier of (A) the date on which such Termination Notice is received by the Cash Manager and (B) the date the insolvency proceeding occurs. The Cash Manager will promptly request, and the Liquidity Provider will make, a Final Drawing thereunder in an amount equal to the then Available Amount thereunder. Any Downgrade Drawing or Non-Extension Drawing remaining unreimbursed as of the date of termination will be automatically converted into a Final Drawing (but solely for purposes of determining the applicable rate of interest thereon and the dates on which such interest is payable) and become due and payable. All Drawings, any accrued interest thereon and any other amounts owing to the Liquidity Provider automatically will be accelerated. A "Liquidity Event of Default" means the serving of a Default Notice by the Controlling Party to ALS following the occurrence of an Indenture Event of Default. 140

149 Notwithstanding the foregoing, ALS will be obligated to pay amounts owing to the Liquidity Provider only to the extent of funds available therefor after giving effect to the payments in accordance with the provisions set forth under "Description of Notes Payment of Principal and Interest Priority of Payments". Upon the circumstances described under "Description of Notes Indenture Events of Default and Remedies", a liquidity provider may become the Controlling Party with respect to the exercise of remedies under the Indenture. The claims of the Liquidity Provider will be payable solely from and to the extent of the available collections and the assets of the ALS Group in accordance with the priority of payments as set forth under "Description of Notes Payment of Principal and Interest Priority of Payments". "Drawing" means a Liquidity Drawing, a Downgrade Drawing, a Non-Extension Drawing or a Final Drawing. LIQUIDITY PROVIDER The initial Liquidity Provider for the Initial Class A Notes is Calyon. For a description of Calyon, see "The Parties Liquidity Provider, Class A-1 Funding Agent and Servicing Agent". 141

150 Description of the Class A-1 Note Funding Agreement The following is a summary of the material terms of the Class A-1 Note Funding Agreement. The summary does not purport to be complete and is qualified in its entirety by reference to all of the provisions of the Class A-1 Note Funding Agreement and the Indenture. GENERAL On the Initial Closing Date, the Class A-1 Funding Agent and the Initial Class A-1 Commitment Holders entered into the Class A-1 Note Funding Agreement with ALS, the Trustee and the Operating Bank. Under the Class A-1 Note Funding Agreement, the Class A-1 Commitment Holders will, subject to the conditions therein, make Advances during the Draw Period to ALS in connection with the purchase from the Seller of the Initial Aircraft, up to a maximum aggregate amount equal to $1,000,000,000 (as such amount is reduced from time to time). Upon each Class A-1 Commitment Holder advancing its portion of an Advance Amount, the principal amount of the Class A-1 Notes held by such Class A-1 Commitment Holder will increase in an amount equal to such portion of such Advance Amount. ADVANCES On or before the last day of the Draw Period, ALS is permitted to request an Advance in connection with the direct or indirect acquisition of each Initial Aircraft-Owning Entity under the Purchase Agreement. Each Advance Amount will consist of advances made by each Class A-1 Commitment Holder ratably in accordance with the ratio of such Class A-1 Commitment Holder's Commitment on such date to the Class A-1 Commitments on such date. The failure of any Class A-1 Commitment Holder to make any portion of an Advance required to be made by it will not relieve any other Class A-1 Commitment Holder of its obligations under the Class A-1 Note Funding Agreement, nor will any Class A-1 Commitment Holder be responsible for any other Class A-1 Commitment Holder's failure to make its pro rata share of the Advance. However, each Class A-1 Commitment Holder has the right, but not the obligation, to fund a portion of an Advance on behalf of another Class A-1 Commitment Holder in the event such other Class A-1 Commitment Holder fails to fund its portion of an Advance in accordance with the Class A-1 Note Funding Agreement. The total advances made by the Class A-1 Commitment Holders constituting a Level 1 Advance relating to the same Initial Aircraft or constituting a Level 2 Advance relating to the same Initial Aircraft are required to be made on the same date. The conditions to making each Advance include, among other things: No Indenture Event of Default or termination of the Servicing Agreement or the termination of any other Service Provider's rights and obligations under the applicable agreement appointing such service provider, or any event that would constitute an Indenture Event of Default or termination of the Servicing Agreement or termination of the rights and obligations of any other Service Provider under such other applicable agreement but for the passage of time or the giving of notice or both, has occurred and is continuing or will result from the effectiveness of the Class A-1 Note Funding Agreement or the making of the applicable Advance. The Funding Termination Date has not occurred. ALS has not breached or defaulted under the Class A-1 Note Funding Agreement. The Operating Bank may not transfer any amounts from the Funding Account without the written instruction of each of the Class A-1 Funding Agent and ALS. After an Advance is made by the Class A-1 Commitment Holders in connection with a particular Initial Aircraft, ALS may not request such Advance again, except that if a Level 1 Advance is repaid to the Class A-1 Commitment Holders because the delivery of the related Initial Aircraft is postponed, to the extent that the Delivery Date of such Initial Aircraft has not yet occurred (and a Non-Delivery Event has not occurred with respect to such Initial Aircraft) ALS may request such Level 1 Advance again during the Draw Period in connection with the later delivery of such Initial Aircraft (or a Substitute Aircraft therefor). Any interest accrued on funds repaid to the applicable Class A-1 Commitment Holder will be paid by ALS on the next succeeding Payment Date (or, in respect of any Advances 142

151 made prior to the first Payment Date following the Initial Delivery Date, on the second Payment Date following the Initial Delivery Date). Level 1 Advances On or before the last day of the Draw Period, ALS will be permitted to request a Level 1 Advance in respect of an Initial Aircraft (including any Substitute Aircraft) expected to be delivered on or after the date such Level 1 Advance is made. The Level 1 Advance Amount for each Initial Aircraft (including any Substitute Aircraft) will be equal to (and, in any event, not exceed) the lesser of (a) the product of the Initial Class A-1 LTV and the Initial Appraised Value for such Initial Aircraft (or Substitute Aircraft, as applicable) and (b) the sum of the Class A-1 Undrawn Commitments. The Operating Bank will transfer each Level 1 Advance Amount on deposit in the Funding Account in respect of an Initial Aircraft to the Aircraft Purchase Account on the Delivery Date of such Aircraft, upon instruction of the Class A-1 Funding Agent and ALS. The Class A-1 Funding Agent will so instruct the Operating Bank upon its satisfaction that certain conditions specified in the Class A-1 Note Funding Agreement are met, which conditions include, among other things, that the Class A-1 Funding Agent is satisfied that the conditions to delivery of an Initial Aircraft under the Purchase Agreement have been met. "Class A-1 Undrawn Commitment" means, with respect to each Class A-1 Commitment Holder on any date, the amount (not less than zero) equal to (i) such Class A-1 Commitment Holder's Commitment as of such date minus (ii) the aggregate amount of Advances made by such Class A-1 Commitment Holder plus (iii) any such Advances that have been repaid in full to such Class A-1 Commitment Holder in accordance with the Class A-1 Note Funding Agreement in respect of a condition to an Advance not being met or in respect of an aircraft which was not delivered to ALS within five Business Days of the relevant Advance Date, in each case on or before such date. Level 2 Advance In connection with the first date on which the aggregate number of Aircraft that have been delivered to ALS will be equal to 30, ALS will be permitted to request a Level 2 Advance with respect to each Aircraft delivered on or prior to such date. The Level 2 Advance Amount for each Initial Aircraft will be equal to (and, in any event, not exceed) the lesser of (a) an amount equal to 3% of the Initial Appraised Value of such Initial Aircraft (or such lower percentage that is determined as described in the proviso) and (b) the sum of the Class A-1 Undrawn Commitments; provided that either (i) the Class A-1 Notes and the Class A-2 Notes are rated no less than A: outlook stable from Standard and Poor's and A2: outlook stable from Moody's as confirmed in writing by each of the Rating Agencies or (ii) if on the Level 2 Advance Date the Class A-1 Notes or the Class A-2 Notes are rated less than A: outlook stable from Standard and Poor's and A2: outlook stable from Moody's, then each Level 2 Advance Amount will be equal to (x) a percentage of the Initial Appraised Value of each Aircraft that would permit the Rating Agencies to increase their ratings of the Class A-1 Notes and the Class A-2 Notes to A: outlook stable by Standard and Poor's and A2: outlook stable by Moody's, as confirmed by a Rating Agency Confirmation, or (y) if such confirmation referred to in clause (x) cannot be obtained from the Rating Agencies, zero. The term "outlook stable" in relation to the Class A-1 Notes and the Class A-2 Notes means all Class A-1 Notes and all Class A-2 Notes that are not (v) on negative watch, (w) on a negative outlook, (x) under review for possible downgrade, (y) under review for credit watch or (z) any term synonymous with the terms stated in clauses (v) through (y). The Operating Bank (at the written instruction of the Class A-1 Funding Agent) will transfer each Level 2 Advance Amount on deposit in the Funding Account to the Note Account for the Class E-1 Notes (for payment to AerVenture Leasing) upon receipt of such Level 2 Advance. Repayment of Advances Upon each Class A-1 Commitment Holder funding its pro rata portion of an Advance, the principal amount of the Class A-1 Notes held by such Class A-1 Commitment Holder will increase in an amount equal to such portion of such Advance in accordance with the terms of the Indenture. The Class A-1 Notes held by each Class A-1 Commitment Holder will be governed by and subject to the Indenture and will rank pari passu with the other Initial Class A Notes, and ALS will pay principal of and interest on each such Note in accordance with terms of the Indenture, including the priority of payments under the Indenture, as described under "Description of Notes Payments of Principal and Interest Priority of Payments". Capital Commitment Register 143

152 The Class A-1 Funding Agent, in its capacity as commitment register (the "Capital Commitment Registrar"), will keep a register (the "Capital Commitment Register") which will provide for the recording and registering of the following information with respect to each Class A-1 Commitment Holder: the name, notice details, wiring instructions and taxpayer identification number of such Class A-1 Commitment Holder, together with the names of the authorized representatives of such Class A-1 Commitment Holder and their mailing addresses, electronic mail addresses and telephone and facsimile numbers; the related Commitment of such Class A-1 Commitment Holder, the Advances made by such Class A-1 Commitment Holder and the related Class A-1 Undrawn Commitment of such Class A-1 Commitment Holder; the date upon which such Class A-1 Commitment Holder became a Class A-1 Commitment Holder; and whether such Class A-1 Commitment Holder is a defaulting Class A-1 Commitment Holder. The Capital Commitment Registrar will update the information contained in the Capital Commitment Register (as identified in the items above) upon (i) the transfer of any Commitment by a Class A-1 Commitment Holder, (ii) each Advance, (iii) each repayment of an Advance and (iv) the receipt of written notice confirming a change in the notice details or the authorized representatives of any Class A-1 Commitment Holder. Upon each update entry in the Capital Commitment Register (and upon written request at any time), the Class A-1 Funding Agent will provide to ALS and the Trustee a copy of the information contained in the Capital Commitment Register; and upon written request at any time by a Class A-1 Commitment Holder or ALS, the Class A-1 Funding Agent will provide such Class A-1 Commitment Holder with a copy of the information contained in the Capital Commitment Register relating to its Commitment. Absent manifest error, the information contained in the Capital Commitment Register will be prima facie evidence of the rights and obligations of each Class A-1 Commitment Holder with respect to its Commitment. Absent manifest error, the information contained in the note register held by the Trustee in accordance with the Indenture will be prima facie evidence of the rights of each Class A-1 Commitment Holder with respect to the Class A-1 Notes held by such Class A-1 Commitment Holder. TERMINATION AND REDUCTION OF COMMITMENTS The Class A-1 Commitments will terminate at the close of business, Paris time, on the last day of the Draw Period (or, if earlier, upon redemption in full of the Initial Class A Notes in accordance with the Indenture or the occurrence of an Indenture Event of Default) and, thereafter, no further Advances will be made. Prior to the Initial Delivery Date, ALS may cancel the Class A-1 Commitments in full (but not in part), provided that ALS will have paid in full all amounts due and owing to the Class A-1 Funding Agent, the Class A-1 Commitment Holders and the Liquidity Provider. Following the Initial Delivery Date, the aggregate amount of the Class A-1 Commitments may be cancelled in full (but not in part) at the request of ALS, provided that ALS also (i) prepays in full the Outstanding Principal Balance of the Initial Class A Notes plus any accrued and unpaid interest thereon, (ii) pays all other amounts (including any Expenses and Special Indemnity Payments) due and owing to the Class A-1 Funding Agent, the Class A-1 Commitment Holders and the Holders of the Initial Class A Notes, (iii) pays all amounts due and owing to the Liquidity Provider and (iv) pays the applicable Redemption Premium to the Class A-1 Commitment Holders and the Holders of the Initial Class A Notes, in each case in accordance with the terms of the Indenture. Any cancellation of the Class A-1 Commitments will be irrevocable and permanent. In addition to the foregoing, the obligations of the Class A-1 Commitment Holders to make Advances will terminate upon the earlier of: (i) the occurrence and continuance of an Indenture Event of Default; (ii) a default by ALS under the Class A-1 Note Funding Agreement where (A) such default continues for a period of (1) 15 days or more after the date upon which written notice of such default has been provided by the Class A-1 Funding Agent to ALS (a "Funding Agreement Default Notice") or (2) if such failure is capable of remedy within 30 days of the date a Funding Agreement Default Notice has been provided to 144

153 ALS by the Class A-1 Funding Agent and the Administrative Agent has promptly provided the Class A-1 Funding Agent with a certificate stating that ALS has commenced, or will promptly commence, and diligently pursue, all reasonable efforts to remedy such failure, 30 days or more after the date a Funding Agreement Default Notice has been provided to ALS by the Class A-1 Funding Agent so long as ALS or any Subsidiary is diligently pursuing such remedy and (B) the Class A-1 Funding Agent has provided ALS with a notice (after expiration of the above-referenced grace period) that the obligation of the Class A-1 Commitment Holders to make Advances has been terminated; (iii) the cancellation, expiration or reduction to zero of the aggregate amount of the Class A-1 Commitments; and (iv) the Funding Termination Date. Notwithstanding any of the foregoing, the obligation of each Class A-1 Commitment Holder to make Advances under the Class A-1 Note Funding Agreement will terminate no later than 30 days after the date a Funding Agreement Default Notice has been provided to ALS by the Class A-1 Funding Agent, unless the default identified in such Funding Agreement Default Notice has been waived by the Class A-1 Funding Agent or remedied. "Draw Period" means the period from and including the Initial Delivery Date and ending on the Funding Termination Date. "Funding Termination Date" means the earliest to occur of (i) September 30, 2010, (ii) the date on which the Class A-1 Commitments have otherwise been reduced to zero pursuant to the Class A-1 Note Funding Agreement and (iii) both (a) the delivery of the final Initial Aircraft pursuant to the Purchase Agreement and (b) if the aggregate number of Initial Aircraft delivered pursuant to the Purchase Agreement is 30, the payment in full of the Level 2 Advances (such payment to be subject to the satisfaction of the conditions precedent set forth in the Class A-1 Note Funding Agreement). INDEMNITIES ALS has agreed to indemnify each Class A-1 Commitment Holder and each Covered Class A Noteholder (as well as each of their affiliates, assignees or participants and certain persons providing each of them with a liquidity or credit enhancement arrangement) (in each case if such person is a Qualifying Lender or a Class A-1 Commitment Holder holding a Class A-1 Note with an Outstanding Principal Balance equal to zero during the Draw Period) for certain increased costs associated with changes in law or regulation and, in the case of Class A-1 Commitment Holders and Covered Class A Noteholders only, for certain taxes (including but not limited to withholding taxes) and breakage costs. If any Class A-1 Commitment Holder or Covered Class A Noteholder (or any of their respective affiliates, assignees, participants or providers of a liquidity or credit enhancement arrangement) requests compensation under such indemnity, then such Class A-1 Commitment Holder or Covered Class A Noteholder (an "Affected Holder") is required to take certain steps to mitigate, eliminate or reduce such amounts, and ALS will have the right to replace an Affected Holder that is a Class A-1 Commitment Holder which has not completed one of the mitigating actions described in the Class A-1 Note Funding Agreement, in each case in compliance with the Class A-1 Note Funding Agreement. "Covered Class A Noteholder" means (a) each Holder of a Class A-1 Note, (b) each Class A-1 Commitment Holder and (c) each Holder of a Class A-2 Note that is a bank or similar financial institution, in each case, which is a Qualifying Lender (except with respect to any Class A-1 Commitment Holder holding a Class A-1 Note with an Outstanding Principal Balance equal to zero during the Draw Period). "Qualifying Lender" means a person who is beneficially entitled to the amounts payable to such person under the Class A Notes (x)(a) that is an entity qualifying as a body corporate; (b) that by virtue of the law of a relevant territory, is resident for the purposes of tax in that relevant territory (a relevant territory for this purpose means (i) a member state of the European Community (other than Ireland) or (ii) a territory which has concluded a double-tax treaty with Ireland which has force of law in Ireland and such relevant territory); and (c) to which such amounts payable are not made in connection with a trade or business carried on by such lender through a branch or agency in Ireland or (y) which is a bank carrying on a bona fide banking business in Ireland within the meaning of Section 246(3)(a) of the Irish Taxes Consolidation Act

154 CLASS A-1 COMMITMENT HOLDERS Any Class A-1 Commitment Holder may transfer or assign all or part of its rights or delegate all or part of its obligations under the Class A-1 Note Funding Agreement, provided that, among other things: (i) any transfer to one or more transferees of all or a portion of its unfunded Commitment (or any obligations related thereto) will (other than in connection with a Transfer Through Change of Control) require the prior written consent of ALS (such consent not to be unreasonably withheld or delayed); (ii) any such transfer or assignment prior to the Funding Termination Date will require the prior written consent of the Class A-1 Funding Agent; (iii) Commitments may be sold or transferred only in minimum denominations of $200,000; and (iv) except with respect to a Transfer Through Change of Control, no such transfer or delegation will be effected unless (A) the parties to such transfer have executed and delivered to the Class A-1 Funding Agent (with a copy to the Trustee) a duly completed sale and transfer form (including certain representations and warranties of such transferee) (a "Sale and Transfer") and (B) the transferee of such transfer has acceded to the Resale Agreement. With respect to any Class A-1 Commitment Holder, any consolidation or amalgamation with, or merger with or into, or transfer of all or substantially all of its assets to another entity, or otherwise by operation of law (a transfer through such event, a "Transfer Through Change of Control"), will result in an automatic assignment and delegation of all of the rights and obligations of such Class A-1 Commitment Holders under the Class A-1 Note Funding Agreement, without further action on the part of such Class A-1 Commitment Holder. Except with respect to a Transfer Through Change of Control, upon its receipt of a duly completed Sale and Transfer executed by a transferring Class A-1 Commitment Holder and a transferee, together with a processing and recordation fee of $1,000 to be paid by such transferee, the Class A-1 Funding Agent in its capacity as Capital Commitment Registrar will accept such Sale and Transfer and record the Class A-1 Commitment Holder identification and amount transferred in the Capital Commitment Register. Except with respect to a Transfer Through Change of Control, no transfer will be effective for purposes of Class A-1 Note Funding Agreement unless it has been recorded in the Capital Commitment Register as provided in this paragraph. Upon recording the transferee Class A-1 Commitment Holder in the Capital Commitment Register as provided above, ALS will execute and deliver to the Trustee, and the Trustee will authenticate and deliver to such transferee Class A-1 Commitment Holder a Class A-1 Note in accordance with the Indenture. Any assignment by a Class A-1 Commitment Holder of any of its rights or the delegation of any of its obligations under the Class A-1 Note Funding Agreement will not include any of such Class A-1 Commitment Holder's rights under the Class A-1 Notes held by such Class A-1 Commitment Holder. Each Class A-1 Commitment Holder may transfer or exchange, in whole or in part, its Class A-1 Notes only in accordance with the terms and conditions set forth in the Indenture. Notwithstanding the foregoing, each Class A-1 Commitment Holder has agreed not to transfer or exchange, in whole or in part, any Class A-1 Notes held by it (including any exchange for Class A-2 Notes) without the prior written consent of the Class A-1 Funding Agent. CLASS A-1 FUNDING AGENT The initial Class A-1 Funding Agent is Calyon. The Class A-1 Funding Agent will exercise its rights under the Related Documents as directed by Class A-1 Commitment Holders holding Class A-1 Undrawn Commitments in an aggregate amount greater than 50% of the total Class A-1 Undrawn Commitments at such time. The Class A-1 Funding Agent may resign at any time by giving 60 days' prior written notice thereof to each of ALS, the Trustee and the Class A-1 Commitment Holders. The Class A-1 Funding Agent may be removed at any time with ALS's prior written consent by written notice of a majority of the Class A-1 Commitment Holders, delivered to the Class A-1 Funding Agent, the Trustee and ALS. In addition, if at any time prior to the one year anniversary of the last day of the Draw Period the Class A-1 Funding Agent materially breaches its obligations under the Class A-1 Note Funding Agreement or under the Indenture, or becomes incapable of acting or is adjudged as bankrupt or 146

155 insolvent or a receiver or liquidator of the Class A-1 Funding Agent or of its property is appointed or any public officer takes charge or control of the Class A-1 Funding Agent or of its property or affairs for the purpose of rehabilitation, conservation or liquidation then, in any such case, (i) ALS may remove the Class A-1 Funding Agent or (ii) any Class A-1 Commitment Holder may, on behalf of itself and all others situated, petition any court of competent jurisdiction for the removal of the Class A-1 Funding Agent and the appointment of a successor Class A- 1 Funding Agent. If the Class A-1 Funding Agent resigns or is removed or if a vacancy occurs in the office of the Class A-1 Funding Agent for any reason, ALS will promptly appoint a successor Class A-1 Funding Agent in accordance with the Class A-1 Note Funding Agreement and upon the written consent of a majority of the Class A-1 Commitment Holders. If ALS fails to appoint a successor Class A-1 Funding Agent within 30 days after notice of such resignation, removal or vacancy, a successor Class A-1 Funding Agent may be appointed by a majority of the Class A-1 Commitment Holders and as notified in writing to ALS and the retiring Class A-1 Funding Agent. ALS has agreed to indemnify the Class A-1 Funding Agent (and its officers, directors, employees and agents) for, and hold it harmless against, any loss, liability or expense Incurred by it without gross negligence or bad faith on its part in connection with the acceptance or administration of the Class A-1 Note Funding Agreement and its duties thereunder, and under the Class A-1 Notes and other Related Documents including the costs and expenses of defending itself against any claim or liability and of complying with any process served upon it or any of its officers in connection with the exercise or performance of any of its powers or duties, and hold it harmless against, any loss, liability or reasonable expense Incurred without gross negligence or bad faith on its part, arising out of or in connection with actions taken or omitted to be taken in reliance on any officer's certificate furnished under the Class A-1 Note Funding Agreement, or the failure to furnish any such officer's certificate required to be furnished thereunder. ALS has also agreed to indemnify the Class A-1 Funding Agent for certain taxes arising in connection with the Class A-1 Note Funding Agreement. 147

156 Description of Notes The following description is a summary of the material terms of the Notes, the Indenture and other agreements. The description does not purport to be complete, does not restate those documents and is qualified in its entirety by reference to those documents. GENERAL The Notes will be issued under the Indenture. On the Initial Closing Date, ALS issued three subclasses of Notes pursuant to the Indenture: the Class A-1 Notes, the Class A-2 Notes and the Class E-1 Notes. On the Initial Closing Date, ALS issued a Class A-1 Note to each Initial Class A-1 Commitment Holder pursuant to the Indenture. Initially, each of the Class A-1 Notes issued to Initial Class A-1 Commitment Holders has an outstanding principal balance equal to zero and a stated amount equal to the principal amount of such Class A-1 Commitment Holder's Commitment under the Class A-1 Note Funding Agreement. The aggregate stated amount of the Class A-1 Notes on the Initial Closing Date was equal to $1,000,000,000. Upon each Class A-1 Commitment Holder advancing its portion of an Advance Amount on an Advance Date in accordance with the provisions of the Class A-1 Note Funding Agreement, the principal amount of the Class A-1 Notes held by such Class A-1 Commitment Holder will increase in an amount equal to such portion of such Advance Amount in accordance with the provisions of the Indenture. On the Initial Closing Date, ALS also issued Class A-2 Notes pursuant to the Indenture. Initially, the Class A-2 Notes also have an outstanding principal balance equal to zero. Holders of Class A-1 Notes will be permitted to exchange their interests in funded Class A-1 Notes for interests in Class A-2 Notes, in accordance with the Indenture and, in the case of each Class A-1 Commitment Holder, subject to the provisions of the Class A-1 Note Funding Agreement and the Resale Agreement. The outstanding principal balance of the Class A-2 Notes will be increased upon the exchange, if any, by any Holders of Class A-1 Notes of interests in funded Class A-1 Notes for interests in the Class A-2 Notes. The outstanding principal balance of the Class A-2 Notes will not increase as a result of Advances made by the Class A-1 Commitment Holders under the Class A-1 Note Funding Agreement. The aggregate outstanding principal balance of the Class A-1 Notes and the Class A-2 Notes, when taken together, may not at any time exceed $1,000,000,000. The Class A-1 Notes will at all times rank pari passu with the Class A-2 Notes. ALS will also issue an aggregate principal amount of up to $418,000,000 of Class E-1 Notes to AerVenture Leasing, AerCap and AerVenture pursuant the Indenture, including (i) $9,328,850 of Class E-1 Notes issued on the Initial Closing Date to AerVenture Leasing, (ii) up to an aggregate amount of $5,000,000 of Class E-1 Notes that may be issued to AerVenture Leasing between the Initial Closing Date and the Initial Delivery Date, (iii) each Class E-1 Note to be issued to AerVenture Leasing in connection with the delivery of each Initial Aircraft to ALS in an amount equal to the Initial Appraised Value of such Initial Aircraft minus the amount of the Level 1 Advance Amount related to such Initial Aircraft and (iv) an amount of Class E-1 Notes issued from time to time to each of AerCap and AerVenture equal to the amount of expenses paid by such person pursuant to the Resale Agreement. Each Holder of Class E-1 Notes may sell any portion of such Class E-1 Notes in the future subject to certain transfer restrictions set forth in the Indenture. The Initial Class A Notes will be issued and transferable in minimum denominations of $200,000. The Class E-1 Notes will be issued and transferable in minimum denominations of $1,000,000. The Notes are solely obligations of ALS and are not generally required to be secured by perfected liens on the Aircraft. The Notes will not represent obligations of any Lessee, the Trustee, the Security Trustee, the Operating Bank, the Servicer, the Administrative Agent, the Cash Manager, any other service providers, the Liquidity Provider, the Class A-1 Funding Agent, the Servicing Agent, the Seller, AerCap, AerVenture Leasing, AerVenture or any affiliate of any of the foregoing. The Indenture provides that ALS will pay the fees and out-of-pocket expenses of the Trustee and will further provide that the Trustee will be entitled to indemnification by ALS for, and will be held harmless by ALS against, any loss, liability or expense incurred by the Trustee (other than through its own bad faith or negligence), subject to certain limitations. 148

157 The Trustee may resign as to all or any of the subclasses of the Notes at any time without cause upon at least 90 days' prior written notice to ALS, the Liquidity Provider, the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing), the Administrative Agent, the Cash Manager, the Servicer and the Noteholders, in which event ALS will be obligated to appoint a successor trustee as to such subclass of Notes. Holders of each Class or subclass of Notes may have divergent or conflicting interests from the Noteholders of other Classes or subclasses. As a result, the occurrence of certain circumstances, including the occurrence of an Indenture Event of Default, may give rise to a potential conflict of interest on the part of the Trustee in its capacity as trustee in respect of more than one Class or subclass of Notes, upon which event the Trustee may be compelled to resign as trustee in respect of more than one Class or subclass of Notes. If the Trustee ceases to be eligible to continue as trustee with respect to any Class or subclass of Notes, becomes incapable of acting as Trustee or becomes bankrupt or insolvent or a receiver takes charge of the Trustee, ALS may remove the Trustee. In addition, Holders of not less than a majority in Outstanding Principal Balance of any Class or subclass of Notes (or with respect to the Initial Class A Notes, the Liquidity Provider, so long as it is the Controlling Party) may at any time remove the Trustee with respect to such Class or subclass without cause by delivering written notice of such removal in writing to ALS, the Administrative Agent, the Cash Manager, the Servicer, the Security Trustee, the Senior Trustee and the Trustee being removed. Any resignation or removal of the Trustee and appointment of a successor trustee will not become effective until acceptance of the appointment by the successor trustee. Pursuant to such resignation, removal and successor trustee provisions, it is possible that a different trustee could be appointed to act as the successor trustee with respect to each Class or subclass of Notes. All references in these listing particulars to the "Trustee" should be read to include the Trustee and any successor trustee appointed in the event of such a resignation or removal. RATINGS It was a condition to the closing of the transaction described in these listing particulars that, as of the Initial Closing Date, the Initial Class A Notes have the following ratings: Ratings Standard & Moody's Poor's Class A-1 Notes... A1 A+ Class A-2 Notes... A1 A+ The ratings of the Initial Class A Notes will address the likelihood of the timely payment of interest on, and the ultimate payment of principal of, the Initial Class A Notes. Payments of principal of and interest on the Initial Class A Notes will be made only after any Required Expenses and certain other amounts have been paid or provided for in full and only to the extent that Available Collections are sufficient in accordance with the priority of payments established for the Notes. In addition, ALS's ability to pay a redemption premium, if any, will not be rated by any of the Rating Agencies. A rating is not a recommendation to buy, sell or hold Initial Class A Notes or Class A-1 Commitments inasmuch as such ratings do not comment as to market price or suitability for a particular investor and may be subject to revision or withdrawal at any time by the assigning Rating Agency. In the event that the rating initially assigned to the Initial Class A Notes is subsequently lowered, suspended or withdrawn for any reason, no person or entity is obliged to provide any additional support or credit enhancement with respect to the Initial Class A Notes or the Class A-1 Commitments. There can be no assurance that a rating will not be lowered or withdrawn. See "Risk Factors Risks Relating to Ratings of the Initial Class A Notes". PAYMENTS On each Payment Date, payments of interest and principal and, in certain limited circumstances described herein, redemption premium, if any, on the Initial Class A Notes, will be made in accordance with the provisions described below under " Payment of Principal and Interest Priority of Payments". 149

158 On each Payment Date, the Trustee will pay or instruct a paying agent (other than the EU Paying Agent) to pay, to the extent of Available Collections transferred to a Note Account, to the Noteholders all principal, redemption price or Outstanding Principal Balance of, and interest on, the Notes of each Class or subclass of Notes, provided that, in the event receipt of funds is confirmed after 1:00 p.m. (New York City time) on such Payment Date or on any Business Day thereafter, then on the Business Day following the Business Day on which payment is received. Each payment on any Payment Date, other than the Final Maturity Date (or, if earlier with respect to any Class or subclass, the date on which such Class or subclass of Notes is paid in full), will be made by the Trustee or paying agent to the Noteholders as of the Record Date. Payments from the applicable Account on a Payment Date with respect to the Notes of any Class or subclass issued in the form of Global Notes will be made by wire transfer to or as instructed by DTC (or its nominees or its and their respective successors, in each case as registered Holder of the Global Notes) at least five Business Days before a Payment Date. At such time, if any, the Notes of any Class or subclass are issued as Definitive Notes, payments from the applicable Account on a Payment Date will be made by check mailed to each Holder of a Definitive Note on the applicable Record Date at its address appearing on the register. Alternatively, upon application in writing to the Trustee, not later than the applicable Record Date, by a Holder of a Definitive Note having an aggregate principal amount of not less than $1,000,000 of such Class or subclass, any such payments may be made by wire transfer to an account designated by such Noteholder at a financial institution in New York, New York. The final payment with respect to any Definitive Note or Global Note, however, will be made only upon presentation and surrender of such Note by the Noteholder or its agent at the office or agency of the applicable Trustee or paying agent (other than the EU Paying Agent) specified in the notice given by the Trustee or paying agent with respect to such final payment. So long as the Class A-2 Notes are admitted to the Official List of the Irish Stock Exchange and to trading on the Alternative Securities Market, ALS will appoint and maintain a paying agent in the European Union (the "EU Paying Agent"), which will initially be Deutsche Bank Luxembourg S.A., and a listing agent (the "Listing Agent"), which will initially be McCann FitzGerald Listing Services Limited in Ireland. If there is a change in the Listing Agent or the EU Paying Agent, publication of such change will be made through the Companies Announcements Office of the Irish Stock Exchange. The Trustee or paying agent (other than the EU Paying Agent) will mail notice of the final payment to the relevant Noteholder, specifying the date and amount of such final payment, no later than five Business Days prior to such final payment and such notice will also be published as provided in " Notices to Noteholders". PAYMENT OF PRINCIPAL AND INTEREST Interest Each Initial Class A Note will bear interest on the Outstanding Principal Balance thereof from the first day any amounts are funded under the Class A-1 Note Funding Agreement, payable monthly in arrears on each Payment Date. Each Initial Class A Note will bear interest for each Interest Accrual Period at the rate per annum set forth in the table titled "The Initial Class A Notes" in the "Summary". The Class E Notes will accrue interest for each Interest Accrual Period at 20.0% per annum. Interest on the Initial Class A Notes will be calculated on the basis of a 360-day year and the actual number of days elapsed in an Interest Accrual Period on the Outstanding Principal Balance of such Notes on the first day of such Interest Accrual Period. Interest on the Class E Notes will be calculated on the basis of a 360-day year and onetwelfth of an annual interest payment on the Outstanding Principal Balance of the Class E Notes and in the case of the initial Interest Accrual Period on the basis of a 360-day year consisting of twelve 30-day months. Additional interest at the then current interest rate of the Initial Class A Notes will accrue on any accrued interest on any Initial Class A Note not paid in full as of a Payment Date therefor. Calculation of Interest For the purpose of calculating the rate of interest payable on the Notes bearing floating rates of interest, including the Initial Class A Notes, ALS and the Cash Manager entered into the Reference Agency Agreement with the Reference Agent and the Class A-1 Funding Agent. The Reference Agent (or, in the case of any Interest Accrual Period during the Draw Period beginning on an Advance Date, the Class A-1 Funding Agent) will determine LIBOR for each Interest Accrual Period two Business Days prior to the commencement of such Interest Accrual Period 150

159 (each, a "Reference Date"). The floating rates of interest for such Interest Accrual Period calculated by the Cash Manager for the Initial Class A Notes will be the sum of (i) LIBOR obtained from the Reference Agent (or, in the case of any Interest Accrual Period beginning on an Advance Date, the Class A-1 Funding Agent) and (ii) the interest rate spread over LIBOR set forth in the table titled "The Initial Class A Notes" in the "Summary". On each Reference Date, the Reference Agent (or, in the case of any Interest Accrual Period beginning on an Advance Date, the Class A-1 Funding Agent) will determine LIBOR as the per annum offered rate for deposits in U.S. dollars for a period of one month (or, in the case of an Interest Accrual Period which is less than a month, a period approximately equal to such Interest Accrual Period) that appears on the display designated as page "Reuters Screen LIBOR01" on the Reuters Monitor Money Rates Services (or such other page or service as may replace it for the purpose of displaying LIBOR of major banks for U.S. dollar deposits) at approximately 11:00 a.m. (London time); provided, however, that on each Reference Date for the first day of an Interest Accrual Period that is an Advance Date, the Class A-1 Funding Agent will determine LIBOR, which will be equal to the relevant Interpolated LIBOR Rate; provided further that the Interest Accrual Period commencing on the Initial Delivery Date will end on but exclude the second Payment Date thereafter. "High Quoted LIBOR" means the per annum offered rate for deposits in U.S. dollars for the period immediately greater than the relevant Interest Accrual Period; provided that such period must appear on the display designated as "Reuters Screen LIBOR01" of the "Reuters Monitor Money Rates Services" (or such other page or service as may replace it for the purpose of displaying LIBOR of major banks for U.S. dollar deposits) at approximately 11:00 a.m. (London time) on the Reference Date for the relevant Advance. "Interpolated LIBOR Rate" means a rate equal to the interpolated LIBOR rate for a period equal to the relevant Interest Accrual Period based on Low-Quoted LIBOR and High-Quoted LIBOR. "Low Quoted LIBOR" means the per annum offered rate for deposits in U.S. dollars for the period immediately less than the relevant Interest Accrual Period; provided that such period must appear on the display designated as "Reuters Screen LIBOR01" of the "Reuters Monitor Money Rates Services" (or such other page or service as may replace it for the purpose of displaying LIBOR of major banks for U.S. dollar deposits) at approximately 11:00 a.m. (London time) on the Reference Date for the relevant Advance. If for any reason such offered rate does not so appear, or if the relevant page is unavailable, the Reference Agent will request that each of the banks whose offered rates would have been used for the purposes of the relevant page if the event leading to the application of this sentence had not happened, or any duly appointed substitute reference bank acting in each case through its principal London office (the "Reference Banks"), provide the Reference Agent or the Class A-1 Funding Agent, as the case may be, with its offered quotation to prime banks for dollar deposits in London for the next Interest Accrual Period concerned as at 11:00 a.m. (London time) on the applicable Reference Date. LIBOR for such Interest Accrual Period with respect to each subclass of Notes bearing a floating rate of interest will be the arithmetic mean (taken to five decimal places) of such quotations (or of such of them, being at least two, as are so provided), as determined by the Reference Agent or the Class A-1 Funding Agent, as the case may be, and notified by it to the Cash Manager. If on any Reference Date only one, or none, of the Reference Banks provides such quotation, LIBOR for the next Interest Accrual Period will be the rate per annum which the Reference Agent determines to be the arithmetic mean of the U.S. dollar lending rates which New York City banks selected by the Reference Agent are quoting on the relevant Reference Date to leading European banks for the next Interest Accrual Period, except that, if the banks so selected by the Reference Agent are not quoting as mentioned above, the applicable rate of interest calculated by the Reference Agent will be the interest rate in effect for the last preceding Interest Accrual Period. Once the Reference Agent or the Class A-1 Funding Agent, as the case may be, has obtained LIBOR or its substitute, the Cash Manager will calculate the interest rate for the Initial Class A Notes and the amount of interest payable on the relevant Payment Date in respect of the Initial Class A Notes. The Reference Agent's determination of LIBOR and the Cash Manager's determination of the interest rate and the amount of interest payable for the Initial Class A Notes (in the absence of manifest error) will be conclusive and binding upon all parties. As promptly as practicable after the determination thereof but not later than the commencement of the following Interest Accrual Period, the Cash Manager will give notice of the applicable LIBOR, the Payment Date, the interest 151

160 rate for the Initial Class A Notes for the relevant Interest Accrual Period and the amount of interest payable on the Initial Class A Notes to ALS, the Listing Agent, the EU Paying Agent, the Irish Stock Exchange, the Trustee, the Rating Agencies and the Servicer. After receipt from the Cash Manager, the Trustee will shortly thereafter provide such notices to the Noteholders as provided in the Indenture. If the Reference Agent does not determine the applicable LIBOR in accordance with the provisions described above, the Cash Manager will determine such applicable LIBOR. ALS will reserve the right to terminate the appointment of the Reference Agent at any time on 30 days' written notice and to appoint a replacement reference agent in its place. Notice of any such termination will be given to the Holders of the Initial Class A Notes. The Reference Agent may not be removed or resign its duties without a successor having been appointed. Principal Amortization To the extent that the amount of funds available for payment on any Payment Date exceeds the amount needed to pay all payments having an equal or higher priority, any such excess funds will be applied to reduce the Outstanding Principal Balance of the Initial Class A Notes, by distributing such excess amount in accordance with the priority of payments set forth in the Indenture. See " Priority of Payments". If ALS issues any Refinancing Notes, each such issuance will constitute a new and subsequent subclass of the Initial Class A Notes. See " Allocation of Principal Among Subclasses of Notes". In respect of each Payment Date, the "Adjusted Portfolio Value" will equal the aggregate sum of the "adjusted values" for all Aircraft in the Portfolio on the related Calculation Date, where the "adjusted value" for each such Aircraft in the Portfolio on such Calculation Date is the product of (a) the Adjusted Base Value of such Aircraft on such Calculation Date and (b) the quotient obtained by dividing the applicable depreciation factor for such Aircraft (as set forth below) (each, a "Depreciation Factor") on such Calculation Date by the Depreciation Factor applicable to such Aircraft as of the date of the Relevant Appraisal with respect to such Calculation Date. The Depreciation Factors for the Initial Aircraft produce a "depreciation curve" that assumes an accelerating decline in the value of Aircraft of increasing age. The accelerating annual decline in Aircraft values that is assumed by the depreciation curve has been expressed as an equation below: Depreciation Factor = (1-(k X n)) X (1 + g) n/12 Where, with respect to any Aircraft: n = age of the Aircraft expressed in months from the date of delivery from its manufacturer k = 1 R Expected Useful Life in months Where: R = 0.2; and g = 0.025; provided that (a) in the event an Aircraft undergoes a conversion, the Depreciation Factor for such Aircraft will be determined by the Board and (b) with respect to each Additional Aircraft, the Depreciation Factor will be determined by the Board in connection with the issuance of the Additional Notes funding the acquisition of such Additional Aircraft. "Expected Useful Life" means, with respect to each Initial Aircraft, 25 years from the date of manufacture (or, in the case of converted freighter aircraft, 15 years from the date of completion of the conversion to freighter configuration) and, with respect to any Additional Aircraft or an Aircraft subject to an Aircraft Conversion, the "Useful Life" established by or pursuant to a resolution of the Board or in any supplement to the Indenture providing for the issuance of Additional Notes to fund the acquisition of such Additional Aircraft or Aircraft Conversion; provided that, for the purposes of calculating the Depreciated Aircraft Value of any Initial Aircraft or 152

161 Substituted Aircraft, the Expected Useful Life of such Initial Aircraft or Substituted Aircraft is 25 years from the date of manufacture. The Depreciation Factors for the Initial Aircraft are used solely for the purposes of determining repayments of principal to Noteholders and do not correlate to or predict actual declines in Aircraft values over any period. Furthermore, such Depreciation Factors are affected by many variables and therefore the depreciation curve will change as the composition of the Portfolio changes through acquisitions and sales or conversions of Aircraft. With respect to Additional Aircraft, the Board will determine the Depreciation Factors relevant thereto in connection with the issuance of the Additional Notes funding the acquisition of such Additional Aircraft. Allocation of Principal Among Subclasses of Notes To the extent that Available Collections are available to pay principal with respect to any Class of Notes on any Payment Date, such amounts will be applied to the various subclasses of the relevant Class in the following order after giving effect to all prior subclass principal payments of such Class: (i) (ii) First, to each subclass, in no order of priority within such subclass, but pro rata according to the amount of, but not to exceed, the excess, if any, of the Outstanding Principal Balance of each such subclass over the product of the applicable Pool Factor (as set forth in Appendix 4) on such Payment Date and the initial principal balance of each such subclass. Second, to each subclass with an Expected Final Payment Date that falls on or before such Payment Date, in order of the earliest issued subclass; provided that in the case of two or more subclasses issued on the same date, Available Collections will be applied to such subclasses in order of the subclass with the earliest Expected Final Payment Date and, with respect to any two or more subclasses having the same Expected Final Payment Date, Available Collections will be applied to such subclasses pro rata according to the Outstanding Principal Balance of each such subclass (after giving effect to any payments under clause (i) above) on such Payment Date. (iii) Third, to each subclass in order of the earliest Expected Final Payment Date, provided, in the case of two or more subclasses having the same Expected Final Payment Date, in no order of priority within such subclass, but pro rata according to the Outstanding Principal Balance of each such subclass (after giving effect to any payments under clauses (i) and (ii) above) on such Payment Date. Additional Notes The ALS Group may, at any time (with the consent of the Liquidity Provider (unless the Liquidity Facility Non- Consent Event has occurred), the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing), the Class A-1 Trustee (acting at the written direction of all of the Holders of the Class A-1 Notes) and subject to certain other conditions), acquire Additional Aircraft from the Seller and/or their respective affiliates. The ALS Group may also, at any time, convert Aircraft from passenger to freighter or mixed use configuration (each, an "Aircraft Conversion"). If such Aircraft Conversion is effected through a payment by ALS or any of its subsidiaries, such payment will be subject to various conditions under the Indenture. The ALS Group will finance acquisitions of Additional Aircraft and may finance Aircraft Conversions using the proceeds from additional notes issued by ALS in up to two classes (Class A and Class E, each of which may consist of one or more subclasses) that will have the same ranking in respect of priority of payments as the Notes of the Class to which such Additional Notes belong. Issuance of Additional Notes will be authorized by a Board resolution and effected only following receipt of a Rating Agency Confirmation and upon obtaining the prior written consent of the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent has occurred and is continuing), the Liquidity Provider (unless the Liquidity Facility Non-Consent Event has occurred), the Class A-1 Trustee (acting at the written direction of all of the Holders of the Class A-1 Notes), and the Class E Noteholders. Additional Notes may be redeemed at a Redemption Price established by any indenture supplement to the Indenture providing for the issuance of such Additional Notes. Optional Redemption with Premium 153

162 General. ALS may redeem (including in connection with any Refinancing) on any Business Day after the Initial Delivery Date any subclass of Class A Notes, in whole (but not in part) (an "Optional Redemption"), out of amounts available for such purpose, if any, deposited by ALS in an account (the "Defeasance/Redemption Account") or a refinancing account (the "Refinancing Account"), as applicable, (and not out of the amounts remaining in the Collections Account) on any Payment Date (any such date, an "Optional Redemption Date") at the Redemption Price (determined as of the Calculation Date for the related Optional Redemption Date) (including any LIBOR Break Costs) plus accrued but unpaid interest (after giving effect to any payment thereof on such date), provided that after the giving of a Default Notice or the acceleration of the maturity of any Notes, the Notes may be redeemed only in whole (but not in part); provided further that in connection with any Optional Redemption, ALS must cancel the remaining Class A-1 Commitments (if any) in full in accordance with the Class A-1 Note Funding Agreement. Written notice of any such Optional Redemption will be given by ALS (or the Administrative Agent on its behalf) to the Trustee not less than ten days and not more than 30 days prior to such Redemption Date. Within each subclass of Notes being redeemed in part, the amount of the Outstanding Principal Balance being redeemed will be applied in each case pro rata among all Notes of such subclass. The redemption price payable by ALS upon a redemption (the "Redemption Price") is the amount (determined as of the Calculation Date for the Redemption Date for any Optional Redemption or any Refinancing) equal to: (a) with respect to any Class A Notes (other than as provided in (b) below) being redeemed (including in connection with the optional cancellation in full of the Class A-1 Commitments pursuant to the Class A-1 Note Funding Agreement), the sum of the applicable Redemption Premium, plus the portion of the Outstanding Principal Balance being redeemed, plus LIBOR Break Costs (if any); (b) with respect to any Class A Notes being redeemed (i) due to the imposition of or requirement to pay certain taxes or increased costs or (ii) after the giving of a Default Notice or the acceleration of the maturity of any of the Notes, any Class A Notes being redeemed, in each case as further described below under " Optional Redemption without Premium", the then Outstanding Principal Balance thereof without Redemption Premium or LIBOR Break Costs; and (c) with respect to any Notes other than the Initial Class A Notes, as provided in the Board resolution or indenture supplement providing for the issuance of such Notes. "LIBOR Break Costs" means, as of any date of redemption of any subclass of Class A Notes (the "Applicable Date"), an amount determined by the Cash Manager on the date that is two Business Days prior to the Applicable Date pursuant to the formula set forth below; provided, however, that no LIBOR Break Costs will be payable (x) if the LIBOR Break Costs, as calculated pursuant to the formula set forth below, is equal to or less than zero, or (y) on or in respect of any Applicable Date that is a Payment Date. LIBOR Break Costs = Z-Y Where: X = with respect to any applicable Interest Accrual Period, the sum of (i) the amount of the Outstanding Principal Balance of such subclass of Class A Notes to be redeemed on the Applicable Date plus (ii) interest payable thereon during the entire then applicable Interest Accrual Period at then effective LIBOR. Y = X, discounted to present value from the last day of the then applicable Interest Accrual Period to the Applicable Date, using then effective LIBOR as the discount rate. Z = X, discounted to present value from the last day of the then applicable Interest Accrual Period to the Applicable Date, using a rate equal to the applicable London interbank offered rate for a period commencing on the Applicable Date and ending on the last day of the then applicable Interest Accrual Period, determined by the Cash Manager as of two Business Days prior to the Applicable Date as the discount rate. The applicable "Redemption Premiums" of the Class A-1 Notes are: 154

163 (a) prior to the Initial Delivery Date, with respect to the cancellation of any Class A-1 Commitments with respect to an optional redemption under the Indenture, an amount equal to zero; (b) after the Initial Delivery Date, with respect to the redemption of the Initial Class A Notes (including in connection with the optional cancellation in full of the Class A-1 Commitments in accordance with the Class A- 1 Note Funding Agreement) (i) an amount due to the applicable Holder of the subclass of Initial Class A Notes being redeemed equal to the product of (x) the Outstanding Principal Balance of the Initial Class A Notes being redeemed as of the applicable Redemption Date and (y) the Redemption Premium Percentage with respect to such date and (ii) an amount due to the applicable Class A-1 Commitment Holder equal to the product of (x) the amount of the Class A-1 Commitment being cancelled as of the applicable Redemption Date and (y) the Redemption Premium Percentage with respect to such date; and (c) with respect to the redemption of any Additional Notes or Refinancing Notes, an amount equal to the redemption premium specified under the terms of such Note. The applicable "Redemption Premium Percentages" of the Initial Class A Notes are: Initial Class Redemption Date A Notes Prior to the Initial Delivery Date % On or after the Initial Delivery Date % On or after the 1-month anniversary of the Initial Delivery Date % On or after the 2-month anniversary of the Initial Delivery Date % On or after the 3-month anniversary of the Initial Delivery Date % On or after the 4-month anniversary of the Initial Delivery Date % On or after the 5-month anniversary of the Initial Delivery Date % On or after the 6-month anniversary of the Initial Delivery Date % On or after the 7-month anniversary of the Initial Delivery Date % On or after the 8-month anniversary of the Initial Delivery Date % On or after the 9-month anniversary of the Initial Delivery Date % On or after the 10-month anniversary of the Initial Delivery Date % On or after the 11-month anniversary of the Initial Delivery Date % On or after the 12-month anniversary of the Initial Delivery Date % On or after the 13-month anniversary of the Initial Delivery Date % On or after the 14-month anniversary of the Initial Delivery Date % On or after the 15-month anniversary of the Initial Delivery Date % On or after the 16-month anniversary of the Initial Delivery Date % On or after the 17-month anniversary of the Initial Delivery Date % On or after the 18-month anniversary of the Initial Delivery Date % On or after the 19-month anniversary of the Initial Delivery Date % On or after the 20-month anniversary of the Initial Delivery Date % On or after the 21-month anniversary of the Initial Delivery Date % On or after the 22-month anniversary of the Initial Delivery Date % On or after the 23-month anniversary of the Initial Delivery Date % On or after the 24-month anniversary of the Initial Delivery Date % On or after the 25-month anniversary of the Initial Delivery Date % On or after the 26-month anniversary of the Initial Delivery Date % On or after the 27-month anniversary of the Initial Delivery Date % On or after the 28-month anniversary of the Initial Delivery Date % On or after the 29-month anniversary of the Initial Delivery Date % On or after the 30-month anniversary of the Initial Delivery Date % On or after the 31-month anniversary of the Initial Delivery Date % On or after the 32-month anniversary of the Initial Delivery Date % On or after the 33-month anniversary of the Initial Delivery Date % On or after the 34-month anniversary of the Initial Delivery Date % On or after the 35-month anniversary of the Initial Delivery Date % On or after the 36-month anniversary of the Initial Delivery Date % 155

164 Refinancing of Class A Notes. Subject to the terms and conditions of the Indenture, ALS may redeem any subclass of Class A Notes (including refinancings of Refinancing Notes) and/or Additional Notes, in whole (but not in part), on any Business Day (a "Refinancing Date") with the proceeds of the issuance of any Refinancing Notes issued in accordance with the "Limitation on Indebtedness" covenant under the Indenture (any such repayment, a "Refinancing"). See " Indenture Covenants Limitation on Indebtedness". Each Refinancing must be authorized pursuant to one or more Board resolutions and may only be undertaken following receipt of a Rating Agency Confirmation and the prior written consent of the Liquidity Provider (unless a Liquidity Facility Non-Consent Event has occurred or will occur in connection with such Refinancing) and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing or will occur in connection with such Refinancing). The amount to be repaid by ALS in connection with the Refinancing of any subclass of Class A Notes will be equal to the Redemption Price (including LIBOR Break Costs, if any) for such subclass on the Refinancing Date plus accrued and unpaid interest (after giving effect to any payment thereof on such date), the Required Expense Amount and all unpaid obligations due and owing to the Class A-1 Funding Agent, the Class A-1 Commitment Holders (including Class A-1 Commitment Fees) and the Holders of the Class A Notes as of the Refinancing Date. Any such Refinancing Notes will have the same ranking with respect to priority of payments as the Notes of the Class to which such Refinancing Notes belong. In respect of any Refinancing of any subclass of Class A Notes, at least three Business Days before the proposed Refinancing Date, the Trustee will give written notice of such Refinancing (a "Notice of Refinancing"), for so long as any Notes are admitted to the Official List of the Irish Stock Exchange and to trading on the Alternative Securities Market, to the Listing Agent for delivery on its behalf to the Companies Announcement Office of the Irish Stock Exchange, in accordance with the notice provisions contained in the Indenture. See " Notices to Noteholders". In connection with any Refinancing, ALS will deposit, or will cause to be deposited, in the Refinancing Account an amount equal to the Redemption Price, together with an amount sufficient to pay all accrued and unpaid interest, as of the Refinancing Date and transaction expenses relating to such Refinancing and, if necessary, any amounts to be deposited in a Cash Collateral Account in connection with such Refinancing. Each Notice of Refinancing will state (i) the applicable Refinancing Date and that such redemption may be revoked or cancelled as provided in the Indenture, (ii) the Trustee's arrangements for making payments in respect of such Refinancing, (iii) the Redemption Price of the Notes to be repaid and the amount of accrued but unpaid interest payable thereon, (iv) that the Notes of the subclass to be repaid must be surrendered (which action may be taken by any Holder of the Notes of such subclass or its authorized agent) and (v) that unless the Redemption Price and any accrued and unpaid interest thereon is not paid, interest on the subclass of Notes to be refinanced will cease to accrue on and after the Refinancing Date. Once a Notice of Refinancing in respect of any Refinancing is published, unless such redemption has been revoked or cancelled as provided in the Indenture, the Notes of each subclass of Notes to which such Notice of Refinancing applies will become due and payable on the Refinancing Date stated in such Notice of Refinancing at the applicable Redemption Price, together with accrued and unpaid interest. Upon the issuance of any Additional Notes or Refinancing Notes, the pool factors (as set forth in Appendix 4) and expected target principal balances (as set forth in Appendix 3) for any subclass of Notes may be adjusted to take into account such issuance. The Holders of the Class A-2 Notes will not have consent rights with respect to the issuance of the Additional Notes and neither the Holders of the Class A-1 Notes nor the Holders of the Class A-2 Notes will have consent rights with respect to the issuance of the Refinancing Notes, and no assurance can be given that the Expected Final Payment Date will not be extended. Optional Redemption without Premium Redemption for Taxation or Increased Costs Purposes. All payments of principal, interest and Redemption Premium, if any, made by ALS in respect of any Notes will be made without withholding or deduction for or on account of any present or future taxes or duties of whatever nature unless required by law. Should such withholding or deduction be required by law, except with respect to (1) Holders of the Class A-1 Notes and (2) certain Holders of the Class A-2 Notes that are banks or similar financial institutions (which Holders, in the case of each of (1) and (2), are Qualifying Lenders), ALS will not be obligated to pay any additional amounts in respect of such withholding or deduction. If at any time: 156

165 (i) ALS is, or on the next Payment Date will be, required to make any withholding or deduction under the laws or regulations of any applicable tax authority with respect to any payment in respect of any subclass of Initial Class A Notes; (ii) ALS is or will be subject to any circumstance (whether by reason of any law, regulation, regulatory requirement or double taxation convention, or the interpretation or application thereof, or otherwise) that has resulted or will result in the imposition of a tax (whether by direct assessment or by withholding at source) or other similar imposition by any jurisdiction which would (A) materially increase the cost to ALS of making payments in respect of any subclass of Class A Notes or of complying with its obligations under or in connection with the Notes; (B) materially increase the operating or administrative expenses of ALS or the Charitable Trust under which 95% of the issued ordinary share capital of ALS is held; or (C) otherwise obligate ALS or any of its subsidiaries to make any material payment on, or calculated by reference to, the amount of any sum received or receivable by ALS, or by the Cash Manager on behalf of the ALS Group as contemplated by the Cash Management Agreement; or (iii) ALS is or will be required to make indemnity payments for certain taxes or increased costs to any Holder of Initial Class A Notes, any Class A-1 Commitment Holder or the Class A-1 Funding Agent pursuant to the Class A-1 Note Funding Agreement; then ALS will inform the Trustee at such time in writing of any such requirement or imposition and will use commercially reasonable efforts to avoid the effect of the same; provided that no actions will be taken by ALS to avoid such effects without a Rating Agency Confirmation and the prior written consent of the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing). If, after using commercially reasonable efforts to avoid the adverse effect described above, ALS or any of the Subsidiaries has not avoided such effects, ALS may, at its election, redeem the affected subclass of Class A Notes on any Business Day in whole (or, if due to the reason specified in clause (iii) above, in part) at the Outstanding Principal Balance of the Class A Notes to be redeemed plus accrued and unpaid interest, but without Redemption Premium. Any redemption due to the reason specified in clause (i) or (ii) above may not occur more than 30 days prior to such time as the requirement or imposition described in (i) or (ii) above (as applicable) is to become effective. Written notice of any such redemption will be given by ALS (or the Administrative Agent on its behalf) to the Trustee not less than ten days and not more than 30 days prior to the Redemption Date for such redemption. Redemption Following an Indenture Event of Default. If a Default Notice has been given to ALS following an Indenture Event of Default, ALS may redeem the Notes in whole, but not in part, on the next Payment Date, at the Redemption Price (which is the Outstanding Principal Balance thereof), plus accrued and unpaid interest, but without Redemption Premium. Method of Redemption In respect of any redemption of any subclass of Class A Notes on any Business Day, at least three Business Days before such Business Day (the "Redemption Date"), the Trustee will give notice of such redemption (a "Notice of Redemption") to each Holder of interests in such subclass of Class A Notes, for as long as any Notes are admitted to the Official List of the Irish Stock Exchange and to trading on the Alternative Securities Market, to the Listing Agent for delivery on its behalf to the Companies Announcement Office of the Irish Stock Exchange, and in accordance with the notice provisions contained in the Indenture. See " Notices to Noteholders". If a redemption is of less than all of the Class A Notes of any subclass, Class A Notes of such subclass to be redeemed will be repaid pro rata according to the Outstanding Principal Balance of each such subclass, to the extent moneys are available. In the case of any optional redemption, ALS will deposit, or will cause to be deposited, in the Defeasance/Redemption Account or, in the case of Refinancing, the Refinancing Account an amount equal to the Redemption Price, together with an amount sufficient to pay or provide for all of the accrued and unpaid interest on the Notes being redeemed (after giving effect to any payment thereof on such date), all amounts due to any Hedge Provider on such Redemption Date, the Required Expense Amount and all unpaid obligations due and owing to the Class A-1 Funding Agent, the Class A-1 Commitment Holders and the Holders of the Class A Notes as of the Redemption Date. In the case of any redemption for tax purposes, ALS will deposit, or will cause to be deposited, in the Defeasance/Redemption Account or, in the case of Refinancing, the Refinancing Account an amount equal to the Outstanding Principal Balance of each subclass of Class A Notes to be redeemed, together with an amount sufficient to pay or provide for all of the accrued and unpaid interest on the Notes being redeemed (after giving 157

166 effect to any payment thereof on such date), the Required Expense Amount and all unpaid obligations due and owing to the Class A-1 Funding Agent, the Class A-1 Commitment Holders and the Holders of the Class A Notes as of the Redemption Date. Each Notice of Redemption will state (i) the applicable Redemption Date and that such redemption may be revoked or cancelled as provided in the Indenture, (ii) the Trustee's arrangements for making payments in respect of such redemption, (iii) the Redemption Price or Outstanding Principal Balance of each subclass of Class A Notes to be redeemed, (iv) in the case of redemption of the Class A Notes of any subclass in whole, the Class A Notes of the subclass to be redeemed must be surrendered to the Trustee to collect the Redemption Price (including LIBOR Break Costs, if any) and accrued and unpaid interest on such Class A Notes and (v) in the case of redemption of the Class A Notes of any subclass in whole, that, unless the Redemption Price and any accrued and unpaid interest thereon is not paid, interest on the subclass of Class A Notes called for redemption will cease to accrue on and after the Redemption Date. Once a Notice of Redemption in respect of a redemption in whole is published, unless such redemption has been revoked or cancelled as provided in the Indenture, the Outstanding Principal Balance on each subclass of Class A Notes to which such Notice of Redemption applies will become due and payable on the Redemption Date stated in such Notice of Redemption. Upon surrender, unless such Redemption has been revoked or cancelled, the Redemption Price or the Outstanding Principal Balance on a Class A Note, together with accrued and unpaid interest thereon, will be paid. All Notes which are redeemed will be surrendered to the Trustee for cancellation and accordingly may not be reissued or resold. ALS may revoke or cancel a Redemption at any time if after the date of the issuance of the Notice of Redemption, there has occurred any change or any development which would reasonably be expected to result in a prospective change in or affect the ability of ALS to perform its obligations under the Indenture or any other Related Document or in the general economic, political or financial conditions in the United States or elsewhere, the effect of which, in the judgment of the Board, is material and adverse and makes it impracticable or inadvisable to proceed with the Redemption of the applicable subclass of Notes on the Redemption Date. Defeasance ALS at any time may terminate all of its obligations under the Notes and the Indenture ("legal defeasance"), except for certain specified obligations. ALS at any time may terminate its obligations under the covenants described under " Indenture Covenants" and " Operating Covenants" and the Indenture Events of Default described under " Indenture Events of Default and Remedies" other than clauses (a), (b), (c), (d), (solely with respect to ALS) (f), and (solely with respect to ALS) (g) set forth under " Indenture Events of Default and Remedies" ("covenant defeasance"). ALS may exercise its legal defeasance option notwithstanding its prior exercise of the covenant defeasance option. If ALS exercises its legal defeasance option, payment of any Notes subject to such legal defeasance may not be accelerated because of an Indenture Event of Default with respect thereto. If ALS exercises its covenant defeasance option, payment of the Notes may not be accelerated because of the Indenture Events of Default described under " Indenture Events of Default and Remedies" other than clauses (a), (b), (c), (d), (solely with respect to ALS) (f), and (solely with respect to ALS) (g) set forth under " Indenture Events of Default and Remedies". In order to exercise either defeasance option, ALS must obtain a Rating Agency Confirmation and the prior written consent of each of the Liquidity Provider and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non- Consent Event has occurred and is continuing), irrevocably deposit in trust (the "defeasance trust") in the Defeasance/Redemption Account cash or obligations of the U.S. government or obligations of corporate issuers, provided they are rated AA+ (or equivalent) or higher by the Rating Agencies and mature within three years of the date of defeasance, or any combination thereof in such amounts as will be sufficient for the payment of all principal, Redemption Premium, if any, and interest on the Notes to redemption or maturity, as the case may be, and must comply with certain other conditions, including delivering to the Trustee an opinion of counsel (both opinion and counsel reasonably acceptable to the Trustee) to the effect that the Noteholders will not recognize income, gain or loss for U.S. federal income tax purposes as a result of such deposit and defeasance and will be subject to U.S. federal income tax on the same amounts and in the same manner and at the same times as would have been the case if such deposit and defeasance had not occurred (and, in the case of legal defeasance only, such opinion of counsel must be based on a ruling of the Internal Revenue Service issued after the date of the sale of the Initial Notes or other change in applicable U.S. federal income tax law). Sources of Payment 158

167 Pursuant to the terms of the Leases, the Lessees will be obligated to make rental payments and certain other payments, including maintenance reserves and security deposits (collectively, the "Rental Payments") to the ALS Group. Pursuant to the terms of the Indenture, Rental Payments, with limited exceptions, will be made directly to the Rental Account held in the name of the Security Trustee on behalf of the Secured Parties. Any Rental Payments or other amounts received by the ALS Group in respect of the assets of the ALS Group will be transferred directly to the Collections Account (other than any Advance which will be paid to the Funding Account and transferred to the Aircraft Purchase Account or the Note Account for the Class E-1 Notes (for payment to AerVenture Leasing), as applicable). Any amounts received by the ALS Group which are required to be segregated will be transferred to a Lessee Funded Account. Subject to certain assumptions, ALS expects that such Rental Payments will be sufficient to pay the principal and interest on the Initial Class A Notes and all other amounts payable by the ALS Group to the Trustee, the Security Trustee, the Operating Bank, each Hedge Provider, the Class A-1 Funding Agent, the Class A- 1 Commitment Holders, the Liquidity Provider and the Service Providers including the Servicer, the Servicing Agent, the Administrative Agent, the Cash Manager and the Reference Agent in each case when and as due (other than amounts payable prior to the Initial Delivery Date, which amounts are expected to be paid out of the cash proceeds of Class E-1 Notes to be issued to AerVenture Leasing). The Notes will constitute direct obligations of ALS and will be subordinated to the payment of Required Expenses and rank pari passu or senior to certain other obligations to the extent specified in the Indenture. Required Expenses constituting indemnification payments to the Trustee, the Directors, the Security Trustee, the Operating Bank, the Cash Manager, the Servicer, the Class A-1 Funding Agent, the Class A-1 Commitment Holders and certain other parties will be limited to $25 million in the aggregate except following the delivery of a Default Notice or during the continuance of an Acceleration Default. The only sources of payment for the Notes and the other obligations of ALS will be (i) the payments made under or in respect of the Leases, (ii) proceeds from any dispositions of any assets of the ALS Group, (iii) net payments under any Hedge Agreements (and any subordinated Hedge Agreements), (iv) amounts on deposit in the Accounts (other than the Funding Account and the Substitute Holdback Account), (v) investment earnings on cash in the Accounts, (vi) insurance proceeds for Aircraft that have suffered an event of loss, (vii) in the case of Required Expenses, Senior Hedge Payments and interest on Initial Class A Notes, amounts drawn under the Liquidity Facility, (viii) amounts drawn under any future Eligible Credit Facility (including on deposit in any Cash Collateral Accounts), (ix) any amounts received by a member of the ALS Group under an acquisition agreement, (x) any other amounts received by a member of the ALS Group pursuant to the terms of the Indenture and (xi) net cash proceeds received from the sale of Refinancing Notes. Each Class of Notes will have the priority set forth in the Indenture. Pursuant to the subordination provisions of the Indenture, no payment of principal, interest and Redemption Premium, if any, on any Class of Notes may be made on any Payment Date unless certain required payments have been made in respect of the Notes of each Class ranking senior to such Class of Notes on such Payment Date. The subordination provisions contained in the Indenture may not be amended or modified without the consent of the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) each provider of an Eligible Credit Facility, each Holder of the Class of Notes affected thereby and each Holder of any Class of Notes ranking senior to such Notes and the receipt of a Rating Agency Confirmation. Priority of Payments Priority of Payments Before Default Notice. Pursuant to the terms of the Indenture and the Cash Management Agreement, on each Payment Date, the Cash Manager will direct the Operating Bank to distribute from, or retain in, as applicable, the Collections Account such amounts in the order of priority set forth below but, in each case, only to the extent that all amounts ranking prior thereto have been paid or retained, as applicable, in full: (i) (ii) First, to the Expense Account, an amount such that the amount on deposit therein is at least equal to the Required Expense Amount for such Payment Date; Second, to the Liquidity Provider, any Liquidity Facility Non-Use Fees due and owing to the Liquidity Provider; (iii) Third, in no order of priority inter se, but pro rata as to the amounts described below in clauses (A), (B) and (C) as follows: (A) to the Note Account for each subclass of Class A Notes, the Interest Amount on such subclass of Class A Notes in no order of priority inter se but pro rata according to the amount of accrued and 159

168 unpaid interest on each such subclass of Class A Notes less the amount of any Liquidity Drawing, if any, in respect of the Interest Amount due on such subclass of Class A Notes paid on or before such Payment Date by the Liquidity Provider under the Liquidity Facility to the extent not theretofore reimbursed to the Liquidity Provider as of such Payment Date; (B) to any Class A-1 Commitment Holder, any Class A-1 Commitment Fees due and owing to such Class A-1 Commitment Holder and any accrued and unpaid interest on any Class A-1 Commitment Fees; and (C) pro rata to any Hedge Provider, an amount equal to any Senior Hedge Payment due from any member of the ALS Group pursuant to any Hedge Agreement; (iv) (v) (vi) Fourth, in no order of priority inter se, but pro rata as to the amounts described in clauses (A) and (B) as follows: (A) to the Initial Primary Liquidity Reserve Account, such amount so that the amount on deposit in such Account is equal to the Required Amount therefor and (B) to any persons providing any Eligible Credit Facilities, any Credit Facility Advance Obligations payable to such persons under the terms of their respective Eligible Credit Facilities and, to the extent any such Eligible Credit Facility consists of a Cash Collateral Account (other than the Initial Primary Liquidity Reserve Account), such amount so that the amount on deposit in each such Account is equal to the Required Amount therefor; Fifth, to the Expense Account, such amount as an accrual (the "Permitted Accruals") in respect of any Modification Payments or Refinancing Expenses as the Cash Manager will determine; Sixth, to the Issuer's Shareholders Account, the Corporate Benefit Distribution and an amount equal to the sum of any Corporate Benefit Distribution (or portion thereof) not paid on any prior Payment Date; (vii) Seventh, to the Note Account for each subclass of Class E Notes, in the order of priority by subclass described under " Allocation of Principal Among Subclasses of Notes", an amount equal to the Excess Sale Proceeds with respect to any sale or other disposition of an Aircraft; (viii) Eighth, to the Note Account for each subclass of the Class A Notes, in the order of priority by subclass described under " Allocation of Principal Among Subclasses of Notes", an amount equal to the Outstanding Principal Balance of each such subclass; (ix) (x) (xi) Ninth, an amount equal to the Special Indemnity Payments to the applicable party pro rata; Tenth, to Hedge Providers, pro rata inter se, the Subordinated Hedge Payments; Eleventh, after the Delivery Expiry Date, and subject to the payment in full of all amounts in clauses (i) through (x) above, to the Note Account for each subclass of Class E Notes, the Interest Amount on such subclass of Class E Notes in no order of priority inter se, but pro rata according to the amount of accrued and unpaid interest on each subclass of Class E Notes; (xii) Twelfth, after the Delivery Expiry Date, and subject to the payment in full of all amounts in clauses (i) through (xi) above, to the Note Account for each subclass of Class E Notes, in the order of priority by subclass described under " Allocation of Principal Among Subclasses of Notes", an amount equal to the Outstanding Principal Balance of each such subclass; and (xiii) Thirteenth, after the Delivery Expiry Date, and subject to the payment in full of all amounts in clauses (i) through (xii) above, to the Note Account for each subclass of Class E Notes in the order of priority by subclass described under " Allocation of Principal Among Subclasses of Notes", all remaining amounts. Priority of Payments Following a Default Notice. Following delivery to ALS and the Cash Manager of a Default Notice, if any Indenture Event of Default described in clause (f) or (g) under " Indenture Events of Default and Remedies" has occurred and is continuing or upon the occurrence of a Critical Mass Event, the allocation of payments described above under " Priority of Payments" will not apply and the Cash Manager will direct the Operating Bank in writing to cause all amounts on deposit in the Collections Account and the Expense Account to be applied on each Payment Date in the following order of priority: (i) First, to the Expense Account, an amount such that the amount on deposit therein is equal to the Required Expense Amount for such Payment Date; 160

169 (ii) Second, to any persons providing any Eligible Credit Facilities, pro rata inter se, any Credit Facility Advance Obligations and Liquidity Facility Non-Use Fees payable to such persons under the terms of their respective Eligible Credit Facilities; (iii) Third, in no order of priority inter se, but pro rata as to the amounts described in clauses (A), (B) and (C): (A) to the Note Account for each subclass of Class A Notes, the Interest Amount on such subclass of Class A Notes in no order of priority inter se but pro rata according to the amount of accrued and unpaid interest on each such subclass of Class A Notes less the amount of any Liquidity Drawing, if any, in respect of the Interest Amount due on such subclass of Class A Notes paid on or before such Payment Date by the Liquidity Provider under the Liquidity Facility to the extent not theretofore reimbursed to the Liquidity Provider as of such Payment Date; (B) to any Class A-1 Commitment Holder, any Class A-1 Commitment Fees due and owing to such Class A-1 Commitment Holder and any accrued and unpaid interest on any Class A-1 Commitment Fees; and (C) pro rata to any Hedge Provider, such amounts as are required to make any Senior Hedge Payments due to such Hedge Provider pursuant to any Hedge Agreement; (iv) (v) (vi) Fourth, to the Note Account for each subclass of Class A Notes, an amount equal to the Outstanding Principal Balance of such subclass of Class A Notes in no order of priority inter se but pro rata according to the amount of the principal of such subclass of Class A Notes; Fifth, an amount equal to the Special Indemnity Payments to the applicable party pro rata; Sixth, to any Hedge Provider, pro rata inter se, such amounts as are required to make any Subordinated Hedge Payments due to such Hedge Provider; (vii) Seventh, to the Issuer's Shareholders Account, an amount equal to the sum of each Corporate Benefit Distribution (or portion thereof) not paid on any prior Payment Date in accordance with the priority of payments described under " Priority of Payments Priority of Payments Before Default Notice"; (viii) Eighth, to the Note Account for each subclass of Class E Notes, the Interest Amount on such subclass of Class E Notes in no order of priority inter se, but pro rata according to the amount of accrued and unpaid interest on such subclass of Class E Notes; (ix) (x) Ninth, to the Note Account for each subclass of Class E Notes, in the order of priority by subclass described under " Allocation of Principal Among Subclasses of Notes", an amount equal to the Outstanding Principal Balance of each such subclass; and Tenth, to the Note Account for each subclass of Class E Notes, in the order of priority by subclass described under " Allocation of Principal Among Subclasses of Notes", all remaining amounts. INDENTURE COVENANTS No Release of Obligations Under the terms of the Indenture, ALS will not take, or knowingly permit any Subsidiary to take, any action which would amend, terminate (other than any termination in connection with the replacement of such agreement with an agreement on terms substantially no less favorable to the ALS Group than the agreement being terminated) or discharge or prejudice the validity or effectiveness of the Indenture (other than as permitted therein), the Security Trust Agreement, any acquisition agreement, any organizational document of any Subsidiary, the Loan, Expenses Apportionment and Guarantee Agreement, the Administrative Agency Agreement, the Servicing Agreement, the Reference Agency Agreement, the Class A-1 Note Funding Agreement, the Liquidity Facility, the Cash Management Agreement or any other Related Document to which ALS or any Subsidiary is a party or permit any party to any such document to be released from such obligations except, in each case, as permitted or contemplated by the terms of such document, and provided that such actions may be taken or permitted, and such releases may be permitted, if ALS will have first obtained a resolution of the Board determining that such action, permitted action or release does not materially adversely affect the interests of the Noteholders and the prior written consent of the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) has been obtained, and provided further that in any case (i) ALS will not take any action that would result in any amendment 161

170 or modification to any conflicts standard or duty of care in such agreements and (ii) there must be at all times an administrative agent with respect to the services provided by the Administrative Agent to the ALS Group and a servicer with respect to all Aircraft in the Portfolio. Limitation on Encumbrances Under the terms of the Indenture, ALS will not, and will not permit any Subsidiary to, create, Incur, assume or suffer to exist any mortgage, pledge, lien, encumbrance, charge or security interest (in each case, an "Encumbrance"), including, without limitation, any conditional sale, any sale with recourse against ALS, any Subsidiary thereof or any affiliate of any Subsidiary, or any agreement to give any security interest over or with respect to, any of ALS's or any Subsidiary's assets (excluding Lessee funds required to be segregated from ALS's other funds under the terms of any Lease), including, without limitation, all shares of capital stock, all beneficial interests in trusts, all ordinary shares and preferred shares and any options, warrants and other rights to acquire such shares or interests ("Ownership Interest") and any Indebtedness of any Subsidiary held by ALS or any Subsidiary. Notwithstanding the foregoing, ALS may create, Incur, assume or suffer to exist (i) any Permitted Encumbrance, (ii) any security interest created or required to be created under the Security Documents or (iii) any other Encumbrance (A) the validity or applicability of which is being contested in good faith in appropriate proceedings by ALS or any Subsidiary and (B) which is lifted within 180 days. Limitation on Restricted Payments Under the terms of the Indenture, ALS will not, and will not permit any of the Subsidiaries to, (i) declare or pay any dividend or make any distribution on its Ownership Interest held by persons other than ALS or any Subsidiary; (ii) purchase, redeem, retire or otherwise acquire for value any shares or Ownership Interest of ALS or any Subsidiary held by or on behalf of persons other than ALS, any Subsidiary or other persons permitted in the Indenture as described in clause (ii)(c) under " Limitation on the Issuance, Transfer and Sale of Ownership Interests"; (iii) make any payment of principal, interest or premium, if any, on the Notes or make any voluntary or optional repurchase, defeasance or other acquisition or retirement for value of Indebtedness of ALS or any Subsidiary that is not owed to ALS or any Subsidiary other than in accordance with the Notes and the Indenture or otherwise provided for in the Related Documents; provided that, subject where applicable to the restrictions set forth in the Indenture, ALS or any of its affiliates may repurchase, defease or otherwise acquire or retire any of the Notes other than from Available Collections, so long as any new notes of ALS issued in connection with such transactions rank pari passu with the Notes being repurchased, defeased, acquired or retired and the Directors have determined that such action does not materially adversely affect the Noteholders and have obtained prior written consent of the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) and a Rating Agency Confirmation; or (iv) make any investments (other than Permitted Account Investments, Allowed Restructurings, investments permitted in the Indenture as described under " Limitation on Engaging in Business Activities" and investments in any member of the ALS Group pursuant to any acquisition agreement or other acquisition of an Additional Aircraft permitted under the Indenture), provided that written notification of the organization or acquisition of each such member of the ALS Group has been given to each Rating Agency, the Liquidity Provider and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing). The term "investment" for purposes of the above restriction means any loan or advance to a person or entity, any purchase or other acquisition of any beneficial interest, capital stock, warrants, rights, options, obligations or other securities of such person or entity, any capital contribution to such person or entity or any other investment in such person or entity. The term "investment" will not include any obligation of a purchaser of an Aircraft to make deferred or installment payments pursuant to any Aircraft Agreement specified in clause (iii) or (v) of the second paragraph under " Limitation on Aircraft Dispositions" below so long as the ALS Group retains a security interest in the relevant Aircraft until all such obligations are discharged. Limitation on Dividends and Other Payment Restrictions Under the terms of the Indenture, ALS will not, and will not permit any of the Subsidiaries to, create or otherwise suffer to exist any consensual encumbrance or restriction of any kind on the ability of any such Subsidiary to (i) declare or pay dividends or make any other distributions permitted by applicable law, or purchase, redeem or 162

171 otherwise acquire for value, any Ownership Interest of ALS or any such Subsidiary, as the case may be, (ii) pay any Indebtedness owed to ALS or such Subsidiary, (iii) make loans or advances to ALS or such Subsidiary or (iv) transfer any of its property or assets to ALS or any other Subsidiary thereof. The provision described in the foregoing paragraph will not restrict any consensual encumbrances or other restrictions which are: (x) Permitted Encumbrances; (y) those existing on the Initial Closing Date, with respect to the Initial Aircraft, or, with respect to any Additional Aircraft, on the date such Aircraft is acquired, under any Related Document, and any amendments, extensions, refinancings, renewals or replacements of such documents; provided that such consensual encumbrances and restrictions in any such amendments, extensions, refinancings, renewals or replacements are no less favorable in any material respect to the Noteholders than those previously in effect and being amended, extended, refinanced, renewed or replaced; or (z) in the case of clause (iv) in the preceding paragraph, those that restrict in a customary manner the subletting, assignment or transfer of any property or asset that is a lease, license, conveyance or contract or similar property or asset. Limitation on Engaging in Business Activities Under the terms of the Indenture, ALS will not, and will not permit any Subsidiary to, engage in any business or activity other than: (i) (ii) purchasing or otherwise acquiring (subject to the limitations in the Indenture described under " Limitation on Aircraft Acquisitions"), owning, holding, converting, maintaining, modifying, managing, operating, leasing, re-leasing and, subject to the limitations in the Indenture described under " Limitation on Aircraft Dispositions", selling or otherwise disposing of the Aircraft (including Permitted Tax-Related Dispositions, as defined below) and entering into all contracts and engaging in all related activities incidental thereto, including from time to time accepting, exchanging, holding or permitting any Subsidiary to accept, exchange or hold promissory notes, contingent payment obligations or equity interests of Lessees or their affiliates issued in connection with the bankruptcy, reorganization or other similar process, or in settlement of delinquent obligations or obligations anticipated to be delinquent of such Lessees or their respective affiliates in the ordinary course of business (an "Allowed Restructuring"); providing loans to, guaranteeing or otherwise supporting the obligations and liabilities of any member of the ALS Group, in each case on such terms and in such manner as the Board sees fit and (whether or not ALS or any Subsidiary derives a benefit therefrom) so long as such loans, guarantees or other supports are provided in connection with the purposes set forth in clause (i) above; provided that written notification has been given to each Rating Agency, the Liquidity Provider and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) of such loan, guarantee or other support; provided that no such notice will be required for any guarantee provided by a member of the ALS Group with respect to any obligations of another member of the ALS Group in respect of the lease, purchase, maintenance, modification, refurbishment, repair or sale of any Aircraft or otherwise in the ordinary course of the aircraft operating lease business; (iii) subject to limitations on indebtedness in the Indenture described under " Limitation on Indebtedness", financing or refinancing the business activities described in clause (i) above through the offer, sale and issuance of any securities of ALS, upon such terms and conditions as the Board sees fit, for cash or in payment or in partial payment for any property purchased or otherwise acquired by any member of the ALS Group; (iv) engaging in currency and interest rate exchange transactions for the purposes of avoiding, reducing, minimizing, hedging against or otherwise managing the risk of any loss, cost, expense or liability arising, or which may arise, directly or indirectly, from any change or changes in any interest rate or currency exchange rate or in the price or value of ALS's or any Subsidiary's property or assets, within limits and with providers specified in a Board resolution from time to time and submitted to the Rating Agencies, the Liquidity Provider and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing), including, but not limited to, dealings, whether involving purchases, sales or otherwise, in foreign currency, spot and forward interest rate exchange contracts, forward interest rate agreements, caps, floors and collars, futures, options, swaps, and any other currency, interest rate and other similar hedging arrangements and such other instruments as are similar to, or derivatives of, any of the foregoing; provided, however, that 163

172 ALS will not, and will not permit any Subsidiary to, enter into any such hedging arrangements or other instruments that (x) are not entered into solely for hedging interest rate or currency risks associated with the Notes and/or the Leases or (y) are not U.S. dollar denominated interest rate, hedges, currency hedges, swaptions, caps or floors (except where the hedging instrument is entered into substantially to hedge risks associated with non-u.s. dollar-denominated Leases) without prior written notification to the Rating Agencies; provided further that ALS will not, and will not permit any Subsidiary to (unless with respect to any action permitted under the Indenture with respect to disposition or transfer to another member of the ALS Group), (A) terminate or transfer such hedging arrangements without prior written notification to the Rating Agencies, except in connection with a sale or other disposition of an Aircraft and (B) enter into any Hedge Agreement after the Initial Closing Date without prior written notification to the Rating Agencies unless such Hedge Agreement contains the Material Hedge Agreement Terms that are substantially the same as but in any event no less favorable to ALS and any applicable Subsidiary than those contained in the Hedge Agreements existing on the Initial Closing Date (including the Initial Hedge Agreements); (v) (vi) (A) establishing, promoting and aiding in promoting, constituting, forming or organizing companies, trusts, syndicates, partnerships or other entities of all kinds in any part of the world for the purposes set forth in clause (i) above, provided that written notification has been given to each Rating Agency, the Liquidity Provider and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) that such company, trust, syndicate, partnership or other entity is set up in compliance with the Indenture, (B) acquiring, holding and disposing of shares, securities and other interests in any such company, trust, syndicate, partnership or other entity and (C) disposing of shares, securities and other interests in, or causing the dissolution of, any existing Subsidiary; provided that any such disposition which results in the disposition of an Aircraft meets the requirements in the Indenture described under " Limitation on Aircraft Dispositions"; taking out, acquiring, surrendering and assigning policies of insurance and assurances with any insurance company or companies which ALS or any Subsidiary may think fit and paying the premiums thereon; and (vii) engaging in the transactions contemplated by the Liquidity Facility. "Material Hedge Agreement Terms" means events of default, termination events, additional termination events, Subordinated Hedge Payment provisions and provisions relating to the obligation of the Hedge Provider to any member of the ALS Group to post collateral, find a replacement counterpart or take other remedial action upon a downgrade in its credit rating (together with the associated ratings thresholds). Limitation on Indebtedness Under the terms of the Indenture, ALS will not, and will not permit any Subsidiary to, incur, create, issue, assume, guarantee or otherwise become liable for or with respect to, or become responsible for, the payment of, contingently or otherwise, whether present or future (in any such case, to "Incur"), Indebtedness. For the purposes of the Indenture, "Indebtedness" means, with respect to any person at any date of determination (without duplication), (i) all indebtedness of such person for borrowed money, (ii) all obligations of such person evidenced by bonds, debentures, notes or other similar instruments, (iii) all obligations of such person in respect of letters of credit or other similar instruments (including reimbursement obligations with respect thereto), (iv) all obligations of such person to pay the deferred and unpaid purchase price of property or services, which purchase price is due more than six months after the date of purchasing such property or service or taking delivery and title thereto or the completion of such services, and payment deferrals arranged primarily as a method of raising finance or financing the acquisition of such property or service, (v) all obligations of such person under a lease of (or other agreement conveying the right to use) any property, whether real, personal or mixed, that is required to be classified and accounted for as a capital lease obligation under generally accepted accounting principles, (vi) all Indebtedness (as defined in clauses (i) through (v) of this paragraph) of other persons secured by a lien on any asset of such person, whether or not such Indebtedness is assumed by such person and (vii) all Indebtedness (as defined in clauses (i) through (v) of this paragraph) of other persons guaranteed by such person. Notwithstanding the foregoing, ALS and any Subsidiary may Incur each and all of the following: (i) Indebtedness in respect of any Initial Notes; (ii) Indebtedness in respect of any Refinancing Notes; provided that (A) the prior 164

173 written consent of each of the Liquidity Provider (unless the Liquidity Facility Non-Consent Event has occurred) and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) has been obtained with respect to such Refinancing and (B) the net proceeds of any such Refinancing will be applied only (x) to repay the Redemption Price plus the Refinancing Expenses of the subclass of Notes being so refinanced and pay any obligations then due and owing to the Holders of the Class A Notes and the Class A-1 Commitment Holders and (y) to fund any Cash Collateral Account established for the related Refinancing Notes (up to the Required Amount therefor), provided further that if any subclass of Class A Notes (other than such Refinancing Notes) are outstanding following such Refinancing, a Rating Agency Confirmation will be obtained with respect to such subclass of Class A Notes; (iii) Indebtedness in respect of guarantees by any member of the ALS Group in favor of Lessees, or otherwise related to the Aircraft that are incurred in the ordinary course of business and that are in respect of the obligations of other members of the ALS Group; (iv) Indebtedness in respect of any Additional Notes (including Class E Notes), the net proceeds of which are applied (A) to finance a permitted Additional Aircraft acquisition or to make Conversion Payments, (B) to fund any Cash Collateral Account established for such Additional Notes (up to the Required Amount therefor) and (C) to fund expenses related thereto; provided that (x) the prior written consent of each of the Class A-1 Trustee (acting at the written direction of all of the Holders of the Class A-1 Notes), the Liquidity Provider (unless the Liquidity Facility Non-Consent Event has occurred) and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) is obtained, prior to the Incurrence of such Indebtedness, and (y) such Additional Notes will be cross collateralized with all secured obligations by the Collateral under the Security Trust Agreement; provided further that with respect to any such Additional Notes, a Rating Agency Confirmation will be obtained with respect to such Additional Notes that are Class A Notes; (v) obligations to the seller of Aircraft under each acquisition agreement and any related lease assignment and assumption agreements and the documents related thereto, including, but not limited to, any Indebtedness owed to any Lessee under any such agreement or the Lease with respect to maintenance contribution obligations; (vi) Indebtedness under the Loan, Expenses Apportionment and Guarantee Agreement and any other loan within the ALS Group; provided that such indebtedness is evidenced in writing and the agreements or promissory notes evidencing such Indebtedness are pledged to the Security Trustee and that ALS provides written notice thereof to each Rating Agency, the Liquidity Provider and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) of the Incurrence of such Indebtedness; (vii) Indebtedness of ALS under any Eligible Credit Facility; provided that a Rating Agency Confirmation and the prior written consent of each of the Liquidity Provider and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) is obtained prior to entering into such new Eligible Credit Facility; (viii) Indebtedness of ALS in respect of any Additional Note that is a Class E Note; provided that (A) a Rating Agency Confirmation and the prior written consent of each of the Liquidity Provider and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) is obtained prior to the issuance of any such Additional Note that is a Class E Note, (B) each Additional Note that is a Class E Note will be unsecured and neither any such Class E Note or the Holders thereof will be given or deemed to have any Encumbrance on any asset of any member of the ALS Group, whether through the Security Trust Agreement or otherwise and (C) the terms of such Additional Note that is a Class E Note will contain no provision inconsistent with the terms of the Indenture; and (ix) Indebtedness of ALS under the Class A-1 Note Funding Agreement and any fee arrangements between ALS and the Class A-1 Funding Agent or the Class A-1 Commitment Holders. Limitation on Aircraft Dispositions Under the terms of the Indenture, ALS will not, and will not permit any Subsidiary to, sell, transfer or otherwise dispose of any Aircraft or any interest therein other than as provided in the Servicing Agreement. In addition and not in lieu of the foregoing, ALS and any Subsidiary will only be permitted to sell, transfer or otherwise dispose of, directly or indirectly, (a) any engine or part of any Aircraft purchased on the date such Aircraft is acquired, (b) any engine or part in connection with the replacement or exchange of such engine or part in accordance with a Lease or (c) one or more Aircraft (i) pursuant to a Purchase Option or other agreement of a similar character existing with respect to an Initial Aircraft on or prior to the Initial Closing Date, or with respect to any Substitute Aircraft or Additional Aircraft, on the closing date therefor; (ii) to any other member of the ALS Group; provided that no such sale, transfer or disposition will be made if it would materially adversely affect the Noteholders or the Class A-1 Funding Agent; provided further that written notification in the form of a certification of ALS confirming that such sale, transfer or disposition will not have a material adverse effect on the Noteholders, 165

174 the Class A-1 Commitment Holders (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) or the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) has been given to the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) of such sale, transfer or disposition; (iii) pursuant to any Aircraft Agreement; provided that (A) such sale does not result in a Concentration Default, (B) the net present value of the cash Net Sale Proceeds thereof is not less than the Note Target Price with respect to such Aircraft, (C) notice of such proposed sale, transfer or disposition has been provided to the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) and the Rating Agencies, (D) the purchaser under such Aircraft Agreement (or the party that will be the beneficial owner of any Aircraft subject to such Aircraft Agreement) is unrelated to ALS, any Subsidiary, any AerCap Entity, any shareholder of AerVenture or any of their respective affiliates (unless such purchaser entered into a written contract to promptly sell such Aircraft (or the Subsidiary which owns such Aircraft) to a person unrelated to ALS, any Subsidiary, any AerCap Entity, any shareholder of AerVenture or any of their respective affiliates and (E) following such sale, transfer or disposition, the number of Aircraft in the Portfolio is equal to or greater than 26; (iv) pursuant to receipt of insurance proceeds in connection with a casualty occurrence, total loss or event of loss (each as defined in the relevant Lease); (v) pursuant to an Aircraft Agreement (including pursuant to a Purchase Option) the net present value of the cash Net Sale Proceeds of which is less than the Note Target Price with respect to such Aircraft, provided that the prior written consent of the Class A-1 Trustee (acting at the written direction of Holders of a majority of the aggregate Outstanding Principal Balance of the Class A-1 Notes) and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) has been obtained and prior written notification has been provided to the Rating Agencies, provided further that if as a result of such sale, transfer or disposition, the number of Aircraft in the Portfolio is less than 26, the prior written consent of the Class A-1 Trustee (acting at the written direction of Holders of at least 80% of the aggregate Outstanding Principal Balance of the Class A-1 Notes) must be obtained; or (vi) pursuant to an Aircraft Agreement that is designed to allow a person that is unrelated to ALS or any Subsidiary to realize tax benefits associated with the Aircraft or other assets being sold (any such sale, transfer or other disposition, a "Permitted Tax-Related Disposition"), provided that ALS provides prior written notification to the Rating Agencies in respect thereof and the prior written consent of the Class A-1 Trustee (acting at the written direction of the Holders of a majority of the aggregate Outstanding Principal Balance of the Class A-1 Notes) and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) has been obtained. The "Note Target Price" means, as of any date determination and with respect to any Aircraft, an amount equal to the sum of (1) the product of (A) the Designated Percentage with respect to such Aircraft and (B) the sum of (i) 110% of the aggregate Outstanding Principal Balance of the Class A Notes plus (ii) any accrued but unpaid interest on such Outstanding Principal Balance plus (iii) any Credit Facility Expenses then due and payable to the Liquidity Provider, plus (2) any hedge breakage costs payable by any member of the ALS Group as a result of an early termination of a Hedge Agreement relating to the sale of such Aircraft, minus (3) any hedge breakage gain payable to any member of the ALS Group as a result of an early termination of a Hedge Agreement relating to the sale of such Aircraft. "Designated Percentage" means, as of any date of determination and with respect to any Aircraft, the percentage obtained by dividing the then most recent Adjusted Base Value of such Aircraft by the then most recent Adjusted Portfolio Value. The net present value of the cash Net Sale Proceeds of any sale, transfer or other disposition of any Aircraft will mean the present value of all payments received or to be received by ALS or any Subsidiary in respect of such Aircraft from the date of execution or option granting date, as the case may be, of the relevant Aircraft Agreement through and including the date of transfer of title to such Aircraft, discounted back to the date of execution or option granting date, as the case may be, of such Aircraft Agreement at the weighted average cost of funds of the ALS Group (based on the cost of funds on the Payment Date immediately preceding such date (excluding for such purpose any interest accrued on the Class E Notes but taking into account any Hedge Agreements)). Limitation on Aircraft Acquisitions Under the terms of the Indenture, ALS will not, and will not permit any Subsidiary to, purchase or otherwise acquire any Aircraft other than the Initial Aircraft or any interest therein. 166

175 Notwithstanding the foregoing, ALS and any Subsidiary will be permitted to (A) purchase or otherwise acquire, directly or indirectly, any Aircraft owned by another member of the ALS Group and (B) purchase or otherwise acquire, directly or indirectly, Additional Aircraft from time to time; provided that, in the case of clause (B), (i) no Indenture Event of Default will have occurred and be continuing, (ii) the acquisition does not result in a Concentration Default (unless 10 Business Days' prior written notification has been provided to the Rating Agencies), (iii) the prior written consent of each of the Liquidity Provider, the Class A-1 Trustee (acting at the written direction of all of the Holders of the Class A-1 Notes) and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) has been obtained and a Rating Agency Confirmation has been received and (iv) all Additional Aircraft are Stage 3 Aircraft (without the use of noise reduction kits). Limitation on Modification Payments and Capital Expenditures Under the terms of the Indenture, ALS will not, and will not permit any Subsidiary to, make any capital expenditures for the purpose of effecting any optional improvement or modification of any Aircraft, including, without limitation, for Aircraft Conversions, or for the purpose of purchasing or otherwise acquiring any engines or parts outside of the ordinary course of business, excluding any capital expenditure made in the ordinary course of business in connection with an Initial Lease or a new lease with respect to such Aircraft (each such non-excluded expenditure, a "Modification Payment" and each Modification Payment in respect of an Aircraft Conversion, a "Conversion Payment") and excluding any capital expenditure made under Leases under provisions in effect on the Delivery Date therefor. Notwithstanding the foregoing, ALS may, and may permit any Subsidiary to, (x) make Modification Payments (in the case of Conversion Payments, with respect to those not financed by the issuance of Additional Notes); provided that (i) each Modification Payment, together with all other Modification Payments made after the Initial Delivery Date in accordance with this paragraph with respect to any single Aircraft, does not exceed the aggregate amount of funds that would be necessary to perform one incidence of heavy maintenance on such Aircraft, including the airframe and the related engines thereof; (ii)(a) such Modification Payment is included in the annual operating budget of the ALS Group and approved by the Board or (B) the amount of funds necessary to make such Modification Payment will have been accrued in advance as a Permitted Accrual in the Expense Account through transfers into the Expense Account pursuant to the Indenture or otherwise allowed to be paid under the Indenture as described under " Limitation on Indebtedness"; (iii) the aggregate amount of all Modification Payments made by a member of the ALS Group, taken as a whole, in accordance with this paragraph after the Initial Closing Date, including such Modification Payment, will not exceed 5% of the aggregate Initial Appraised Value of all Aircraft acquired by the ALS Group; and (iv) such Modification Payment is made with the prior written consent of the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing); and (y) make any Conversion Payment from the proceeds of Additional Notes issued in accordance with the Indenture in which case the limitations in clause (x) do not apply (other than the limitation in (iv) of clause (x)). Limitation on Consolidation, Amalgamation, Merger and Transfer of Assets Under the terms of the Indenture, ALS will not, and will not permit any Subsidiary to, consolidate with, amalgamate with, merge with or into, or sell, convey, transfer, lease or otherwise dispose of its property and assets (as an entirety or substantially as an entirety in one transaction or in a series of related transactions) to, any other person, or permit any other person to merge with or into ALS or any Subsidiary, unless (i) the resulting entity is a special purpose entity, the charter of which is substantially similar to ALS's Memorandum of Association or the equivalent charter document of such Subsidiary, as the case may be, and, after such consolidation, merger, amalgamation, sale, conveyance, transfer, lease or other disposition, payments from such resulting entity to the Noteholders do not give rise to any withholding tax payments less favorable to the Noteholders than the amount of any withholding tax payments which would have been required had such event not occurred, (ii) in the case of consolidation, amalgamation, merger or transfer by ALS, the surviving successor or transferee entity will expressly assume all of the obligations of ALS in the Indenture, the Notes and each other Related Document to which ALS is then a party (with, in the case of a transfer only, ALS thereupon being released) and in the case of any consolidation, merger amalgamation, or transfer by any member of the ALS Group, the surviving successor or transferee entity will expressly assume all of the obligations of such member of the ALS Group under each Related Document to which it is then a party (with, in the case of a transfer only, that member of the ALS Group thereupon being released), (iii) each of a Rating Agency Confirmation, and the prior written consent of each of the Liquidity Provider (unless 167

176 the Initial Liquidity Facility Non-Consent Event has occurred) and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) are obtained with respect to such merger, amalgamation, sale, conveyance, transfer, lease or disposition, (iv) immediately after giving effect to such transaction, no Indenture Event of Default will have occurred and be continuing, and (v) ALS delivers to the Trustee an officer's certificate and an opinion of counsel, in each case stating that such consolidation, amalgamation, merger or transfer and such supplemental indenture comply with the above criteria and, if applicable, the covenant described under " Limitation on Aircraft Dispositions" and that all conditions precedent provided for in the Indenture relating to such transaction have been complied with; provided that this covenant will not apply to any such consolidation, merger, amalgamation, sale, conveyance, transfer, lease or disposition (a) within and among the ALS Group if such consolidation, merger, amalgamation, sale, conveyance, transfer, lease or disposition, as the case may be, would not materially adversely affect the Noteholders and ALS provides written notice of such act to each Rating Agency and obtains the prior written consent of each of the Liquidity Provider and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing), (b) complying with the terms of the covenant described under " Limitation on Aircraft Dispositions" or complying with the terms of the covenant described under " Limitation on the Issuance, Transfer and Sale of Ownership Interests" or (c) effected as part of a single transaction providing for the redemption or defeasance of the Notes in accordance with the terms thereof as described under " Payment of Principal and Interest Method of Redemption" or " Defeasance", respectively. Limitation on Transactions with AerCap, AerVenture, AerVenture Leasing and Affiliates Under the terms of the Indenture, ALS will not, and will not permit any Subsidiary to, directly or indirectly, enter into, renew or extend any transaction (including, without limitation, the purchase, sale, lease or exchange of property or assets, or the rendering of any service) with AerVenture, AerVenture Leasing, AerCap and their affiliates or any affiliate of ALS or any Subsidiary, except upon fair and reasonable terms no less favorable to ALS or such Subsidiary than could be obtained, at the time of such transaction or at the time of the execution of the agreement providing therefor, in a comparable arm's-length transaction with a person that is not such an affiliate and pursuant to enforceable agreements. Limitation on the Issuance, Transfer and Sale of Ownership Interests Under the terms of the Indenture, ALS will not (i) issue, deliver or sell any shares, beneficial interests, participations or other equivalents in equity (however designated, whether voting or non-voting) including, without limitation, all ordinary shares of ALS (other than the issuance of shares, beneficial interests, participations or other equivalents existing on or prior to the Initial Closing Date), or (ii) sell, or permit any Subsidiary, directly or indirectly, to issue, deliver or sell, any shares, beneficial interests, participations or other equivalents in equity (however designated, whether voting or non-voting, other than shares, beneficial interests, participations or other equivalents existing on or prior to the Initial Closing Date) except (A) the issuance, sale, delivery, transfer or pledge of Ownership Interests in any member of the ALS Group to or for the benefit of any other member of the ALS Group; (B) the issuance of 95% of the shares of ALS to the Charitable Trust Trustee or its nominees and of 5% of the shares of ALS to AerVenture Leasing; (C) issuances or sales of Ownership Interests of Subsidiaries incorporated outside of Ireland to nationals in the jurisdiction of incorporation or organization of such Subsidiary, as the case may be, to the extent required by applicable law or necessary in the determination of the Board to avoid adverse tax consequences or to facilitate the registration or leasing of Aircraft, provided that (1) any such sale or issuance has received unanimous approval of the Directors and the sum of the Adjusted Base Values as of the Calculation Date immediately preceding such sale or issuance of each Aircraft owned by each Subsidiary subject to sales or issuances pursuant to this clause does not exceed 10% of the sum of the Adjusted Base Values as of such Calculation Date of all Aircraft and (2) prior written notification must be given to Moody's in connection therewith; (D) the pledge of shares, membership interests and beneficial interests in the Subsidiaries pursuant to the Security Documents and (E) the issuance, sale, delivery, transfer or pledge of any Ownership Interests of a Subsidiary in order to effect the sale of all Aircraft owned by such Subsidiary in compliance with the terms of the covenant described under " Limitation on Aircraft Dispositions" (including in connection with a Permitted Tax-Related Disposition). Bankruptcy and Insolvency; Corporate Governance Under the terms of the Indenture, (i) ALS will promptly provide the Trustee, the Liquidity Provider, the Class A-1 Funding Agent and the Rating Agencies with written notice of the institution of any proceeding by or against ALS 168

177 or any Subsidiary, as the case may be, seeking to adjudicate any of them bankrupt or insolvent, or seeking liquidation, Irish law examinership, winding-up, reorganization, arrangement, adjustment, protection, relief or composition of their debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee or other similar official for either all or any substantial part of their property, (ii) ALS will not take any action to waive, repeal, amend, vary, supplement or otherwise modify its charter documents or those of any Subsidiary in a manner that would adversely affect the rights, privileges or preferences of any Noteholders, and (iii) ALS will not, without an affirmative unanimous written resolution of the Board, take any action to waive, repeal, amend, vary, supplement or otherwise modify the provisions of its charter documents or those of any Subsidiary and will not permit any Subsidiary to take any such action without an affirmative unanimous written resolution of the board of directors of such Subsidiary. Payment of Principal, Redemption Premium, if any, and Interest and Class A-1 Commitment Fees Under the terms of the Indenture, ALS will duly and punctually pay or provide for payment of the principal, redemption premium, if any, and interest on the Notes, and the Class A-1 Commitment Fees, each in accordance with the terms of the Indenture and the Notes. Limitation on Employees Under the terms of the Indenture, ALS will not, and will not permit any Subsidiary to, employ or maintain any employees; provided that trustees and directors will not be deemed to be employees for purposes of this sentence. Compliance and Agreement Under the terms of the Indenture, ALS will comply, and will cause each Subsidiary to comply, with the provisions of the Related Documents and the constitutional documents of the members of the ALS Group. ALS will ensure that title to each Aircraft will not be held by ALS and will be held in a separate special purpose entity (including a trust) whose constitutional documents contain restrictions similar (subject to local law requirements) to the restrictions (including, but not limited to, the provisions regarding limited purpose and maintaining separateness from other entities as described in the Indenture) contained in the forms of constitutional documents of the Subsidiaries, attached as exhibits to the Purchase Agreement. Maintenance of Separate Existence Under the terms of the Indenture, except to the extent provided in the Indenture or the other Related Documents, ALS will, and will cause each Subsidiary to, maintain certain policies and procedures relating to its existence as a separate corporation, company or other legal entity. Independent Director Under the terms of the Indenture, ALS will cause each Subsidiary (except any trust of which a member of the ALS Group is the holder of the beneficial interest) to have at least one Independent Director and, upon the resignation or removal of any Independent Director, ALS will not permit such Independent Director to be replaced without the consent of the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing); provided that such consent will be deemed to have been provided if the Class A-1 Funding Agent does not respond to such request within 30 days after receipt of such request. Registered Office Under the terms of the Indenture, ALS will cause each Subsidiary which is incorporated under the laws of Ireland to (a) maintain its registered office in Ireland in accordance with the Irish Companies Acts 1963 to 2006 and every other enactment which is to be read together with any of those Acts and (b) maintain its centre of main interests (as that phrase is used in Article 3(l) of Council Regulation (EC) No. 1346/2000 on Insolvency Proceedings) in Ireland. Class E Notes 169

178 Under the terms of the Indenture, ALS will treat the Class E Notes as equity for U.S. federal income tax purposes and will not take any action contrary to such characterization, including, without limitation, filing any tax return inconsistent therewith, except as otherwise required by law. OPERATING COVENANTS Concentration Limits Under the terms of the Indenture, without prior written notification to each of the Ratings Agencies and the prior written consent of the Class A-1 Trustee (acting at the written direction of Holders of at least 75% of the aggregate Outstanding Principal Balance of the Class A-1 Notes) and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing), ALS will not permit any Subsidiary to lease or release any Aircraft if entering into such proposed Lease would cause the Portfolio to exceed any of the Concentration Limits set forth below (as such limits may be adjusted by ALS from time to time, subject to prior written notification to the Rating Agencies and the prior written consent of the Class A-1 Trustee (acting at the written direction of Holders of at least 75% of the aggregate Outstanding Principal Balance of the Class A-1 Notes) and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing), the "Concentration Limits"). Number of Aircraft in Lessee Concentration Limits Portfolio (1) Single Lessee rated BBB/Baa2 (or the equivalent) or better... 7 Other single Lessee (2)... 5 Three largest Lessees Number of Aircraft in Country Concentration Limits Portfolio (1) United States or United Kingdom... 8 Other countries rated BBB/Baa2 (or the equivalent) or better (3)... 8 Other single countries... 7 Undesignated (4)... 3 Number of Aircraft in Region Concentration Limits (5) Portfolio (1) Individual developed market region Emerging market region (Asia) Individual emerging market region other than Asia (6) Aggregate undesignated... 4 (1) Number of all Aircraft then in the Portfolio leased to Lessees habitually based or domiciled in the applicable country. (2) Except that up to eight Aircraft may be leased to two single Lessees (BBB-/Baa3 or lower). (3) Based on the sovereign foreign currency debt rating assigned by the Rating Agencies to the country in which a Lessee is habitually based or domiciled at the time the relevant Lease is executed. For purposes of this test, the rating is the lower of the Standard & Poor's or Moody's rating. (4) Any undesignated country which is rated BBB or better will not be subject to the "undesignated" country Concentration Limits but will be subject to the "other countries rated BBB/Baa2 (or the equivalent) or better" country Concentration Limits. (5) The designation of Regions is set forth below. (6) Except that no more than four of the Initial Aircraft may be leased to Lessees habitually based or domiciled in Russia. Region Countries Developed markets: Europe... European Union (excluding Bulgaria, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Luxembourg, Malta, Poland, Romania, Slovakia and Slovenia), Iceland, Norway and Switzerland North America... Canada and United States Asia/Pacific... Australia, Hong Kong, Japan, New Zealand and Singapore 170

179 Region Countries Emerging markets: Europe... Bulgaria, Channel Islands, Croatia, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Luxembourg, Malta, Poland, Russia, Slovakia and Turkey Asia/Pacific... China, Guam, Indonesia, Macau, Malaysia, Philippines, South Korea, Taiwan, Thailand and Vietnam Indian subcontinent... India Latin America/Caribbean... Argentina, Bermuda, Brazil, Cayman Islands, Chile, Colombia, Costa Rica, El Salvador, Guatemala, Jamaica, Mexico, Panama, Peru, Puerto Rico and Trinidad & Tobago Africa/Middle East... Bahrain, Egypt, Jordan, Kuwait, Morocco, Oman, Qatar, Saudi Arabia, South Africa, Tunisia and United Arab Emirates Undesignated... Algeria, Angola, Aruba, Bahamas, Bangladesh, Barbados, Belarus, Benin, Bhutan, Botswana, Brunei Darussalam, Comoros, Congo, Dominican Republic, Falkland Islands, Faroe Islands, Fiji, French Guiana, French Polynesia, Greenland, Guadeloupe, Guinea, Honduras, Isle of Man, Israel, Kazakhstan, Kenya, Kiribati, Lebanon, Macedonia, Mauritius, Mongolia, Mozambique, Nepal, Netherlands Antilles, Nicaragua, Niger, Pakistan, Papua New Guinea, Paraguay, Romania, Samoa, Seychelles, Sri Lanka, Suriname, Tanzania, Tonga, Ukraine, Uruguay, Vanuatu and Venezuela Prohibited... Afghanistan, Albania, Armenia, Azerbaijan, Belize, Bolivia, Bosnia and Herzegovina, Cambodia, Cameroon, Cape Verde Islands, Chad, Cuba, Ecuador, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Georgia, Ghana, Grenada, Guyana, Haiti, Iran, Iraq, Kyrgyz Republic, Laos, Liberia, Libya, Madagascar, Malawi, Moldova, Myanmar, Namibia, New Caledonia, Nigeria, North Korea, Sao Tome and Principe, Senegal, Serbia and Montenegro, Soloman Islands, Somalia, Sudan, Syria, Turkmenistan, Uganda, Uzbekistan, Yemen, Zambia, Zimbabwe and all other countries (other than any country for which repossession insurance must be obtained pursuant to the Indenture) not listed here or under "Developed markets: Europe, North America, Asia/Pacific", "Emerging markets: Europe, Asia/Pacific, Indian subcontinent, Latin America/Caribbean, Africa/Middle East" and "Undesignated" In addition, without prior written notification to each of the Rating Agencies, under the terms of the Indenture ALS will not permit any member of the ALS Group (i) to lease or re-lease any Aircraft to any Lessee habitually based or domiciled in (a) certain countries listed above as "prohibited" (as amended from time to time as described below) and (b) certain other countries without procuring aircraft repossession insurance, (ii) to enter into any Lease (including any renewal or extension of any existing Lease) that expressly permits the Lessee to sublease an Aircraft to a sublessee habitually based or domiciled in a prohibited country or (iii) to consent to a sublease of an Aircraft to a sublessee of an Aircraft habitually based or domiciled in a prohibited country. The list of prohibited countries may be modified from time to time upon prior written notification to Moody's and with the prior written consent of the Class A-1 Trustee (acting at the written direction of Holders of at least 75% of the aggregate Outstanding Principal Balance of the Class A-1 Notes) and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing). The list of countries with respect to which aircraft repossession insurance must be obtained may be modified from time to time with the prior written notification to the Rating Agencies and the prior written consent of the Class A-1 Trustee (acting at the written direction of Holders of a majority of the aggregate Outstanding Principal Balance of the Class A-1 Notes) and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing). The Indenture contains no limitations with respect to the country or region where sub-lessees will habitually base Aircraft if (i) such sublease is permitted under the relevant Lease (including by reason of consent or waiver, if applicable, unless such sublease is expressly prohibited under the terms of the Lease and ALS agrees that if consenting to such sublease would result in a breach of the Concentration Limits, such consent will be withheld by the applicable member of the ALS Group) and (ii) the relevant Lessee is a signatory to a Lease (including a renewed Lease). 171

180 The concentration limits described above in this section " Operating Covenants Concentration Limits" will apply as of the Delivery Expiry Date. Prior to the Delivery Expiry Date, the following concentration limits with respect to Initial Lessees (the "Initial Lessee Concentration Limits") will apply. Number of Aircraft in Portfolio (1) Top one Lessee... 5 Top three Lessees Top five Lessees Any single Lessee other than each of the top five Lessees... 3 Lessees habitually based or domiciled in Russia... 4 (1) Number of Initial Aircraft then in the Portfolio leased to Lessees habitually based or domiciled in the applicable country. A determination as to whether ALS has complied with the Initial Lessee Concentration Limits will be based on the Leases to which the Initial Aircraft are subject during the period prior to the Delivery Expiry Date, regardless of the time or order of acquisition prior to the Delivery Expiry Date of any Initial Aircraft. Any failure to meet the Concentration Limits arising solely by reason of the non-acquisition of an Initial Aircraft will be deemed not to result in a Concentration Default. Compliance with Law; Maintenance of Permits Under the terms of the Indenture, ALS will (i) comply, and cause each Subsidiary to comply, in all material respects with all applicable laws, (ii) obtain, and cause each Subsidiary to obtain, all material governmental (including regulatory) registrations, certificates, licenses, permits and authorizations required for the use and operation of the Aircraft owned by it, including, without limitation, a current certificate of airworthiness for each Aircraft (issued by the applicable aviation authority and in the appropriate category for the nature of operations of such Aircraft), except that (A) no certificate of airworthiness will be required for any Aircraft (x) during any period when such Aircraft is undergoing maintenance, modification or repair, or (y) following the withdrawal or suspension by such applicable aviation authority of certificates of airworthiness in respect of all aircraft of the same model or period of manufacture as such Aircraft (in which case ALS will comply, and cause each Subsidiary to comply, with all directions of such applicable aviation authority in connection with such withdrawal or suspension), (B) no registrations, certificates, licenses, permits or authorizations required for the use or operation of any Aircraft need be obtained with respect to any period when such Aircraft is not being operated and (C) no such registrations, certificates, licenses, permits or authorizations will be required to be maintained for any Aircraft that is not the subject of a Lease, except to the extent required under applicable laws, (iii) not cause or knowingly permit, directly or indirectly, through any Subsidiary, any Lessee to operate any Aircraft under any Lease in any material respect contrary to any applicable law and (iv) not knowingly permit, directly or indirectly, through any Subsidiary, any Lessee not to obtain all material governmental (including regulatory) registrations, certificates, licenses, permits and authorizations required for such Lessee's use and operation of any Aircraft under any operating Lease except as provided in clauses (ii)(a) and (ii)(b) above. The covenant described in the foregoing paragraph will not be deemed to have been breached by virtue of any act or omission of a Lessee or sub-lessee, or of any person which has possession of the Aircraft or any engine for the purpose of repairs, maintenance, modification or storage, or by virtue of any requisition, seizure, or confiscation of the Aircraft (other than seizure or confiscation arising from a breach by ALS or a Subsidiary of such covenant) (each, a "Third Party Event"); provided that (i) neither ALS nor any Subsidiary consents or has consented to such Third Party Event; and (ii) ALS or any Subsidiary which is the lessor or owner of such Aircraft promptly and diligently takes such reasonable actions as a leading international aircraft operating lessor would reasonably take in respect of such Third Party Event, including, as deemed appropriate (taking into account, among other things, the laws of the jurisdictions in which the Aircraft are located), seeking to compel such Lessee or other relevant person to remedy such Third Party Event or seeking to repossess the relevant Aircraft or engine. Appraisal of Aircraft Under the terms of the Indenture, ALS will, at least twice per calendar year until the earlier of the Level 2 Advance Date and the Funding Termination Date, and once per calendar year thereafter, commencing shortly prior to the Initial Delivery Date, deliver to the Trustee, the Cash Manager, the Liquidity Provider and the Class A-1 Funding 172

181 Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) for inclusion in the next monthly report (with no obligation of review or inquiry on the part of the Trustee) three appraisals of the Base Value of each of the Aircraft, from the Appraisers, or if any of the Appraisers is unable to provide an appraisal, from the remaining Appraisers and such other independent appraisers that are members of the International Society of Transport Aircraft Trading or similar professional aircraft appraisal organization selected by ALS with the prior written consent of the Class A-1 Funding Agent (to the extent such selection is prior to the Delivery Expiry Date), each such appraisal to be dated within 30 days prior to its delivery to the Trustee. Maintenance of Assets Under the terms of the Indenture, ALS will (i) with respect to each Aircraft and engine that is subject to a Lease, cause, directly or indirectly, through any Subsidiary, such Aircraft and engine to be maintained in a state of repair and condition consistent with the reasonable commercial practice of leading international aircraft operating lessors with respect to similar aircraft under lease, taking into consideration, among other things, the identity of the relevant Lessee (including the credit standing and operating experience thereof), the age and condition of the Aircraft and the jurisdiction in which such Aircraft will be operated or registered under such Lease and (ii) with respect to each Aircraft that is not subject to a Lease, maintain, and cause each Subsidiary to maintain, such Aircraft in a state of repair and condition consistent with the reasonable commercial practice of leading international aircraft operating lessors with respect to aircraft not under lease. Each Aircraft and engine subject to a Lease will be maintained in compliance with the applicable regulations of, and the applicable maintenance programs approved by, the applicable aviation authority. No breach of this covenant, however, will be deemed to have occurred by virtue of any Third Party Event; provided that (i) neither ALS nor any Subsidiary consents or has consented to such Third Party Event and (ii) ALS or such Subsidiary which is the lessor or owner of such Aircraft promptly and diligently takes such commercially reasonable actions as a leading international aircraft operating lessor would reasonably take in respect of such Third Party Event, including as deemed appropriate, seeking to compel such Lessee or other relevant person to remedy such Third Party Event or seeking to repossess the relevant Aircraft or engine. Notification of Trustee, Liquidity Provider, Administrative Agent and Cash Manager Under the terms of the Indenture, ALS will notify the Trustee, the Liquidity Provider, the Administrative Agent and the Cash Manager in writing as soon as ALS or any Subsidiary becomes aware of any loss, theft, damage or destruction to any Aircraft or engine if the potential cost of repair or replacement of such asset (without regard to any insurance claim related thereto) may exceed the lower of $5 million and the damage notification threshold specified in the relevant Lease. Leases Under the terms of the Indenture, ALS will adopt and will cause the Primary Servicer to use the pro forma lease provided to ALS on the Initial Closing Date, as such pro forma lease agreement or agreements may be revised for purposes of the ALS Group specifically or generally from time to time by the Primary Servicer in a manner consistent with the Servicer Standard of Care and in accordance with the procedure described below (the "Pro Forma Lease"), for use by the Primary Servicer on behalf of ALS or any Subsidiary as a starting point in the negotiation of Future Leases with persons who are not members of the ALS Group; provided, however, that with respect to any Future Lease entered into in connection with (x) the renewal or extension of an Initial Lease, (y) the leasing of an Aircraft to a person that is or was the Lessee under an Initial Lease or (z) the leasing of an Aircraft to a person that is or was a lessee under an operating lease of an aircraft that is being managed or serviced by the Primary Servicer (such Future Lease, a "Renewal Lease"), a form of lease substantially similar to such Initial Lease or operating lease (a "Precedent Lease"), as the case may be, may be used by the Primary Servicer, in lieu of the Pro Forma Lease, on behalf of ALS or any Subsidiary as a starting point in the negotiation of such Future Lease with persons who are not members of the ALS Group. Provided that the Primary Servicer commences the negotiation of a lease of any Aircraft in accordance with the paragraph above, the terms of any executed Lease may vary from the terms of the Servicer's Pro Forma Lease or the Precedent Lease employed by the Primary Servicer in accordance with such clauses. It is the intention of the parties that following the execution and delivery of any Lease with respect to an Aircraft, the Primary Servicer will deliver a copy of the executed Lease, together with a copy thereof marked to reflect changes from the precedent employed in accordance with the foregoing procedures, if requested by ALS, to ALS within 20 Business Days of such 173

182 execution and delivery. Each Lease will contain certain core lease provisions specified in the Indenture (the "Core Lease Provisions"). Sixty days prior to each anniversary of the Initial Closing Date for purposes of the annual review of the Servicer's Pro Forma Lease (the "Annual Review"), the Primary Servicer will provide ALS, the Liquidity Provider, the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing), the Rating Agencies and the Administrative Agent with a copy of the Revisions (as defined below) made since the last Annual Review, or, in the case of the first Annual Review, since the Initial Closing Date. At each Annual Review, ALS may propose amendments to the Servicer's Pro Forma Lease (provided that ALS may not propose amendments which would require the Primary Servicer to obtain lease terms which are not reasonably commercially available) and the Primary Servicer will revise the Servicer's Pro Forma Lease in accordance with such proposed amendments. ALS may take independent advice as to whether any such amendments should be made. At any time and from time to time, the Primary Servicer may make revisions (the "Revisions") to the Servicer's Pro Forma Lease to conform it to the Primary Servicer's then current pro forma lease used in its own business and will commence the negotiation of any Lease thereafter with the Servicer's Pro Forma Lease as so revised; provided that the Core Lease Provisions and the specific terms of the Core Lease Provisions of the Pro Forma Lease may not be amended without the prior written consent of ALS and the Class A-1 Trustee (acting at the written direction of Holders of a majority of the aggregate Outstanding Principal Balance of the Class A-1 Notes). ALS will not enter into, and will not permit any Subsidiary to enter into, any Future Lease the Rental Payments under which are denominated in a currency other than U.S. dollars; provided that subject to the restrictions set forth in the hedging policy of ALS (which provides that, so long as any principal of, or interest on, the Class A-1 Notes and the Class A-2 Notes is outstanding, ALS will be obligated to enter into currency hedges with respect to all of the Rental Payments under the Non-U.S. Dollar Leases for the entire term of such Non-U.S. Dollar Leases), ALS may enter into, and may permit any Subsidiary to enter into, a Future Lease the Rental Payments under which are denominated in a currency other than U.S. dollars (each a "Non-U.S. Dollar Lease"), if (x) prior written notification has been provided to the Rating Agencies and (y) after giving effect to such Rental Payments, the aggregate Rental Payments scheduled to be received by the ALS Group during the three-month period beginning on the date such Future Lease is scheduled to commence in currency other than U.S. dollars do not exceed 7% (or a higher percentage with the prior written consent of the Class A-1 Trustee (acting at the written direction of Holders of two-thirds of the aggregate Outstanding Principal Balance of the Class A-1 Notes)) of the then aggregate scheduled Rental Payments to be received on all Leases during such period, including such Rental Payments calculated at the spot rate of exchange. Under the terms of the Indenture, ALS will not, and will not permit any Subsidiary to, enter into any Lease for an Aircraft, the Lessee of which, at the inception of such Lease, is subject to bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization, examination, relief of debtors or other similar proceedings. This requirement may be waived with the prior written consent of the Class A-1 Trustee (acting at the written direction of all of the Holders of the Class A-1 Notes), the Class A-1 Funding Agent (unless a Class A-1 Commitment Non- Consent Event has occurred and is continuing) and the Liquidity Provider (unless the Initial Primary Liquidity Facility Non-Consent Event has occurred) and prior written notification to the Rating Agencies. Opinions Under the terms of the Indenture, ALS will not enter into, and will not permit any Subsidiary to enter into, any Future Lease with any person that is not a member of the ALS Group or change the jurisdiction of registration of any Aircraft that is subject to a Lease, unless, upon entering into such Future Lease or changing the jurisdiction of registration of such Aircraft (or within a commercially reasonable period thereafter), the Primary Servicer obtains such legal opinions, if any, with regard to compliance with the registration requirements of the relevant jurisdiction, enforceability of the Future Lease, protection of ownership interest, matters relating to the Cape Town Convention (if applicable) and such other matters customary for such transactions to the extent that receiving such legal opinions is consistent with the reasonable commercial practice of leading international aircraft operating lessors. Insurance Under the terms of the Indenture, commencing on the Initial Delivery Date, ALS will maintain or cause, directly or indirectly through the Subsidiaries, to be maintained with reputable and responsible insurers or, provided that the applicable insurance policy contains a cut-through clause requiring the reinsurers to pay the insured directly (other than in any instances where local law requirements mandate otherwise), with insurers that maintain relevant 174

183 reinsurance with reputable and responsible reinsurers (i) airline hull insurance for each Aircraft in an amount at least equal to the Note Target Price for such Aircraft (except that such amount may be less than the Note Target Price if a Rating Agency Confirmation from Moody's and the prior written consent of the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) and the Class A-1 Trustee (acting at the written direction of Holders of a majority of the aggregate Outstanding Principal Balance of the Class A-1 Notes) have been obtained and prior written notification has been provided to Standard & Poor's) (or the equivalent thereof from time to time if such insurance is denominated in a currency other than U.S. dollars), (ii) airline liability insurance (including war risk insurance) for each Aircraft and occurrence in an amount at least equal to the relevant amounts set forth in the Indenture for each model of aircraft and as amended from time to time with the prior written notification to the Rating Agencies and the prior written consent of the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) and the Class A-1 Trustee (acting at the written direction of Holders of a majority of the aggregate Outstanding Principal Balance of the Class A-1 Notes) has been obtained and (iii) airline repossession insurance ("Repossession Insurance") for each Aircraft subject to a Lease to a Lessee habitually based or domiciled in a jurisdiction determined in accordance with the Repossession Insurance guidelines, as set forth in the Indenture and which may be amended from time to time only with the prior written notification to the Rating Agencies and the prior written consent of the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) and the Class A-1 Trustee (acting at the written direction of Holders of a majority of the aggregate Outstanding Principal Balance of the Class A-1 Notes) has been obtained, in an amount at least equal to the Note Target Price (or the equivalent thereof from time to time if such insurance is denominated in a currency other than U.S. dollars) for such Aircraft; provided that with respect to any such insurance for any Aircraft subject to a Lease, such insurance may be subject to commercially reasonable deductible and self-insurance arrangements (taking into account, among other things, the creditworthiness and experience of the Lessee, if any, the type of aircraft and market practices in the aircraft insurance industry generally). The coverage and terms (including endorsements, deductibles and self-insurance arrangements) of any insurance maintained with respect to any Aircraft not subject to a Lease will be substantially consistent with the commercial practices of leading international aircraft operating lessors regarding similar aircraft. In determining the amount of insurance required to be maintained by the covenant described in the foregoing paragraph, ALS may take into account any indemnification from, or insurance provided by, any governmental, supranational or inter-governmental authority or agency (other than, with respect to Repossession Insurance, any governmental authority or agency of any jurisdiction for which Repossession Insurance must be obtained), the sovereign foreign currency debt rating of which is rated at least A-, or the equivalent, by at least one of the Rating Agencies (provided that such credit rating requirement will not apply in the case of any War Risk Coverage), against any risk with respect to an Aircraft at least in an amount which, when added to the amount of insurance against such risk maintained by ALS (or which ALS has caused to be maintained), will be at least equal to the amount of insurance against such risk otherwise required by this covenant (taking into account self-insurance permitted by the covenant). Any such indemnification or insurance provided by such government will provide substantially similar protection as the insurance required as described above. Under the terms of the Indenture, ALS will cause, or will cause the applicable Subsidiary to cause, each Lessee to be obligated under its respective Lease to maintain War Risk Coverage as part of the insurance requirements in such Lease. ALS will cause, or will cause the applicable Subsidiary to cause, each Lessee to maintain War Risk Coverage on the Aircraft leased by such Lessee in an amount at least equal to the greater of (a) $750 million with respect to wide body aircraft and $500 million with respect to narrowbody aircraft if such War Risk Coverage is available in the insurance market at commercially reasonable rates or through an Applicable Governmental Program and (b) the amount of War Risk Coverage that prudent international aircraft operating lessors (which on the Initial Closing Date would include the Servicer) are requiring lessees of similarly situated leased aircraft to maintain; provided that in no event will any Lessee maintain War Risk Coverage in an amount less than $50 million. So long as the Lessees under the Initial Leases maintain War Risk Coverage in amounts at least equal to the respective Current War Risk Coverage Amounts with respect to such Lessees, (x) such Lessees and the Initial Leases will be deemed to be in compliance with the insurance requirements of the Indenture and (y) the War Risk Coverage requirements set forth above will apply only to Future Leases, Additional Leases, any extensions or renewals of or amendments to any Leases and any changes to the Current War Risk Coverage Amounts. In the event that a Lessee does not maintain such requisite level of War Risk Coverage or allows such War Risk Coverage to lapse, ALS will cause the applicable Lessor to immediately bring enforcement proceedings against the 175

184 applicable Lessee under the terms of the applicable Lease to repossess the applicable Aircraft and use its best efforts to ensure that such Aircraft does not operate without War Risk Coverage at such required levels; provided, however, that so long as ALS is in compliance with the requirements set forth in the next succeeding sentence and the applicable Lessee is not otherwise in default under the related Lease, ALS will have 180 days to cause, or to cause the applicable Lessor to cause, the Lessee to comply with the insurance requirements set forth herein and under the Lease prior to bringing any such enforcement proceedings; provided further that if, for any reason, neither ALS nor the applicable Lessor has a right under the applicable Lease to require a Lessee to maintain War Risk Coverage at the requisite levels, ALS will nevertheless be obligated to cause such Lessee to maintain War Risk Coverage at the requisite levels described in the Indenture (by negotiating in good faith with such Lessee or otherwise), subject only to the additional time provided in the immediately preceding proviso if ALS is in compliance with requirements set forth in the next succeeding sentence and the applicable Lessee is not otherwise in default under the related Lease. ALS will carry contingent and excess War Risk Coverage in an amount at least equal to $300 million; provided that if such contingent and excess War Risk Coverage is not commercially available at commercially reasonable rates, ALS will carry contingent and excess War Risk Coverage in an amount at least equal to the amount of such contingent and excess umbrella War Risk Coverage maintained by prudent international aircraft operating lessors. The insurance obligations set forth in the foregoing paragraphs may be waived after prior written notification to the Rating Agencies and upon receipt of the prior written consent of the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) and the Class A-1 Trustee (acting at the written direction of Holders of a majority of the aggregate Outstanding Principal Balance of the Class A-1 Notes). "Applicable Governmental Program" means, with respect to any Lessee, any governmental program applicable to the Lessee and/or the Aircraft leased by such Lessee that provides War Risk Coverage with respect to such Aircraft. "Current War Risk Coverage Amount" means, with respect to each Lessee under an Initial Lease, the amount of War Risk Coverage maintained by such Lessee with respect to the Aircraft under such Initial Lease on the Initial Closing Date, as set forth in the Indenture. "War Risk Coverage" means third party (i.e., non-passenger) liability war risk insurance coverage. Indemnity Under the terms of the Indenture, ALS will, and will cause each Subsidiary to, include in each Lease between ALS or such Subsidiary and a person who is not a member of the ALS Group an indemnity from such person in respect of any losses or liabilities arising from the use or operation of the Aircraft during the term of such Lease, subject to such exceptions, limitations and qualifications as are consistent with the reasonable commercial practices of leading international aircraft operating lessors. Hedge Agreements Under the terms of the Indenture, ALS will, and will cause each applicable Subsidiary to, hedge interest rate and currency risks pursuant to the Hedge Agreements in accordance with the hedging policy described in the Indenture (unless otherwise consented to by the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) and the Class A-1 Trustee (acting at the written direction of Holders of a majority of the aggregate Outstanding Principal Balance of the Class A-1 Notes)). ALS will not be permitted to amend the hedging policy described in the Indenture without the prior written consent of the Class A-1 Trustee (acting at the written direction of Holders of two-thirds of the aggregate Outstanding Principal Balance of the Class A-1 Notes) and prior written notification to each of the Rating Agencies, the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) and the Liquidity Provider. Compliance Through Agents ALS will be entitled to delegate the performance of any of its covenants under the Indenture to one or more Service Providers pursuant to one or more Related Documents entered into in accordance with the terms of the Indenture so long as each such Related Document is subject to the lien of the Security Trust Agreement. Nothing in this covenant 176

185 is intended to, or will, relieve ALS from any liability or consequences arising from the failure of ALS or any such Service Provider to perform any such covenant strictly in accordance with the terms of the Indenture. Liquidity Provider Consent Under the terms of the Indenture, to the extent that the Liquidity Provider's consent or approval is required under the Indenture or any other Related Document, such consent will not be required in the event that no Class A Notes are outstanding and no Credit Facility Advance Obligations are due and owing to the Liquidity Provider (and, in the case of any issuance of Additional Notes, the Liquidity Facility Non-Consent Event has occurred). Class A-1 Funding Agent Consent Under the terms of the Indenture, to the extent that (a) the Class A-1 Funding Agent's consent or approval is required under the Indenture or any other Related Document or (b) the Class A-1 Funding Agent has any other rights (other than its right to receive indemnity payments and the right to be reimbursed for expenses) under the Indenture or any other Related Document, including the right to receive notice, opinions or any other document, such consent and/or approval will not be required and all rights of the Class A-1 Funding Agent (other than any rights in its capacity as a Class A-1 Commitment Holder or Holder of Notes) under the Indenture and any other Related Document will immediately terminate (unless specified otherwise in the applicable Related Document) if a Class A- 1 Commitment Non-Consent Event has occurred. Class A-1 Trustee Consent In the event that the Class A-1 Notes have been paid in full, the Class A-1 Commitments have been terminated or reduced to zero in accordance with the terms of the Class A-1 Note Funding Agreement and all other amounts due and owing to the Holders of the Class A-1 Notes have been paid in full, the Class A-1 Trustee will have no further consent or approval rights under the Indenture or the other Related Documents and at such time, the Class A-1 Trustee will no longer have any rights to receive any reports, certificates, opinions or other documents pursuant to the Indenture or the other Related Documents. INDENTURE EVENTS OF DEFAULT AND REMEDIES Each of the following events will constitute an Indenture Event of Default with respect to any subclass of Notes under the Indenture (unless otherwise specified below): (a) failure by ALS to pay interest on any subclass of Notes when such amount becomes due and payable, and such default continues for a period of five or more Business Days; (b) failure by ALS to pay when due principal of any subclass of Notes no later than the applicable final maturity date; (c) failure by ALS to pay when due Class A-1 Commitment Fees (or any portion thereof); (d) failure by ALS to pay any amount (other than interest) when due and payable in connection with any subclass of Notes, to the extent that there are, on any Payment Date, amounts available for such payment in the Collections Account or the Cash Collateral Account with respect to the Notes of such subclass, and such default continues for a period of five or more Business Days after such Payment Date; (e) failure of any of the representations of warranties of ALS under the Indenture to be true and correct or failure by ALS to comply with any of the covenants, obligations, conditions or provisions binding on it under the Indenture or any Notes (other than a payment default for which provision is made in clause (a), (b), (c) or (d) above), if in any such case such failure materially adversely affects the Holders of such subclass of Notes and continues for a period of 30 days or more (or, if such failure is capable of remedy within 60 days of the date of the written notice referred to below, and the Administrative Agent has promptly provided the Trustee with a certificate stating that ALS has commenced, or will promptly commence, and diligently pursue all reasonable efforts to remedy such failure, 60 days so long as ALS or any Subsidiary is diligently pursuing such remedy but in any event no longer than 60 days) after written notice thereof has been given to ALS by the Controlling Party or by the Holders of a majority of the aggregate Outstanding Principal Balance of the Notes of the Senior Class; 177

186 (f) a court having jurisdiction in the premises enters a decree or order for (i) relief in respect of ALS, or any direct or indirect Subsidiary thereof (other than a Non-Significant Subsidiary), under any applicable law relating to bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization, examination, relief of debtors or other similar law now or hereafter in effect, (ii) appointment of a receiver, liquidator, examiner, assignee, custodian, trustee, sequestrator or similar official of ALS or any direct or indirect Subsidiary thereof (other than a Non-Significant Subsidiary) or (iii) the winding-up or liquidation of the affairs of ALS or any direct or indirect Subsidiary (other than a Non-Significant Subsidiary) and, in each case, such decree or order will remain unstayed or such writ or other process will not have been stayed or dismissed within 90 days from entry thereof; (g) ALS or any direct or indirect Subsidiary (other than a Non-Significant Subsidiary) (i) commences a voluntary case under any applicable law relating to bankruptcy, insolvency, receivership, winding-up, liquidation, reorganization, examination, relief of debtors or other similar law now or hereafter in effect, or consents to the entry of an order for relief in any involuntary case under any such law, (ii) consents to the appointment of or taking possession by a receiver, liquidator, examiner, assignee, custodian, trustee, sequestrator or similar official of ALS or any direct or indirect Subsidiary (other than a Non-Significant Subsidiary) or for all or substantially all of the property and assets of ALS or any direct or indirect Subsidiary (other than a Non- Significant Subsidiary) or (iii) effects any general assignment for the benefit of creditors; (h) one or more judgments or orders for the payment of money that are in the aggregate in excess of 5% of the Adjusted Portfolio Value is rendered against ALS or any Subsidiary or any other member of the ALS Group and either (i) enforcement proceedings have been commenced by any creditor upon such judgment or order or (ii) there will be any period of ten consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal or otherwise, will not be in effect; provided, however, that any such judgment or order will not be an Indenture Event of Default if and for so long as (x) the amount of such judgment or order is covered by a valid and binding policy of insurance between the defendant and the insurer covering payment thereof and (y) such insurer, which will be rated at least "A" by A.M. Best Company or any similar successor entity, has been notified of, and has not disputed the claim made for payment of, the amount of such judgment or order; (i) the constitutional documents creating ALS cease to be in full force and effect without replacement documents having the same terms being in full force and effect; or (j) the aggregate number of Initial Aircraft that have been delivered to ALS under the Purchase Agreement as of the Delivery Expiry Date is less than 22. Any payment under an Eligible Credit Facility (or drawing of funds from a Cash Collateral Account) will constitute a payment by ALS for purposes of clauses (a), (b), (c) and (d) above. "Non-Significant Subsidiary" means a direct or indirect Subsidiary with respect to which an order or decree described in clause (f) under " Indenture Events of Default and Remedies" above has been entered or an event described in clause (g) under " Indenture Events of Default and Remedies" above has occurred if, as of the date of the entry of such order or decree or of such event, as the case may be, such Subsidiary, together with all of the Subsidiaries that have been and, unless liquidated, continue to be subject to such an order or decree or event, as the case may be, own or lease Aircraft having an aggregate Adjusted Base Value of less than 10% of the Adjusted Portfolio Value as of such applicable date of such order or decree or event. The Indenture provides that, within 30 days of the occurrence of a default under the Indenture or an Indenture Event of Default in respect of any subclass of Notes, the Trustee will give to ALS, the Cash Manager, the Noteholders of such subclass, the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing), any paying agent, the Rating Agencies and the Liquidity Provider notice, transmitted by mail, of all uncured or unwaived defaults under the Indenture known to it on such date (except, that with respect to a default or an Indenture Event of Default (other than with respect to interest, principal or Redemption Price, if any) the Trustee may withhold such notice if it determines in good faith that withholding such notice is in the best interest of the affected Noteholders); provided that the Trustee will in any event notify the Liquidity Provider and the Class A-1 Funding Agent of any such default or Indenture Event of Default. If an Indenture Event of Default with respect to the Senior Class (other than an Indenture Event of Default under (f) or (g) above) will have occurred and be continuing, the Controlling Party may, and (if the Controlling Party solely is the Senior Trustee) when instructed in 178

187 writing by the Holders of a majority of the aggregate Outstanding Principal Balance of the Senior Class will, give a Default Notice to ALS, the Cash Manager, the Administrative Agent, the Class A-1 Funding Agent, each Hedge Provider, the Security Trustee and the Trustee declaring the Outstanding Principal Balance of the Notes and all accrued and unpaid interest thereon to be due and payable. No person other than the Controlling Party may give a Default Notice or exercise or direct the exercise of any remedy in respect of any Indenture Event of Default. At any time after the Controlling Party has declared the Outstanding Principal Balance of the Notes to be due and payable and prior to the exercise of any other remedies pursuant to the Indenture, the Controlling Party may (and if the Controlling Party is the Senior Trustee, upon the written direction of Holders of a majority of the aggregate Outstanding Principal Balance of the Senior Class will) by written notice to ALS, the Senior Trustee (if not the Controlling Party), the Cash Manager, the Administrative Agent, the Security Trustee and the Trustee rescind and annul such declaration and thereby annul its consequences if: (i) there has been paid to or deposited with the Senior Trustee an amount sufficient to pay all overdue installments of interest on the Notes, and the principal and Redemption Price, if any, of the Notes that would have become due otherwise than by such declaration of acceleration, (ii) the rescission would not conflict with any judgment or decree and (iii) all other defaults and Indenture Events of Default, other than nonpayment of interest on and principal of the Notes that have become due solely because of such acceleration, have been cured or waived. If the Controlling Party is the Liquidity Provider, only it may give a notice of rescission and annulment. If an Indenture Event of Default under clause (e) or (f) occurs, the Outstanding Principal Balance of the Notes and all accrued and unpaid interest thereon will automatically become due and payable without any further action by any party. Each Holder of Class E Notes will have the right on any date occurring on or after the date of the occurrence of an Indenture Event of Default that is continuing on such date with respect to any subclass of Class A Notes, upon at least 20 Business Days' written notice to the Trustee (with a copy to ALS and the Cash Manager), to purchase all, but not less than all, of the Class A Notes for a purchase price equal to the then Outstanding Principal Balance of each subclass of Class A Notes, plus accrued and unpaid interest (at the Applicable Rate of Interest for the related subclass of Class A Notes) on such Outstanding Principal Balance together with any Special Indemnity Payments and Class A-1 Funding Agent Obligations due and payable to the Class A-1 Funding Agent and Holders of the Class A-1 Notes (any such principal and interest in respect of any such subclass of Class A Notes and indemnity or other payments, the "Outstanding Priority Balance"). As a condition precedent to the purchase of the Class A Notes by any Holder of Class E Notes, all Credit Facility Obligations due and payable to the providers of Eligible Credit Facilities are required to have been paid in full by such Holder of Class E Notes and any Eligible Credit Facility is required to have been terminated or cancelled in full. Upon receipt of any such notice, the Cash Manager will calculate the then Outstanding Priority Balance. So long as any Class A-1 Commitment Holder holds or beneficially owns any Class A-1 Notes, such Class A-1 Commitment Holder will have the right on any date occurring on or before the 60th day after the date of the occurrence of an Indenture Event of Default that is continuing on such date with respect to any subclass of the Class A Notes, upon at least 20 Business Days' written notice to the Trustee (with a copy to ALS and the Cash Manager), to purchase all, but not less than all, of the Class A Notes for a purchase price equal to the then Outstanding Priority Balance. Upon receipt of any such notice, the Cash Manager will calculate the then Outstanding Priority Balance. If any Class A-1 Commitment Holder elects to exercise such purchase rights, each Holder of a Class E Note will continue to have the right to exercise its purchase right described above for a purchase price equal to the sum of (x) the then Outstanding Priority Balance and (y) all Class A-1 Funding Agent Obligations that are due and owing. The Indenture contains a provision entitling the Trustee (except with respect to losses, damages or obligations arising from the Trustee's negligence or bad faith) to be indemnified by the Holders of any Class of Notes before proceeding to exercise any right or power under the Indenture or the Cash Management Agreement at the request or direction of such Holders (the basis of any loss, damage or obligation, if in respect of any third party liability, should be supported by an opinion of counsel). No Noteholder will have the right, other than through the Controlling Party acting in accordance with the Indenture, to sue for recovery or take any other actions to enforce the obligations of ALS to pay any and all amounts due and payable under the Notes, and no Holder of the Notes will have the right to take any steps to cause the filing for bankruptcy of ALS or any other member of the ALS Group unless: (a) the Senior Trustee is the sole Controlling Party; (b) such Holder holds Notes of the Senior Class and has previously given written notice to the Senior Trustee of a continuing Indenture Event of Default; 179

188 (c) the Holders of a majority of the aggregate Outstanding Principal Balance of the Senior Class make a written request to the Senior Trustee to pursue a remedy under the Indenture; (d) such Holder or Holders offer to the Senior Trustee an indemnity reasonably satisfactory to the Senior Trustee against any costs, expenses and liabilities to be incurred in complying with such request; (e) the Senior Trustee does not comply with such request within 60 days after receipt of the request and the offer of indemnity; and (f) during such 60-day period, Holders of a majority of the Outstanding Principal Balance of the Senior Class do not give the Senior Trustee a revocation or direction inconsistent with such request. For the purposes of the preceding description, the term "default" means the occurrence of any event or act which is, or after notice or lapse of time, or both, would constitute, an Indenture Event of Default. SUBORDINATION Under the terms of the Indenture, each Noteholder and each Secured Party has agreed that its claims against ALS for payment of amounts are subordinate to any claims ranking in priority thereto as described above in " Payment of Principal and Interest Priority of Payments" and " Payment of Principal and Interest Allocation of Principal Among Subclasses of Notes" (each such prior claim, a "Senior Claim") which subordination will continue until the holder of such Senior Claim (a "Senior Claimant"), or the Trustee on its behalf, has received the full cash amount of such Senior Claim. Each Noteholder is also obligated to hold for the benefit of the Senior Claimant any amounts received by such Noteholder which, under the terms of the Indenture, should have been paid to or on behalf of the Senior Claimant. Each Noteholder also agrees to execute and deliver such instruments and documents, and take all further action that the Controlling Party may reasonably request, in order to effectuate the above. Each Noteholder's right with respect of any Collateral will be subordinated to the rights of Senior Claimants as described in "Description of the Security Trust Agreement Subordination". Funds provided for the purpose of depositing amounts in any Cash Collateral Account, drawn under any Eligible Credit Facility, in the Funding Account or for a defeasance of the Notes, a Refinancing or for an Optional Redemption of the Notes will not be subject to the foregoing subordination provisions. MODIFICATION AND WAIVER The Indenture provides that, with the consent of the Holders of a majority of the Outstanding Principal Balance of the Notes (voting as a single Class), the Liquidity Provider and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing), ALS, when authorized by a Board resolution and after prior written notification to the Rating Agencies, may amend or modify the Notes or the Indenture; provided that any amendment may modify the covenants regarding aircraft dispositions as described under " Indenture Covenants Limitation on Aircraft Dispositions", modification payments and capital expenditures as described under " Indenture Covenants Limitation on Modification Payments and Capital Expenditures" and the operating covenants described under " Operating Covenants" without the consent of the Liquidity Provider unless such amendment is with respect to a provision which includes the Liquidity Provider's right of consent or approval thereunder; provided further that, except as provided in the Indenture in connection with the issuance of Refinancing Notes and upon the acquisition of any Additional Aircraft, any amendment of the provisions setting forth the frequency or the currency of payment of, the maturity of, or the method of calculation of the amount of any interest, principal or Redemption Price payable in respect of any subclass of Notes, or reducing the percentage of the aggregate Outstanding Principal Balance of any subclass of Notes required to approve any such amendment or waiver, or altering the manner or priority of payment of any subclass of any Class of Notes except as provided for in the Indenture, is not permitted without the consent of each provider of an Eligible Credit Facility, the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) and each Holder of each Note outstanding in each instance affected thereby and a Rating Agency Confirmation (each, a "Basic Terms Modification"). Any such Basic Terms Modification approved by the required Holders of any subclass of any Class of Notes will be binding on the Holders of the relevant subclass or Class of Notes and each party to the Indenture. The foregoing, however, will not prevent any member of the ALS Group from amending any Lease; provided that such amendment is otherwise permitted by the Indenture. 180

189 Notwithstanding the foregoing, the Trustee may agree with ALS, without the consent of any Holder of any Notes, any provider of an Eligible Credit Facility or any other person, to make all necessary modifications to the Indenture (either by a supplement indenture or by means of one or more resolutions of the Board) to provide for (i) additional certificated notes of any class or subclass to be issued pursuant to the terms of the Indenture, (ii) the transfer restrictions thereon, including appropriate securities law legends, (iii) the procedures applicable to transfers and exchanges between such certificated notes and Global Notes, (iv) the forms of such certificated notes and (v) any incidental matters required to give full effect to the issuance of such certificated notes and the modifications made as described in this paragraph. Certain conditions to the issuance of Additional Notes and Refinancing Notes are described under " Indenture Covenants Limitation on Indebtedness". The subordination provisions contained in the Indenture may not be amended or modified without the consent of each provider of an Eligible Credit Facility, the Class A-1 Funding Agent (unless a Class A-1 Commitment Non- Consent Event has occurred and is continuing), each Holder of the subclass of Notes affected thereby and each Holder of any subclass of Notes ranking senior to such Notes and receipt of a Rating Agency Confirmation. In no event will the provisions relating to the priority of the Required Expenses, Senior Hedge Payments or any Eligible Credit Facilities or the provisions relating to subordination in the Indenture be amended or modified. ACCOUNTS The Cash Manager, acting on behalf of the Security Trustee, has directed the Operating Bank to establish and maintain on its books and records in the name of the Security Trustee the Accounts: (i) on or prior to the Initial Closing Date (a) a collections account (the "Collections Account"), (b) the Aircraft Purchase Account, (c) one or more rental accounts (each, a "Rental Account"), (d) one or more lessee funded accounts (each, a "Lessee Funded Account"), (e) the Expense Account, (f) one note account for each of the Class A-1 Notes, the Class A-2 Notes and the Class E-1 Notes (each, a "Note Account"), (g) the Initial Primary Liquidity Reserve Account, (h) a payment account for the Liquidity Facility (the "Initial Primary Liquidity Payment Account"), (i) the Funding Account, (j) an account for ALS's shareholders (the "Issuer's Shareholders Account"), (k) the account for any Substitute Holdback Deposit Amounts (the "Substitute Holdback Account") and (l) the Expense Reserve Account, each on the Initial Closing Date; (ii) at any time, as necessary, (a) any additional Rental Accounts and any additional Lessee Funded Accounts, (b) any additional Note Accounts, (c) an additional Aircraft Purchase Account for each Additional Aircraft not acquired on the Closing Date for the related Additional Notes, (d) an aircraft conversion account (the "Aircraft Conversion Account"), (e) the Defeasance/Redemption Account and (f) the Refinancing Account; and (iii) any other Account (including any other Cash Collateral Account) the establishment of which is set forth in a Board resolution delivered to the Trustee, the Security Trustee and the Cash Manager, in each case at such time as is set forth in the Indenture or in such Board resolution. On or before the Initial Delivery Date, ALS will establish an Irish collections account (the "Irish VAT Refund Account") in its name at an institution permitted under the Indenture. Each of the Accounts (other than the Non-Trustee Accounts and the Irish VAT Refund Account) will be established and maintained (a) initially with Deutsche Bank Trust Company Americas, so long as Deutsche Bank Trust Company Americas (i) has either (A) a long-term unsecured debt rating of A (or the equivalent) or better by each Rating Agency or (B) a short-term unsecured debt rating of A-1 by Standard & Poor's and P-1 by Moody's and (ii) can act as a securities intermediary under the New York Uniform Commercial Code, and (b) thereafter with any bank organized under the laws of the United States or any state thereof, or the District of Columbia (or any branch of a foreign bank licensed under any such laws) appointed as the Operating Bank in respect of any Eligible Account, so long as it (i) has either (A) a long-term unsecured debt rating of AA (or the equivalent) or better, by each Rating Agency or (B) a short-term unsecured debt rating of A-1 by Standard & Poor's and P-1 by Moody's and (ii) can act as a securities intermediary under the New York Uniform Commercial Code. Except where local legal or regulatory reasons do not permit, all of such Accounts will be held in the name of the Security Trustee, who will have sole dominion and control over the Accounts, including, among other things, the sole power to direct withdrawals from or transfers among such Accounts. Subject to certain conditions set forth in the Cash Management Agreement, the Security Trustee will delegate such authority over the Accounts to the Cash Manager; provided that the Security Trustee will not be responsible for the acts or omissions of the Cash Manager. For as long as any Notes remain outstanding, funds on deposit in the Accounts will be invested and reinvested by the Cash Manager (or the Operating Bank at the written direction of the Cash Manager), on behalf of the Security 181

190 Trustee, at the direction of the Financial Administrative Agent on ALS's behalf (except that the Liquidity Provider may direct the Cash Manager to invest amounts on deposit in the Initial Primary Liquidity Reserve Account and following the giving of a Default Notice or if any Indenture Event of Default described in clause (f) or (g) under " Indenture Events of Default and Remedies" has occurred and is continuing, the Security Trustee will direct the investments of funds on deposit in all other Accounts, in money market funds having a rating of at least AA by Standard & Poor's and Aa2 by Moody's) in one or more investments meeting issuer and/or rating criteria specified in the Indenture maturing, in the case of the Collections Account and Expense Account, such that sufficient funds will be available to make required payments on the first succeeding scheduled Payment Date after such Permitted Account Investments are made; provided that investment and reinvestment of funds in a Lessee Funded Account must be made in a manner and with maturities that conform to the requirements of the related Leases or Aircraft Agreements, as the case may be. Investment earnings on funds deposited in any Account (except for any Aircraft Purchase Account or the Initial Primary Liquidity Reserve Account), net of losses and investment expenses, will, to the extent permitted by the terms of such related Leases in the case of such funds in a Lessee Funded Account, be deposited in the Collections Account and treated as collections. Aircraft Purchase Account; Funding Account On each Advance Date, a Level 1 Advance will be made to ALS pursuant to the terms of the Indenture and the Class A-1 Note Funding Agreement in connection with the delivery of an Initial Aircraft. On the Delivery Date of such Initial Aircraft, the Level 1 Advance Amount related to such Initial Aircraft will be transferred from the Funding Account out of the proceeds of such Advance into the Aircraft Purchase Account and applied as described under "Description of the Purchase Agreement Payment for Initial Aircraft and Non-Delivery of Initial Aircraft". In addition, on the Level 2 Advance Date, an amount equal to any Level 2 Advance Amount made will be transferred from the Funding Account to the Note Account for the Holders of the Class E Notes, to be paid to AerVenture Leasing. Additional Aircraft Purchase Accounts The proceeds of any Additional Notes to be used to purchase Additional Aircraft will, after making any other deposits out of such proceeds pursuant to the Indenture, the terms of an indenture supplement to the Indenture or a resolution of the Board relating to such Additional Notes, be deposited in an additional Aircraft Purchase Account and will be held in such Account and invested in Permitted Account Investments until applied for the purchase of Additional Aircraft in accordance with the provisions of the relevant Aircraft Agreement. Substitute Holdback Account If, on the Delivery Date of any Aircraft, the Cash Manager determines that the Substitute Balance is greater than zero, the Cash Manager will transfer from the Aircraft Purchase Account to the Substitute Holdback Account an amount equal to the excess, if any, of (i) the Substitute Balance immediately after giving effect to the delivery of the relevant Aircraft over (ii) the Substitute Holdback Account Balance immediately prior to giving effect to the delivery of such Aircraft (such amount, the "Substitute Holdback Deposit Amount"). The amount so deposited will be held in the Substitute Holdback Account and invested in Permitted Account Investments until applied as provided under the Indenture. If, on the Delivery Date of any Aircraft, the Cash Manager determines that the Substitute Holdback Account Balance immediately prior to giving effect to the delivery of the relevant Aircraft is greater than the Substitute Balance immediately after giving effect to the delivery of such Aircraft, the Cash Manager will pay the Substitute Holdback Distribution Amount from the Substitute Holdback Account to the Note Account for the Class E-1 Notes (for payment to AerVenture Leasing). On the Delivery Expiry Date, any amounts remaining in the Substitute Holdback Account (the "Substitute Holdback Release Amount") will be transferred to the Collections Account. Rental Account The Lessees will make all payments under the Leases directly into the applicable Rental Account. Pursuant to the Cash Management Agreement, the Cash Manager will transfer, or cause to be transferred, all funds deposited into each Rental Account into the Collections Account as collections within one Business Day of receipt thereof (other than certain limited amounts, if any, required to be deposited in Non-Trustee Accounts, as described below). 182

191 Non-Trustee Accounts If the Cash Manager determines (based on information provided to the Cash Manager in a written notice from the Financial Administrative Agent) that, for any tax or other regulatory or legal reason, any payments under the Leases may not be deposited into an account in the name of the Security Trustee, then pursuant to the Indenture, the relevant member of the ALS Group may establish one or more accounts (each, a "Non-Trustee Account") for such amounts in its own name (but subject to the direction and control of the Cash Manager on behalf of the Security Trustee at any institution permitted under the Indenture), provided that the Lessor under the relevant Lease is or becomes a party to the Security Trust Agreement, or any document executed pursuant thereto, or otherwise, for the purpose of granting a security interest in any Collateral to the Security Trustee for the benefit of the Secured Parties or for the purpose of perfecting such security interest, with respect to such amounts. Collections Account All Collections received by the ALS Group will be deposited in the Collections Account and from there will either be transferred to another Account as described above and below or retained in the Collections Account. Collections will include all amounts received by the ALS Group, including, but not limited to, (i) Rental Payments (including any maintenance reserves and security deposits, other than those on deposit in a Lessee Funded Account), (ii) amounts transferred from any Cash Collateral Account to the Collections Account, if applicable, (iii) amounts received in respect of claims for damages or in respect of any breach of contract for nonpayment of any of the foregoing, (iv) net proceeds of any sale or other disposition of an Aircraft or amounts received under any Aircraft Agreement, (v) proceeds of any insurance payments in respect of any Aircraft, (vi) certain amounts transferred from a Lessee Funded Account to the Collections Account, (vii) net payments to the ALS Group under any Hedge Agreement, (viii) investment income, if any, on all amounts on deposit in the Accounts (except (A) to the extent that any such proceeds are required to be paid over to any Lessee under a Lease or (B) the proceeds of any investments of the funds in the Aircraft Purchase Accounts and the Initial Primary Liquidity Reserve Account), (ix) any amounts transferred from the Aircraft Purchase Account into the Collections Account, (x) any amount transferred from the Aircraft Conversion Account to the Collections Account, (xi) any amounts received by a member of the ALS Group under an acquisition agreement, (xii) any other amounts received by any member of the ALS Group or any Subsidiary (including any amounts received from any other member of the ALS Group or any other Subsidiary, whether by way of distribution, dividend, repayment of a loan or otherwise and any proceeds received in connection with any Allowed Restructuring) and (xiii) the Substitute Holdback Release Amount; provided that Collections will not include (i) segregated funds transferred to a Lessee Funded Account, (ii) certain funds to be applied in connection with a redemption or defeasance, (iii) certain funds received in connection with a Refinancing, (iv) except with respect to any amounts transferred therefrom to the Collections Account, amounts in any Cash Collateral Account, the Substitute Holdback Account, the Funding Account, any Aircraft Purchase Account and the Aircraft Conversion Account, (v) other amounts not to be included as Collections pursuant to any Related Document, including amounts not payable to a member of the ALS Group or Subsidiary and expenses incurred in connection with the receipt of Collections and (vi) payments under the Liquidity Facility (collectively, the "Collections"). Collections on deposit in the Collections Account will be calculated by the Cash Manager as of the close of business on the Calculation Date. The portion of the Required Expense Amount that has not been paid directly by the Administrative Agent to Required Expense payees will be transferred into the Expense Account on each Payment Date and the Cash Manager may, from time to time, transfer other amounts into the Expense Account in respect of unanticipated Required Expenses falling due and payable within such Interest Accrual Periods and may, on any Payment Date, to the extent of funds available therefor, make payments in accordance with the priorities set forth in " Payment of Principal and Interest Priority of Payments". To the extent funds are available therefor on any Payment Date, the Cash Manager may also transfer amounts to the Expense Account in respect of expenses and costs that are not regular, monthly recurring expenses, including Modification Payments and refinancing expenses, if any, anticipated to become due and payable in any future Interest Accrual Period. Amounts received in respect of certain segregated security deposits and maintenance reserves (as described below) will be transferred directly into a Lessee Funded Account. Cash Collateral Accounts 183

192 ALS may arrange for one or more credit facilities. These facilities consist of (i) the Liquidity Facility, (ii) Eligible Credit Facilities (other than the Liquidity Facility) and (iii) Cash Collateral Accounts. Providers of Eligible Credit Facilities will be reimbursed under the terms of those facilities and Cash Collateral Accounts will be replenished to a Required Amount established by ALS but in each case only within the respective priorities of payment. "Required Amount" means (a) initially, with respect to a Primary Liquidity Reserve Account, zero; provided that, in the case of the Initial Primary Liquidity Reserve Account, if a Downgrade Drawing, a Non-Extension Drawing or (in certain limited circumstances specified in the Indenture) a Final Drawing has occurred, the "Required Amount" will be the Maximum Commitment and (b) thereafter, on any Payment Date, with respect to the Primary Liquidity Reserve Account and any Eligible Credit Facility, such amounts as the Board has unanimously determined (and for which a Rating Agency Confirmation and prior written consent of the Liquidity Provider and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) has been received) plus the increase, if any in the Required Amount for any Cash Collateral Account or Credit Facility provided for by the terms of any Additional Notes or Refinancing Notes. Upon receipt by the Cash Manager and the Trustee of a Board resolution providing for the establishment of any Cash Collateral Account as an Eligible Credit Facility for one or more subclasses of Notes or in respect of any other obligation, and with the prior written consent of the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) and the Liquidity Provider (unless the Liquidity Facility Non- Consent Event has occurred), the Cash Manager will direct the Operating Bank in writing to establish (within three Business Days of giving such written notice) and maintain such Cash Collateral Account pursuant to the Indenture in the name of the Security Trustee for the benefit of the Holders of the Notes of each such subclass and/or the Secured Parties holding such other obligation. All amounts provided in connection with any such Board resolution for deposit in such Cash Collateral Account and amounts to be deposited in such Cash Collateral Account pursuant to the terms set forth in " Payment of Principal and Interest Priority of Payments" as an Eligible Credit Facility will be held in such Cash Collateral Account for application, and all replenishment will be made in accordance with the terms of the Board resolution (which will include the basis of any replenishment of such Cash Collateral Account) relating to such Eligible Credit Facility, and will be subject to the prior written consent of the Liquidity Provider (unless the Liquidity Facility Non-Consent Event has occurred). Initial Primary Liquidity Reserve Account Following the funding of the Initial Primary Liquidity Reserve Account with a Downgrade Drawing, a Final Drawing or a Non-Extension Drawing, if the Cash Manager determines that on any Payment Date, after making all withdrawals and transfers, there will be insufficient funds available for payment of the Required Expense Amount for such Payment Date, Senior Hedge Payments, Class A-1 Commitment Fees and the Interest Amount for the Initial Class A Notes, the Cash Manager will so notify the Trustee in writing and will direct the Operating Bank in writing on such Payment Date to withdraw from the Initial Primary Liquidity Reserve Account the lesser of the amount equal to the shortfall in making the payments set forth above and the amount on deposit therein. The amount so withdrawn will be applied first, to the Expense Account, an amount such that the amount on deposit therein is at least equal to the Required Expense Amount for such Payment Date, and second, in no order of priority inter se, but pro rata, (A) to the Note Accounts for the Class A-1 Notes and the Class A-2 Notes, the Interest Amount on the Class A-1 Notes and the Class A-2 Notes, respectively, (B) to any Class A-1 Commitment Holder, any Class A-1 Commitment Fees due and owing to such Class A-1 Commitment Holder and any accrued and unpaid interest on any Class A-1 Commitment Fees and (C) pro rata, to any Hedge Provider, an amount equal to any Senior Hedge Payment due from any member of the ALS Group pursuant to any Hedge Agreement. Initial Primary Liquidity Payment Account If there has been a Liquidity Drawing, the Cash Manager will direct the Liquidity Provider to distribute the proceeds of such drawing to the Initial Primary Liquidity Payment Account. The Cash Manager will direct the Operating Bank on the Payment Date related to such Liquidity Drawing to withdraw from the Initial Primary Liquidity Payment Account the proceeds of such Liquidity Drawing and the Trustee will, as set forth in a written notice from the Cash Manager, apply such amount first, to the Expense Account an amount such that the amount on deposit therein is at least equal to the Required Expense Amount for such Payment Date, and second, in no order or priority inter se, but pro rata, (A) to the Note Accounts for each of the Class A-1 Notes and the Class A-2 Notes, the Interest Amount on the Class A-1 Notes and the Class A-2 Notes, respectively, (B) to any Class A-1 Commitment Holder, any Class A-1 Commitment Fees and any accrued and unpaid interest thereon and (C) pro rata, to any Hedge 184

193 Provider, an amount equal to any Senior Hedge Payment due from any member of the ALS Group pursuant to any Hedge Agreement. Lessee Funded Account Lessee security deposits and certain supplemental rent payments to provide for maintenance reserves may be required to be segregated from other ALS funds. Amounts received from Lessees or the Seller in respect of security deposits and such maintenance obligations will be held in the Lessee Funded Account. Funds on deposit in the Lessee Funded Account will be used to make certain maintenance and security deposit repayments (or such other payments as may be required or permitted under the terms of the relevant Leases) or may be applied against maintenance related payments otherwise required to be made by the Lessee during the term of the related Lease and will not be used to make payments in respect of the Notes unless the underlying obligation to the Lessee has been satisfied, including after the delivery of a Default Notice. In the event that ALS or any Subsidiary is required under the terms of a Lease to reimburse a Lessee for maintenance reserves, security deposits or similar payments, it will first withdraw funds (if any) from the applicable Lessee Funded Account (if any), to the extent the funds in such Lessee Funded Account are set aside for such payments pursuant to the applicable Lease, prior to making any withdrawal from the Expense Account. In certain circumstances where Lessees relinquish their rights to receive certain maintenance and security deposit payments upon the expiration of a lease, surplus funds may be credited from the Lessee Funded Account to the Collections Account. Expense Account On each Payment Date, the Cash Manager will withdraw from the funds deposited in the Collections Account, as provided in the priority of payments established for the Notes, an amount such that the amount on deposit in the Expense Account equals the Required Expense Amount, which amount will then be used to pay the Required Expenses. To the extent that such amount has not been paid directly by the Administrative Agent to Required Expense payees, such amount will be deposited into the Expense Account. In addition, in the period between Payment Dates, the Cash Manager may make further withdrawals of cash from the Collections Account in order to satisfy expenses due and payable prior to the next Payment Date that were not previously anticipated to become so due and payable on the previous Payment Date. If funds on deposit in the Collections Account are less than the Required Expense Amount on any Payment Date, the ALS Group will be unable to make the transfers to the Expense Account described above in full on such date, which may lead to a default under one or more of the Related Documents or the ALS Group's various service agreements. All Available Collections remaining in the Collections Account will be used by the Cash Manager to make payments on the Notes in accordance with the priority of payments established therefor as described under " Payment of Principal and Interest Priority of Payments". Refinancing Account Upon receipt of a written notice of a Refinancing or of a Board resolution authorizing a Refinancing, the Cash Manager will cause the Operating Bank to establish a Refinancing Account for the benefit of the Holders of the subclass of Class A Notes to be refinanced. The Cash Manager will deposit all net proceeds of any such Refinancing (after application of Permitted Accruals in the Expense Account) into the Refinancing Account. Such amounts will be held in the Refinancing Account until the Outstanding Principal Balance and all accrued and unpaid interest, and redemption premium, if any, on such refinanced Notes, and any Refinancing Expenses are paid and such refinanced Notes are cancelled. Defeasance/Redemption Account Upon written notice to the Cash Manager or of a Board resolution authorizing the redemption (other than a Refinancing) or defeasance of any subclass of Notes, the Cash Manager will direct the Operating Bank to establish and maintain a Defeasance/Redemption Account. All amounts received for the purpose of any such redemption or defeasance will be deposited in the Defeasance/Redemption Account. Aircraft Conversion Account The proceeds of any Additional Notes to be used to fund any Aircraft Conversion will, after making any other deposits out of such proceeds pursuant to the Indenture, the terms of an indenture supplement to the Indenture or 185

194 resolution of the Board relating to such Additional Notes, be deposited in the Aircraft Conversion Account and will be held in such Account and invested in Permitted Account Investments until applied to make Conversion Payments in accordance with the provisions of the applicable conversion agreement. Note Account Upon the issuance of Notes of any subclass for which a Note Account was not previously established, the Cash Manager will cause the Operating Bank to establish and maintain a Note Account for such subclass of Notes. All amounts transferred to a Note Account for any subclass of Notes in accordance with the priority of payments described under " Payment of Principal and Interest Priority of Payments" or otherwise pursuant to the Indenture will be applied to the payment of such subclass of Notes in accordance with the terms of the Indenture; provided that such amounts will be paid to a specific Holder or specific Holders of such subclass of Notes if, and to the extent, so provided in the Indenture. Pursuant to the Indenture, certain amounts will be transferred to the Note Account for the Class E-1 Notes to be paid to AerVenture Leasing, including any Level 2 Advance Amount paid to ALS in accordance with the Class A-1 Note Funding Agreement, any Substitute Holdback Distribution Amount and, on the second Payment Date following the Initial Delivery Date, any amounts remaining in the Expense Reserve Account. Issuer's Shareholders Account Upon the transfer of the Corporate Benefit Distribution to the Issuer's Shareholders Account in accordance with the priority of payments described under " Payment of Principal and Interest Priority of Payments" and only to the extent determined by the Board to be paid as a dividend or a distribution to the Shareholders (as notified to the Trustee), the Trustee will pay such amounts to the Shareholders, pro rata according to their ownership of the shares in ALS. Irish VAT Refund Account The payments of refunds with respect to Irish value-added tax and any other amounts related to Irish tax payments payable to any member of the ALS Group will be, when received, deposited in the Irish VAT Refund Account. Funds held in the Irish VAT Refund Account will be converted, pursuant to the conversion procedures set forth in the Indenture, into U.S. dollars with a recognized foreign exchange dealer or foreign commercial bank. Upon conversion and receipt of U.S. dollars, the Cash Manager will cause such amounts to be deposited from the Irish VAT Refund Account to the Collections Account as soon as administratively practicable. The cost and expense of any such conversion will be added to and reflected in the rate obtained for conversion and neither the Cash Manager nor its affiliates will be liable in respect of the exchange rate obtained for any such conversion or any related cost or expense. All amounts held in the Irish VAT Refund Account will remain uninvested pending conversion to U.S. dollars and transfer to the Collections Account. Expense Reserve Account The cash proceeds of the Class E-1 Note issued to AerVenture Leasing on the Initial Closing Date were deposited in the Expense Reserve Account for payment of expenses and fees due prior to the Initial Delivery Date. If ALS determines the amounts available in the Accounts will not be sufficient to satisfy ALS's obligations, ALS may request from time to time between the Initial Closing Date and the Initial Delivery Date, and AerVenture Leasing may agree, that AerVenture Leasing purchase Class E-1 Notes in an aggregate principal amount up to $5,000,000. Any cash proceeds from the issuance of such Class E-1 Notes will be deposited in the Expense Reserve Account. To the extent amounts available in the Collections Account and the Expense Account are not sufficient to satisfy the obligations of ALS, amounts in the Expense Reserve Account will be applied to make payments of Required Expenses, Liquidity Facility Non-Use Fees, Class A-1 Commitment Fees, Senior Hedge Payments and interest on the Class A Notes from the Initial Closing Date through the second Payment Date following the Initial Delivery Date. On the second Payment Date after the Initial Delivery Date, after all deposits and transfers described under " Payment of Principal and Interest Priority of Payments" have been made, all amounts remaining in the Expense Reserve Account will be transferred to the Note Account for the Class E-1 Notes, to be paid to AerVenture Leasing. NOTICES TO NOTEHOLDERS 186

195 Save as provided below, any notice to the Holders of Notes will be validly given by (i) either of (a) the information contained in such notice appearing on the relevant page of the Reuters Screen or such other medium for the electronic display of data as may be approved by the Trustee and notified to Noteholders or (b) publication in the Financial Times (European Edition) and The Wall Street Journal (National Edition) or, if either newspaper will cease to be published or timely publication therein will not be practicable, in such English language newspaper or newspapers as the Trustee will approve having a general circulation in Europe and the United States and (ii) so long as any subclass of Global Notes are held through the facilities of DTC, Euroclear and/or Clearstream, Luxembourg, and so long as such Notes are admitted to the Official List of the Irish Stock Exchange and to trading on the Alternative Securities Market and the rules of such exchange so permit, delivery of the relevant notice to DTC, Euroclear and/or Clearstream, Luxembourg for communication by them to the beneficial owners of the Global Notes of such subclass. Notwithstanding the above, any notice to the Noteholders of any Class or subclass of Notes bearing a floating rate of interest specifying an interest rate for such Notes, any Payment Date, any principal payment or any payment of redemption premium, if any, will be validly given by delivery of the relevant notice to DTC (or its nominees or its and their respective successors, in each case as registered Holder of the Global Notes), Euroclear and/or Clearstream, Luxembourg for communication by them to such Noteholders and also must be promptly delivered to the Listing Agent and made available at the offices of the EU Paying Agent and delivered to the Companies Announcement Office of the Irish Stock Exchange (other than notices required to be delivered by the Administrative Agent or Cash Manager). Any such notice will be deemed to have been given on the first day on which any of such conditions have been met. The Trustee will be at liberty to sanction some other method of giving notice to the Noteholders if, in its opinion, such other method is reasonable, having regard to the number and identity of the Noteholders and/or to market practice then prevailing, is in the best interests of the Noteholders and will comply with the rules of the Alternative Securities Market of the Irish Stock Exchange or such other stock exchange (if any) on which the Notes are then listed, and any such notice will be deemed to have been given on such date as the Trustee may approve; provided that notice of such method is given to the Noteholders in such manner as the Trustee will require. GOVERNING LAW AND JURISDICTION The Indenture, the Notes, the Cash Management Agreement and the Administrative Agency Agreement will be governed by and construed in accordance with the laws of the State of New York. In the Indenture, the Cash Management Agreement and the Administrative Agency Agreement, the members of the ALS Group will submit to the jurisdiction of the U.S. federal and New York State courts located in The City of New York for all purposes of or in connection with the Notes, the Indenture, the Cash Management Agreement and the Administrative Agency Agreement, as the case may be. BOOK ENTRY; DELIVERY AND FORM; DEFINITIVE NOTES Class A-1 Notes The Class A-1 Notes will be issued in definitive, fully registered form and registered in the name of the Holder of such Class A-1 Notes. An individual certificated note will be issued to each such Holder (which will initially be each Initial Class A-1 Commitment Holder) and represent the Class A-1 Notes held by such Holder from time to time as reflected in the register maintained by the Trustee in accordance with the Indenture. The Class A-1 Notes are currently not expected to clear through any clearing system. Class A-2 Notes On the Initial Closing Date, a Class A-2 Note in the form of a Regulation S Global Note and a Class A-2 Note in the form of a Rule 144A Global Note were each deposited with the Trustee and registered in the name of Cede & Co. as nominee of DTC and cleared under their accepted CUSIP and ISIN through DTC. Class A-2 Notes to be offered and sold to U.S. investors in reliance on Rule 144A will be represented by one or more Rule 144A Global Notes in registered form without interest coupons and with any applicable legend and will be registered in the name of Cede & Co. as nominee for DTC cleared under their accepted CUSIP and ISIN through DTC. Class A-2 Notes to be offered and sold to investors outside the United States in reliance on Regulation S will be represented by one or more Regulation S Global Notes in registered form without interest coupons and with any 187

196 applicable legend and will be registered in the name of Cede & Co. as nominee for DTC and cleared under their accepted CUSIP and ISIN through Euroclear and/or Clearstream, Luxembourg. Class A-2 Notes to be offered and sold in the United States to Institutional Accredited Investors will be in the form of Definitive Notes without interest coupons and with any applicable legend and registered in the name of the Holder of such Class A-2 Note. The Class A-2 Notes will be subject to transfer restrictions described in the Indenture. Definitive Notes "Definitive Notes" means any Notes in definitive, fully registered form, including the Class A-1 Notes, the Class A- 2 Notes issued to Institutional Accredited Investors, the Class E Notes and any Notes exchanged in accordance with the Indenture (and as described below). A Holder of beneficial interests in a Global Note will receive definitive notes in registered form without interest coupons in exchange for such beneficial interests only if: DTC notifies the Trustee and ALS that it is not willing or able to act as depositary for the Global Notes and the Trustee does not appoint a successor at ALS's request within 90 days of DTC's notice; as a result of changes in the laws or regulations of Bermuda or Ireland or any authority having power to tax or in the interpretation or administration of such laws or regulations which become effective on or after the Initial Closing Date, ALS or any Paying Agent becomes aware that it is or will be required to make any deduction or withholding from any payment in respect of the notes represented by such Global Notes which would not be required if such Notes were in definitive form; or after an Indenture Event of Default has occurred with respect to any subclass of Notes, Holders representing 51% or more of the aggregate Outstanding Principal Balance of such subclass notify ALS, the Trustee, and DTC that continuing a book-entry system through DTC, including in the case of such Definitive Notes admitted to the Official List of the Irish Stock Exchange and to trading on the Alternative Securities Market at the office of the EU Paying Agent, is no longer in the best interests of such Noteholders. If any of these events occurs, the Trustee will notify the relevant Holders and will arrange for such Definitive Notes to be issued in exchange for the Holders' beneficial interests in Global Notes. The Trustee or a paying agent will make distributions of interest, principal and any redemption premium on any Definitive Notes directly to Holders of Definitive Notes in whose names the Definitive Notes were registered at the close of business on the record date. Such distributions will be made by check mailed to the address of such Holder as it appears on the register maintained by the Trustee. A Noteholder holding Definitive Notes representing at least $1,000,000 of principal balance, upon application to the Trustee, may apply to have distributions paid by wire transfer to its account at a financial institution in New York, New York. Payments of principal of any Definitive Notes listed on the Irish Stock Exchange may also be made at the office of the EU Paying Agent. The final payment on any such Definitive Notes, however, will be made only upon presentation and surrender of such Definitive Notes at the office or agency of the paying agent, other than the EU Paying Agent, specified in the notice of final distribution to Noteholders. Definitive Notes will be freely transferable and exchangeable for Definitive Notes of the same subclass at the office of the Trustee or the offices of the registrar in New York, New York upon compliance with the procedures set forth in the Indenture. No service charge will be imposed for any registration of transfer or exchange, but payment of a sum sufficient to cover any tax or other governmental charge may be required. Upon the issue of Definitive Notes, Noteholders will be able to transfer Definitive Notes at the office of the registrar. In the case of a transfer of only a part of a Definitive Note, a new Definitive Note in respect of the balance of the principal amount of the Definitive Note not transferred will be delivered at the office of the registrar or sent by mail to the transferor. A Noteholder may exchange or replace a Definitive Note that is mutilated, destroyed, lost or stolen, at the offices of the Trustee or the registrar in New York, New York, upon presentation of the Note or satisfactory evidence of destruction, loss or theft. An indemnity satisfactory to the Trustee or the registrar or co-registrar may be required at the expense of the Noteholder before a replacement Definitive Note will be issued. The Noteholder will have to pay 188

197 any tax or other governmental charge imposed in connection with such exchange or replacement and any other related expenses, including the fees and expenses of the trustee, the registrar and co-registrar. Restrictions on Transfer The transfer or exchange of each of the Class A-1 Notes and the Class A-2 Notes will be subject to the applicable procedures set forth in the Indenture, including as described herein under "Transfer Restrictions". 189

198 Description of the Security Trust Agreement The following summary describes certain provisions of the Security Trust Agreement and is qualified in its entirety by reference to the provisions of the Security Trust Agreement. For purposes of the following description, "Secured Obligations" means all of the obligations of ALS that are secured by the Security Trust Agreement, including, but not limited to, all of its obligations to make any payments in accordance with the Indenture and all of its obligations to make payments to the Service Providers under other Related Documents. "Secured Parties" includes the Noteholders, the Service Providers, Hedge Providers, the Liquidity Provider, any other Eligible Provider, the Class A-1 Funding Agent and the Security Trustee. THE COLLATERAL Pursuant to the Security Trust Agreement, in order to secure the payment and performance of all of its Secured Obligations, ALS has assigned and pledged, and the Initial Subsidiaries will assign and pledge, to the Security Trustee, for its benefit and the benefit of the Secured Parties (except, with respect to clauses (ix) and (xi) below, the relevant Service Provider), a security interest in all of such member of the ALS Group's right, title and interest in the Collateral. The Collateral will include, but is not limited to, the following (the "Collateral"): (i) (ii) subject to other Security Documents in favor of the Security Trustee required by laws of non-u.s. jurisdictions (see " Foreign Security Documents"), capital stock of the Subsidiaries and indebtedness of the Subsidiaries and all additional shares or capital stock acquired by the ALS Group (including any Aircraft Interests in the nature of capital stock) and additional indebtedness owed to the ALS Group, including all dividends, interest, cash, instruments and other property received, receivable or otherwise distributable with respect or in exchange for any stock or indebtedness after the Initial Closing Date (collectively, the "Security Collateral"); all of the beneficial interest in the Subsidiaries and the additional beneficial interests acquired by the ALS Group (including any Aircraft Interests in the nature of beneficial interests), including any and all certificates, evidencing or creating such interest, any contracts or instruments pursuant to which such interest is created or issued and all distributions, cash, instruments and other property received, receivable or otherwise distributable in respect of or in exchange for such beneficial interest after the Initial Closing Date (collectively, the "Beneficial Interest Collateral"); (iii) all of the shares in the Subsidiaries and the additional shares acquired by the ALS Group (including any Aircraft Interests in the nature of shares), including any and all certificates, evidencing or creating such interest, any contracts or instruments pursuant to which such interest is created or issued and all distributions, cash, instruments and other property received, receivable or otherwise distributable in respect of or in exchange for such shares after the Initial Closing Date (collectively, the "Membership Interest Collateral"); (iv) (v) (vi) all Non-Trustee Accounts and all funds or any other interest held in, and all certificates and instruments, if any, representing or evidencing such accounts, all notes, certificates of deposit, deposit accounts, checks and other instruments delivered to or otherwise possessed by the Security Trustee for or on behalf of the ALS Group in substitution for or in addition to any or all of the then existing Non-Trustee Account Collateral and all interest, dividends, cash, instruments and other property received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing (collectively, the "Non-Trustee Account Collateral"); with respect to each member of the ALS Group, all right of such member in and to each Account at any time established and all cash, investment property, investments and earnings thereon, other investments, securities, instruments or other property at any time credited to any such Account with the Security Trustee (collectively, the "Account Collateral"); all other "investment property" of each member of the ALS Group, including any interest ALS may have in all Permitted Account Investments made or acquired from or with the proceeds of any Non-Trustee Account Collateral or Account Collateral of such member of the ALS Group and all certificates and instruments, if any, representing or evidencing such Permitted Account Investments and all interest, dividends, instruments and 190

199 other property received, receivable or otherwise distributed in respect of or in exchange for any or all of the foregoing; (vii) with respect to each member of the ALS Group, all of such member's rights in respect of the Secured Intercompany Obligations owed to it and all of such member's right, title and interest in and to all security assignments, cash deposit agreements and other security agreements executed in such member's favor (collectively, the "Assigned Agreements") and all of such member of the ALS Group's right, title and interest in and to all deposit accounts, if any, representing or evidencing such deposit accounts and all other property of whatever nature, all funds held therein or other property held in such deposit account, all certificates and instruments, in each case pledged, assigned or transferred to it or mortgaged or charged in its favor pursuant to any Assigned Agreement and all "supporting obligations" relating to any Assigned Agreement; (viii) with respect to each member of the ALS Group, all of such member's right, title and interest in and to all Leases to which such member is or may from time to time be party and any leasing arrangements among any member of the ALS Group with respect to such Leases together with all Related Collateral Documents (all such Leases and Related Collateral Documents, the "Assigned Leases"), including, without limitation, (a) all rights of such member to receive moneys due and to become due under or pursuant to such Assigned Leases, (b) all rights of such member to receive proceeds of any insurance, indemnity, warranty or guaranty pursuant to or with respect to such Assigned Leases, (c) claims of such member for damages arising out of or for breach or default under such Assigned Leases, (d) all rights under any such Assigned Lease with respect to any subleases of the Aircraft subject to such Assigned Lease, (e) the right of such member to terminate such Assigned Leases, to compel performance and otherwise exercise all remedies thereunder, whether arising under such Assigned Leases or by statute or at law or in equity and (f) any deregistration power of attorney issued in favor of such member; (ix) (x) (xi) with respect to each member of the ALS Group, all of such member's right, title and interest in and to the Servicing Agreement, Administrative Agency Agreement, the Cash Management Agreement, the Indenture (with respect to the obligations of ALS to the Trustee), the Reference Agency Agreement and the Security Trust Agreement (with respect to the obligations of each member of the ALS Group to the Security Trustee and the Operating Bank) and all other servicing agreements between any member of the ALS Group and a Service Provider including, without limitation, (a) all rights of such member to receive any moneys due or payable under or pursuant to such servicing agreements, (b) any claims of such member for damages arising out of, or for breach or default under, such servicing agreements, (c) all rights to indemnification under such servicing agreements and (d) all rights to compel performance under such servicing agreements, in each case whether arising under such servicing agreements or by statute, at law or in equity; with respect to each member of the ALS Group, all of such member's right, title and interest in and to the Purchase Agreement and any agreements pursuant to which Additional Aircraft are acquired; with respect to each member of the ALS Group, all of such member's right, title and interest in and to any insurance maintained by ALS or such member or any other person on their behalf; (xii) with respect to each member of the ALS Group, all of such member's right, title and interest in and to all Eligible Credit Facilities not consisting of a Cash Collateral Account and Hedge Agreements and all rights to administer, draw upon and otherwise deal with each such Eligible Credit Facility, if any, and to administer and otherwise deal with each such Hedge Agreement; (xiii) with respect to each member of the ALS Group, all of such member's right, title and interest in and to the personal property identified in a supplement to the Security Trust Agreement executed and delivered by such member to the Security Trustee; (xiv) with respect to each member of the ALS Group, all "aircraft objects" (as defined in the Cape Town Convention) identified in the Security Trust Agreement and any money or non-money proceeds of an "aircraft object" arising from the total or partial loss or physical destruction of the "aircraft object" or its total or partial confiscation, condemnation or requisition and all books, manuals, logs, records, writings, information, data and inspection modification and overhaul records and other like property relating to the "aircraft object"; 191

200 (xv) with respect to each member of the ALS Group, all of such member's "letters of credit" (including any "letter of credit rights" or "supporting obligations"); and (xvi) all proceeds of any and all of the foregoing Collateral, including, without limitation, proceeds that constitute property of the types described in subparagraphs (i) through (xv) above. VOTING RIGHTS OF THE ALS GROUP So long as no Default Notice has been delivered to ALS and no Indenture Event of Default described in clauses (f) and (g) under "Description of Notes Indenture Events of Default and Remedies" (each, an "Acceleration Default") has occurred and is continuing, each member of the ALS Group will be entitled to exercise any and all voting and other consensual rights pertaining to all or any part of the Security Collateral, Membership Interest Collateral and the Beneficial Interest Collateral pledged by such member for any purpose not inconsistent with the terms of the Security Trust Agreement, the charter or constitutional documents of such member or the Indenture; provided, however, that such member may not exercise or refrain from exercising any such right if in its judgment such action would have a material adverse effect on the value of all or any part of the Security Collateral, Membership Interest Collateral or the Beneficial Interest Collateral. Upon the delivery by the Security Trustee of a Default Notice to any member of the ALS Group or following the occurrence and during the continuance of an Acceleration Default, all rights of such member to exercise or refrain from exercising the voting and other consensual rights that it would otherwise be entitled to exercise pursuant to the Security Trust Agreement, will (i) to the extent permitted by applicable law, cease, and all such rights will thereupon become vested in the Security Trustee, which will thereupon have the sole right to exercise or refrain from exercising such voting and other consensual rights (including, but not limited to, the right, subject to the restrictions set forth in the applicable organizational documents, to remove or appoint any trustee, directors and officers of any direct or indirect Subsidiary) and (ii) to the extent not permitted by applicable law, such member will, to the fullest extent permitted by applicable law, exercise or direct the exercise of the relevant voting and other consensual rights as directed by the Security Trustee, provided, however, that, in the case of either (i) or (ii), the Security Trustee will have no obligation to exercise such voting or consensual right without instruction from the Controlling Party. REMEDIES Upon delivery of a Default Notice pursuant to the Indenture or if any Acceleration Default under the Indenture has occurred and is continuing, the Security Trustee may exercise in respect of the Collateral, in addition to other rights and remedies provided for in the Security Trust Agreement, all the rights and remedies of a secured party upon default under the applicable Uniform Commercial Code (the "UCC") (whether or not the UCC applies to the affected Collateral) and all rights and remedies under applicable law, and also may (i) require any member of the ALS Group who has pledged such Collateral to, and such member will agree that it will at its expense and upon request of the Security Trustee, assemble all or part of the Collateral as directed by the Security Trustee and make it available to the Security Trustee, (ii) without notice except as specified in the Security Trust Agreement, sell or cause the sale of the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Security Trustee's offices or elsewhere, for cash, on credit or for future delivery and upon such other terms as the Security Trustee deems commercially reasonable and (iii) exercise all rights of ALS or any other member of the ALS Group under the Loan, Expenses Apportionment and Guarantee Agreement or any other agreements in respect of Intercompany Obligations or of any member of the ALS Group under any Lease. SUBORDINATION Pursuant to the Security Trust Agreement, the respective rights and interest of any Noteholder (each, a "Subordinated Creditor") in the Collateral will be subordinate, to the extent and in the manner set forth in the Security Trust Agreement and in the Indenture, to all rights and interest in the Collateral of any person (each, a "Senior Creditor") whose right to receive payment ranks higher in the priority of payments as set forth under "Description of Notes Payment of Principal and Interest Priority of Payments". The Senior Creditors will have at all times interests prior and senior to that of the Subordinated Creditors in all Collateral until the payment in full of all payment obligations (other than certain payment obligations of certain Required Expenses as set forth in the Security Trust Agreement) owed to such Senior Creditors (the "Senior Obligations"). 192

201 Accordingly, pursuant to the Security Trust Agreement, so long as any of the Senior Obligations remain unpaid, any trustee or representative of any Noteholders (the "Subordinated Representatives"), along with the Subordinated Creditors, may not commence, or join with any creditor other than the Security Trustee and the Senior Creditors in commencing any enforcement, collection, execution, levy or foreclosure proceeding with respect to the Collateral or proceeds of Collateral. Upon request by the Controlling Party, the Subordinated Representatives and the Subordinated Creditors will, at the expense of ALS, join in enforcement, collection, execution, levy or foreclosure proceedings and otherwise cooperate fully in the maintenance of such proceedings by the Security Trustee, including without limitation by executing and delivering all such consents, pleadings, releases and other documents and instruments as the Security Trustee may reasonably request in connection therewith and the conduct of such proceedings will at all times be under the exclusive control of the Security Trustee acting at the direction of the Controlling Party. Furthermore, upon written request by the Controlling Party, the Subordinated Representatives will release the liens and security interests in favor of the Subordinated Creditors in any Collateral and execute and deliver all such directions, consents, pleadings, releases and other documents and instruments as the Controlling Party may reasonably request in connection therewith, upon any sale, lease, transfer or other disposition of such Collateral or part thereof in accordance with the Security Trust Agreement. Neither the Subordinated Representatives nor the Subordinated Creditors may contest, or bring (or join in) any action or proceeding for the purpose of contesting, the validity, perfection or priority of, or seeking to avoid, the rights of the Controlling Party or the Senior Creditors in or with respect to the Collateral. In addition, upon any distribution of all or any of the Collateral or proceeds of Collateral to creditors of any member of the ALS Group, upon the dissolution, winding-up, liquidation, arrangement, reorganization, adjustment, protection, relief, or composition of such Subsidiary or its debts, whether in any bankruptcy, insolvency, arrangement, reorganization, receivership, relief or similar case or proceedings or upon an assignment for the benefit of creditors or any other marshalling of the assets and liabilities of such Subsidiary, or otherwise, any distribution of any kind of Collateral or proceeds of Collateral that otherwise would be deliverable to the Subordinated Creditors will be delivered directly to the Security Trustee for application to or as collateral for the payment or prepayment of the Senior Obligations until the Senior Obligations will have been paid in full. Funds to be used for the purpose of making payments for an Optional Redemption of the Notes will not be subject to the foregoing subordination provisions. CAPE TOWN CONVENTION The security interest in (i) each "aircraft object" (as defined in the Cape Town Convention) granted to the Security Trustee pursuant to the Security Trust Agreement where the Aircraft-owning entity owning such "aircraft object" is situated in a country that has ratified the Cape Town Convention (a "Cape Town Contracting State") or where the relevant Aircraft is registered in a Cape Town Contracting State, and (ii) any Lease entered into, assigned, novated or extended after March 1, 2006 (or such later date as the Cape Town Convention may be given effect under the law of any applicable jurisdiction) with a Lessee situated in a Cape Town Contracting State or in respect of an Aircraft that is registered in a Cape Town Contracting State, will each provide for an "international interest" (as defined in the Cape Town Convention) that will be registered with the International Registry. If the Lessor under such Lease is situated in a Cape Town Contracting State, the assignment of the international interests in connection with such Leases to the Security Trustee pursuant to the Security Trust Agreement will also be registered with the International Registry. Each Lease of an Aircraft that is registered in a country that is not a Cape Town Contracting State and with a Lessee located in a country that is not a Cape Town Contracting State will not be registered with the International Registry, and each "aircraft object" that is registered in a country that is not a Cape Town Contracting State and is owned by an Aircraft-owning entity that is situated in a country that is not a Cape Town Contracting State will not be registered with the International Registry, as each such Lease and the security interest in each such "aircraft object" would not provide for an international interest under the Cape Town Convention. Currently, in certain jurisdictions (including the United States) such filings with the International Registry are not sufficient to provide a perfected security interest enforceable against third parties in an "aircraft object" registered in such jurisdiction, but additional steps which will not be taken by the ALS Group would be required such as recordation with the local aviation authority. Up to 15% of the Aircraft (by Adjusted Base Value) (such Aircraft, the "15% Aircraft") may be owned by members of the ALS Group not situated in Cape Town Contracting States if (i) the security interest granted with respect to each such 15% Aircraft under the Security Trust Agreement is perfected under the local law of the 193

202 applicable jurisdiction of registration of the Aircraft (or, if deemed necessary or advisable by local counsel in the jurisdiction of the applicable Lessee of such Aircraft, the jurisdiction of such Lessee) (including, if applicable, by the filing and recording of local law mortgages) and (ii) ALS has delivered to the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing) and the Security Trustee a favorable written opinion of reputable counsel as to (x) the valid perfection of the security interest under local law where the Aircraft is registered (or, if deemed necessary or advisable by local counsel in the jurisdiction of the applicable Lessee of such Aircraft, the jurisdiction of such Lessee), (y) the enforceability of such local law mortgages (if any) and (z) any other matters as the Class A-1 Funding Agent or the Security Trustee may reasonably request (to the extent that an opinion on such matter is reasonably able to be given under local law). FOREIGN SECURITY DOCUMENTS In addition to their pledge under the Security Trust Agreement, ALS has further assigned and pledged, and the Subsidiaries will further assign and pledge, to the Security Trustee, for its benefit and the benefit of the Secured Parties, a security interest in all of the ALS Group's right, title and interest in the shares in the Holding Company, the Initial Aircraft Companies and the Initial Leasing Intermediaries and the interest in the Irish VAT Refund Account. In each case the applicable Security Document is governed by the laws of the jurisdiction of organization of the Initial Subsidiary whose shares are pledged, or, in the case of the Irish VAT Refund Account, the jurisdiction in which the account is located. In accordance with the Security Trust Agreement, members of the ALS Group may enter into additional Security Documents governed by the laws of non-u.s. jurisdictions in respect of Collateral the ALS Group acquires or establishes in the future. "Security Documents" means, collectively, the Security Trust Agreement, the ALS Share Charge and any document executed pursuant thereto, or otherwise, for the purpose of granting a security interest in any Collateral to the Security Trustee for the benefit of the Secured Parties or for the purposes of perfecting such security interest. 194

203 Taxation IRISH TAX CONSIDERATIONS The following summary is based on an opinion of KPMG on principles of Irish taxation law. These principles depend on interpretations of current law, regulations, rulings and decisions and Irish Revenue practice, and reliance on Irish Revenue confirmations obtained prior to the issue of and in connection with the Notes, all of which are subject to change. Any such change may be applied retroactively and may adversely affect the principles of Irish tax on which the opinion is based. This summary does not address all Irish tax principles that may apply to all categories of noteholders, some of which may be subject to special rules. Irish Income and Withholding Taxes on Payments on the Notes In the opinion of KPMG, there will be no withholding or deduction for Irish taxes on principal and interest paid by ALS on the Initial Class A Notes or any payment of the principal and interest on the book-entry interests. The foregoing opinion is based on certain assumptions, including (1) the Class A-1 Notes are, at each interest payment date, beneficially owned by (a) companies who are resident for tax in either a member state of the European Union (other than Ireland) or in a territory which has concluded a double tax treaty with Ireland which has force of law in Ireland and such relevant territory, and where such amounts payable are not made in connection with a trade or business carried on by such Holder of Class A-1 Notes through a branch or agency in Ireland or (b) a bank carrying on a bona fide banking business in Ireland and (2) the Class A-2 Notes will be listed before any interest payments are made on the Alternative Securities Market of the Irish Stock Exchange or on another stock exchange which is recognized for relevant purposes of Irish law and interest on the Initial Class A Notes and book-entry interests is paid by a paying agent outside of Ireland. This is known as the Eurobond exemption from withholding tax. In other circumstances, where the aforementioned assumptions do not apply, interest payments on the Notes may become subject to Irish withholding tax at the standard income tax rate which is currently 20% unless relief is available and is claimed under the provisions of a double taxation treaty between Ireland and the country of tax residence of the Noteholder. In this regard, Ireland has tax treaties with a number of jurisdictions which, under certain circumstances, reduce the rate of Irish withholding tax on payments of interest to persons resident in those jurisdictions. If any Irish withholding tax is imposed, Noteholders and holders of book-entry interests should note that, except with respect to (1) Holders of Class A-1 Notes and (2) certain Holders of Class A-2 Notes that are banks or similar financial institutions (which Holders, in the case of each of (1) and (2), are Qualifying Lenders), ALS will not make any additional payments for any withholding tax. Interest payments made by ALS on the Initial Class A Notes have an Irish source and whether or not paid gross are, under existing Irish tax law, chargeable to Irish income tax by self-assessment. Certain categories of taxpayer may be exempt from taxation of interest: Under Irish domestic law, a company that is not resident in Ireland and is resident either in a Member State of the EU or in a country with which Ireland has a double taxation agreement will be exempt from Irish tax on any interest received on the Initial Class A Notes provided it does not carry on a trade in Ireland through a branch or agency to which this interest is attributable and as long as ALS is making the interest payments in the ordinary course of its trade or business. A person will be exempt from Irish tax on interest on the Initial Class A Notes where the Initial Class A Notes qualify for the Eurobond exemption from withholding tax (see above) provided the person does not carry on a trade in Ireland through a branch or agency to which the interest is attributable and the person is not resident in Ireland and is resident in a Member State of the EU or in a country with which Ireland has a double taxation agreement. In addition, an exemption from Irish tax may also be available under the terms of an applicable double tax agreement to certain persons entitled to the benefits of such an agreement. 195

204 Where a Holder of the Initial Class A Notes cannot avail itself of these exemptions, the Noteholder will be chargeable to Irish income tax by direct assessment. Taxation of Capital Gains Capital gains tax is chargeable at the rate of 20% on taxable capital gains with allowance being made for acquisition costs and enhancement expenditure. The Initial Class A Notes are chargeable assets for Irish capital gains tax purposes. However, non-resident Holders are only liable for capital gains tax on the disposal of the Initial Class A Notes where the Notes are held as part of the assets of a business carried on through an Irish branch or agency. Irish Capital Acquisitions Tax Irish Capital Acquisitions Tax ("CAT") applies to gifts and inheritances where the donor/deceased or the beneficiary is resident or ordinarily resident in Ireland at the date of the gift or inheritance or to the extent that the property of which the gift or inheritance consists is situated in Ireland at that date. Special rules with regard to residence apply where an individual is not domiciled in Ireland. The beneficiary is primarily liable to pay CAT. Persons who are secondarily liable include the donor, in the case of a gift, or the personal representatives, in the case of an inheritance. Certain tax-free group thresholds apply which vary with the degree of relationship between the donor/deceased and the beneficiary. The current tax-free group thresholds are: 521,208 for gifts and inheritances taken by a child, 52,121 for gifts and inheritances taken by a parent, grandparent, grandchild, brother, sister, nephew or niece, and 26,060 for gifts and inheritances taken by other persons. All taxable gifts and inheritances within the same group threshold received by an individual since December 1, 1991 are aggregated and only the excess over the tax-free threshold is taxed. CAT is charged at a flat rate of 20%. Gifts and inheritances between spouses are exempt from CAT. The Initial Class A Notes may constitute property situated in Ireland for CAT purposes. Although there is no gift and inheritance tax convention between the United States and Ireland, an estate tax convention between the two countries was ratified in 1951 and it is understood that the relevant authorities regard that convention as now applying to Irish inheritance tax and U.S. federal estate tax arising on death but not to tax on gifts. Irish Stamp Duty No stamp duty, stamp duty reserve tax or issue, documentary, registration or other similar tax imposed by any government department or other taxing authority of or in Ireland (collectively "Irish stamp duty") should be payable by Noteholders on the creation, initial issue or delivery of Initial Class A Notes. The Initial Class A Notes should be considered loan capital within the meaning of Section 85 of the Stamp Duties Consolidation Act, 1999, and, provided the issue price is not less than 90% of their nominal value, the transfer of any interest therein by written instrument should not attract Irish stamp duty. Transfers of book entry interests in the Initial Class A Notes which are not effected by written instrument should not be chargeable with Irish stamp duty. Any Irish stamp duty charged would be at the rate of one per cent of the amount of the consideration for the transfer or, if greater, the market value of the interest in the Initial Class A Notes being transferred. EU Directive on the Taxation of Savings Income The regulations implementing in Ireland the European Union Directive on the Taxation of Savings Income (the "Directive") (EC (Taxation of Savings Income in the form of Interest Payments) Regulations 2003) provide for various reporting requirements for paying agents in respect of interest payments made to individuals resident in other member states of the EU. These reporting requirements do not apply where: (1) payments of interest on the Notes will be made by the Trustee or the paying agent, (2) neither the Trustee nor the paying agents carries on a trade in Ireland through a branch or agency to which its activities as paying agent are attributable and (3) the payments are not made through a residual entity (essentially an intermediary through which interest payments are made) in Ireland. 196

205 Irish Taxation of the ALS Group The following discussion of the Irish taxation of the ALS Group is based on the advice of KPMG, ALS's tax advisor. ALS and the other Irish tax-resident members of the ALS Group should be subject to Irish corporate tax on their net trading income at a 12.5% rate and on non-trading income at a rate of 25%. There can be no assurance that these tax rates will not be changed in future. A company will not be subject to Irish income tax if it is not Irish tax resident, has no branch or agency in Ireland and has no Irish source income. The non-irish tax resident Initial Aircraft-Owning Entities have adopted certain operational provisions in their organizational documents regarding the management and operation of their businesses designed to minimize the likelihood of Irish taxation of their income. In the opinion of KPMG, Irish tax advisor to ALS, the non-irish tax resident Initial Aircraft-Owning Entities should not be subject to Irish income tax on their non-irish source income. However, there can be no assurance that these companies will not be subject to Irish tax on some or all of their income. Irish Value Added Tax Ireland generally imposes Value Added Tax ("VAT") on the supply of goods and services. Any Irish VAT that may become payable by a member of the ALS Group in connection with any management services performed by the Servicer will be eligible to be reclaimed by that company on the assumption that invoices addressed to any member of the ALS Group relate to costs attributable to a business activity of that company which is considered to be a supply of goods or services by that company. Some or all of the services provided to the ALS Group by the Cash Manager may be exempt from Irish VAT. To the extent that any Irish VAT is payable on services provided to a member of the ALS Group by the Cash Manager or by the Administrative Agent such VAT will be eligible to be reclaimed by that company on the same assumption as set out in the preceding paragraph. Irish VAT may also be payable on services provided to an ALS Group company by other service providers in Ireland or abroad (on a reverse charge basis). Such VAT should also be eligible to be recovered on the same assumption as that set out earlier in this paragraph. Payments by a Lessee to ALS and its Irish resident Subsidiary companies will not be subject to Irish VAT in any case where the leased Aircraft is used or to be used by a transport undertaking operating for reward chiefly on international routes. CERTAIN BERMUDA TAX CONSIDERATIONS The following summary is based upon the opinion of Conyers Dill & Pearman, acting as special counsel in Bermuda to ALS, on the tax treatment under Bermuda law of ALS and the tax treatment under Bermuda law for the purchase, ownership and disposition of the Initial Class A Notes. The discussion is based on an interpretation of laws, regulations, all of which are currently in effect and are subject to change. Any such change may be applied retroactively and may adversely affect the Bermuda tax consequences described herein. Investors should consult their professional advisers regarding the possible tax consequences of their subscribing for, purchasing, holding, selling or redeeming the Initial Class A Notes under the laws of their countries of citizenship, residence, ordinary residence or domicile. The following is a general summary of Bermuda taxation in relation to the Initial Class A Notes. Under existing Bermuda laws: payments of principal and interest in respect of the Initial Class A Notes will not be subject to taxation in Bermuda, no withholding will be required on such payments to any Noteholder and gains derived from the sale of Initial Class A Notes will not be subject to Bermuda income or corporation tax, as Bermuda currently has no income, corporation or capital gains tax and no estate duty, inheritance tax or gift tax; and certificates evidencing the Initial Class A Notes, in registered form, to which title is not transferable by delivery, will not attract Bermuda stamp duty. 197

206 ALS has been formed under the laws of the Bermuda as an exempted company, and as such, ALS has obtained an assurance from the Minister of Finance of Bermuda under the Exempted Undertakings Tax Protection Act 1966 that, in the event that any legislation is enacted in Bermuda imposing any tax computed on profits or income, or computed on any capital asset, gain or appreciation, or any tax in the nature of estate duty or inheritance tax, such tax will not, until March 28, 2016, be applicable to ALS or to any of its operations or to its shares, debentures or other obligations except insofar as such tax applies to persons ordinarily resident in Bermuda or to any taxes payable by ALS in respect of real property owned or leased by ALS in Bermuda. CERTAIN UNITED STATES TAX CONSIDERATIONS IRS Circular 230 Disclosure THE DESCRIPTIONS OF U.S. FEDERAL TAX ISSUES DESCRIBED BELOW, IN THE SECTION ENTITLED "CERTAIN ERISA CONSIDERATIONS" AND ELSEWHERE IN THESE LISTING PARTICULARS ARE NOT INTENDED OR WRITTEN FOR USE, AND CANNOT BE USED, FOR THE PURPOSE OF AVOIDING U.S. FEDERAL, STATE OR LOCAL TAX PENALTIES. THOSE DESCRIPTIONS WERE WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING OF THE TRANSACTIONS GIVING RISE TO THE MATTERS ADDRESSED HEREIN. EACH PROSPECTIVE PURCHASER OF THE INITIAL CLASS A NOTES SHOULD SEEK ADVICE BASED ON THAT PERSON'S PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR. Subject to the limitations and qualifications stated herein, the discussion below sets forth the expected material U.S. federal income tax consequences of the activities of the ALS Group. The discussion is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations thereunder, published rulings and court decisions, all as currently in effect and all subject to change at any time, possibly with retroactive effect. Taxation of the ALS Group ALS is treated as a corporation for U.S. federal income tax purposes. The ALS Group and the Servicer will adopt certain operating procedures designed to reduce the risk that any member of the ALS Group will be deemed to have engaged in a trade or business in the United States. As long as a member of the ALS Group is not treated as engaged in a U.S trade or business, ALS Group income will not be subject to U.S. federal net income tax. If a member of the ALS Group were treated as engaged in a U.S. trade or business, ALS Group income could be subject to U.S. federal income taxes the imposition of which would reduce the cash flow available to pay interest on and principal of the Initial Class A Notes. ALS expects that substantially all of its rental income and gain from the sale of Aircraft will be exempt from U.S. tax by reason of ALS and the Irish tax-resident Initial Aircraft-Owning Subsidiaries qualifying for certain exemptions from U.S. federal income tax pursuant to an income tax treaty between the United States and Ireland. The ability of the members of the ALS Group to qualify for those exemptions may depend in part on the common direct or indirect ownership of the beneficial equity interests in ALS, the Servicer and the Administrative Agent and the activities of the Servicer and the Administrative Agent in Ireland enabling the members of the ALS Group to be treated as engaged in the active conduct of a trade or business in Ireland. ALS will take the position that the Class E-1 Notes represent the only equity interests in ALS. The Indenture contains restrictions on the ability of a Holder of Class E-1 Notes to transfer those Notes if the transfer would subject the ALS Group to materially increased U.S. taxes. It is a condition to each Level 1 Advance that U.S. tax counsel to ALS provide advice indicating that, as of the date of such advice, ALS should be entitled to claim benefits under the tax treaty between the United States and Ireland with respect to certain U.S. source rental income received by ALS. This advice will be based on facts and law (including regulations, rulings and other guidance) as of the time the advice is given. Any changes in the facts or law (including the interpretation thereof) from the date of such advice could impact the analysis and conclusions of counsel. In addition, the advice to be provided by ALS's tax counsel will represent the best judgment of such counsel at the time the advice is given and will not be binding on the applicable tax authorities or the courts. However, no assurance can be given that Irish tax-resident members of the ALS Group will qualify for the exemption from U.S. federal income tax pursuant to the U.S-Ireland income tax treaty; such 198

207 qualification may be threatened by a direct or indirect transfer of the Class E-1 Notes or beneficial equity interests in the Servicer or the Administrative Agent, the appointment of a new Servicer or Administrative Agent, the activities of the Servicer and Administrative Agent in Ireland not being sufficient to cause ALS to be treated as engaged in the active conduct of a trade or business, changes in the U.S.-Ireland income tax treaty or its interpretation, or otherwise. OTHER TAXES Holders of the Initial Class A Notes may be liable for taxes in the country, state or locality in which they are resident or doing business. Since the tax laws of each country, state, and locality may differ, each prospective investor should consult its own tax counsel with respect to any such taxes that may be payable as a result of an investment in the Initial Class A Notes. THE ABOVE DISCUSSION IS A GENERAL SUMMARY. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PARTICULAR INVESTOR. EACH PROSPECTIVE INVESTOR IS STRONGLY URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES TO IT OF AN INVESTMENT IN THE INITIAL CLASS A NOTES. 199

208 Certain ERISA Considerations TO ENSURE COMPLIANCE WITH INTERNAL REVENUE SERVICE CIRCULAR 230, HOLDERS ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF FEDERAL TAX ISSUES IN THESE LISTING PARTICULARS IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED UPON BY HOLDERS FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON HOLDERS UNDER THE INTERNAL REVENUE CODE; (B) SUCH DISCUSSION IS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) HOLDERS SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR. General The United States Employee Retirement Income Security Act of 1974, as amended ("ERISA") imposes certain requirements on "employee benefit plans" (as defined in Section 3(3) of ERISA) that are subject to the fiduciary responsibility provisions of Title I of ERISA, including entities such as collective investment funds and separate accounts whose underlying assets include the assets of any such plan (collectively, "ERISA Plans"), and on those persons who are fiduciaries with respect to ERISA Plans. Investments by ERISA Plans are subject to ERISA's general fiduciary requirements, including the requirement of investment prudence and diversification and the requirement that an ERISA Plan's investments be made in accordance with the documents governing the ERISA Plan. The prudence of a particular investment must be determined by the responsible fiduciary of an ERISA Plan by taking into account the ERISA Plan's particular circumstances and all of the facts and circumstances of the investment including, but not limited to, the matters discussed in "Risk Factors" and the fact that in the future there may be no market in which such fiduciary will be able to sell or otherwise dispose of the Initial Class A Notes. Section 406 of ERISA and Section 4975 of the United States Internal Revenue Code of 1986, as amended (the "Code") prohibit certain transactions involving the assets of an ERISA Plan (as well as those plans that are not subject to Title I of ERISA but which are subject to Section 4975 of the Code, such as individual retirement accounts including entities whose underlying assets include the assets of such plans (together with ERISA Plans, "Plans")) and certain persons (referred to as "parties in interest", for purposes of ERISA, or "disqualified persons", for purposes of the Code) having certain relationships to such Plans, unless a statutory or administrative exemption is available. A party in interest or disqualified person who engages in a prohibited transaction may be subject to excise taxes and other penalties and liabilities under ERISA and Section 4975 of the Code. A regulation promulgated by the U.S. Department of Labor (the "DOL") at 29 C.F.R. Section , as modified by Section 3(42) of ERISA (the "Plan Asset Regulation"), describes what constitute the assets of a Plan with respect to the Plan's investment in an entity for purposes of certain provisions of ERISA and Section 4975 of the Code, including the fiduciary responsibility provisions of Title I of ERISA and Section 4975 of the Code. Under the Plan Asset Regulation, if a Plan invests in an "equity interest" of an entity that is neither a "publicly offered security" nor a security issued by an investment company registered under the Investment Company Act, the Plan's assets include both the equity interest and an undivided interest in each of the entity's underlying assets, unless it is established that the entity is an "operating company" or, as further discussed below, that equity participation in the entity by "benefit plan investors" is not "significant". Prohibited transactions within the meaning of Section 406 of ERISA or Section 4975 of the Code may arise if Initial Class A Notes are acquired with the assets of a Plan with respect to which ALS or any Class A-1 Commitment Holder is a party in interest or a disqualified person. Certain exemptions from the prohibited transaction provisions of Section 406 of ERISA and Section 4975 of the Code may be applicable, however, depending in some cases on the type of Plan fiduciary making the decision to acquire an Initial Class A Note and the circumstances under which such decision is made. Included among these exemptions are DOL Prohibited Transaction Class Exemption ("PTCE") (relating to investments by bank collective investment funds), PTCE (relating to transactions effected by a "qualified professional asset manager"), PTCE 90-1 (relating to investments by insurance company pooled separate accounts), PTCE (relating to investments by insurance company general accounts), and PTCE (relating to transactions effected by certain in-house asset managers) (collectively, the "Investor-Based Exemptions") or the exemption pursuant to Section 4975(d)(20) of the Code and Section 408(b)(17) of ERISA relating to transactions with service providers (other than certain fiduciaries) for adequate consideration (the 200

209 "Statutory Exemption"). There can be no assurance that any of these Investor-Based Exemptions, the Statutory Exemption or any other exemption will be available with respect to any particular transaction involving the Initial Class A Notes. Governmental plans and certain church plans, while not subject to the fiduciary responsibility provisions of ERISA or the provisions of Section 4975 of the Code, may nevertheless be subject to state, local or other federal laws that are substantially similar to the foregoing provisions of ERISA and the Code. Any insurance company proposing to invest assets of its general account in the Initial Class A Notes should consider the extent to which such investment would be subject to the requirements of Title I of ERISA and Section 4975 of the Code in light of the U.S. Supreme Court's decision in John Hancock Mutual Life Insurance Co. v. Harris Trust and Savings Bank, 510 U.S. 86 (1993). In particular such insurance company should consider the extent of the relief granted by the DOL in PTCE 95-60, and the effect of Section 401(c) of ERISA as interpreted by regulations thereunder by the DOL in January Initial Class A Notes The Plan Asset Regulation defines an "equity interest" as any interest in an entity other than an instrument that is treated as indebtedness under applicable local law and which has no substantial equity features. It is expected that the Initial Class A Notes will be treated as debt of ALS for U.S. income tax purposes. Because of this, and the traditional debt features of the Initial Class A Notes, as well as the absence of conversion rights, warrants and other typical equity features, the Initial Class A Notes when issued should not be considered to be "equity interests" in ALS and, accordingly, the assets of ALS should not be considered "plan assets" under ERISA. Nevertheless, without regard to whether the Initial Class A Notes are considered equity interests, prohibited transactions within the meaning of Section 406 of ERISA or Section 4975 of the Code may arise if such Initial Class A Notes are acquired with the assets of an ERISA Plan with respect to which ALS or any Class A-1 Commitment Holder is a party in interest or a disqualified person. However, one or more of the Investor-Based Exemptions or the Statutory Exemption may be available to cover such prohibited transactions. By its acquisition of the Initial Class A Notes each purchaser and subsequent transferee thereof will be deemed to have represented and agreed that either (a) it is neither a Plan, nor a governmental, non-u.s., church or other plan which is subject to any federal, state, local or non-u.s. law that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code or (b) its acquisition, holding and disposition of an Initial Class A Note will not constitute or result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code (or, in the case of a governmental, non-u.s., church or other plan, will not violate any substantially similar law). Any Plan fiduciary or other person who proposes to use assets of any Plan to purchase any Initial Class A Notes should consult with its counsel regarding the applicability of the fiduciary responsibility and prohibited transaction provisions of ERISA and Section 4975 of the Code to such an investment, and to confirm that such investment will not constitute or result in a non-exempt prohibited transaction or any other violation of an applicable requirement of ERISA. The sale of the Initial Class A Notes to a Plan, or to a person using assets of any Plan to effect its purchase of any Initial Class A Notes, is in no respect a representation by ALS or any Class A-1 Commitment Holder that such an investment meets all relevant legal requirements with respect to investments by Plans generally or any particular Plan, or that such an investment is appropriate for Plans generally or any particular Plan. Investors whose investment activities are subject to regulation by federal, state or local law or governmental authorities should review the applicable laws and/or rules, policies and guidelines adopted from time to time by such authorities before purchasing any Initial Class A Notes. No representation is made as to the proper characterization of the Initial Class A Notes for legal investment or other purposes or as to the ability of particular investors to purchase any Initial Class A Notes under applicable law or other legal investment restrictions. Accordingly, all investors whose investment activities are subject to such laws and/or regulations, regulatory capital requirements or review by regulatory authorities should consult their own legal advisors in determining whether and to what extent the Initial Class A Notes constitute a legal investment or are subject to investment, capital or other restrictions. 201

210 Resale Agreement In connection with the Class A-1 Note Funding Agreement, each of ALS, AerVenture, AerCap, Calyon, in its capacity as agent for the Class A-1 Commitment Holders (the "Reselling Noteholder Agent") and each Initial Class A-1 Commitment Holder entered into the Resale Agreement on the Initial Closing Date pursuant to which each of ALS, AerVenture and AerCap agree to assist Class A-1 Commitment Holders in the resale to investors of all or a portion of the Class A-1 Notes that Class A-1 Commitment Holders fund under the Class A-1 Note Funding Agreement by offering to investors either Class A-1 Notes or Class A-2 Notes received in exchange for Class A-1 Notes in accordance with the terms of the Indenture. The Class A-1 Note Funding Agreement requires that each Class A-1 Commitment Holder become a party to the Resale Agreement. The Resale Agreement provides that in connection with each offering of Class A-1 Notes (other than as provided below) or Class A-2 Notes received in exchange for Class A-1 Notes in accordance with the terms of the Indenture to investors by Class A-1 Commitment Holders electing to participate in such offering (each, a "Selling Class A Noteholder"), each such Selling Class A Noteholder will agree to make offers and sales solely (i) to persons whom such Selling Class A Noteholder reasonably believes to be "qualified institutional buyers", as defined in Rule 144A (a "QIB"), (ii) to a limited number of persons whom the Selling Class A Noteholder reasonably believes to be institutional "accredited investors" as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act or an entity all of the equity owners of which are institutional accredited investors (collectively "Institutional Accredited Investors") or (iii) to purchasers in offshore transactions meeting the requirements of Rule 904 of Regulation S ("Regulation S Purchasers") (such persons specified in clauses (i), (ii) and (iii) being referred to herein, with respect to Class A Notes, as the "Eligible Purchasers"). Notwithstanding the foregoing, Class A-1 Commitment Holders may, subject to the provisions of the Class A-1 Note Funding Agreement and the Indenture, elect to sell Class A-1 Notes to investors without conducting an offering pursuant to the process outlined in the Resale Agreement so long as any such sales are made exclusively to a Regulation S Purchaser who is not a "U.S. person" and who acquires the Class A-1 Notes outside the United States in an "offshore transaction" (each within the meaning of Regulation S). (a "Class A-1 Non-U.S. Sale"). Any Class A-1 Non-U.S. Sale will not be governed by nor subject to the Resale Agreement. Pursuant to the Resale Agreement, ALS, AerVenture and AerCap each jointly and severally agree to indemnify each Selling Class A Noteholder against certain liabilities, including certain liabilities under the Securities Act, or to contribute to payments that such Selling Class A Noteholder may be required to make in respect of these liabilities (provided that AerCap and AerVenture each will waive any right of contribution that they may have against ALS in respect of such indemnity). AerVenture and AerCap also agree to reimburse the Selling Class A Noteholders for certain expenses incurred in connection with the offering of the Initial Class A Notes to the extent provided in the Resale Agreement. The Resale Agreement also requires that each Selling Class A Noteholder represent and agree at the time of an offering of Class A Notes that: It has not offered or sold and will not offer or sell any Initial Class A Notes to investors in the United Kingdom prior to the expiry of the period of six months from the offering date of the Initial Class A Notes hereby, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations of 1995, as amended. It has not communicated or caused to be communicated and will not communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (the "FSMA")) received by it in connection with the issue or sale of any Initial Class A Notes in circumstances in which Section 21(1) of the FSMA does not apply to ALS. It has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to Class A Notes in, from or otherwise involving the United Kingdom. If operating in or otherwise involving Ireland, it will not offer or sell any Initial Class A Notes, otherwise than: (A) in conformity with the provisions of the European Communities (Markets in Financial Instruments) 202

211 Regulations 2007, as amended (the "MiFID Regulations") and, if acting under and within the terms of an authorization to do so for the purposes of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments (MiFID) it has complied with any applicable requirements of the MiFID Regulations or as imposed, or deemed to have been imposed, by the Financial Regulator pursuant to the MiFID Regulations and, if acting within the terms of an authorization granted to it for the purposes of Directive 2006/48/EC of the European Parliament and the Council of the 14 June 2006 relating to the taking up and the pursuit of the business of credit institutions as amended, replaced or consolidated from time to time, it has complied with any codes of conduct or practice made under Section 117(1) of the Central Bank Act 1989 of Ireland (as amended) and any applicable requirements of the MiFID Regulations or as imposed pursuant to the MiFID Regulations; and (B) in circumstances which do not require the publication of a prospectus within the meaning of Directive 2003/71/EX (the "Prospectus Directive"). It will not undertake any directed selling efforts with respect to Initial Class A Notes in Bermuda and will not offer to sell or sell Initial Class A Notes to persons resident for income tax purposes in Bermuda (other than to financial institutions in the normal course of business). A financial institution for these purposes includes, without limitation, a bank, finance house, insurance company, investment trust or fund, mutual fund or society, pension fund and other institution of a like nature. It will not offer or sell any Initial Class A-1 Notes, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan. The Initial Class A Notes will not be registered under the Securities Act and may not be offered or sold within the United States except in certain transactions exempt from the registration requirements of the Securities Act. In addition, the Initial Class A Notes will be subject to certain restrictions on resales and transfer as described under "Transfer Restrictions". 203

212 Reports to Noteholders The Administrative Agent will distribute to the Trustee, and the Trustee will distribute, to each Noteholder, the Liquidity Provider, the Class A-1 Funding Agent, each Hedge Provider and each Rating Agency (any such distribution, a "Trustee Report Distribution"), on the second Business Day before each Payment Date and on any other date for distribution of any payments with respect to each subclass of Notes then outstanding, a monthly report prepared by the Administrative Agent with respect to any payment to be made on such Payment Date or other date, as the case may be, setting forth certain information after giving effect to such payment (each, a "Monthly Report"). The annual appraisals will be reflected in the first Monthly Report following the receipt of such appraisals. By the 15th day of February, May, August and November, the Administrative Agent will distribute to the Trustee, who will on the next Payment Date make a Trustee Report Distribution of, a report including (i) a statement setting forth an analysis of the Collections Account activity for the preceding fiscal quarter ended March 31, June 30, September 30 and December 31, respectively, (ii) a discussion and analysis of such activity and of any significant developments affecting the ALS Group in such quarter and (iii) an updated description of the Aircraft then in the Portfolio and the related Lessees (each, a "Quarterly Report"). On or prior to June 30 of each year, the Administrative Agent will distribute to the Trustee, who will on the next Payment Date make a Trustee Report Distribution of, a report including (x) a statement setting forth an analysis of the Collections Account activity for the preceding fiscal year ended December 31, (y) a discussion and analysis of such activity and of any significant developments affecting the ALS Group in such year and (z) updated information with respect to the Aircraft then in the Portfolio (each, an "Annual Report"). Each Annual Report will include audited consolidated financial statements of the ALS Group. Each Quarterly Report and Annual Report will also contain a quarterly or annual, as the case may be, statement of (a) the Aircraft on ground distinguishing between those on ground due to any repossessions and those subject to re-marketing for re-leasing and (b) a comparison of actual versus expected payment results. The Trustee will deliver a copy of, or make available via a website, each Quarterly Report and Annual Report to any Holder or other Secured Party who requests a copy thereof. ALS will cause the Administrative Agent to deliver, after the end of each calendar year but not later than the latest date permitted by law, to the Trustee, the Cash Manager, the Liquidity Provider, the Class A-1 Funding Agent and the Directors; and the Trustee will (or will instruct any Paying Agent to) furnish to each person who at any time during such calendar year was a Holder of any subclass of Notes during such calendar year, a statement prepared by the Administrative Agent containing the sum of the amounts determined in accordance with the Indenture with respect to the subclass of Notes for such calendar year or, in the event such person was a Holder of any subclass of Notes during only a portion of such calendar year, for the applicable portion of such calendar year, and such other items as are readily available to the Administrative Agent and which a Holder will reasonably request as necessary for the purpose of such Holder's preparation of its U.S. federal income or other tax returns. In the event that any such information has been provided by any paying agent directly to such person through other tax-related reports or otherwise, the Trustee in its capacity as paying agent will not be obligated to comply with such request for information. ALS will not prepare financial statements for distribution to Noteholders in addition to reports described in this section. At such time, if any, as the Notes of any Class are issued in the form of Definitive Notes, the Administrative Agent will prepare and the Trustee will deliver the information described above to each Holder of record of a Definitive Note of such Class as the name and period of ownership of such Holder of record of a Definitive Note of such Class appears on the records of the Trustee. The Trustee will maintain the records concerning the Holders of such Notes. 204

213 Book-Entry Registration, Global Clearance and Settlement GLOBAL CLEARANCE AND SETTLEMENT Transfers of beneficial interests in Class A-2 Notes issued as Global Notes between DTC Participants will occur in the ordinary manner in accordance with DTC rules. Transfers between participating organizations whose securities are held by Clearstream, Luxembourg (the "Clearstream Participants") and participants in Euroclear (the "Euroclear Participants") will occur in the ordinary manner in accordance with the applicable rules and operating procedures of Clearstream, Luxembourg and Euroclear. Clearstream, Luxembourg and Euroclear will hold omnibus positions of beneficial interests in Global Notes on behalf of their participants through customers' securities accounts in their respective names on the books of their respective depositaries, which are Euroclear Bank S.A./N.V., as operator of Euroclear, and Citibank, N.A. as operator of Clearstream (in such capacities, the "Securities Depositaries") which, in turn, will hold such positions in customers' securities accounts in the Securities Depositaries' names on the books of DTC. Cross market transfers between persons holding directly or indirectly through DTC Participants, on the one hand, and directly or indirectly through Clearstream Participants or Euroclear Participants, on the other, will be effected by DTC in accordance with DTC rules on behalf of Clearstream, Luxembourg or Euroclear, as the case may be, by its respective Securities Depositary. However, such cross market transactions will require delivery of instructions to Clearstream, Luxembourg or Euroclear, as the case may be, by the counterparty in such system in accordance with its rules and procedures and within its established deadlines. If the transaction meets its settlement requirements, Clearstream, Luxembourg or Euroclear, as the case may be, will deliver instructions to its respective Securities Depositary to take action to effect final settlement on its behalf by delivering or receiving securities in DTC, and making or receiving payment in accordance with normal procedures for same-day funds settlement applicable to DTC. Clearstream Participants and Euroclear Participants may not deliver instructions directly to the Securities Depositaries. Because of time-zone differences, credits of beneficial interests in Global Notes received in Clearstream, Luxembourg or Euroclear as a result of a transaction with a DTC Participant will be made during the securities settlement processing day dated the Business Day following the DTC settlement date. Such credits or any transactions in such beneficial interests settled during such processing will be reported to the relevant Clearstream Participant or Euroclear Participant on such Business Day. Cash received in Clearstream, Luxembourg or Euroclear as a result of sales of beneficial interests in the Global Notes by or through a Clearstream Participant or Euroclear Participant to a DTC Participant will be received with value on the DTC settlement date but will be available in the relevant Clearstream, Luxembourg or Euroclear cash account only as of the Business Day following settlement in DTC. Exchanges Among Global Notes Noteholders may hold their interests in the Regulation S Global Note directly through Euroclear or Clearstream if they are participants in such systems or indirectly through organizations that are participants in such systems. After the expiration of the restricted period (as defined below), Noteholders may also hold such interests through organizations other than Euroclear or Clearstream that are participants in the DTC system. Euroclear and Clearstream will hold such interests in the Regulation S Global Note on behalf of their participants through customers' securities accounts in their respective names on the books of their respective depositaries. Such depositaries, in turn, will hold such interests in the Regulation S Global Note in customers' securities account in the depositaries' names on the books of DTC. Prior to the 40th day after the later of the commencement of the offering of any Class A-2 Notes initially issued in the form of a Regulation S Global Note and the date of the closing of the offering of such Class A-2 Notes (through and including the 40th day, the "restricted period"), transfers by an owner of a beneficial interest in a Regulation S Global Note to a transferee who takes delivery of such beneficial interest through a Rule 144A Global Note will be made only in accordance with applicable procedures and upon receipt by the Trustee of a written certification from the transferor of the beneficial interest in respect of the form provided in the Indenture to the effect that such transfer is being made to a person whom the transferor reasonably believes is a qualified institutional buyer within the 205

214 meaning of Rule 144A in a transaction meeting the requirements of Rule 144A. Such written certification will no longer be required after the expiration of the restricted period. Transfers by an owner of a beneficial interest in a Rule 144A Global Note to a transferee who takes delivery of such interest through the Regulation S Global Note, whether before or after the expiration of the restricted period, will be made only upon receipt by the Trustee of a certification from the transferor to the effect that such transfer is being made in accordance with Regulation S or (if available) Rule 144 under the Securities Act and that, if such transfer is being made prior to the expiration of the restricted period, the beneficial interest transferred will be held immediately thereafter through Euroclear or Clearstream. Any beneficial interest in respect of one of the Global Notes that is transferred to a person who takes delivery in the form of a beneficial interest in another Global Note will, upon transfer, cease to be a beneficial interest in such Global Note and become an interest in the other Global Note. DTC The description of the operations and procedures of DTC, Euroclear and Clearstream set forth below are provided solely as a matter of convenience. These operations and procedures are solely within the control of the respective settlement systems and are subject to change by them from time to time. Neither ALS nor the Selling Class A Noteholders takes any responsibility for these operations or procedures, and Noteholders are urged to contact the relevant system or its participants directly to discuss these matters. DTC is a limited purpose trust company organized under the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered pursuant to the provisions of Section 17A of the Exchange Act. DTC holds securities for DTC Participants and to facilitate the clearance and settlement of securities transactions between DTC Participants through electronic book-entry changes in accounts of DTC Participants, thereby eliminating the need for physical movement of certificates. DTC Participants include securities brokers and dealers (including the Selling Class A Noteholders), banks, trust companies and clearing corporations and may in the future include certain other organizations. Indirect access to the DTC system also is available to others such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a DTC Participant either directly or indirectly ("Indirect Participants"). ALS expects that pursuant to procedures established by DTC (i) DTC will credit the accounts of participants designated by the Selling Class A Noteholders with an interest in the Global Note and (ii) ownership of the Class A- 2 Notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the interests of participants) and the records of participants and the indirect participants (with respect to the interest of persons other than participants). Purchases of securities under the DTC system must be made by or through participants, which will receive a credit for such securities on DTC's records. The ownership interest of each actual purchaser of each security is in turn to be recorded on the participant and indirect participants' records. Purchasers of ownership interests in securities under the DTC system will not receive written confirmation from DTC of their purchases. Purchasers are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the participant or indirect participant through which the purchaser entered into the transaction. Transfers of ownership interests in securities under the DTC system are to be accomplished by entries made on the books of participants and indirect participants acting on behalf of the purchasers of such ownership interests. Purchasers will not receive certificates representing their ownership interests in the securities under the DTC system, except in the event that use of the book-entry system for such securities is discontinued. Investors who are not DTC Participants but desire to purchase, sell or otherwise transfer ownership of, or other interests in, beneficial interests in a Global Note may do so only through DTC Participants. Indirect Participants are required to effect transfers through a DTC Participant. Payments of interest, principal and redemption premium, if any, in respect of the Class A-2 Notes will be made to DTC and are the responsibility of ALS. Noteholders will receive all distributions of interest, principal and redemption premium, if any, in respect of the Class A-2 Notes from the Trustee or a paying agent through DTC Participants and Indirect Participants. Disbursement of such payments to 206

215 DTC Participants will be the responsibility of DTC and disbursement of such payments to the Noteholders will be the responsibility of DTC Participants and Indirect Participants. DTC's practice is to credit DTC Participants' accounts on the payment date in accordance with their respective holdings shown on DTC's records unless DTC has reason to believe that it will not receive payment on such payment date. Payments by DTC Participants to their customers who own the Class A-2 Notes will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in registered form, and will be the responsibility of such DTC Participant. While so registered, owners of beneficial interests will be permitted to exercise the rights of Noteholders only indirectly through DTC and DTC Participants. No beneficial owner of an interest in Global Notes will be able to transfer that interest except in accordance with applicable procedures of DTC, in addition to those provided for under the Indenture and, if applicable, those of Euroclear and Clearstream, Luxembourg. Under the rules, regulations and procedures governing DTC and its operations (the "Rules"), DTC is required to make book-entry transfers of interests in the Global Notes among the DTC Participants on whose behalf it acts with respect to the Class A-2 Notes and to receive and transmit distributions of interest, principal and redemption premium, if any, in respect of the Class A-2 Notes. DTC Participants and Indirect Participants similarly are required to make book-entry transfers and receive and transmit such payments on behalf of their respective beneficial interests in the Global Notes. The Rules provide a mechanism by which owners of beneficial interests in the Global Notes will receive payments and will be able to transfer their interests. The Rules applicable to DTC and DTC Participants are on file with the U.S. Securities and Exchange Commission. DTC has advised ALS that it will take any action permitted to be taken by a Holder of Class A-2 Notes under the Indenture only at the direction of one or more DTC Participants to whose accounts beneficial interests in the Global Notes representing those Class A-2 Notes are credited. Additionally, DTC has advised ALS that it will take such actions with respect to any percentage of the Outstanding Principal Balance of any Class A-2 Notes only at the direction of and on behalf of the DTC Participants whose customers own such outstanding principal amount. DTC may take conflicting actions with respect to different subclasses of Class A Notes to the extent that such actions are taken on behalf of DTC Participants whose holdings include such different subclasses of Class A Notes. Clearstream, Luxembourg Distributions with respect to Class A-2 Notes held through Clearstream, Luxembourg will be credited to cash accounts of Clearstream Participants in accordance with Clearstream, Luxembourg's rules and procedures, to the extent received by its Securities Depositary. Clearstream, Luxembourg will take any other action permitted to be taken by a Noteholder under the Indenture on behalf of a Clearstream Participant only in accordance with its rules and procedures and subject to its Securities Depositary's ability to effect such actions on its behalf through DTC. Euroclear Securities clearance accounts and cash accounts with Euroclear are governed by the Terms and Conditions Governing Use of Euroclear and the related Operating Procedures of the Euroclear System and applicable Belgian law (collectively, the "Terms and Conditions"). The Terms and Conditions govern transfers of securities and cash within Euroclear, withdrawals of securities and cash from Euroclear and receipts of payments with respect to securities in Euroclear. All securities of a particular subclass in Euroclear are held on a fungible basis without attribution of specific certificates to specific securities clearance accounts. Euroclear acts under the Terms and Conditions only on behalf of Euroclear Participants, and has no record of or relationship with persons holding through Euroclear Participants. Distributions with respect to Class A-2 Notes held through Euroclear will be credited to the cash accounts of Euroclear Participants in accordance with the Terms and Conditions, to the extent received by its Securities Depositary. Euroclear will take any other action permitted to be taken by a Noteholder under the Indenture on behalf of a Euroclear Participant only in accordance with the Terms and Conditions and subject to its Securities Depositary's ability to effect such actions on its behalf through DTC. Although DTC, Clearstream, Luxembourg and Euroclear have agreed to the foregoing procedures in order to facilitate transfers of the Class A-2 Notes among participants of DTC, Clearstream, Luxembourg and Euroclear, they are under no obligation to perform or continue to perform such procedures and may discontinue providing services as securities depositary with respect to the Class A-2 Notes at any time by giving reasonable notice to ALS 207

216 or the Trustee. Under such circumstances, in the event that a successor securities depositary is not obtained, Definitive Notes are required to be prepared and delivered. 208

217 Transfer Restrictions Because the following restrictions will apply to the Initial Class A Notes, purchasers or Holders should consult legal counsel prior to making any offer, resale, pledge or transfer of any of the Initial Class A Notes. The Initial Class A Notes have not been registered under the Securities Act or with any securities regulatory authority in any jurisdiction and may not be offered or sold except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The Initial Class A Notes are being offered and sold only: (1) to QIBs in reliance upon the exemption from the registration requirement of the Securities Act provided by Rule 144A; (2) to persons other than U.S. persons (within the meaning of the Securities Act) ("Foreign Purchasers") in offshore transactions in reliance upon Regulation S; (3) to Institutional Accredited Investors that, prior to their purchase of any Initial Class A Notes, sign a letter of representation in the form attached as an exhibit to the Indenture; (4) pursuant to an exemption from registration provided by Rule 144 of the Securities Act; and (5) pursuant to another available exemption from registration or an effective registration statement under the Securities Act. By its purchase of any Initial Class A Notes, including beneficial interests in the Initial Class A Notes, each purchaser will be deemed to: (1) represent that it is purchasing the Initial Class A Notes for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account (i) is a QIB or an Institutional Accredited Investor with such knowledge and experience in financial and business matters as are necessary in order to evaluate the merits and risks of an investment in the Initial Class A Notes or (ii) if purchasing Initial Class A Notes pursuant to Regulation S, is not a U.S. person and has acquired such Initial Class A Notes in an offshore transaction in compliance with Regulation S; (2) acknowledge that the Initial Class A Notes have not been registered under the Securities Act or with any securities regulatory authority in any jurisdiction and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons, except as set forth below: if it is a person other than a Foreign Purchaser outside the United States or is a Foreign Purchaser who has held Initial Class A Notes for a period exceeding 40 days after the later of the commencement of the offer of such Initial Class A Notes or the closing date of the sale of such Initial Class A Notes, agree that if it should resell or otherwise transfer any of the Initial Class A Notes in the future, it will do so only (i) to ALS, (ii) to a person who the seller reasonably believes is a QIB in a transaction meeting the requirements of Rule 144A, (iii) in an offshore transaction in compliance with Rule 904 of Regulation S, (iv) to Institutional Accredited Investors or (v) pursuant to the exemption from registration provided by Rule 144 under the Securities Act (if available) or pursuant to another available exemption from registration under the Securities Act and, in each case (i) through (v) above, in accordance with any applicable securities laws of any state in the United States or any applicable jurisdiction; (3) agree that it will deliver to each person to whom it transfers Initial Class A Notes notices of any restrictions on transfer of such Initial Class A Notes; (4) acknowledge that none of ALS, the Selling Class A Noteholders or any person representing ALS or the Selling Class A Noteholders has made any representation to it with respect to ALS or the offering or sale of the Initial Class A Notes, other than the information contained in these Offering Materials, which Offering Materials have been delivered to it and upon which it is relying in making its investment decision with respect to the Initial Class A Notes. Accordingly, it acknowledges that no representations or warranty is made by the Selling Class A 209

218 Noteholders as to the accuracy or completeness of such materials. It acknowledges that it has had access to such financial and other information concerning ALS and the Initial Class A Notes as it has deemed necessary in connection with its decision to purchase any of the Initial Class A Notes, including an opportunity to ask questions of, receive answers from and request information from, ALS and the Selling Class A Noteholders; (5) represent and agree that in the case of the Initial Class A Notes either (a) it is neither a Plan, nor a governmental, non-u.s., church or other plan which is subject to any federal, state, local or non-u.s. law that is substantially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code or (b) its acquisition, holding and disposition of an Initial Class A Note will not constitute or result in a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975 of the Code (or, in the case of a governmental, non-u.s., church or other plan, will not violate any substantially similar law); (6) understand that the Initial Class A Notes (other than certain other securities issued in circumstances specified in the Indenture) will bear a legend to the following effect (as applicable) unless otherwise agreed by ALS and the Holder thereof: NEITHER THIS NOTE NOR ANY INTEREST HEREIN HAS BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR WITH ANY SECURITIES REGULATORY AUTHORITY IN ANY JURISDICTION AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT IN TRANSACTIONS NOT SUBJECT TO, OR EXEMPT FROM THE REGISTRATION REQUIREMENTS OF, THE SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS. BY ITS ACQUISITION HEREOF, EACH HOLDER OR BENEFICIAL OWNER OF AN INTEREST HEREIN (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER", AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), AND HAS ACQUIRED THE NOTE, OR SUCH INTEREST HEREIN, IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501 (a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE SECURITIES ACT) OR AN ENTITY, ALL OF THE EQUITY OWNERS OF WHICH ARE INSTITUTIONAL ACCREDITED INVESTORS (AN "INSTITUTIONAL ACCREDITED INVESTOR"), (C) IT IS NOT A U.S. PERSON, AS DEFINED IN REGULATION S UNDER THE SECURITIES ACT ("REGULATION S") AND IS ACQUIRING THIS NOTE, OR SUCH INTEREST HEREIN, IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S OR (D) IT HAS ACQUIRED THIS NOTE, OR SUCH INTEREST HEREIN, PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT ("RULE 144") OR PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, AND, IN EACH OF THE CASES (A) THROUGH (D) ABOVE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAW OF ANY STATE IN THE UNITED STATES OR ANY APPLICABLE JURISDICTION; (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE, OR AN INTEREST HEREIN, EXCEPT (A) TO THE ISSUER, (B) TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A, (C) TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER FURNISHES TO THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE AND THE DEPOSITARY) AND AN OPINION OF COUNSEL ACCEPTABLE TO THE ISSUER THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (D) IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S OR (E) PURSUANT TO AN EXEMPTION FROM REGISTRATION IN ACCORDANCE WITH RULE 144 (IF AVAILABLE), OR PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT, AND, IN EACH OF THE CASES (A) THROUGH (E) ABOVE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE IN THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE, OR A BENEFICIAL INTEREST HEREIN, IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IF THE PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR OR THE PROPOSED TRANSFER IS PURSUANT TO AN EXEMPTION FROM REGISTRATION IN ACCORDANCE WITH RULE 144 OR PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT 210

219 OTHER THAN RULE 144A OR REGULATION S, THE PROPOSED TRANSFEREE MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE ISSUER SUCH CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS AND AGREES THAT EITHER (A) IT IS NOT AN "EMPLOYEE BENEFIT PLAN" AS DEFINED IN SECTION 3(3) OF THE UNITED STATES EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), THAT IS SUBJECT TO THE FIDUCIARY RESPONSIBILITY REQUIREMENTS OF TITLE I OF ERISA, A "PLAN" AS DESCRIBED IN SECTION 4975(E)(1) OF THE UNITED STATES INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF AN EMPLOYEE BENEFIT PLAN'S OR PLAN'S INVESTMENT IN SUCH ENTITY OR OTHERWISE OR A GOVERNMENTAL, NON-U.S., CHURCH OR OTHER PLAN WHICH IS SUBJECT TO ANY FEDERAL, STATE, LOCAL OR NON-U.S. LAW THAT IS SUBSTANTIALLY SIMILAR TO THE PROVISIONS OF SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE ("SIMILAR LAW") OR (B) ITS ACQUISITION, HOLDING AND DISPOSITION OF THIS NOTE WILL NOT CONSTITUTE OR RESULT IN A NON-EXEMPT PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE OR, IN THE CASE OF A GOVERNMENTAL, NON-U.S., CHURCH OR OTHER PLAN, WILL NOT VIOLATE ANY SIMILAR LAW. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE FOREGOING RESTRICTIONS; [Insert the following only for Class A-1 Notes held by a Class A-1 Commitment Holder: THIS NOTE IS SUBJECT TO CERTAIN ADDITIONAL TRANSFER RESTRICTIONS SET OUT IN THE CLASS A-1 NOTE FUNDING AGREEMENT AND THE RESALE AGREEMENT.] (7) understand that the Class A-2 Notes represented by a Global Note will also bear the following legend on the face thereof: UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IN EXCHANGE FOR THIS NOTE IS REGISTERED IN THE NAME OF CEDE & CO., OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN; TRANSFERS OF THIS NOTE SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS NOTE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH ON THE REVERSE HEREOF; (8) understand each Class A-1 Note held by a person who is not a U.S. person, as defined in Rule 902 of Regulation S, or the Class A-2 Notes represented by a Regulation S Global Note will also, in addition to the legends specified in clauses (6) and (7) above (as applicable), bear the following legend on the face thereof: PRIOR TO THE EXPIRATION OF THE FORTY-DAY PERIOD FROM AND INCLUDING THE LATER OF THE COMMENCEMENT OF THE OFFERING OF THE NOTES EVIDENCED HEREBY AND DATE OF ISSUANCE HEREOF, THIS NOTE, OR ANY BENEFICIAL INTEREST HEREIN, MAY NOT BE RESOLD OR OTHERWISE TRANSFERRED EXCEPT (A) OUTSIDE THE UNITED STATES IN 211

220 COMPLIANCE WITH RULE 904 OF REGULATION S, (B) TO AN INSTITUTIONAL ACCREDITED INVESTOR WHO, PRIOR TO ITS PURCHASE OF THIS NOTE, SHALL HAVE SIGNED A LETTER IN THE FORM OF EXHIBIT I TO THE INDENTURE OR (C) TO A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, IN EACH CASE IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; (9) understand that the Class A-1 Notes will also bear the following legend on the face thereof: THIS NOTE IS SUBJECT TO THE EXCHANGE PROVISIONS SET FORTH UNDER SECTION 2.07(e) OF THE INDENTURE; (10) understand that the Definitive Notes will also bear the following legend on the face thereof: IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR SUCH CERTIFICATES AND OTHER INFORMATION AS IT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS AND THE OTHER RESTRICTIONS CONTAINED IN THE INDENTURE; (11) represent that (except for AerCap and subsidiaries of AerCap) it is not an "affiliate" (as defined in Rule 144 of the Securities Act) of ALS or acting on behalf of ALS; represent that it agrees to treat the Initial Class A Notes as indebtedness for all purposes (including, but not limited to, tax purposes) and will not take any action contrary to such characterization, including, without limitation, filing any tax returns or financial statements; and (12) acknowledge that ALS, the Trustee, the Selling Class A Noteholders and others will rely upon the truth and accuracy of the foregoing acknowledgments, representations and agreements, and agree that if any of the acknowledgments, representations or warranties deemed to have been made by it by its purchase of an Initial Class A Note are no longer accurate, it will promptly notify ALS and the Selling Class A Noteholders and, if it is acquiring any Initial Class A Note as a fiduciary or agent for one or more investor accounts, it represents that it has sole investment discretion with respect to each such account and that it has full power to make the foregoing acknowledgments, representations and agreements on behalf of each such account and that each such investor account is eligible to purchase the Initial Class A Notes. 212

221 Legal Matters Certain legal matters relating to the Initial Notes will be passed upon for ALS, AerVenture Leasing and AerCap by Milbank, Tweed, Hadley & McCloy LLP, New York, New York, special United States counsel to ALS, AerVenture Leasing and AerCap; Conyers Dill & Pearman, special Bermuda counsel to ALS, AerVenture Leasing, AerCap and Calyon; and McCann FitzGerald, special Irish counsel to ALS, AerVenture Leasing and AerCap. Certain legal matters relating to the Initial Class A Notes will be passed upon for the Selling Class A Noteholders by Clifford Chance US LLP, New York, New York, special United States counsel to the Selling Class A Noteholders. Prospective investors should consider the applicability of statutes, rules, regulations, orders, guidelines or agreements generally governing the investments made by a particular investor including, but not limited to, "prudent investor" provisions and percentage-of-assets limitations. Investors should consult their own legal advisors in determining whether and to what extent the Initial Class A Notes constitute legal investment for such investors. The Trustee, ALS and Calyon make no representation as to the proper characterization of the Initial Class A Notes for legal investment or financial institution regulatory purposes, or as to the ability of particular investors to purchase Initial Class A Notes under applicable legal investment restrictions. The uncertainties described above (and any unfavorable future determinations concerning legal investment or financial institutions' regulatory characteristics of the Initial Class A Notes) may adversely affect the liquidity of the Initial Class A Notes. 213

222 Experts Valuations of the Aircraft have been made by three expert aircraft Appraisers: Ascend, a division of Airclaims Limited, BK Associates, Inc. and IBA Group Limited. These valuations are discussed in detail elsewhere in these listing particulars and are included herein in reliance upon the authority of such firms as experts in giving such Appraisals. Ascend's address is Cardinal Point, Newall Road, Heathrow Airport, London TW6 2AS, UK and it is certified as an appraiser of aviation equipment by the International Society of Transport Aircraft Trading. Its appraisal is included in Appendix 7, in the form and context in which it is included, with the consent of Ascend, who has authorized the contents of Appendix 7. BK Associates, Inc. address is 1295 Northern Boulevard, Manhasset, New York USA and it is certified as an appraiser of aviation equipment by the International Society of Transport Aircraft Trading. Its appraisal is included in Appendix 7, in the form and context in which it is included, with the consent of BK Associates, Inc., who has authorized the contents of Appendix 7. IBA Group Limited's address is Meadowcroft House, 180 Balcombe Road, Horley, Surrey, RH6 9AE, United Kingdom and it is certified as an appraiser of aviation equipment by the International Society of Transport Aircraft Trading. Its appraisal is included in Appendix 7, in the form and context in which it is included, with the consent of IBA Group Limited, who has authorized the contents of Appendix 7. The section entitled "The Commercial Aircraft Industry" is included with the consent of Simat, Helliesen & Eichner, Inc., is based upon information either compiled or produced by Simat, Helliesen & Eichner, Inc. and is included herein in reliance upon the authority of such firm as an expert, although Simat, Helliesen & Eichner, Inc. does not take responsibility for factual inaccuracies in the material provided to it by the outside sources referenced in such section. Simat, Helliesen & Eichner, Inc.'s address is 210 High Holburn, London WC1V7EU UK. 214

223 Irish Listing and General Information CUSIP, ISIN AND COMMON CODE The CUSIP number of the Rule 144A Global Notes is AA7 and the CUSIP number of the Regulation S Global Notes is G0129Y AA2. The ISIN of the Rule 144A Global Notes is US009350AA70 and the ISIN of the Regulation S Global Notes is BMG0129YAA21. The common code of the Rule 144A Global Notes is and the common code of the Regulation S Global Notes is For as long as the Class A-2 Notes are listed on the Irish Stock Exchange, copies of the memorandum of association and bye-laws of ALS, the Appraisals, the Indenture and all documents mentioned in these listing particulars that have been prepared in connection with the issuance of the Class A-2 Notes may be inspected in physical and/or electronic form at the registered office of the Primary Administrative Agent. The issuance of the Initial Class A Notes by ALS has been authorized by resolution of the Board passed on June 26, 2008 and ALS will not issue the Initial Class A Notes until all necessary consents, approvals and authorizations in connection with such issuance of the Initial Class A Notes have been obtained. ALS represents that there has been no material adverse change in its financial position or prospects since December 31, The Listing Agent will notify the Irish Stock Exchange promptly of any change in the outstanding principal amount of the Class A-2 Notes. Any notice to the Noteholders of any subclass of Notes bearing a floating rate of interest specifying an interest rate for such Notes, will be promptly given to the Irish Stock Exchange. ALS's auditors are KPMG, Chartered Accountants. The Class A-2 Notes have been accepted for clearance by Clearstream, Luxembourg and Euroclear. The Class A-1 Notes are not, and are not expected to be, listed on any stock exchange, nor are they expected to clear through any clearing system. It is expected that the total expenses relating to the application for admission of the Class A-2 Notes to the Official List of the Irish Stock Exchange and to trading on the Alternative Securities Market will be approximately 20,000. Since its incorporation, ALS has not produced audited financial statements. 215

224 Glossary means euros. $ means U.S. dollars. Additional Notes means any Notes of any subclass (including additional subclasses) issued pursuant to the Indenture, the proceeds of which are used, in substantial part, to (i) acquire Additional Aircraft or its corresponding Aircraft Interests or (ii) make any Conversion Payments. Adjusted Base Value means, with respect to any Aircraft on any Calculation Date, the average of the Base Values of such Aircraft as determined by the appraisals of such Aircraft delivered in connection with the Relevant Appraisal with respect to such Calculation Date. AerVenture Loans means loans made by AerVenture Leasing or its affiliates to the Subsidiaries (other than the Aircraft Owner Trusts) in order to finance the purchase price of the Initial Aircraft. affiliate means, with respect to any person, any other person that, directly or indirectly, controls, is controlled by or is under common control with, such person or is a director or officer of such person. Aircraft Agreement means any lease, sub-lease, conditional sale agreement, finance lease, hire purchase agreement or other agreement (other than an agreement relating to maintenance, modification or repairs) or any Purchase Option granted to a person (other than a Purchase Option granted to a member of the ALS Group) to purchase an Aircraft, in each case pursuant to which any person acquires or is entitled to acquire legal title to, or the economic benefits of ownership of, such Aircraft. Applicable Rate of Interest means, with respect to the Initial Class A Notes, the interest rate set forth in the table titled "The Initial Class A Notes" in the "Summary" and, with respect to any other subclass of Notes, as of any date of determination thereof, the interest rate set forth in or determined in accordance with the terms of such subclass of Notes. Assumed Discount Rate means 9.0% per annum. Assumed FV means, with respect to any Aircraft, an amount equal to the Depreciated Aircraft Value of such Aircraft on the date that is 25 years from the date of its manufacture. Available Collections means, as of the close of business on any Calculation Date, amounts on deposit in the Collections Account which will be deemed to include any amount to be paid by a Hedge Provider on the related Payment Date pursuant to any Hedge Agreement. The Available Collections with respect to any payment to be made therefrom will be determined after giving effect to all payments, if any, having priority to such payment under the priority of payments described under "Description of Notes Payment of Principal and Interest Priority of Payments". Business Day means a day on which commercial banks and foreign exchange markets are open in Paris, France and New York, New York and, with respect to the determination or payment of interest on any Note bearing a floating rate of interest, a day on which U.S. dollar deposits may be dealt in on the London inter-bank market and, with respect to payments to or withdrawals from the Non-Trustee Accounts, a day on which the financial institution at which such account is located is open for business. Cape Town Convention means the Convention on International Interests in Mobile Equipment and its Protocol on Matters Specific to Aircraft Equipment, concluded in Cape Town, South Africa on November 16, 2001, together with all regulations and procedures issued in connection therewith, and all other rules, amendments, supplements, modifications, and revisions thereto (in each case using the English language version). Cash Collateral Account means the Primary Liquidity Reserve Account (if established) and each account related to an Eligible Credit Facility established as an Account pursuant to the Indenture. 216

225 Charitable Trust means the Aircraft Lease Securitisation II Purpose Trust, a charitable purpose trust established under the laws of Bermuda to beneficially own 95% of the issued share capital of ALS. Class means any class of Notes issued pursuant to the Indenture. Class A Notes means, collectively, all Notes designated as a subclass of Class A, including the Class A-1 Notes, the Class A-2 Notes, all Additional Notes, if any, so designated, all Refinancing Notes, if any, so designated and all Notes, if any, issued in replacement or substitution therefor. Class A-1 Commitment Expenses means all amounts in respect of fees (including Class A-1 Commitment Fees), indemnities or costs and expenses incurred by the Class A-1 Funding Agent and the Class A-1 Commitment Holders (including, without limitation, in connection with the enforcement, defense or preservation of any rights in respect of any of the Related Documents) due to the Class A-1 Funding Agent and the Class A-1 Commitment Holders under the Class A-1 Note Funding Agreement or any fee letter between ALS and the Class A-1 Funding Agent or the Initial Class A-1 Commitment Holders. Class A-1 Commitment Fee Letter means the fee letter, dated as of the Initial Closing Date, between ALS and the Class A-1 Funding Agent. Class A-1 Commitment Fees means the commitment fees payable to the Class A-1 Funding Agent pursuant to the terms of the Class A-1 Commitment Fee Letter. Class A-1 Commitment Non-Consent Event means (A) the occurrence of the earlier of (x) the date that is 12 months after the Class A-1 Commitments have been terminated or reduced to zero and (y) the date on which no Class A-1 Funding Agent Obligations are due and owing to the Class A-1 Funding Agent and any Class A-1 Commitment Holder or (B) a default under the Class A-1 Note Funding Agreement arising as a result of a failure to fund by any Class A-1 Commitment Holder has occurred and is continuing, unless otherwise cured by another Class A-1 Commitment Holder pursuant to the Class A-1 Note Funding Agreement. Class A-1 Funding Agent Fee Letter means the fee letter, dated as of the Initial Closing Date, between ALS and the Class A-1 Funding Agent. Class A-1 Funding Agent Obligations means all fees, expenses, indemnities, costs and other amounts owing to or incurred by the Class A-1 Funding Agent or the Class A-1 Commitment Holders under the Class A-1 Note Funding Agreement, the Indenture and the other Related Document and all amounts in respect of fees, indemnities, costs and expenses incurred by the Class A-1 Funding Agent or any Class A-1 Commitment Holder in connection with the enforcement, defense or preservation of any of their respective rights as Class A-1 Funding Agent or Class A-1 Commitment Holder, as applicable, under any of the Related Documents; provided that the Class A-1 Funding Obligations will not include any amounts due under the Class A-1 Notes. Class A-1 Notes means the Class A-1 Floating Rate Asset Backed Notes Series Class A-2 Notes means the Class A-2 Floating Rate Asset Backed Notes Series Class E Notes means, collectively, all Notes designated as a subclass of Class E, including the Class E-1 Notes, all Additional Notes, if any, so designated, all Refinancing Notes, if any, so designated and all Notes, if any, issued in replacement or substitution therefor. Class E-1 Notes means the Class E-1 Fixed Rate Deferrable Interest Asset Backed Notes Series Concentration Default means an Indenture Event of Default under "Description of Notes Operating Covenants Concentration Limits", which would arise if effect were given to any sale, transfer or other disposition or any purchase or other acquisition pursuant to an Aircraft Agreement as of the date of such Aircraft Agreement regardless of whether such sale, transfer or other disposition or purchase or other acquisition is scheduled or expected to occur after the date of such Aircraft Agreement. 217

226 control of a person means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such person, whether through the ownership of voting ownership interest, by contract or otherwise. Controlling Party means at any time of determination prior to the Initial Delivery Date, the Class A-1 Funding Agent and, thereafter, the Senior Trustee; provided that in the case of the Liquidity Provider or, for any other Eligible Credit Facility, if and only if so provided in the Board resolution providing for such Eligible Credit Facility, at any time from and including the date that is no earlier than 30 months from the earliest to occur of (a) the date on which the entire amount available under such Eligible Credit Facility (other than any Eligible Credit Facility in the form of a Cash Collateral Account) has been drawn (except as a result of (i) a Downgrade Drawing or (ii) a Non- Extension Drawing, in each case not applied to pay any Expenses Shortfalls, Senior Hedge Payment Shortfalls, Class A-1 Commitment Fee Shortfalls or Class A Interest Shortfalls) and remain unreimbursed and (b) the date on which the Notes has been accelerated, the provider of such Eligible Credit Facility will have the right to elect, by written notice to the Trustee, to become the Controlling Party (in place of the Senior Trustee) thereafter, but only for so long as any Credit Facility Obligations due to such provider remain unpaid. Corporate Benefit Distribution means $1,000, to be made annually on the Payment Date falling in December of each year, beginning in Credit Facility Advance Obligations means all Credit Facility Obligations other than Credit Facility Expenses and Special Indemnity Payments. Credit Facility Expenses means all Credit Facility Obligations other than (i) the principal amounts under, or the principal amount of any drawings under, the Eligible Credit Facilities, (ii) interest accrued on Credit Facility Obligations, (iii) any Liquidity Facility Non-Use Fees and (iv) any portion constituting Special Indemnity Payments. Credit Facility Obligations means all principal, interest, fees, expenses, indemnities, costs and other amounts owing to or incurred by the providers of Eligible Credit Facilities. Critical Mass Event means if, on the Delivery Expiry Date with respect to the Initial Aircraft, the number of Initial Aircraft delivered to ALS pursuant to the Purchase Agreement is less than 22 Aircraft. Delivery Expiry Date means, as to the Initial Aircraft, the earlier of (i) the Level 2 Advance Date and (ii) September 30, 2010 or, as to any Additional Aircraft, has the meaning given to that or any comparable term in any other acquisition agreement. Depreciated Aircraft Value means, with respect to any Aircraft, as of any date of determination, an amount equal to the product of (i) the Initial Appraised Value of such Aircraft and (ii) the quotient obtained by dividing the Depreciation Factor applicable to such Aircraft on such date of determination by the Depreciation Factor applicable to such Aircraft on the Initial Closing Date. Eligible Credit Facility means (a) the Liquidity Facility provided by the Liquidity Provider, (b) any credit agreement, letter of credit, guarantee, credit or liquidity enhancement facility, term loan or other credit facility provided by or supported by a further such credit facility provided by an Eligible Provider in favor of any member of the ALS Group and subjected to the lien of the Security Trust Agreement and designated by the Board as an Eligible Credit Facility and (c) any segregated trust account maintained in the name of the Security Trustee pursuant to the Security Trust Agreement and established for the purpose of providing like credit or liquidity support and designated by the Board as an Eligible Credit Facility; provided that the provider of an Eligible Credit Facility will agree therein that it is entitled only to the priority of repayment accorded to Eligible Credit Facilities under the priority of payments described under "Description of Notes Payment of Principal and Interest Priority of Payments". Eligible Provider means a person (other than any member of the ALS Group) whose short-term unsecured debt is rated P-1 (or, in the absence of a short-term unsecured debt rating by Moody's, a long term unsecured debt rating of A1) by Moody's and A-1 (or, in the absence of a short-term issuer credit rating by Standard & Poor's, a long term issuer credit rating of AA-) by Standard & Poor's is otherwise designated as an Eligible Provider by the Board subject to a Rating Agency Confirmation from Standard & Poor's and prior written notification to Moody's. 218

227 Excess Sale Proceeds means, with respect to any sale or other disposition of any Aircraft, including by reason of such Aircraft suffering a total loss, an amount equal to the excess of (a) the Net Sale Proceeds with respect to such sale or other disposition over (b) the Note Target Price for the related Aircraft. Future Rental Payments means all Rental Payments (not including maintenance reserves or security deposits) assumed to be payable by or on behalf of a Lessee under Future Leases with respect to an Aircraft. For the purposes of calculating Future Rental Payments, the following assumptions shall apply: (i) all Rental Payments (not including maintenance reserves or security deposits) payable under the current Lease will be paid in accordance with the terms of such Lease and all Rental Payments (not including maintenance reserves or security deposits) under each Future Lease will be paid in accordance with the assumed terms of such Future Leases, described below; (ii) each Lease of such Aircraft will expire on its scheduled expiry date and there will be no off-lease period; (iii) such Aircraft will be re-leased at a fixed rate equal to the product of (a) the Lease Rate Factor (as set forth in Appendix 5) for the calendar month during which such Future Lease is assumed to commence and (b) the Depreciated Aircraft Value as of the date such Future Lease is assumed to commence; and (iv) the term of each Future Lease will be equal to five years, except that each Aircraft shall be disposed of on the date that is 25 years from the date of manufacture of such Aircraft. guarantee means any obligation, contingent or otherwise, of any person directly or indirectly guaranteeing any Indebtedness or other obligation of any other person and, without limiting the generality of the foregoing, any obligation, direct or indirect, contingent or otherwise, of such person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other person or (ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided that the term "guarantee" will not include endorsements for collection or deposit in the ordinary course of business. The term "guarantee" when used as a verb has a corresponding meaning. Hedge Payment means any amounts payable by any member of the ALS Group on each Payment Date under the Hedge Agreements. Holder or Noteholder means, with respect to any Note, the person in whose name such Note is registered from time to time in accordance with the terms of the Indenture (which, in the case of any Global Note, will be the bearer thereof, which will initially be Cede & Co on behalf of DTC); provided that, in respect of any act or direction by Holders of Class A-1 Notes on any date on which the Class A-1 Commitments have not been terminated nor reduced to zero, the Holders of the Class A-1 Notes will include all Class A-1 Commitment Holders as of such date, each voting to the extent of its respective Class A-1 Undrawn Commitment. Indemnification Agreement means the indemnification agreement, dated as of June 23, 2008, between Calyon, ALS, AerCap and AerVenture. Initial Appraised Value means (a) in the case of each Initial Aircraft (other than a Substitute Aircraft), as of any date of determination, the lower of (x) the Initial Closing Date Appraised Value and (y) the average of appraisals by each of the Initial Appraisers of such Aircraft as of a date (such date, an "appraisal date") prior to the Delivery Expiry Date with respect to the Initial Aircraft (which appraisals will (A) determine the Base Value of such Aircraft as of such appraisal date taking into account the age of each Aircraft on such appraisal date and (B) determine the Base Value of such Aircraft on the basis of the airframe and engine type expected at such date of determination to be delivered or, after the relevant Delivery Date, actually delivered on the Delivery Date); provided that the appraisals used to calculate the Initial Appraised Value of any Initial Aircraft on any date of determination are dated as of a date (x) no later than the Delivery Date of such Aircraft and (y) (1) during the Draw Period, no earlier than six months prior to the Delivery Date of such Aircraft (or in the case of the Initial Delivery Date, no earlier than 45 calendar days prior to such date) or (2) after the Draw Period, no earlier than 12 months prior to the Delivery Date of such Aircraft; (b) in the case of any Substitute Aircraft, the average of the appraisals by each of the Initial Appraisers of the Base Value of such Aircraft as of a date not more than six months prior to the date of the 219

228 acquisition of such Aircraft; and (c) in the case of any Additional Aircraft, the average of the appraisals by each of the Appraisers of the Base Value of such Aircraft as of a date not more than six months prior to the Closing Date for the issuance of the relevant Additional Notes. Initial Appraisers means Ascend, a division of Airclaims Limited, BK Associates, Inc. and IBA Group Limited, or any replacement for any such person that is unable to provide an appraisal, provided that such replacement appraiser is another independent appraisers that are members of the International Society of Transport Aircraft Trading or similar professional aircraft appraisal organization, selected by ALS. Initial Class A-1 LTV means (i) so long as the aggregate number of Initial Aircraft that have been delivered to ALS pursuant to the Purchase Agreement is less than 15 Aircraft, zero and (ii) so long as the aggregate number of Initial Aircraft that have been delivered to ALS pursuant to the Purchase Agreement is 15 or more Aircraft, 71% of the Initial Appraised Value for such Aircraft. Initial Closing Date means a date on or about June 26, Initial Closing Date Appraised Value means the average of the appraisals by each of the Initial Appraisers of the Base Value of such Aircraft as of October 31, 2007 Intercompany Obligations means, with respect to each applicable Subsidiary, its obligations (including, without limitation, under the guarantee contained therein, if any) to ALS under the Loan, Expenses Apportionment and Guarantee Agreement. Interest Amount means, with respect to each subclass of Notes, on any Payment Date, (a) the amount of interest accrued and unpaid to such Payment Date at the Applicable Rate of Interest with respect to such subclass of Notes for the immediately preceding Interest Accrual Period ending on such Payment Date, determined in accordance with the terms of such subclass of Notes (including, without duplication, any Interest Amount due and payable on a prior Payment Date that was not paid on such Payment Date), plus (b) interest at the rate specified in clause (a) above on any Interest Amount due but not paid on any prior Payment Date. International Registry means the International Registry under the Cape Town Convention. Lease Rate Factor means the lease rate factor as set forth in Appendix 5. Lessor means the relevant Initial Aircraft-Owning Entity that leases an Aircraft to a Lessee and any Subsidiary that leases an Aircraft to a Lessee and is operating under a head lease/sublease arrangement with a head lessor. Liquidity Facility Non-Consent Event means the occurrence of (i) the payment of the Class A Notes in full (other than any Refinancing Notes that are Class A-1 Notes or Class A-2 Notes so long as the Initial Class A Notes covered by the Liquidity Facility have been paid in full with the proceeds of the issuance of such Refinancing Notes, such Refinancing Notes are not covered by the Liquidity Facility and the Liquidity Facility has been terminated in connection with such Refinancing), (ii) the termination of the Liquidity Facility and (iii) the payment of all Credit Facility Obligations owed to the Liquidity Provider in full. Liquidity Facility Non-Use Fee means a fee (payable on each Payment Date) by ALS to the Liquidity Provider amounting to 0.75% per annum on the daily Maximum Commitment, and after the Liquidity Provider makes a Downgrade Drawing or a Non-Extension Drawing, on the amounts of any such Downgrade Drawing or Non- Extension Drawing not withdrawn from the Initial Primary Liquidity Reserve Account pursuant to the terms of the Indenture. Loan, Expenses Apportionment and Guarantee Agreement means the Loan, Expenses Apportionment and Guarantee Agreement expected to be dated as of the Initial Delivery Date between ALS as lender and the Subsidiaries who are borrowers from time to time. Net Sale Proceeds means, with respect to any sale or other disposition of any assets, the aggregate amount of cash received or to be received from time to time (whether as initial or deferred consideration) by or on behalf of the seller in connection with such transaction after deducting therefrom (without duplication) (a) reasonable and customary brokerage commissions and other similar fees and commissions (including fees received by the Servicer 220

229 under the Servicing Agreement) and (b) the amount of taxes payable in connection with or as a result of such transaction, in each case to the extent, but only to the extent, that the amounts so deducted are, at the time of receipt of such cash, actually paid to a person that is not an affiliate of the seller and are properly attributable to such transaction or to the asset that is the subject thereof. Outstanding Principal Balance means, with respect to any Notes outstanding, the total principal amount evidenced by such outstanding Notes unpaid at any time; provided that, except as provided hereafter, the Outstanding Principal Balance of each Class A-1 Note held by a Class A-1 Commitment Holder as of any date will be equal to (i) the principal amount theretofore funded by such Class A-1 Commitment Holder thereunder through Advances requested by ALS in accordance with the Indenture and not repaid as of such date, minus (ii) any portion of the amount specified in clause (i) of this proviso which has theretofore been exchanged for Definitive Notes or interests in Class A-2 Notes or transferred to another Holder, in each case in accordance with the terms of the Indenture; provided further that solely for the purposes of determining whether Holders of the requisite Outstanding Principal Balance of Notes have given any request, demand, authorization, direction, notice, consent or waiver under the Indenture, as of any date on which the Class A-1 Commitments have not been terminated nor reduced to zero, the Outstanding Principal Balance of the Class A-1 Notes will be equal to the sum of (x) the Outstanding Principal Balance of the Class A-1 Notes determined as provided in the foregoing proviso and (y) the sum of all Class A-1 Undrawn Commitments as of such date. Permitted Encumbrance means (i) any lien for taxes, assessments and governmental charges or levies not yet due and payable or which are being contested in good faith by appropriate proceedings; (ii) in respect of any Aircraft, any lien of a repairer, carrier or hangar keeper arising in the ordinary course of business by operation of law or any engine or parts-pooling arrangements or other similar lien; (iii) any permitted lien or encumbrances on any Aircraft, or engines or Parts thereof, as defined under any Lease thereof (other than liens or encumbrances created by the relevant lessor); (iv) any lien created by or through or arising from debt or liabilities or any act or omission of any Lessee in each case either in contravention of the relevant Lease (whether or not such Lease has been terminated) or without the consent of the relevant lessor (provided that if such lessor becomes aware of any such lien, it will use commercially reasonable efforts to have any such lien lifted); (v) any head lease, lease, conditional sale agreement or Purchase Option under the Initial Lease of any Initial Aircraft existing (x) in the case of the Initial Aircraft, on the Initial Closing Date and (y) in the case of any Additional Aircraft, on the date of acquisition of such Aircraft or otherwise existing on the relevant closing date or Aircraft Agreement meeting certain requirements pursuant to the Indenture; (vi) any lien for air navigation authority, airport tending, gate or handling (or similar) charges or levies; (vii) any lien created in favor of ALS or the ALS Group or the Security Trustee securing the Notes and the other obligations secured under the Security Trust Agreement; and (viii) any Encumbrance arising under an Eligible Credit Facility. Pool Factors means the pool factors set forth in Appendix 4. Present Value of Assumed FV means, with respect to the Assumed FV of any Aircraft, as of any date of determination, the present value of such Assumed FV for such Aircraft, discounted back to such date of determination at a rate equal to the Assumed Discount Rate. Present Value of Future Lease Payments means, with respect to any Aircraft, as of any date of determination, the present value of the Future Rental Payments assumed to be received by the applicable Subsidiary under Future Leases in respect of such Aircraft, discounted back to such date of determination at a rate equal to the Assumed Discount Rate. Present Value of Lease Payments means, with respect to any Lease, as of any date of determination, the present value of the contracted Rental Payments (not including maintenance reserves and security deposits) to be received by the applicable Subsidiary under such contracted Lease, discounted back to such date of determination at a rate equal to the Assumed Discount Rate. Primary Liquidity Reserve Account means any Cash Collateral Account established by or pursuant to a Board resolution designating such Account as a "Primary Liquidity Reserve Account". Purchase Option means a contractual option granted by the lessor or owner under an Aircraft Agreement (including pursuant to a conditional sale agreement) as to the purchase of the applicable Aircraft. 221

230 Related Collateral Document means any letter of credit, third party or bank guarantee or cash collateral provided by or on behalf of a lessee to secure such lessee's obligations under a Lease. Related Documents means the Indenture, the Administrative Agency Agreement, each Eligible Credit Facility, the Cash Management Agreement, the Shareholders Undertaking, the Initial Notes, the Reference Agency Agreement, the Security Trust Agreement and any other Security Document, the Class A-1 Note Funding Agreement, the Class A-1 Funding Agent Fee Letter, the Class A-1 Commitment Fee Letter, the Servicing Agent Fee Letter, the Servicing Agreement, the Purchase Agreement and any other acquisition agreement, the Loan, Expenses Apportionment and Guarantee Agreement and any Hedge Agreement. References to "Related Documents" will also include, where the context requires, any Refinancing Notes and any Additional Notes and guarantees, asset or stock purchase agreements, swap or other interest rate, currency or other hedging agreements or any other agreement entered into or security offered by any member of the ALS Group in connection with any acquisition of Additional Aircraft or Aircraft Conversions and issuance of Additional Notes or Refinancing Notes. Relevant Appraisal means, with respect to any date of determination, the most recent appraisals obtained in accordance with the Indenture prior to such date of determination (and included in a monthly report). Reserved Cash means any amounts designated as such in a Board resolution subject to the prior written consent of the Liquidity Provider and the Class A-1 Funding Agent (unless a Class A-1 Commitment Non-Consent Event has occurred and is continuing). Secured Intercompany Obligations means with respect to each grantor of a security interest under the Security Trust Agreement, all Intercompany Obligations owed by such grantor now or thereafter existing, whether for principal, interest, fees, expenses or otherwise. Senior Class means (a) so long as any Class A Notes are outstanding, the Class A Notes and (b) after the Class A Notes have been repaid in full and so long as any Class E Notes are outstanding, the Class E Notes. Service Provider means each of the Trustee, the Servicer, the Cash Manager, the Operating Bank, the Reference Agent, the Administrative Agent, the Class A-1 Trustee, the Servicing Agent, the secretary of ALS and any other service providers retained from time to time by a member of the ALS Group pursuant to the Related Documents. Servicing Agent Fee Letter means the fee letter, dated as of the Initial Closing Date, between ALS and the Servicing Agent. Special Indemnity Payments means any indemnity amounts owing at any time and from time to time by ALS to the Class A-1 Commitment Holders under the Resale Agreement, to Calyon under the Indemnification Agreement, to the Servicer under the Servicing Agreement and any other indemnity amounts owing at any time and from time to time to any other person party to a Related Document which, in each case, arise from violations of the Security Act, the U.S. Securities Exchange Act of 1934, as amended, or any other securities law, and any indemnification amounts (including, without limitation, any and all claims, expenses, obligations, liabilities, losses, damages and penalties) of, or owing to, the Trustee, the Directors, the Security Trustee, the Operating Bank, the Cash Manager, the Class A- 1 Trustee, the note custodian, any authorized paying agent, the Charitable Trust Trustee, the Class A-1 Funding Agent, the Class A-1 Commitment Holders and any other Service Provider that are not payable as Required Expenses, and any indemnities or costs due and payable to the Holders of the Class A Notes under certain sections of the Class A-1 Note Funding Agreement. Substitute Balance means, at any time of determination, the sum of all Substitute PVs accrued as of such time. Substitute Holdback Account Balance means, at any time of determination, the then current balance in the Substitute Holdback Account. Substitute Holdback Distribution Amount means, for any Substitution Date, an amount equal to the lower of (a) the excess, if any, of the Substitute Holdback Account Balance immediately prior to giving effect to the delivery of the relevant Aircraft over the Substitute Balance immediately after giving effect to the delivery of such Aircraft and (b) the Substitute Holdback Account Balance immediately prior to giving effect to the delivery of the relevant Aircraft. 222

231 Substitute Lease means (a) a Lease of a Substitute Aircraft or (b) a Lease of an Initial Aircraft (other than a Substitute Aircraft) that is different from the lease related to such Aircraft as described in the Purchase Agreement, in each case as of the Delivery Date of such Aircraft. Substitute PV means, for any date of determination, (a) where an Initial Aircraft (other than a Substitute Aircraft) is delivered with a Substitute Lease, an amount equal to the difference between: (i) the sum of (A) the Present Value of Lease Payments with respect to the applicable Existing Lease and (B) the Present Value of Future Lease Payments with respect to such Initial Aircraft (assuming the first Future Lease of such Aircraft will commence on the scheduled expiry date of the Existing Lease), and (ii) the sum of (A) the Present Value of Lease Payments with respect to such Substitute Lease and (B) the Present Value of Future Lease Payments with respect to such Initial Aircraft (assuming the first Future Lease of such Aircraft will commence on the scheduled expiry date of the Substitute Lease); and (b) where a Substitute Aircraft is delivered, an amount equal to the difference between: (i) the product of (A) a fraction, the numerator of which is the Initial Appraised Value of the Substitute Aircraft and the denominator of which is the Initial Appraised Value of the Substituted Aircraft and (B) the sum of (x) the Present Value of Lease Payments with respect to the applicable Existing Lease, (y) the Present Value of Future Lease Payments with respect to the applicable Substituted Aircraft (assuming the first Future Lease of such Aircraft will commence on the scheduled expiry date of the Existing Lease) and (z) the Present Value of Assumed FV with respect to such Substituted Aircraft, and (ii) the sum of (A) the Present Value of Lease Payments with respect to the applicable Substitute Lease, (B) the Present Value of Future Lease Payments with respect to such Substitute Aircraft (assuming the first Future Lease of such Aircraft will commence on the scheduled expiry date of the Substitute Lease) and (C) the Present Value of Assumed FV with respect to such Substitute Aircraft. Substituted Aircraft means an aircraft identified in the Purchase Agreement as expected, at the Initial Closing Date, to be delivered to ALS under the Purchase Agreement, for which a Substitute Aircraft is substituted. Substitution Date means the Delivery Date of a Substitute Aircraft, or an Initial Aircraft with a Substitute Lease. 223

232 Index of Defined Terms $ % Aircraft NG A A A A A A ACAS...90 Acceleration Default Account Collateral Accounts...20 Acquisition...65 Additional Aircraft...1 Additional Lease...1 Additional Notes...4 Adjusted Base Value Adjusted Portfolio Value Administrative Agency Agreement...31 Administrative Agent...31 Administrative Services Advance...4 Advance Amount...4 Advance Date...4 Aegean...9 Aer Lingus...9 AerCap...4 AerCap C.V AerCap Group...38 AerCap Ireland...30 AerCo...40 Aeroflot...9 AerVenture...2 AerVenture Group...59 AerVenture Leasing...2 AerVenture Loans Affected Holder affiliate Air Arabia...9 Air France...9 Airbus...2 Airbus Purchase Agreement...2 Aircraft...1 Aircraft Agreement Aircraft Allocation Amount Aircraft Assets...31 Aircraft Conversion Aircraft Conversion Account Aircraft Interest Aircraft Liens...45 Aircraft Purchase Account...3 Airworthiness Directives...46 Al Fawares ALFACO All Nippon Airways...95 Allowed Restructuring Aloha Airlines...35 ALS...1 ALS ALS Group...1 ALS Share Charge American...88 Annual Report Annual Review Applicable Date Applicable Governmental Program Applicable Rate of Interest Appraisals...29 Appraisers...29 Ascend...7 ASK...84 Assigned Agreements Assigned Leases Assumed Discount Rate Assumed First Year's Net Revenue...5 Assumed FV Assumed Interest Coverage Ratio...6 ATA Airlines...35 ATSA...35 Available Amount Available Collections Avianca...35 Aviation Capital Group Base Value...29 Basic Terms Modification Beneficial Interest Collateral Board...64 Boeing...83 British Airways...85 Business Day Calculation Date...19 Cape Town Contracting State Cape Town Convention Capital Commitment Register Capital Commitment Registrar Cash Collateral Account Cash Management Agreement

233 Cash Manager...3 CAT Cerberus...65 Changed Circumstance Charitable Trust Charitable Trust Trustee...20 CIS Class Class A Interest Shortfall Class A Notes...17 Class A-1 Commitment Expenses Class A-1 Commitment Fee Letter Class A-1 Commitment Fee Shortfall Class A-1 Commitment Fees Class A-1 Commitment Holder...3 Class A-1 Commitment Non-Consent Event Class A-1 Commitments...3 Class A-1 Funding Agent...3 Class A-1 Funding Agent Fee Letter Class A-1 Funding Agent Obligations Class A-1 Non-U.S. Sale Class A-1 Note Funding Agreement...3 Class A-1 Notes...4 Class A-1 Trustee...18 Class A-1 Undrawn Commitment Class A-2 Notes...4 Class E Note Directors...64 Class E Noteholder...64 Class E Notes Class E-1 Notes...4 Clearstream Participants Clearstream, Luxembourg...28 Code Collateral Collections Collections Account Commission...82 Commitment...3 Concentration Default Concentration Limits control Controlling Party Conversion Payment Core Lease Provisions Corporate Benefit Distribution covenant defeasance Covered Class A Noteholder Credit Facility Advance Obligations Credit Facility Expenses Credit Facility Obligations Critical Mass Event Current War Risk Coverage Amount DC DC Default Notice...27 defeasance trust Defeasance/Redemption Account Definitive Notes Delivery Date...2 Delivery Expiry Date Delivery Period...2 Delta...35 Depreciated Aircraft Value depreciation curve Depreciation Factor Designated Percentage Direct Aircraft Companies...1 Direct Aircraft Owner Trusts...1 Direct Aircraft-Owning Entities...1 Direct Initial Subsidiaries...1 Directive Directors...64 DOL Downgrade Drawing Draw Period Drawing DTC...28 easyjet...91 EFW...96 EIS...96 ELFAA...91 Eligible Credit Facility Eligible Provider Eligible Purchasers Encumbrance ERISA ERISA Plans EU...46 EU Paying Agent Euroclear...28 Euroclear Participants EVS...95 Excess Sale Proceeds Exchange Act...82 Existing Initial Lease...2 Existing Leasing Contracts...2 Expected Final Payment Date...18 Expected Useful Life Expense Account...23 Expense Reserve Account...22 Expenses Shortfall Final Drawing Final Maturity Date...18 Financial Administrative Agent...31 Financial Administrative Services Foreign Purchasers Frontier...35 FSMA Funding Account...3 Funding Agreement Default Notice Funding Termination Date Future Hedge Agreements

234 Future Lease...1 Future Rental Payments GDP...83 GECAS Generation Generation Generation Global Notes...28 GPA guarantee Hedge Agreements...24 Hedge Payment Hedge Providers...24 Hemus Air...9 High Quoted LIBOR Holder Holding Company...1 IATA...84 ICAO...46 ILFC...97 IMF...84 Incur Indebtedness Indemnification Agreement Indenture...4 Indenture Event of Default...27 Independent Directors...64 Indirect Aircraft Companies...1 Indirect Aircraft Owner Trusts...1 Indirect Aircraft-Owning Entities...1 Indirect Initial Subsidiaries...1 Indirect Participants Initial Aircraft...1 Initial Aircraft Companies...1 Initial Aircraft Owner Trusts...1 Initial Aircraft-Owning Entities...1 Initial Appraised Value Initial Appraisers Initial Class A Notes...4 Initial Class A-1 Commitment Holder...3 Initial Class A-1 LTV Initial Closing Date...1 Initial Closing Date Appraised Value Initial Delivery Date...2 Initial Hedge Agreements Initial Lease LOI...2 Initial Leases...1 Initial Leasing Intermediaries...1 Initial Lessee Concentration Limits Initial Lessees...1 Initial Liquidity Facility Non-Consent Event Initial Loan to Assumed First Year's Net Revenue...5 Initial Loan to Value...5 Initial Notes...4 Initial Primary Liquidity Payment Account Initial Primary Liquidity Reserve Account Initial Subsidiaries...1 Institutional Accredited Investors Insurance Servicer...31 Insurance Services Intercompany Loans...20 Intercompany Obligations Interest Accrual Period...19 Interest Amount International Registry Interpolated LIBOR Rate investment Investor-Based Exemptions Irish stamp duty Irish Stock Exchange...28 Irish VAT Refund Account ISIN...28 Issuer's Shareholders Account Japan Airlines...95 Jetstar...93 Juneyao...9 L LCC...83 Lease Rate Factor Leases...1 legal defeasance Lessee Funded Account Lessees...1 Lessor Level 1 Advance...3 Level 1 Advance Amount...3 Level 2 Advance...3 Level 2 Advance Amount...3 Level 2 Advance Date...3 LIBOR...19 LIBOR Break Costs Liquidity Drawings Liquidity Event of Default Liquidity Facility...18 Liquidity Facility Non-Consent Event Liquidity Facility Non-Use Fee Liquidity Provider...4 Listing Agent Loan, Expenses Apportionment and Guarantee Agreement Losses...40 Low Quoted LIBOR Lufthansa...87 Material Hedge Agreement Terms Maximum Commitment MD Membership Interest Collateral Mexicana...9 MiFID Regulations Modification Payment Monthly Report Moody's

235 Net Sale Proceeds New Airbus Aircraft...2 NLM...67 Non-Delivery Event Non-Extension Drawing Non-Significant Subsidiary Non-Trustee Account Non-Trustee Account Collateral Non-U.S. Dollar Lease Northwest...35 Note Account Note Payment Assumptions Note Target Price Noteholder Notes...4 Notice of Redemption Notice of Refinancing Nouvelair...9 OAG...91 Oasis Hong Kong...35 Official List...28 Operating Bank...3 Opinions...59 Optional Redemption Optional Redemption Date Outstanding Principal Balance Outstanding Priority Balance Ownership Interest Payment Date...19 Pembroke Permitted Account Investments Permitted Accruals Permitted Encumbrance Permitted Tax-Related Disposition Plan Asset Regulation Plans Pool Factors Portfolio...1 Precedent Lease Present Value of Assumed FV Present Value of Future Lease Payments Present Value of Lease Payments Primary Administrative Agent...31 Primary Administrative Services Primary Liquidity Reserve Account Primary Servicer...31 Pro Forma Lease Prospectus Directive PTCE PTF...96 Purchase Agreement...2 Purchase Option QIB Qualifying Lender Quarterly Report Rating Agencies...18 Rating Agency Confirmation...26 Recent Appraised Value...29 Record Date...19 Redemption Date Redemption Premium Percentages Redemption Premiums Redemption Price Reference Agency Agreement...32 Reference Agent...32 Reference Banks Reference Date Refinancing Refinancing Account Refinancing Date Refinancing Expenses...23 Refinancing Notes...4 Regulation S...28 Regulation S Global Note...28 Regulation S Purchasers Related Collateral Document Related Documents Relevant Appraisal Renewal Lease Rental Account Rental Payments Replacement Facility Replacement Study...95 Repossession Insurance Required Amount Required Expense Amount...22 Required Expenses...23 Resale Agreement...4 Reselling Noteholder Agent Reserved Cash Revisions Royal Jordanian...9 RPK...84 Rule 144A...28 Rule 144A Global Note...28 Rules Ryanair...91 SALE Sale and Transfer SARS...35 Scheduled Delivery Date...2 Secured Intercompany Obligations Secured Obligations Secured Parties Securities Act...62 Securities Depositaries Security Collateral Security Documents Security Trust Agreement...20 Security Trustee...20 Seller...2 Selling Class A Noteholder

236 Senior Claim Senior Claimant Senior Class Senior Creditor Senior Hedge Payment...24 Senior Hedge Payment Shortfall Senior Obligations Senior Trustee...27 Service Provider Servicer...31 Servicer Conflicts Standard Servicer Representative...40 Servicer Standard of Care Services Servicing Agent...30 Servicing Agent Fee Letter Servicing Agreement...30 SH&E...83 Shareholders Undertaking Sky Europe...92 Skybus...35 Special Indemnity Payments Spectrum Spring Airlines...9 Standard & Poor's...18 Standard of Performance Statutory Exemption Subordinated Creditor Subordinated Hedge Payment...24 Subordinated Representatives Subsidiaries...1 Substitute Aircraft...45 Substitute Balance Substitute Holdback Account Substitute Holdback Account Balance Substitute Holdback Deposit Amount Substitute Holdback Distribution Amount Substitute Holdback Release Amount Substitute Lease Substitute PV Substituted Aircraft Substitution Date TAP Portugal...9 Target Sales Price...31 Termination Notice Terms and Conditions Third Party Event Threshold Rating Transfer Through Change of Control Trustee...3 Trustee Report Distribution UCC United...35 US Airways...35 Varig...35 VAT Virgin Atlantic...85 Virgin Blue...93 War Risk Coverage Wataniya Airways...9 Y

237 Appendix 1 Monthly Gross Revenues Based on the Note Payment Assumptions Payment Date Gross Revenues ($) Initial Closing Date... 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May ,661,932 Jun ,016,802 Jul ,016,802 Aug ,016,802 Sep ,454,188 Oct ,812,373 Nov ,691,465 Dec ,029,315 Jan ,029,315 Feb ,397,114 Mar ,916,973 Apr ,711,561 May ,084,250 Jun ,084,250 Jul ,084,250 Aug ,084,250 Sep ,084,250 Oct ,084,250 Nov ,084,250 Dec ,084,250 Jan ,084,250 Feb ,084,250 Mar ,084,250 Apr ,084,250 May ,084,250 Jun ,084,250 Jul ,084,250 Aug ,084,250 Sep ,084,250 Oct ,084,250 Nov ,084,250 Dec ,084,250 Jan ,084,250 Feb ,084,250 Mar ,084,250 Apr ,084,250 May ,084,250 Jun ,084,250 Jul ,084,250 Aug ,084,250 Sep ,084,250 Oct ,084,250 Nov ,084,250 Dec ,084,250 Payment Date Gross Revenues ($) Jan ,084,250 Feb ,084,250 Mar ,084,250 Apr ,084,250 May ,084,250 Jun ,084,250 Jul ,084,250 Aug ,084,250 Sep ,084,250 Oct ,084,250 Nov ,084,250 Dec ,084,250 Jan ,743,270 Feb ,395,883 Mar ,841,500 Apr ,287,018 May ,287,018 Jun ,287,018 Jul ,287,018 Aug ,287,018 Sep ,287,018 Oct ,287,018 Nov ,287,018 Dec ,287,018 Jan ,943,532 Feb ,635,429 Mar ,778,509 Apr ,170,378 May ,562,411 Jun ,207,542 Jul ,207,542 Aug ,667,962 Sep ,667,962 Oct ,309,777 Nov ,309,777 Dec ,774,436 Jan ,774,436 Feb ,774,436 Mar ,405,372 Apr ,405,372 May ,502,324 Jun ,502,324 Jul ,974,137 Aug ,974,137 Sep ,974,137 Oct ,668,961 Nov ,311,616 Dec ,718,958 Jan ,194,661 Feb ,764,752 Mar ,397,540 Apr ,877,581 May ,924,726 Jun ,924,726 Jul ,407,192 A1-1

238 Payment Date Gross Revenues ($) Aug ,407,192 Sep ,969,806 Oct ,602,006 Nov ,208,008 Dec ,697,343 Jan ,315,255 Feb ,315,255 Mar ,803,028 Apr ,803,028 May ,803,028 Jun ,803,028 Jul ,462,654 Aug ,120,922 Sep ,609,092 Oct ,097,467 Nov ,097,467 Dec ,750,643 Jan ,750,643 Feb ,890,002 Mar ,031,418 Apr ,697,657 May ,687,664 Jun ,671,481 Jul ,671,481 Aug ,671,481 Sep ,671,481 Oct ,671,481 Nov ,671,481 Dec ,671,481 Jan ,671,481 Feb ,671,481 Mar ,824,428 Apr ,037,331 May ,652,594 Jun ,595,075 Jul ,025,739 Aug ,565,319 Sep ,565,319 Oct ,071,109 Nov ,071,109 Dec ,606,450 Jan ,606,450 Feb ,116,896 Mar ,116,896 Apr ,116,896 May ,647,256 Jun ,647,256 Jul ,691,362 Aug ,691,362 Sep ,209,668 Oct ,209,668 Nov ,209,668 Dec ,464,477 Jan ,988,774 Feb ,855,325 Mar ,016,292 Apr ,136,891 May ,094,144 Jun ,130,088 Jul ,160,509 Aug ,160,509 Payment Date Gross Revenues ($) Sep ,675,771 Oct ,675,771 Nov ,190,677 Dec ,701,342 Jan ,244,775 Feb ,769,318 Mar ,322,431 Apr ,322,431 May ,837,591 Jun ,837,591 Jul ,837,591 Aug ,837,591 Sep ,349,421 Oct ,861,045 Nov ,368,477 Dec ,876,122 Jan ,876,122 Feb ,385,146 Mar ,385,146 Apr ,401,516 May ,411,509 Jun ,941,162 Jul ,969,791 Aug ,983,636 Sep ,983,636 Oct ,983,636 Nov ,983,636 Dec ,983,636 Jan ,983,636 Feb ,983,636 Mar ,983,636 Apr ,983,636 May ,976,340 Jun ,033,860 Jul ,641,302 Aug ,613,237 Sep ,053,158 Oct ,547,368 Nov ,547,368 Dec ,064,030 Jan ,064,030 Feb ,553,583 Mar ,553,583 Apr ,075,002 May ,075,002 Jun ,075,002 Jul ,559,083 Aug ,559,083 Sep ,567,785 Oct ,567,785 Nov ,097,232 Dec ,097,232 Jan ,097,232 Feb ,230,681 Mar ,726,115 Apr ,585,456 May ,638,805 Jun ,602,861 Jul ,529,877 Aug ,560,323 Sep ,549,568 A1-2

239 Payment Date Gross Revenues ($) Oct ,549,568 Nov ,056,411 Dec ,056,411 Jan ,538,343 Feb ,013,800 Mar ,482,518 Apr ,001,350 May ,510,070 Jun ,510,070 Jul ,004,705 Aug ,004,705 Sep ,004,705 Oct ,004,705 Nov ,497,273 Dec ,989,627 Jan ,462,348 Feb ,935,267 Mar ,935,267 Apr ,424,918 May ,424,918 Jun ,386,886 Jul ,358,257 Aug ,822,757 Sep ,779,548 Oct ,707,470 Nov ,707,470 Dec ,707,470 Jan ,707,470 Feb ,707,470 Mar ,707,470 Apr ,707,470 May ,707,470 Jun ,707,470 Jul ,669,364 Aug ,697,429 Sep ,207,760 Oct ,098,635 Nov ,493,883 Dec ,977,221 Jan ,977,221 Feb ,441,417 Mar ,441,417 Apr ,919,998 May ,919,998 Jun ,388,468 Jul ,388,468 Payment Date Gross Revenues ($) Aug ,388,468 Sep ,861,459 Oct ,861,459 Nov ,805,503 Dec ,805,503 Jan ,281,186 Feb ,281,186 Mar ,281,186 Apr ,421,845 May ,930,999 Jun ,650,183 Jul ,599,395 Aug ,568,949 Sep ,446,417 Oct ,316,935 Nov ,223,918 Dec ,223,918 Jan ,000,174 Feb ,558,051 Mar ,231,613 Apr ,317,965 May ,717,795 Jun ,435,411 Jul ,698,584 Aug ,232,837 Sep ,592,125 Oct ,592,125 Nov ,592,125 Dec ,230,448 Jan ,733,491 Feb ,365,625 Mar ,351,621 Apr ,935,848 May ,702,516 Jun ,245,616 Jul ,822,907 Aug ,822,907 Sep ,407,647 Oct ,012,018 Nov ,162,481 Dec ,377,604 Jan ,603,205 Feb ,934,078 Mar ,664,175 Apr ,168,549 May ,853,853 A1-3

240 Appendix 2 Assumed Portfolio Value Assumed Portfolio Payment Date Value ($) Initial Closing Date... 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr ,380,160 May ,883,043 Jun ,372,199 Jul ,866,541 Aug ,355,560 Sep ,036,311 Oct ,879,134 Nov ,120,641 Dec ,294,060 Jan ,613,557 Feb ,035,807,561 Mar ,219,006,192 Apr ,314,368,694 May ,361,580,464 Jun ,360,630,261 Jul ,359,670,366 Aug ,358,700,743 Sep ,357,721,357 Oct ,356,732,172 Nov ,355,733,151 Dec ,354,724,257 Jan ,353,705,455 Feb ,352,676,708 Mar ,351,637,979 Apr ,350,589,231 May ,349,530,428 Jun ,348,461,533 Jul ,347,382,508 Aug ,346,293,317 Sep ,345,193,922 Oct ,344,084,285 Nov ,342,964,370 Dec ,341,834,137 Jan ,340,693,551 Feb ,339,542,572 Mar ,338,381,164 Apr ,337,209,287 May ,336,026,904 Jun ,334,833,976 Jul ,333,630,464 Aug ,332,416,332 Sep ,331,191,539 Oct ,329,956,046 Nov ,328,709,816 Dec ,327,452,809 Jan ,326,184,986 Assumed Portfolio Payment Date Value ($) Feb ,324,906,307 Mar ,323,616,734 Apr ,322,316,227 May ,321,004,746 Jun ,319,682,252 Jul ,318,348,704 Aug ,317,004,064 Sep ,315,648,290 Oct ,314,281,343 Nov ,312,903,182 Dec ,311,513,768 Jan ,310,113,059 Feb ,308,701,015 Mar ,307,277,595 Apr ,305,842,758 May ,304,396,464 Jun ,302,938,670 Jul ,301,469,337 Aug ,299,988,422 Sep ,298,495,884 Oct ,296,991,682 Nov ,295,475,773 Dec ,293,948,117 Jan ,292,408,670 Feb ,290,857,391 Mar ,289,294,238 Apr ,287,719,168 May ,286,132,139 Jun ,284,533,108 Jul ,282,922,033 Aug ,281,298,871 Sep ,279,663,578 Oct ,278,016,112 Nov ,276,356,429 Dec ,274,684,487 Jan ,273,000,241 Feb ,271,303,648 Mar ,269,594,665 Apr ,267,873,247 May ,266,139,351 Jun ,264,392,932 Jul ,262,633,946 Aug ,260,862,349 Sep ,259,078,097 Oct ,257,281,144 Nov ,255,471,446 Dec ,253,648,958 Jan ,251,813,635 Feb ,249,965,432 Mar ,248,104,304 Apr ,246,230,205 May ,244,343,090 Jun ,242,442,913 Jul ,240,529,628 Aug ,238,603,190 Sep ,236,663,551 A2-1

241 Assumed Portfolio Payment Date Value ($) Oct ,234,710,667 Nov ,232,744,490 Dec ,230,764,975 Jan ,228,772,074 Feb ,226,765,741 Mar ,224,745,929 Apr ,222,712,591 May ,220,665,680 Jun ,218,605,148 Jul ,216,530,948 Aug ,214,443,033 Sep ,212,341,355 Oct ,210,225,866 Nov ,208,096,517 Dec ,205,953,262 Jan ,203,796,051 Feb ,201,624,837 Mar ,199,439,570 Apr ,197,240,202 May ,195,026,684 Jun ,192,798,968 Jul ,190,557,003 Aug ,188,300,742 Sep ,186,030,134 Oct ,183,745,130 Nov ,181,445,680 Dec ,179,131,735 Jan ,176,803,245 Feb ,174,460,158 Mar ,172,102,426 Apr ,169,729,998 May ,167,342,823 Jun ,164,940,850 Jul ,162,524,029 Aug ,160,092,309 Sep ,157,645,639 Oct ,155,183,967 Nov ,152,707,241 Dec ,150,215,411 Jan ,147,708,425 Feb ,145,186,231 Mar ,142,648,776 Apr ,140,096,009 May ,137,527,877 Jun ,134,944,328 Jul ,132,345,309 Aug ,129,730,767 Sep ,127,100,650 Oct ,124,454,904 Nov ,121,793,477 Dec ,119,116,314 Jan ,116,423,363 Feb ,113,714,569 Mar ,110,989,879 Apr ,108,249,239 May ,105,492,594 Jun ,102,719,891 Jul ,099,931,074 Aug ,097,126,090 Sep ,094,304,883 Assumed Portfolio Payment Date Value ($) Oct ,091,467,399 Nov ,088,613,582 Dec ,085,743,377 Jan ,082,856,730 Feb ,079,953,583 Mar ,077,033,882 Apr ,074,097,570 May ,071,144,592 Jun ,068,174,892 Jul ,065,188,412 Aug ,062,185,097 Sep ,059,164,890 Oct ,056,127,734 Nov ,053,073,572 Dec ,050,002,346 Jan ,046,914,000 Feb ,043,808,476 Mar ,040,685,716 Apr ,037,545,663 May ,034,388,258 Jun ,031,213,443 Jul ,028,021,160 Aug ,024,811,351 Sep ,021,583,957 Oct ,018,338,918 Nov ,015,076,177 Dec ,011,795,674 Jan ,008,497,348 Feb ,005,181,142 Mar ,001,846,996 Apr ,494,849 May ,124,641 Jun ,736,313 Jul ,329,803 Aug ,905,052 Sep ,461,999 Oct ,000,582 Nov ,520,742 Dec ,022,416 Jan ,505,543 Feb ,970,062 Mar ,415,911 Apr ,843,028 May ,251,351 Jun ,640,817 Jul ,011,365 Aug ,362,931 Sep ,695,453 Oct ,008,868 Nov ,303,112 Dec ,578,123 Jan ,833,837 Feb ,070,190 Mar ,287,118 Apr ,484,557 May ,662,443 Jun ,820,712 Jul ,959,298 Aug ,078,138 Sep ,177,166 A2-2

242 Assumed Portfolio Payment Date Value ($) Oct ,256,317 Nov ,315,526 Dec ,354,727 Jan ,373,854 Feb ,372,842 Mar ,351,624 Apr ,310,135 May ,248,308 Jun ,166,075 Jul ,063,371 Aug ,940,129 Sep ,796,280 Oct ,631,758 Nov ,446,495 Dec ,240,424 Jan ,013,476 Feb ,765,583 Mar ,496,677 Apr ,206,690 May ,895,552 Jun ,563,194 Jul ,209,549 Aug ,834,545 Sep ,438,114 Oct ,020,186 Nov ,580,691 Dec ,119,560 Jan ,636,721 Feb ,132,104 Mar ,605,638 Apr ,057,253 May ,486,878 Jun ,894,441 Jul ,279,870 Aug ,643,095 Sep ,984,042 Oct ,302,641 Nov ,598,818 Dec ,872,502 Jan ,123,619 Feb ,352,096 Mar ,557,861 Apr ,740,841 May ,900,960 Jun ,038,147 Jul ,152,327 Assumed Portfolio Payment Date Value ($) Aug ,243,425 Sep ,311,368 Oct ,356,081 Nov ,377,488 Dec ,375,516 Jan ,350,089 Feb ,301,131 Mar ,228,567 Apr ,132,322 May ,012,318 Jun ,868,480 Jul ,700,731 Aug ,508,995 Sep ,293,195 Oct ,053,253 Nov ,789,093 Dec ,500,636 Jan ,187,805 Feb ,240,309 Mar ,452,028 Apr ,447,963 May ,628,392 Jun ,771,114 Jul ,439,962 Aug ,890,113 Sep ,504,574 Oct ,112,321 Nov ,700,015 Dec ,267,592 Jan ,904,408 Feb ,579,047 Mar ,883,066 Apr ,730,178 May ,686,662 Jun ,644,716 Jul ,780,279 Aug ,317,350 Sep ,843,253 Oct ,055,574 Nov ,383,337 Dec ,511,184 Jan ,193,025 Feb ,633,718 Mar ,514,088 Apr ,716,519 May ,843,535 A2-3

243 Appendix 3 Expected Target Principal Balance Payment Date Principal Balance ($) Initial Closing Date... 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr ,729,606 May ,381,520 Jun ,951,917 Jul ,238,301 Aug ,612,599 Sep ,050,859 Oct ,328,959 Nov ,683,457 Dec ,864,433 Jan ,020,110 Feb ,787,926 Mar ,413,009 Apr ,022,944 May ,460,193 Jun ,081,765 Jul ,503,611 Aug ,065,272 Sep ,597,195 Oct ,931,810 Nov ,402,855 Dec ,678,233 Jan ,087,743 Feb ,466,684 Mar ,327,546 Apr ,642,182 May ,765,368 Jun ,016,781 Jul ,078,449 Aug ,265,958 Sep ,421,683 Oct ,390,244 Nov ,481,032 Dec ,386,407 Jan ,411,557 Feb ,404,037 Mar ,063,842 Apr ,988,803 May ,732,823 Jun ,590,359 Jul ,268,770 Aug ,058,151 Sep ,813,572 Oct ,392,623 Nov ,078,788 Dec ,590,451 Jan ,206,614 Feb ,787,869 Payment Date Principal Balance ($) Mar ,924,300 Apr ,432,927 May ,771,839 Jun ,208,547 Jul ,477,480 Aug ,841,494 Sep ,169,222 Oct ,332,113 Nov ,585,971 Dec ,676,984 Jan ,293,746 Feb ,319,521 Mar ,403,790 Apr ,276,852 May ,990,863 Jun ,785,114 Jul ,422,439 Aug ,137,030 Sep ,811,783 Oct ,332,833 Nov ,926,636 Dec ,368,918 Jan ,320,951 Feb ,639,469 Mar ,457,997 Apr ,071,109 May ,051,015 Jun ,543,088 Jul ,892,148 Aug ,745,513 Sep ,554,333 Oct ,675,239 Nov ,850,790 Dec ,328,583 Jan ,854,735 Feb ,334,551 Mar ,052,238 Apr ,905,553 May ,530,779 Jun ,197,770 Jul ,167,485 Aug ,172,435 Sep ,128,199 Oct ,356,798 Nov ,071,045 Dec ,159,885 Jan ,705,879 Feb ,725,790 Mar ,944,122 Apr ,755,210 May ,400,543 Jun ,063,560 Jul ,032,338 Aug ,011,804 Sep ,469,492 Oct ,278,807 Nov ,588,246 A3-1

244 Payment Date Principal Balance ($) Dec ,208,556 Jan ,123,005 Feb ,982,305 Mar ,047,430 Apr ,208,591 May ,262,382 Jun ,304,421 Jul ,679,274 Aug ,478,584 Sep ,638,825 Oct ,117,646 Nov ,572,121 Dec ,372,239 Jan ,145,700 Payment Date Principal Balance ($) Feb ,719,807 Mar ,195,601 Apr ,130,112 May ,804,490 Jun ,267,936 Jul ,642,059 Aug ,967,915 Sep ,224,468 Oct ,397,277 Nov ,514,009 Dec ,550,767 Jan ,526,169 Feb ,430,351 Mar A3-2

245 Appendix 4 Pool Factors Payment Date Pool Factor Initial Closing Date... 0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Payment Date Pool Factor Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov A4-1

246 Payment Date Pool Factor Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Payment Date Pool Factor Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar A4-2

247 Appendix 5 Lease Rate Factors Age of Aircraft in Months Lease Rate Factor Age of Aircraft in Months Lease Rate Factor A5-1

248 Age of Aircraft in Months Lease Rate Factor Age of Aircraft in Months Lease Rate Factor A5-2

249 Age of Aircraft in Months Lease Rate Factor Age of Aircraft in Months Lease Rate Factor A5-3

250 Appendix 6 Lease Rate Factor Modifiers Age of Aircraft in Months Lease Rate Modifier Age of Aircraft in Months Lease Rate Modifier A6-1

251 Age of Aircraft in Months Lease Rate Modifier Age of Aircraft in Months Lease Rate Modifier A6-2

252 Age of Aircraft in Months Lease Rate Modifier Age of Aircraft in Months Lease Rate Modifier A6-3

253 Appendix 7 Appraisals A7-1

254

255

256

257

258

259

260

261