<PAGE>

                                                   LIMITED LIABILITY PARTNERSHIP

[CLIFFORD CHANCE LOGO]                                            EXECUTION TEXT

                               DATED 18  MAY 2004

                THE BANKS AND FINANCIAL INSTITUTIONS NAMED HEREIN
                                   as Lenders

                THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND,
                                  LONDON BRANCH
                                 as Lead Manager

                THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND,
                                  PARIS BRANCH
                                 as Lead Manager

                THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND,
                                FRANKFURT BRANCH
                                 as Lead Manager

                THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND,
                                  LONDON BRANCH
                               as Security Trustee

                THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND,
                                  LONDON BRANCH
                                    as Agent

                             WHITNEY LEASING LIMITED
                                   as Borrower

                              AIRCRAFT SPC-12, INC.
                               as Borrower Parent

                     INTERNATIONAL LEASE FINANCE CORPORATION
                                  as Guarantor

                     INTERNATIONAL LEASE FINANCE CORPORATION
                             as Subordinated Lender

                           AIRCRAFT FACILITY AGREEMENT

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                                    CONTENTS
<TABLE>
<CAPTION>
CLAUSE                                                                                                 PAGE
<S>                                                                                                    <C>
1.     Definitions...................................................................................    4
2.     Availability..................................................................................   36
3.     Utilisation Of The Facility...................................................................   44
4.     Repayment And Prepayment......................................................................   56
5.     Guarantee And Indemnity.......................................................................   74
6.     Representations And Warranties................................................................   78
7.     Undertakings And Covenants....................................................................   83
8.     Subordination.................................................................................   99
9.     Trigger Events................................................................................  102
10.    Default.......................................................................................  107
11.    Proceeds Account..............................................................................  110
12.    Application Of Sums Received By The Lenders...................................................  112
13.    Indemnities...................................................................................  117
14.    Change In Circumstances.......................................................................  125
15.    Mitigation And Contest Rights.................................................................  130
16.    Fees And Expenses.............................................................................  135
17.    Change Of Agent And Security Trustee..........................................................  136
18.    Assignments And Transfers.....................................................................  136
19.    Set-Off And Pro Rata Payments.................................................................  143
20.    Rights Cumulative, Waivers, Severability......................................................  144
21.    Further Assurance.............................................................................  145
22.    Notices.......................................................................................  145
23.    Governing Law And Jurisdiction................................................................  148
24.    Miscellaneous.................................................................................  149
25.    Confidentiality...............................................................................  150
26.    Counterparts And Delivery By Facsimile........................................................  151
27.    Third Parties Rights..........................................................................  151

SCHEDULE 1 LENDERS...................................................................................  153

SCHEDULE 2 FORM OF LOAN SUPPLEMENT...................................................................  154
</TABLE>

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<TABLE>
<S>                                                                                                    <C>
SCHEDULE 3 FORM OF TRANSFER CERTIFICATE..............................................................  170

SCHEDULE 4 FORM OF UTILISATION NOTICE................................................................  176

SCHEDULE 5     ......................................................................................  178
       Part A Details Of Proposed Aircraft And Proposed Aircraft Delivery Schedule (All Figures
              In US$)................................................................................  178
       Part B International Lease Finance Corporation Sample Loan Profiles...........................  181

SCHEDULE 6 GUARANTOR COVENANTS.......................................................................  182

SCHEDULE 7 CONDITIONS PRECEDENT AND SUBSEQUENT TO A UTILISATION......................................  187
       Part A Conditions Precedent To Each Utilisation...............................................  187
       Part B Further Conditions Precedent...........................................................  190
       Part C Conditions Subsequent To A Utilisation.................................................  193

SCHEDULE 8 ENGLISH PROCESS AGENTS....................................................................  195

SCHEDULE 9 INSURANCE.................................................................................  196

SCHEDULE 10 FORM OF CERTIFICATE TO BE GIVEN ON EACH QUARTER DATE.....................................  200

EXECUTION PAGES......................................................................................  202
</TABLE>

<PAGE>

THIS AIRCRAFT FACILITY AGREEMENT is made on ____ May 2004

BETWEEN:

(1)   THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND, LONDON BRANCH, a banking
      institution established under the laws of Scotland acting for the purposes
      of this Agreement through its offices at PO Box No. 39900, Level 7,
      Bishopsgate Exchange, 155 Bishopsgate, London EC2M 3YB, England (as
      BRITISH LEAD MANAGER) acting on behalf of and for the account of the
      British Lenders;

(2)   THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND, PARIS BRANCH, a banking
      institution established under the laws of Scotland acting for the purposes
      of this Agreement through its offices at 10 rue Cimarosa, 75116 Paris,
      France (as FRENCH LEAD MANAGER) acting on behalf of and for the account of
      the French Lenders;

(3)   THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND, FRANKFURT BRANCH, a
      banking institution established under the laws of Scotland acting for the
      purposes of this Agreement through its offices at Goetheplatz 4, D-60311
      Frankfurt am Main, Germany (as GERMAN LEAD MANAGER) acting on behalf of
      and for the account of the German Lenders;

(4)   THE FINANCIAL INSTITUTIONS NAMED IN SCHEDULE I HERETO;

(5)   THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND, a banking institution
      established under the laws of Scotland acting for the purposes of this
      Agreement through its offices at PO Box No. 39900, Level 7, Bishopsgate
      Exchange, 155 Bishopsgate, London EC2M 3YB, England in its capacity as
      Agent for and on behalf of itself and the Lenders (in such capacity, the
      "AGENT");

(6)   THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND, a banking institution
      established under the laws of Scotland acting for the purposes of this
      Agreement through its offices at PO Box No. 39900, Level 7, Bishopsgate
      Exchange, 155 Bishopsgate, London EC2M 3YB, England in its capacity as
      security trustee for and on behalf of, inter alios, itself, the Lead
      Managers and the Lenders (in such capacity, the "SECURITY TRUSTEE");

(7)   WHITNEY LEASING LIMITED, a company incorporated under the laws of Bermuda
      and having its registered office at American International Building, 29
      Richmond Road, Pembroke HM 08, Bermuda (the "BORROWER");

(8)   AIRCRAFT SPC-12, INC., a company incorporated under the laws of California
      and having its principal place of business at c/o International Lease
      Finance Corporation, 10250 Constellation Boulevard, 34th Floor, Los
      Angeles, CA 90067, United States of America (the "BORROWER PARENT");

(9)   INTERNATIONAL LEASE FINANCE CORPORATION, a corporation incorporated under
      the laws of the State of California and having its principal place of

                                       -3-
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      business at 10250 Constellation Boulevard, 34th Floor, Los Angeles, CA
      90067, United States of America as guarantor (herein in such capacity
      called the "GUARANTOR"); and

(10)  INTERNATIONAL LEASE FINANCE CORPORATION, a corporation incorporated under
      the laws of the State of California and having its principal place of
      business at 10250 Constellation Boulevard, 34th Floor, Los Angeles, CA
      90067, United States of America as other lender (in such capacity, the
      "SUBORDINATED LENDER").

WHEREAS:

This Agreement sets out the terms upon which the Lenders will make available to
the Borrower the Facility described herein to enable the Borrower to purchase
the Aircraft.

NOW IT IS HEREBY AGREED as follows:

1.    DEFINITIONS

1.1   In this Agreement (including the Recitals, the Schedules and the Annexes
      hereto) except where the context otherwise requires or there is an express
      provision to the contrary, the following words and expressions shall have
      the following meanings:

      "ACCELERATION EVENT" means a Termination Event in respect of which the
      Agent has served a notice in accordance with the provisions of and having
      the effect set out in Clauses 10.2.3 and 10.2.4 respectively.

      "ACCESSION DEED" means a deed of accession to this Agreement to be entered
      into by the relevant Sub-Borrower and/or Intermediate Lessee in the Agreed
      Form.

      "ADVANCE" means, in respect of a Utilisation, the aggregate of the sums to
      be advanced by each of the Relevant Lenders to the Borrower in respect of
      that Utilisation.

      "AFFECTED LENDER" shall have the meaning given thereto in Clauses 14.1
      (Increased Costs), 14.2 (Market Disruption), 14.3 (Illegality) and 15.2
      (Prepayment of Affected Loans and Replacement of Affected Lender).

      "AGREED FORM" means in relation to the documents specified in Clause
      2.9.1(b)(xv) the form of such documents agreed between the Borrower and
      the Agent, as evidenced by their initials (or those of one of their duly
      authorised director's or officer's) on the cover of each such document.

      "AGREEMENT" means this aircraft facility agreement.

      "AIG" means American International Group, Inc..

      "AIG GROUP COMPANY" means AIG and any person of which or in which AIG
      owns, directly or indirectly, 50% or more of:

      (a)   the combined voting power of all classes of stock having general
            voting power under ordinary circumstances to elect a majority of the
            board of directors of such person, if it is a corporation;

                                       -4-
<PAGE>

      (b)   the capital interest or profits interest of such person, if it is a
            partnership, limited liability company, joint venture or similar
            entity; or

      (c)   the beneficial interest of such person, if it is a trust,
            association or other unincorporated organisation.

      "AIRCRAFT" means, as the context may require, any or all of the Eligible
      Aircraft financed hereunder by the Borrower pursuant to a Utilisation
      Notice (and, save where the context otherwise requires, includes any or
      all of the Replacement Aircraft) comprising, with respect to each
      individual aircraft, the Airframe together with the relevant Engines
      (whether or not any of the relevant Engines may from time to time be
      installed on the Airframe) together with the relevant Technical Records.

      "AIRCRAFT OPERATIVE DOCUMENTS" means, in respect of an Aircraft, each of:

      (a)   the relevant Loan Supplement, the relevant Utilisation Notice, the
            relevant Bill of Sale, the relevant BFE Bill of Sale, the relevant
            Purchase Agreement (to the extent that it relates to the purchase of
            that Aircraft and the Warranties relating to that Aircraft), the
            relevant Partial Purchase Agreement Assignment, the relevant Engine
            Agreement (to the extent that it relates to the Engine Warranties
            relating to that Aircraft), the relevant Intermediate Lease (if
            any), the relevant Accession Deed (if any) and each of the Aircraft
            Security Documents; and

      (b)

            (i)   any other document, instrument or memorandum annexed to any of
                  the documents referred to in (a) above,

            (ii)  any notice or acknowledgement required pursuant to the terms
                  of any of the documents referred to in (a) and/or (b)(i)
                  above; and

            (iii) any document, instrument or memorandum (x) which is executed
                  and delivered in connection with a restructuring in accordance
                  with the terms of this Agreement of any or all of the
                  arrangements contemplated by any of the documents referred to
                  in (a) above, (y) which the Guarantor, the Borrower, the
                  relevant Intermediate Lessee or the relevant Sub-Borrower
                  agrees constitutes an Aircraft Operative Document or (z) which
                  is entered into in substitution for or which amends or
                  augments or varies all or any part of any of the documents
                  referred to in this definition (including this part
                  (b)(iii)(z)) in each case in accordance with the terms of this
                  Agreement.

      "AIRCRAFT PURCHASE PRICE" means, in respect of an Aircraft, the final
      contract price for that Aircraft on delivery (including any Buyer
      Furnished Equipment PROVIDED THAT the cost of such Buyer Furnished
      Equipment shall not exceed five per cent. (5%) of the final contract price
      (excluding the cost of such Buyer Furnished Equipment) net of any and all
      credit memoranda of the type hereinafter described) after deduction of all
      credit memoranda in each case which are expressed to be capable of being
      applied against the

                                       -5-
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      purchase price of that Aircraft as set out in the relevant purchase
      agreement by the Seller and/or the Manufacturer and/or the relevant Engine
      Manufacturer and exclusive of any capitalised interest, together with the
      final contract price for the Post-Delivery Modifications (if any) to be
      carried out on such Aircraft that are invoiced on or prior to the Delivery
      Date.

      "AIRCRAFT SECURITY DOCUMENTS" means, in respect of an Aircraft, each of:

      (a)   this Agreement, the Borrower Debenture, the relevant Lease Security
            Assignment (if any), the relevant Intermediate Lease Security
            Assignment (if any), the relevant Mortgage, the relevant
            Sub-Borrower Guarantee (if any), the relevant Assignment Re Engine
            Warranties, the relevant Partial Purchase Agreement Assignment, the
            Charge Over Shares of Borrower, the relevant Charge Over Shares of
            Sub-Borrower (if any), the relevant Sub Borrower Debenture (if any),
            the relevant Intermediate Lessee Debenture (if any), the relevant
            Charge Over Shares of Intermediate Lessee (if any), the relevant
            Notice(s) of Charge (if any);

      (b)

            (i)   any other instrument, document or memorandum annexed to any of
                  the documents referred to in (a) above,

            (ii)  any notice or acknowledgement required pursuant to the terms
                  of any of the documents referred to in (a) and/or (b)(i)
                  above; and

            (iii) any document, instrument or memorandum (w) which is executed
                  and delivered in connection with or following a restructuring
                  of any or all of the arrangements contemplated by any of the
                  documents referred to in (a) above, (x) which the Guarantor or
                  the Borrower or any Sub-Borrower or any Intermediate Lessee
                  agrees constitutes an Aircraft Security Document, (y) which
                  secures the obligations of any one or more of the Obligors
                  under any of the Aircraft Operative Documents or (z) which is
                  entered into in substitution for or which amends or augments
                  or varies all or any part of any of the documents referred to
                  in this definition (including this part (b)(iii)(z)) in each
                  case in accordance with the terms of this Agreement.

      "AIRFRAME" means, in respect of an Aircraft, the airframe more
      particularly identified in schedule 1 to the relevant Mortgage including
      all Parts installed in or on the airframe at the Delivery Date (or which,
      having been removed therefrom, remain the property of the Borrower or, if
      applicable, the relevant Sub-Borrower), and any substitutions, renewals
      and replacements of such Parts from time to time made in or to or
      installed in or on the said airframe including any Parts which are for the
      time being detached from the airframe but remain the property of the
      Borrower or, if applicable, the relevant Sub-Borrower.

                                       -6-
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      "ALTERNATIVE UTILISATION" means, in relation to an Eligible Aircraft, a
      Utilisation which is part of a leveraged or tax-based financing of that
      Eligible Aircraft.

      "APPLICABLE MARGIN" means, in respect of any Loan, the rate specified as
      such in the relevant Loan Supplement (if any).

      "APPLICABLE RATE" shall, in respect of any Loan, have the meaning given to
      such term in the relevant Loan Supplement.

      "APPROVED LENDERS" means such banks and financial institutions as may from
      time to time be agreed between the Original Lender and the Guarantor as
      being potential Lenders for some or all of the Aircraft, it being
      acknowledged for any such persons to be considered an "APPROVED LENDER",
      it must also be eligible to receive the benefit of the ECA Guarantees.

      "ASSIGNMENT RE ENGINE WARRANTIES" means, in respect of an Aircraft (other
      than where such Aircraft is powered by Engines manufactured by Rolls-Royce
      plc), the deed of assignment of the relevant Engine Agreement insofar as
      it relates to the Engine Warranties in respect of the Engines relating to
      that Aircraft to be entered into between the Guarantor and the Borrower or
      a Sub-Borrower (as the case may be), and including if applicable the
      Lessee as a party or subject to its rights, substantially in the Agreed
      Forms.

      "ASSUMED FINANCED AMOUNT" means, in relation to an Aircraft, the amount
      applicable to that Aircraft in the column headed "ASSUMED FINANCED AMOUNT"
      in Schedule 5 Part A.

      "AVAILABILITY PERIOD" means the period from the date hereof up to and
      including 31 May 2005 or such later date as the parties hereto may agree,
      subject to earlier termination as provided for in this Agreement.

      "AVIATION AUTHORITY" means, in respect of an Aircraft, any Government
      Entity which under the laws of the State of Registration may from time to
      time:

      (a)   have control or supervision of civil aviation in the State of
            Registration; or

      (b)   have jurisdiction over the registration, airworthiness or operation
            of, or other similar matters relating to that Aircraft.

      "BANKING DAY" means a day (other than a Saturday, Sunday or holiday
      scheduled by law) on which banks are open for the transaction of domestic
      and foreign exchange business and otherwise for the transaction of
      business of the nature required by this Agreement or the other Transaction
      Documents, as applicable, in London, Paris, Frankfurt, Los Angeles and New
      York City and also, in relation to a day on which a payment is required,
      in the place where such payment is to be made in accordance with this
      Agreement or any of the other Transaction Documents, as applicable.

      "BFE BILL OF SALE" means, in respect of an Aircraft, the bill of sale
      executed or to be executed by the Guarantor in favour of the Seller
      substantially in the Agreed Form

                                       -7-
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      pursuant to which title to the Buyer Furnished Equipment is transferred
      from the Guarantor to the Seller.

      "BILL OF SALE" means, in respect of an Aircraft, the bill of sale executed
      or to be executed by the Seller in favour of the Borrower or any
      Sub-Borrower (as the case may be) substantially in the Agreed Form
      evidencing the transfer of title to that Aircraft or any confirmation of
      sale if title to the Aircraft is to pass by way of physical delivery of
      the Aircraft from the Seller to the Borrower or any Sub-Borrower.

      "BORROWER ACCOUNTS" means each of the Borrower Maintenance Reserve
      Account, the Borrower Rental Account and the Borrower Security Deposit
      Account and "BORROWER ACCOUNT" shall mean any of them.

      "BORROWER CONSTITUTIONAL DOCUMENTS" means the certificate of
      incorporation, the memorandum of association and by-laws of the Borrower.

      "BORROWER DEBENTURE" means the document so entitled to be dated on or
      before the first Utilisation Date and made between the Borrower and the
      Security Trustee in a form acceptable to the Export Credit Agencies.

      "BORROWER MAINTENANCE RESERVE ACCOUNT" means the existing Dollar account
      in the name of the Borrower with JP Morgan Chase Bank or Bank of America
      or with such other financial institution as may be approved by the
      Security Trustee (such approval not to be unreasonably withheld).

      "BORROWER PARENT" means Aircraft SPC-12, Inc. a company incorporated under
      the laws of California and whose principal place of business is at c/o
      International Lease Finance Corporation, 10250 Constellation Boulevard,
      34th Floor, Los Angeles, CA 90067, United States of America.

      "BORROWER RENTAL ACCOUNT" means the existing Dollar account in the name of
      the Borrower, with JP Morgan Chase Bank or Bank of America or with such
      other financial institution as may be approved by the Security Trustee
      (such approval not to be unreasonably withheld).

      "BORROWER SECURITY DEPOSIT ACCOUNT" means the existing Dollar account in
      the name of the Borrower with JP Morgan Chase Bank or Bank of America or
      with such other financial institution as may be approved by the Security
      Trustee (such approval not to be unreasonably withheld).

      "BRITISH CREDITS" shall, in respect of an Advance, have the meaning given
      to that term in the relevant Loan Supplement.

      "BRITISH LENDERS" means the banks named in schedule 1, part A of each Loan
      Supplement and their successors, Transferees and assigns.

      "BUSINESS DAY" means a day (other than a Saturday or Sunday or holiday
      scheduled by law) on which banks are open for the transaction of domestic
      and foreign exchange business and otherwise for the transaction of
      business of the nature required by this

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      Agreement or the other Transaction Documents, as appropriate, in London,
      Paris, Frankfurt, New York City, Los Angeles and Bermuda and, when used in
      respect of an Aircraft of which a Sub-Borrower is or is to be the owner,
      the city in which such Sub-Borrower has its principal place of business.

      "BUYER FURNISHED EQUIPMENT" means, in respect of an Aircraft, the buyer
      furnished equipment relating to that Aircraft supplied by the Guarantor to
      the Seller prior to the Delivery Date or, as the case may be, during any
      Post-Delivery Modification period relating to the relevant Aircraft
      PROVIDED THAT such equipment has been invoiced on or prior to the Delivery
      Date.

      "CANCELLATION NOTICE" shall have the meaning given to such term in Clause
      9.2.1(h) (Second Trigger Event).

      "CAPE TOWN CONVENTION" means the Convention on International Interests in
      Mobile Equipment and the Protocol thereto on Matters Specific to Aircraft
      Equipment signed at Cape Town on 16 November 2001.

      "CHANGE IN LAW" means, in each case after the date of this Agreement, (i)
      the introduction, abolition, withdrawal or variation of any applicable
      law, regulation, practice or concession or official directive, ruling,
      request, notice, guideline, statement of policy or practice statement by
      the Bank of England, the Financial Services Authority, the Banque de
      France, the Deutsche Bundesbank, the Federal Reserve Bank of New York, the
      European Union, European Central Bank or any central bank, tax, fiscal,
      governmental, international, national or other competent authority or
      agency (whether or not having the force of law but in respect of which
      compliance by banks or other financial institutions in the relevant
      jurisdiction is generally considered to be mandatory), or (ii) any change
      in any interpretation, or the introduction or making of any law or further
      interpretation, or any new or different interpretation by any court,
      tribunal, governmental, revenue, international, national, fiscal or other
      competent authority, or (iii) the compliance by banks or other financial
      institutions with any new or different request or direction (in each case
      whether or not having the force of law but in respect of which compliance
      by banks or other financial institutions in the relevant jurisdiction is
      generally considered to be mandatory) from any central bank, fiscal,
      governmental, revenue, international, national, monetary or other
      authority; PROVIDED THAT in respect of a Lender, any such implementation,
      introduction, abolition, withdrawal or variation, change in interpretation
      or new or different interpretation in relation to any applicable law or
      regulation and/or practice, concession, directive, ruling, request,
      notice, guideline, statement of policy or practice statement having effect
      in the jurisdiction in which the relevant Lender is organised, has its
      principal place of business or has its Lending Office shall not constitute
      a Change in Law if, prior to the date of this Agreement, such
      implementation, introduction, abolition, withdrawal or variation, change
      in interpretation or new or different interpretation had been announced or
      proposed generally to banks and other financial institutions in the
      jurisdiction in which the relevant Lender is organised or has its
      principal place of business or has its Lending Office by way of the
      publication of

                                       -9-
<PAGE>

      any Act of Parliament, statute or statutory instrument or the publication
      or delivery or issue of any notice, directive or guideline applicable to
      banks generally by the relevant central bank, a European Union institution
      or other applicable authority, government, department, committee or agency
      (which under the laws of the jurisdiction in which the relevant Lender has
      its Lending Office, is organised or has its principal place of business
      for the time being has control or supervision of banking regulations)
      PROVIDED FURTHER THAT in respect of Clause 14.1 (Increased Costs) it is
      expressly acknowledged that the reference in the proviso above to
      "announced" or "proposed" shall not include the consultative paper
      relating to a new capital adequacy framework issued by the Basel Committee
      on Banking Supervision in June 1999 in its form as of the date of this
      Agreement or the consultative papers in respect of the new Basel Capital
      Accord issued by the Basel Committee on Banking Supervision in January
      2001 and April 2003 in their form as at the date hereof or the
      Consultative Paper CP3: Directive on Risk Based Capital Requirements for
      credit institutions and investment firms published by the European
      Commission in its form as at the date of this Agreement.

      "CHARGE OVER SHARES OF BORROWER" means the agreement so entitled dated on
      or before the first Utilisation Date and made between the Borrower Parent
      and the Security Trustee and relating to the shares of the Borrower in a
      form acceptable to the Export Credit Agencies.

      "CHARGE OVER SHARES OF INTERMEDIATE LESSEE" means any deed of charge
      entered into from time to time between the Borrower or any relevant
      Sub-Borrower (as the case may be) and the Security Trustee in relation to
      the shares of any Intermediate Lessee substantially in the Agreed Form.

      "CHARGE OVER SHARES OF SUB-BORROWER" means any deed of charge entered into
      from time to time between the Borrower and the Security Trustee in
      relation to the shares of any Sub-Borrower substantially in the Agreed
      Form.

      "CHARGES OVER SHARES" means together the Charge Over Shares of Borrower,
      each Charge Over Shares of Intermediate Lessee, if any, and each Charge
      Over Shares of Sub-Borrower, if any.

      "COFACE" means Compagnie Francaise d'Assurance pour le Commerce Exterieur.

      "COMMITMENT" means at any time:

      (i)   in relation to the Original Lender the amount described as such set
            out opposite the name of the Original Lender in Schedule 1 less
            (subject to Clause 18.2.3) the amount of the Original Lender's
            Relevant Proportion of any Advances made before such time which
            remain outstanding and owed to the Original Lender (and have not
            been transferred as contemplated by Clauses 18.2 or 18.3);

      (ii)  in the case of any other Lender, the amount described as such set
            opposite the name of such Lender in the schedule to the relevant
            Loan Supplement less the

                                      -10-
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            amount of such Lender's Relevant Proportion of the Advance made
            pursuant to such Loan Supplement (if applicable);

      in either case as the same may be cancelled or reduced pursuant to the
      terms of this Agreement (including the terms of Clauses 2.5.2 and 2.5.3
      (Reduction and Cancellation of the Facility).

      "COMPULSORY ACQUISITION" means, in respect of an Aircraft or an Engine,
      requisition of title or other compulsory acquisition of title (but
      excluding requisition for use or hire) of such Aircraft or Engine, as the
      case may be, by a Government Entity.

      "DEFAULT INTEREST PERIOD" means, in relation to the determination of the
      Default Rate, each period (not exceeding six months) as the Agent selects
      in its absolute discretion, the first such period commencing on the date
      on which the overdue payment was due and each subsequent period commencing
      on the last day of the preceding period for so long as the relevant
      default continues.

      "DEFAULT RATE" means (i) in relation to any amount of principal or
      interest in respect of a Loan due and unpaid and any other amount due and
      unpaid under the Transaction Documents to a Lender in respect of a Loan
      the rate of interest per annum equal to the aggregate of the Applicable
      Rate and one per cent. (1%) per annum and (ii) in relation to any other
      sum due and unpaid to any of the Lenders, the Lead Managers or the
      Representatives the rate of interest per annum equal to the sum of LIBOR
      and one point five per cent. (1.5%) per annum.

      "DELIVERY DATE" means, in respect of an Aircraft, the date upon which that
      Aircraft is delivered to the Borrower or, as the case may be, a
      Sub-Borrower by the Seller which date shall be the date of the delivery of
      the relevant Bill of Sale.

      "DOLLARS" and "US$" means the lawful currency for the time being of the
      United States of America.

      "ECA GUARANTEES" means, in relation to a Utilisation, together (i) the
      master guarantee agreement to be entered into between ECGD and the British
      Lead Manager together with each guarantee supplement to be entered into
      between ECGD and the relevant British Lenders in respect of an Advance,
      (ii) the guarantee agreements to be entered into between COFACE, the
      relevant French Lenders and the French Lead Manager and (iii) the
      guarantee agreements to be entered into between EULER-HERMES and the
      relevant German Lenders.

      "ECA PREMIUM" means the fee payable in respect of each Loan to the
      relevant Export Credit Agency in an amount separately agreed in
      consideration for which such Export Credit Agency guarantees or otherwise
      covers, inter alia, the participation of the British Lenders, the French
      Lenders or the German Lenders respectively in the Credits and which shall
      be non-refundable to the extent that the relevant Loan is actually
      advanced pursuant to Clause 3.7 (Disbursement of the Loan).

                                      -11-
<PAGE>

      "ECGD" means Her Britannic Majesty's Secretary of State acting by the
      Export Credits Guarantee Department.

      "ELIGIBLE AIRCRAFT" means, as the context may require (a) any or all of
      the Airbus A318, A319, A320, A321, A330 and A340 Aircraft purchased
      pursuant to any Purchase Agreement including the Aircraft referred to in
      Schedule 5 Part A during the period from the date hereof to the end of the
      Availability Period or (b) such other A318, A319, A320, A321, A330 and
      A340 Airbus aircraft as may be agreed between the Borrower and the Agent
      (acting upon the instructions of the Instructing Group) or such other
      Airbus aircraft as may be agreed between the Borrower and the Agent
      (acting upon the instructions of the Instructing Group), subject always to
      Clause 2.7 (Amount).

      "ENGINE" or "ENGINES" means, in respect of an Aircraft, (a) each of the
      engines described in schedule 1 to the relevant Mortgage, whether or not
      from time to time during the term of the relevant Loan installed on the
      Airframe or any other airframe (for so long as it remains property of the
      Borrower or Sub-Borrower) but which, having been removed from the
      Airframe, remains the property of the Borrower or, if applicable, the
      relevant Sub-Borrower (as the case may be), or (b) any other Replacement
      Engine substituted therefor which becomes the property of the Borrower or
      the relevant Sub-Borrower (as the case may be), including, if applicable,
      any other engine which may from time to time be installed upon or attached
      to the Airframe and which becomes the property of the Borrower or, if
      applicable, the relevant Sub-Borrower, and (c) insofar as the same belong
      to the Borrower or, if applicable, the relevant Sub-Borrower, and to the
      extent the context so permits, any and all Parts of whatever nature from
      time to time relating to an engine referred to in (a) and (b) above
      whether or not installed on or attached to such engine and (d) insofar as
      the same belong to the Borrower or the relevant Sub-Borrower (as the case
      may be), all substitutions, replacements or renewals from time to time
      made on or to any item referred to in (a), (b) and (c).

      "ENGINE AGREEMENT" means each of:

      (a)   The General Terms Agreement No. 6-3987 dated 22 June 1984 between
            CFM International, Inc. and the Guarantor;

      (b)   The General Terms Agreement No. 6-5792 dated 1 November 1985 between
            General Electric Company and the Guarantor;

      (c)   The V2500 General Terms of Sale Agreement reference IAE/ILFC dated 9
            December 1992 between IAE International Aero Engines AG and the
            Guarantor;

      (d)   The Pratt & Whitney Group Large Commercial Engines United
            Technologies Corporation PW4000 Series Engine and Propulsion System
            Service Policy (issued: May 1986, last revised February 1994)

                                      -12-
<PAGE>

      (e)   The RB211-524 and RB211 Trent Terms of Business Agreement DEG 1828
            dated 20 September 1990 between Rolls-Royce plc and the Guarantor,

      including, in each case, any relevant amendment, modification, letter
      agreements and supplements thereto.

      "ENGINE MANUFACTURERS" means each of CFM International, Inc., General
      Electric Company, IAE International Aero Engines AG, United Technologies
      Corporation, Pratt & Whitney Group and Rolls-Royce plc, and their
      successors and assigns.

      "ENGINE WARRANTIES" means, in respect of the Engines relating to an
      Aircraft, the warranties, including the conditions and limitations
      applicable thereto, contained in:

      (a)   articles XIII and XVIII and Sections I, II and X of exhibit B to the
            Engine Agreement between CFM International, Inc. and the Guarantor;

      (b)   articles XIII and XVIII and Sections I, II and X of exhibit B to the
            Engine Agreement between General Electric Company and the Guarantor;

      (c)   clauses 1, 3, 4, 5 and 6 and exhibits A, C and D of the Engine
            Agreement between IAE International Aero Engines AG and the
            Guarantor;

      (d)   the engine sales warranty and service policy benefits set out in the
            Engine Agreement of United Technologies Corporation, Pratt & Whitney
            Group and the Guarantor or, as the case may be;

      (e)   warranties CE35 and CE49A in respect of the "Installation Items",
            and Warranty CE7 Amendment One in respect of the "Non-Installation
            Items" in each case as set forth in Exhibit D to the Engine
            Agreement between the Guarantor and Rolls-Royce plc;

      (f)   together with, in each case, the patent indemnities set forth in the
            relevant Engine Warranties, if any, and any and all rights of the
            Guarantor under the relevant Engine Agreement to compel performance
            of the same and the right to claim damages in respect thereof but
            only insofar as such warranties, indemnities and rights arise in
            respect of the Engines relating to the relevant Aircraft.

      "EULER-HERMES" means EULER-Hermes Kreditversicherungs AG.

      "EXISTING AIRCRAFT" shall have the meaning given to such term in Clause
      4.7.1 (Substitution of Aircraft).

      "EXPENSES" means (i) any reasonable out-of-pocket costs and expenses
      (including the agreed or, if not agreed, the reasonable legal fees and
      expenses of (a) United Kingdom, Bermuda and California counsel, or other
      counsel in another jurisdiction of organisation of a Sub-Borrower or
      Intermediate Lessee, acting for the Representatives, the Lenders and the
      Export Credit Agencies as a group and (b) after a Second Trigger Event or
      Termination Event, any other counsel appointed by the Lenders, the

                                      -13-
<PAGE>

      Representatives and the Export Credit Agencies as a group and (ii) after a
      Second Trigger Event or Termination Event, insurance fees and insurance
      expenses (if any and to the extent approved by the Borrower, such approval
      not to be unreasonably withheld), and (iii) after an Acceleration Event
      remarketing fees and all other advisers' fees and expenses, but, in any
      event, excluding all Taxes (it being acknowledged that such Taxes may be
      indemnified by the Borrower or an Obligor, as the case may be, if at all,
      pursuant to Clause 13.2 (Documentary Taxes), Clause 13.5 (Tax Treatment of
      Indemnity Payments), Clause 13.8 (Value Added Tax) or any other Clause
      hereof to the extent such Clauses are applicable and subject to Clause
      13.6 (No Double-Counting)) as well as any Value Added Tax thereon, which
      may be reasonably incurred by the Security Trustee, the Agent, the Lenders
      and the Export Credit Agencies as a group in connection with the execution
      and delivery of the Transaction Documents or in connection with the
      performance, enforcement, attempted enforcement or preservation of their
      respective rights and duties hereunder or thereunder PROVIDED THAT the
      reference to such out-of-pocket costs and expenses being "reasonably"
      incurred and to legal fees and expenses being "reasonable" shall not apply
      when such out-of-pocket costs and expenses are incurred or sustained,
      after a Termination Event, in connection with the enforcement or
      preservation or attempted enforcement or preservation of rights.

      "EXPORT CREDIT AGENCIES" means each of COFACE, ECGD and EULER-HERMES.

      "FAA" mean the Federal Aviation Administration (or its successor) of the
      United States of America.

      "FACILITY" means the term loan facility made available by the Lenders to
      the Borrower pursuant to this Agreement.

      "FACILITY AMOUNT" shall have the meaning given to that term in Clause 2.1
      (Facility).

      "FACILITY DOCUMENTS" means each of:

      (a)   this Agreement, the Charge Over Shares of Borrower, the Borrower
            Debenture, Sub-Borrower/Intermediate Lessee Regular Jurisdiction
            Letter Agreement and the other documents, instruments and agreements
            relating thereto referred to in Clause 2.9.1(b) (Conditions
            Precedent) and the Borrower Constitutional Documents (but excluding
            the Lenders' Agreement); and

      (b)

            (i)   any other document, instrument or memorandum annexed to any of
                  the documents referred to in (a) above;

            (ii)  any notice or acknowledgement required pursuant to the terms
                  of any of the documents referred to in (a) and/or (b)(i)
                  above; and

            (iii) any document, instrument or memorandum (x) which is executed
                  and delivered in connection with a restructuring in accordance
                  with the

                                      -14-
<PAGE>

                  terms of this Agreement of any or all of the arrangements
                  contemplated by any of the documents referred to in (a) above,
                  (y) which the Guarantor or any of the Borrower or any
                  Sub-Borrower agrees constitutes a Facility Document or (z)
                  which is entered into in substitution for or which amends or
                  augments or varies or novates all or any part of any of the
                  documents referred to in this definition (including this part
                  (b)(iii)(z)) in each case in accordance with the terms of this
                  Agreement.

      "FAIR MARKET VALUE" means, in relation to an Aircraft and/or a particular
      date, the market value of such Aircraft as of such date (expressed in
      Dollars and taking into account stable market conditions) assuming an
      arms-length sales transaction, with a purchase price payable in Dollars,
      free and clear of all Liens, between an informed and willing buyer and an
      informed and willing seller under no unusual compulsion.

      "FINAL DISPOSITION" means, in relation to an Aircraft:

      (a)   the sale by the Borrower or the relevant Sub-Borrower (including in
            each case a sale by a Receiver after an Acceleration Event on behalf
            of the Borrower or the relevant Sub-Borrower, appointed under the
            Borrower Debenture, the relevant Mortgage or the relevant
            Sub-Borrower Debenture (as the case may be)) or by the Security
            Trustee as mortgagee against immediate payment in cash or for other
            consideration, whether through an agent on its behalf or otherwise,
            of all its right, title and interest in and to such Aircraft
            (including, without limitation, a sale to the relevant Lessee, the
            Guarantor and/or to any other person other than to the Borrower or a
            Sub-Borrower or a person who becomes the Borrower or a Sub-Borrower
            in accordance with this Agreement and whether pursuant to the terms
            of the relevant Lease or otherwise howsoever); or

      (b)   completion by delivery of such Aircraft to the purchaser or lessee,
            as the case may be, of a sale, lease or other disposition by or on
            behalf of the Borrower or the relevant Sub-Borrower (including, in
            each case, a sale by a Receiver after an Acceleration Event on
            behalf of the Borrower or the relevant Sub-Borrower, appointed under
            the Borrower Debenture, the relevant Mortgage or the relevant
            Sub-Borrower Debenture (as the case may be)), or by the Security
            Trustee as mortgagee, pursuant to a conditional sale, hire purchase,
            full pay-out finance lease or other arrangement involving the
            retention by or on behalf of the Borrower or any Sub-Borrower or the
            Security Trustee, as mortgagee, of title to, or a security or
            similar interest in, such Aircraft.

      "FINAL DISPOSITION PROCEEDS" means, in relation to an Aircraft, the
      aggregate amount of:

      (a)   all consideration (whether cash or otherwise) received and retained
            by or on behalf of the Borrower or the relevant Sub-Borrower or
            (after an Acceleration

                                      -15-
<PAGE>

            Event) the Security Trustee, as mortgagee, upon or as a result of
            the Final Disposition of such Aircraft;

      (b)   any cash received and retained as a result of the sale by the
            Borrower or the relevant Sub-Borrower or (after an Acceleration
            Event) the Security Trustee as mortgagee of its right, title and
            interest in and to any agreement for the Final Disposition of such
            Aircraft in a manner contemplated by paragraph (b) of the definition
            of Final Disposition or any non-cash consideration received by
            either of them as a result of the Final Disposition of such Aircraft
            (as the case may be);

      (c)   if a Final Disposition proceeds to completion, any non-refundable
            deposit (not otherwise included under clause (a) or (b) above) in
            relation to such Final Disposition paid to or for the account of the
            Borrower or the relevant Sub-Borrower or (after an Acceleration
            Event) the Security Trustee as mortgagee by a person acquiring or
            proposing to acquire such Aircraft under a contract or offer to
            purchase or otherwise acquire it which has been withdrawn,
            terminated or cancelled or has lapsed; and

      (d)   if an Acceleration Event has occurred any non-refundable deposit
            paid to or for the account of the Borrower or the relevant
            Sub-Borrower or (after such Acceleration Event) the Security Trustee
            as mortgagee by a person acquiring or proposing to acquire such
            Aircraft under a contract or offer to purchase or otherwise acquire
            it which has been withdrawn, terminated or cancelled or has lapsed.

      "FINANCIAL INDEBTEDNESS" shall have the meaning given to such term in
      paragraph 1 of Schedule 6.

      "FIRST TRIGGER EVENT" means the long term debt obligations of the
      Guarantor being rated below A- if and as rated by Standard & Poor's
      Corporation or A3 if and as rated by Moody's Investor Service, Inc., or an
      equivalent by an alternative service of equivalent recognition (if neither
      Standard & Poor's Corporation nor Moody's Investor Service, Inc. has
      assigned any rating).

      "FRENCH CREDITS" shall, in respect of an Advance, have the meaning given
      to that term in the relevant Loan Supplement.

      "FRENCH LENDERS" means the banks named in schedule 1, part B of each Loan
      Supplement and their successors, Transferees and assigns.

      "FURTHER UTILISATION" has the meaning given to it in Clause 2.10 (Master
      Opinions).

      "GENERAL TERMS AGREEMENT" means, in relation to any of the Aircraft, the
      General Terms Agreement dated 10 November 1988 between the Seller and the
      Guarantor.

      "GERMAN CREDITS" shall, in respect of an Advance, have the meaning given
      to that term in the relevant Loan Supplement.

                                      -16-
<PAGE>

      "GERMAN LENDERS" means the banks named in schedule 1, part C of each Loan
      Supplement and their successors, Transferees and assigns.

      "GOVERNMENT ENTITY" means (i) any national, state or local government or
      (ii) any board, commission, department, division, instrumentality, court
      or agency or political sub-division thereof, howsoever constituted.

      "GUARANTEED OBLIGATIONS" means any and all monies, liabilities and
      obligations (whether actual or contingent, whether now existing or
      hereafter arising, whether or not for the payment of money, and including
      any obligation or liability to pay damages and including any interest
      which, but for the application of bankruptcy or insolvency laws, would
      have accrued on the amounts in question), which are now or which may at
      any time and from time to time hereafter be due, owing, payable or
      incurred or be expressed to be due, owing, payable or incurred from or by
      any or all of the Obligors to the Agent, the Security Trustee and/or any
      of the Lenders under or in connection with any of the Transaction
      Documents and references to "GUARANTEED OBLIGATIONS" includes references
      to any part thereof.

      "HOME COUNTRIES" means the United Kingdom, the French Republic and Germany
      and "HOME COUNTRY" shall mean any one of them.

      "HOME COUNTRY AIRCRAFT" means an Aircraft which is leased to a TO Lessee
      incorporated in a Home Country.

      "INDEMNITEE" means each of the Agent, the Security Trustee and each Lender
      (including any permitted assignees and permitted transferees of a Lender)
      together with their respective officers and employees.

      "INSTRUCTING GROUP" means all of the Lead Managers together (each one
      acting on the instructions of the relevant Export Credit Agency).

      "INSURANCES" means, in relation to an Aircraft, any and all contracts or
      policies of insurance and reinsurance complying with the provisions of
      Schedule 9 or an indemnity from a Government Entity as indemnitor, as
      appropriate, and required to be effected and maintained in accordance with
      this Agreement.

      "INTEREST PERIOD" means, in respect of a Loan, each period commencing from
      (and including) the Utilisation Date of the relevant Aircraft, or as the
      case may be, a Repayment Date to (but excluding) the next subsequent
      Repayment Date; provided, however, that after a Material Termination Event
      or an Acceleration Event, the Agent may elect an Interest Period of one
      (1) month.

      "INTERMEDIATE LEASE" means, in respect of an Aircraft, the lease to be
      entered into between the Borrower or a Sub-Borrower or another
      Intermediate Lessee (as the case may be) as lessor and an Intermediate
      Lessee as lessee.

      "INTERMEDIATE LEASE SECURITY ASSIGNMENT" means, in respect of an Aircraft,
      the security assignment relating to the Intermediate Lease in each case
      for that Aircraft to

                                      -17-
<PAGE>

      be entered into between the Borrower or, as the case may be, any
      Sub-Borrower or another Intermediate Lessee and the Security Trustee
      substantially in the Agreed Form.

      "INTERMEDIATE LESSEE" means, in respect of the delivery of a specific
      Aircraft, such person (other than the Borrower or a Sub-Borrower) as the
      Guarantor or the Borrower may determine in accordance with the provisions
      of Clause 3.3 (Sub-Borrower/Intermediate Lessees) shall enter into a Lease
      as lessor with the relevant Lessee or with another Intermediate Lessee.

      "INTERMEDIATE LESSEE ACCOUNTS" means, in respect of an Intermediate
      Lessee, collectively the Intermediate Lessee Maintenance Reserve Account,
      the Intermediate Lessee Rental Account and the Intermediate Lessee
      Security Deposit Account.

      "INTERMEDIATE LESSEE DEBENTURE" means, in respect of an Intermediate
      Lessee, a debenture to be granted by such Intermediate Lessee in favour of
      the Security Trustee, in the Agreed Form.

      "INTERMEDIATE LESSEE MAINTENANCE RESERVE ACCOUNT" means, in respect of an
      Intermediate Lessee, the Dollar account with JP Morgan Chase or Bank of
      America or such other financial institution as may be approved by the
      Security Trustee (such approval not to be unreasonably withheld) in the
      jurisdiction of organisation of the Intermediate Lessee.

      "INTERMEDIATE LESSEE RENTAL ACCOUNT" means, in respect of an Intermediate
      Lessee, such Dollar account with JP Morgan Chase or Bank of America or
      such other financial institution as may be approved by the Security
      Trustee (such approval not to be unreasonably withheld) in the
      jurisdiction of organisation of the Intermediate Lessee.

      "INTERMEDIATE LESSEE SECURITY DEPOSIT ACCOUNT" means, in respect of an
      Intermediate Lessee, such Dollar account with JP Morgan Chase or Bank of
      America or such other financial institution as may be approved by the
      Security Trustee (such approval not to be unreasonably withheld) in the
      jurisdiction of organisation of the Intermediate Lessee.

      "IRREGULAR JURISDICTION" means any jurisdiction other than a Regular
      Jurisdiction.

      "LEAD MANAGERS" means each of The Governor and Company of the Bank of
      Scotland, London Branch (in its capacity as lead manager for the British
      Lenders), The Governor and Company of the Bank of Scotland, Paris Branch
      (in its capacity as lead manager for the French Lenders) and The Governor
      and Company of the Bank of Scotland, Frankfurt Branch (in its capacity as
      lead manager for the German Lenders) and "LEAD MANAGER" shall mean any one
      of them.

      "LEASE" means, in respect of an Aircraft, any lease agreement relating to
      that Aircraft to be entered into (including by novation or assignment)
      between the Borrower, a Sub-Borrower or an Intermediate Lessee (as the
      case may be) as lessor and the relevant Lessee as lessee.

                                      -18-
<PAGE>

      "LEASE SECURITY ASSIGNMENT" means, in respect of an Aircraft, the security
      assignment relating to the Lease in each case for that Aircraft to be
      entered into between the Borrower or, as the case may be, any Sub-Borrower
      or, as the case may be, any Intermediate Lessee and the Security Trustee
      substantially in the form of schedule 2 to the relevant Mortgage.

      "LENDERS" means, collectively, the Original Lender (for so long as it has
      any Commitment hereunder) and, in respect of each Advance, each of the
      British Lenders, the French Lenders and the German Lenders.

      "LENDERS' AGREEMENT" means the agreement so entitled dated on or before
      the first Utilisation Date and made between the Agent, the Security
      Trustee and each of the Lenders as amended and acceded to from time to
      time and in a form acceptable to the Export Credit Agencies.

      "LENDING OFFICE" means, in relation to a Lender and a Loan, its branch or
      office at the address specified against its name in the Loan Supplement
      relating to such Loan or in the Transfer Certificate whereby such Lender
      becomes a party hereto or such other branch or office determined in
      accordance with the provisions of this Agreement.

      "LESSEE" means, in respect of an Aircraft, the Borrower's, the relevant
      Sub-Borrower's or the relevant Intermediate Lessee's customer who is the
      lessee of that Aircraft.

      "LIBOR" means, in respect of an Interest Period, a Default Interest Period
      or other relevant period:

      (a)   the rate per annum which is conclusively (save for manifest error)
            certified by the Agent to be the rate for deposits of Dollars in an
            amount substantially equal to the relevant Advance or other relevant
            amount for a period equal to, or as close as practicable to, the
            relevant Interest Period, Default Interest Period or other relevant
            period which appears on the Telerate Market Service Page 3750 (or
            its successor or replacement page) as at a.m. (London time) two (2)
            London Banking Days prior to the commencement of the relevant
            Interest Period, Default Interest Period or other relevant period;
            or

      (b)   if such rate does not appear on the Telerate Market Service Page
            3750 (or its successor or replacement page), LIBOR for the relevant
            Interest Period, Default Interest Period or other relevant period
            shall be the rate per annum conclusively (save for manifest error)
            certified by the Agent as the arithmetic mean (rounded upwards if
            necessary to the nearest one hundredth of one per cent. (1/100%)) of
            the respective rates per annum notified to the Agent at which the
            Reference Banks are offered Dollar deposits by prime banks in the
            London Interbank Euro Currency Market in an amount substantially
            equal to the relevant Advance or other relevant amount and for a
            period having a duration equal to or as close as practicable to such
            Interest Period, Default Interest Period or such other relevant
            period, as the case may be, as at 11.00

                                      -19-
<PAGE>

            a.m. (London time) two (2) London Banking Days prior to the
            commencement of such Interest Period or other relevant period
            PROVIDED THAT if any Reference Bank fails to provide a rate, LIBOR
            in relation to such Interest Period, Default Interest Period or such
            other relevant period shall be determined on the basis of the rate
            notified by each Reference Bank which does provide such a rate and
            (ii) if no Reference Bank provides a rate then LIBOR in relation to
            such Interest Period, Default Interest Period or other relevant
            period shall be the rate per annum certified by the Agent (acting on
            instructions of the Relevant Lender) to be the arithmetic mean
            (rounded upwards to the nearest one hundredth of one per cent.
            (1/100%)) of the cost to such Relevant Lender of funding (in
            Dollars) an amount substantially equal to that Relevant Lender's
            Relevant Proportion of the Advance or other relevant amount for a
            period having a duration equal to or as close as practicable to such
            Interest Period, Default Interest Period or other relevant period at
            or about 11.00 a.m. (London time) on the first day of such Interest
            Period, Default Interest Period or other relevant period.

      "LIBOR BREAK AMOUNT" means, with respect to any repayment of a Loan on any
      day other than a Repayment Date, the amount (if any) equal to the product
      of (i) the amount to be repaid, (ii) the amount (if any) expressed as a
      percentage by which six month LIBOR as of the Repayment Date before the
      date of repayment on an amount equal to the amount to be repaid exceeds
      LIBOR as of the date of such repayment on such amount to be repaid for the
      period from the date of repayment to the date when interest would next be
      payable on such Loan (absent such repayment) and (iii) a fraction, the
      numerator of which is the number of days from and including the date of
      repayment, to but excluding the date when interest would next have been
      payable on such Loan and the denominator of which is 360.

      "LIEN" means any encumbrance or security interest whatsoever, howsoever
      created or arising including any right of ownership, security, mortgage,
      pledge, charge, lease, lien, statutory right in rem, hypothecation, title
      retention arrangement, attachment, levy, claim, right of detention or
      security interest whatsoever, howsoever created or arising or any right or
      arrangement having a similar effect to any of the above.

      "LOAN" means, in respect of an Advance, together the British Credits, the
      French Credits and the German Credits or (as the context may require) the
      aggregate principal amount of the British Credits, the French Credits and
      the German Credits owing to the Relevant Lenders in respect of the
      relevant Advance from time to time.

      "LOAN SUPPLEMENT" means, in respect of an Aircraft, the loan supplement
      relating to that Aircraft to be entered into between the Borrower, the
      Agent, the Security Trustee and the Relevant Lenders substantially in the
      form set out in Schedule 2.

      "LONDON BANKING DAY" means a day (other than a Saturday, Sunday or holiday
      scheduled by law) on which banks are open for general interbank business
      in London (including dealing in Dollar deposits).

                                      -20-
<PAGE>

      "LOSSES" means any losses, demands, liabilities, claims, actions,
      proceedings, penalties, fines, damages, adverse judgments, orders or other
      sanctions (in each case exclusive of loss of profit or income).

      "MAINTENANCE RESERVE ACCOUNTS" means each of the Borrower Maintenance
      Reserve Account, each Sub-Borrower Maintenance Reserve Account and each
      Intermediate Lessee Maintenance Reserve Account and "MAINTENANCE RESERVE
      ACCOUNT" means any of them.

      "MAINTENANCE RESERVES" means, in respect of an Aircraft, the maintenance
      reserves, if any, payable from time to time by the Lessee to the Borrower,
      Sub-Borrower or the Intermediate Lessee (as the case may be) then held by
      the Borrower, the Intermediate Lessee or the Sub-Borrower (as the case may
      be) and unutilised.

      "MANUFACTURER" means Airbus S.A.S. currently of 1 Rond Point Maurice
      Bellonte, Blagnac 31707, France together with its successors and assigns.

      "MASTER OPINIONS" means the legal opinions required to be given with
      respect to the applicable Obligors pursuant to sub-paragraphs (a), (b),
      (c) and (d) of paragraph 3 of Part A to Schedule 7 on or before the first
      Utilisation under this Agreement, and the legal opinions required to be
      given pursuant to paragraph 4 of Part A to Schedule 7 with respect to a
      relevant Sub-Borrower or Intermediate Lessee concerning its Accession Deed
      and the Aircraft Security Documents to which it is a party at the time it
      accedes to this Agreement, and any replacement opinion given hereunder in
      respect thereof.

      "MATERIAL ADVERSE EFFECT" means a material adverse effect on the validity
      of any of the obligations of any Obligor under this Agreement and the
      other Transaction Documents to which it is a party.

      "MATERIAL TERMINATION EVENT" means any Termination Event of the nature
      contemplated in Clauses 10.1.1 (Non-Payment), 10.1.5 (Repudiation of
      Guarantee), 10.1.6 (Insolvency), 10.1.7 (Appointment of Trustee etc.) and
      10.1.8 (Analogous Events).

      "MORTGAGE" means, in respect of an Aircraft, (i) the deed of assignment
      and aircraft mortgage relating to that Aircraft to be entered into between
      the Borrower or, as the case may be, a Sub-Borrower and the Security
      Trustee substantially in the Agreed Form and (ii) any local law mortgages
      relating to the Aircraft entered into from time to time pursuant to
      Clauses 9.2.1(i) and 9.2.1(g)(i) or any other provision of this Agreement.

      "NOTICE OF CHARGE" means, in respect of an Aircraft, a letter comprising
      notice of charge and aircraft mortgage and quiet enjoyment covenant from
      the Security Trustee, the Intermediate Lessee (if any) and the Borrower or
      Sub-Borrower (as the case may be) to the Lessee and the Sub-Lessee (if
      any) in the Agreed Form.

                                      -21-
<PAGE>

      "OBLIGORS" means any or all of the Borrower Parent, the Borrower, each
      Sub-Borrower, each Intermediate Lessee and, where the context so permits,
      the Guarantor, and "OBLIGOR" means any one of them.

      "ORIGINAL LENDER" means Halifax plc in its capacity as the only "Lender"
      as at the date of this Agreement.

      "PART" means, in relation to an Aircraft, each module, appliance, part,
      accessory, instrument, furnishing and other item of equipment of
      whatsoever nature (including the Buyer Furnished Equipment), other than a
      complete Engine or engine, which at any time of determination is
      incorporated or installed in or attached to the relevant Airframe or any
      relevant Engine, in each case title to which is vested in the Borrower or
      the relevant Sub-Borrower (as the case may be) or, having been removed
      therefrom, title to which remains vested in the Borrower or the relevant
      Sub-Borrower (as the case may be).

      "PARTIAL PURCHASE AGREEMENT ASSIGNMENT" means, in relation to an Aircraft,
      the partial purchase agreement assignment to be entered into (subject to
      the consent of the Seller) between the Guarantor and the Borrower or, as
      the case may be, the relevant Sub-Borrower substantially in the Agreed
      Form in respect of the right to take title to that Aircraft under the
      relevant Purchase Agreement, and including with respect to the warranties
      the Lessee as a party or subject to its rights.

      "PERMITTED LIENS" means, in relation to an Aircraft:

      (a)   any Lien affecting that Aircraft for Taxes or other governmental or
            statutory charges or levies not yet assessed or, if assessed, not
            yet due and payable or, if due and payable, which the Borrower, the
            relevant Sub-Borrower, the relevant Intermediate Lessee or the
            relevant Lessee or the relevant Sub-Lessee is disputing or
            contesting in good faith by appropriate proceedings (and when
            required in order to pursue such proceedings, an adequate bond has
            been provided) so long as such proceedings, or the continued
            existence of such Lien, do not at that time involve any likelihood
            of the sale, forfeiture or loss of the Aircraft or any relevant
            Engine or Part; or

      (b)   any Lien affecting the Aircraft for the fees or charges of any
            airport or air navigation authority arising in the ordinary course
            of business by statute or by operation of law, in each case for
            amounts the payment of which either is not yet due and payable or,
            if due and payable, is being disputed or contested in good faith by
            appropriate proceedings (and when required in order to pursue such
            proceedings, an adequate bond has been provided) so long as such
            proceedings, or the continued existence of such Lien, do not at that
            time involve any likelihood of the sale, forfeiture or loss of the
            Airframe or, any relevant Engine or Part; or

      (c)   any Lien affecting that Aircraft for the fees or charges of any
            supplier, mechanic, workman, repairer, employee or similar Lien
            arising in the

                                      -22-
<PAGE>

            ordinary course of business by contract or by statute or by
            operation of law, in each case for amounts (i) the payment of which
            is not yet due and payable, or (ii) which are not overdue for
            payment having regard to the custom of the relevant trade, in
            circumstances where no enforcement action against the Aircraft has
            yet been taken by the relevant Lienholder or (iii) if due and
            payable is being disputed or contested in good faith with the
            relevant Lienholder by appropriate proceedings (and when required in
            order to pursue such proceedings, an adequate bond has been
            provided) so long as such proceedings, or the continued existence of
            such Lien, do not at that time involve any likelihood of the sale,
            forfeiture or loss of the Airframe or, any relevant Engine or Part;
            or

      (d)   any Lien affecting that Aircraft (other than a Lien for Taxes)
            arising out of judgments or awards against the Borrower or the
            relevant Sub-Borrower or the relevant Intermediate Lessee or the
            relevant Lessee or the relevant Sub-Lessee with respect to which at
            the time the period for an appeal has not expired or an appeal is
            being presented in good faith and with respect to which within forty
            (40) days thereafter there shall have been secured a stay of
            execution pending such appeal (and when required in order to pursue
            such proceedings, an adequate bond has been provided) so long as
            such judgment or award, or the continued existence of such Lien,
            does not at that time involve any likelihood of the sale, forfeiture
            or loss of the Airframe, any relevant Engine or Part; or

      (e)   any Lien created pursuant to any of the Transaction Documents for
            the relevant Aircraft; or

      (f)   a debt, liability or other obligation (whether financial or
            otherwise) imposed on the Borrower, the relevant Sub-Borrower or the
            relevant Intermediate Lessee (as the case may be) or any person
            claiming through or under the Borrower as purchaser of that Aircraft
            pursuant to the relevant Partial Purchase Agreement Assignment; or

      (g)   Liens permitted or which are the responsibility of the Lessee, under
            the relevant Lease including any assignment of the relevant
            Warranties and Engine Warranties thereunder and the rights of any
            Sub-Lessee or charterer of the Aircraft (including of any Engine or
            Part) or any other person under an agreement or arrangements
            permitted by the provisions of the relevant Lease or Sub-Lease; or

      (h)   the rights of insurers in respect of the Insurances or the Aircraft
            (including the Engines); or

      (i)   the interests of a voting or owner trustee, as applicable, in
            connection with the relevant Sub-Borrower or the relevant
            Intermediate Lessee in the United States; or

                                       -23-
<PAGE>

      (j)   any Lien bonded against by the Borrower, any Sub-Borrower, any
            Intermediate Lessee (unless, in each case, a Second Trigger Event
            has first occurred and is continuing), any Lessee or any Sub-lessee,
            or other similar third party security (which does not itself result
            in a Lien on the Aircraft or any part thereof) is provided with
            respect to such Lien by any such person PROVIDED THAT, after the
            occurrence and continuation of a Second Trigger Event, any such
            bonding or other similar third party security as against any Lessee
            or any Sub-lessee is first approved by the Security Trustee, acting
            reasonably; or

      (k)   any other Lien created with the prior written consent of the
            Security Trustee.

      "POST-DELIVERY MODIFICATION PERIOD" means the period of one hundred and
      eighty (180) days following the Delivery Date of an Aircraft.

      "POST-DELIVERY MODIFICATIONS" means an alteration, modification or
      addition to an Aircraft which is to be performed within the Post-Delivery
      Modification Period and which is performed pursuant to the relevant
      Purchase Agreement and the cost of which is included in the commercial
      invoice for such Aircraft issued by the Seller on the Delivery Date.

      "PROCEEDS" means, in relation to an Aircraft:

      (a)   any and all amounts received or recovered under this Agreement;

      (b)   any Final Disposition Proceeds and any Sub-Borrower Sale Proceeds;

      (c)   any and all other proceeds of enforcement of the Aircraft Security
            Documents relating to such Aircraft;

      (d)   any Total Loss Proceeds;

      (e)   any Requisition Proceeds; and

      (f)   any and all other amounts (other than in respect of fees) received
            by the Agent, the Security Trustee or any Lender from any of the
            Obligors (whether directly or through the Borrower) pursuant to the
            provisions of the Transaction Documents.

      "PROCEEDS ACCOUNT" means, in relation to each Aircraft, the Dollar account
      of the Security Trustee with Bank of Scotland or such other account as may
      be designated in writing by the Security Trustee from time to time to
      which any Proceeds will be credited or such other account as the Security
      Trustee may designate from time to time by notice to the other parties
      hereto.

      "PROHIBITED COUNTRY" means, in relation to an Aircraft, any country to
      which the export and/or use of an aircraft of the same model as such
      Aircraft with engines of the same model as are attached thereto is not
      permitted under (a) any United Nations sanctions, (b) the Council
      Regulation (EC) No. 149/2003 which updates and amends

                                      -24-
<PAGE>

      Council Regulation (EC) 1334/2000, (c) the United States Export
      Administration Act 1979 (as amended) or any successor legislation and/or
      the Export Administration Regulations promulgated thereunder, (d) where
      applicable, the various regulations administered from time to time by the
      Office of Foreign Assets Control of the U.S. Treasury Department, (e) any
      similar or corresponding legislation then in effect in the United States,
      the United Kingdom, France, Spain or Germany or (f) any subsequent United
      Nations Sanctions Orders the effect of which prohibits or restricts the
      export and/or use of an aircraft of the same model as such Aircraft with
      engines attached thereto to such country.

      "PURCHASE AGREEMENT" means, in relation to an Aircraft each of:

      (a)   the A318/A319/A320/A321 family purchase agreement between the Seller
            and the Guarantor dated as of 11 January 1999, as further amended;

      (b)   the A320 family purchase agreement between the Seller and the
            Guarantor dated as of 29 August 1997, as further amended;

      (c)   the A320 family purchase agreement between the Seller and the
            Guarantor dated as of 17 June 2001, as further amended;

      (d)   the A320 family purchase agreement between the Seller and the
            Guarantor dated as of 18 April 2000, as further amended;

      (e)   the A320 family purchase agreement between the Seller and the
            Guarantor dated as of 9 November 2000, as further amended;

      (f)   the A330 purchase agreement between Seller and the Guarantor dated
            as of 17 June, 2001, as further amended;

      (g)   the A330-200 purchase agreement between Seller and the Guarantor
            dated as of 9 November, 2000, as further amended;

      (h)   the A330-200 purchase agreement between the Seller and the Guarantor
            dated as of 29 August, 1997, as further amended; and

      (i)   the A340-500/600 family purchase agreement between Seller and the
            Guarantor dated as of 22 July, 1998, as further amended;

      pursuant to which the Seller agreed to sell and the Guarantor agreed to
      purchase, inter alia, the Aircraft together with the exhibits thereto and
      all applicable change orders, letter agreements and other amendments or
      supplements thereto.

      "QUARTER DATE" means each February 28, May 31, August 31 and November 30
      in each year.

      "RECEIVER" means any receiver or receiver and manager appointed after an
      Acceleration Event by the Agent or the Security Trustee on the
      instructions of the Instructing Group pursuant to and in accordance with
      any Aircraft Security Document.

      "REFERENCE BANKS" means HBOS Treasury part of Halifax plc, Citibank, N.A.
      and Societe Generale.

                                      -25-
<PAGE>

      "REGULAR JURISDICTION" means Bermuda, the United States of America, the
      Cayman Islands, the Federal Territory of Labuan, Malaysia and Ireland
      (subject to the provisions of the Sub-Borrower Intermediate Lessee Regular
      Jurisdiction Letter Agreement) or any other jurisdiction in which a
      Sub-Borrower or an Intermediate Lessee has already been established and
      such entity has acceded to this Agreement prior to the date of the
      relevant Utilisation Notice.

      "RELEVANT EVENT" means any event which with any one or more of the lapse
      of time, the giving of notice, or the making of a determination, would
      become a Termination Event were a notice to be given by the Agent to the
      Borrower pursuant to Clause 10.2.3 or 10.2.4.

      "RELEVANT JURISDICTION" means any member of the European Union,
      Switzerland, Norway, the United States of America, Canada, Japan,
      Australia or New Zealand.

      "RELEVANT LENDERS" means, in respect of any Loan at any time, the Lenders
      to whom such Loan is owed at such time (or if such Loan has been repaid in
      full to whom such Loan was owed immediately prior to the repayment in full
      thereof).

      "RELEVANT PROPORTION" means, with respect to any Lender and a Loan, at any
      time, the proportion which such Lender's share of the British Credits, the
      French Credits or the German Credits (as the case may be) bears to the
      total amount of such Loan at such time.

      "RENTAL ACCOUNTS" means each of the Borrower Rental Account, each
      Sub-Borrower Rental Account and each Intermediate Lessee Rental Account
      and "RENTAL ACCOUNT" means any of them.

      "RENTALS" means, in respect of an Aircraft, the rentals payable by the
      Lessee to the Borrower, the Sub-Borrower or the Intermediate Lessee (as
      the case may be) pursuant to the relevant Lease.

      "REPAYMENT DATE" means, in relation to a Loan, each repayment date as set
      forth in column 2 of schedule 2 (2) to the relevant Loan Supplement
      PROVIDED THAT (i) if any Repayment Date would otherwise fall on a day
      which is not a Banking Day, such Repayment Date shall be deemed to fall on
      the immediately succeeding Banking Day unless such Repayment Date falls in
      the calendar month next succeeding that in which it would otherwise have
      fallen, in which case it shall fall on the immediately preceding Banking
      Day and (ii) the final scheduled Repayment Date for any Loan shall not
      extend beyond ten (10) years from the Delivery Date for the relevant
      Aircraft (or if such day is not a Banking Day the immediately preceding
      Banking Day).

      "REPAYMENT INSTALMENT" means, in relation to a Loan, with respect to each
      Repayment Date, the principal amount due and payable on such Repayment
      Date, as determined in accordance with Clause 4.2 (Repayment of Principal)
      and as set out in schedule 2 to the relevant Loan Supplement together with
      interest thereon payable pursuant to Clause 4.1 (Payment of Interest).

                                      -26-
<PAGE>

      "REPLACEMENT AIRCRAFT" has the meaning set forth in Clause 4.7.1
      (Substitution of Aircraft).

      "REPLACEMENT BILL OF SALE" means a bill of sale substantially in the
      Agreed Form as contemplated by Clause 4.7.5(a) (Substitution of Aircraft).

      "REPLACEMENT ENGINE" means an engine of an Engine Manufacturer, of the
      same or an improved model and suitable for use on the Airframe and having
      a utility at least equal to the Engine in respect of which a Total Loss or
      transfer of title has occurred.

      "REPRESENTATIVES" means the Agent and the Security Trustee.

      "REQUIRED INSURED VALUE" means, in relation to an Aircraft, at any time of
      determination 110% of the principal amount outstanding in respect of the
      relevant Loan at such time.

      "REQUISITION PROCEEDS" means, in relation to an Aircraft, any monies
      and/or other compensation received directly by the Borrower, the relevant
      Sub-Borrower or the relevant Intermediate Lessee (if any) and/or the
      Security Trustee in its capacity as mortgagee in respect of the Compulsory
      Acquisition of such Aircraft.

      "RR ENGINE WARRANTY AGREEMENT" means, in the case of an Aircraft powered
      by Engines manufactured by Rolls-Royce plc, the engine warranty agreement
      relating to such Aircraft and Engines to be entered into by Rolls-Royce
      plc as Engine Manufacturer, the Guarantor, the relevant Lessee, the
      Security Trustee and the Borrower or, as appropriate, relevant
      Sub-Borrower substantially in the Agreed Form.

      "SCHEDULED DELIVERY DATE" means, in respect of an Aircraft, the date
      nominated in the relevant Utilisation Notice for the delivery of that
      Aircraft, from the Seller to the Borrower or the Sub-Borrower (as the case
      may be).

      "SCHEDULED DELIVERY MONTH" means, in respect of an Aircraft, the month in
      which that Aircraft is scheduled to be delivered as set out in Schedule 5
      Part A as the same may be varied by any notice delivered by the Borrower
      to the Agent under Clause 2.5.1 (Reduction and Cancellation of the
      Facility).

      "SECOND TRIGGER EVENT" means (i) the long term debt obligations of the
      Guarantor being rated below BBB if and as rated by Standard & Poor's
      Corporation or Baa2 if and as rated by Moody's Investor Service Inc., or
      an equivalent by an alternative service of equivalent recognition (if
      neither Standard & Poor's Corporation nor Moody's Investor Service, Inc.
      has assigned any rating) or (ii) the long term debt obligations of the
      Guarantor ceasing to be publicly rated by any reputable, internationally
      recognised rating agency because the Guarantor has of its own volition
      requested that none of its debt be so rated.

      "SECURED OBLIGATIONS" means together any and all monies, liabilities and
      obligations (whether actual or contingent, whether now existing or
      hereafter arising, whether or not for the payment of money, and including
      any obligation or liability to pay damages

                                      -27-
<PAGE>

      and including any interest which, but for the application of bankruptcy or
      insolvency laws, would have accrued on the amounts in question) which are
      now or which may at any time and from time to time hereafter be due,
      owing, payable or incurred or expressed to be due, owing, payable or
      incurred from or by the Borrower or any of the other Obligors to any one
      or more of the Lenders, the Agent and/or the Security Trustee under any of
      the Transaction Documents.

      "SECURITY DEPOSIT" means, in respect of an Aircraft, any security deposit
      payable by the Lessee to the relevant Borrower, Sub-Borrower or
      Intermediate Lessee (as the case may be) then held by the Borrower, the
      Intermediate Lessee or the Sub-Borrower (as the case may be) and
      unutilised.

      "SECURITY DEPOSIT ACCOUNTS" means each of the Borrower Security Deposit
      Account, each Sub-Borrower Deposit Account and each Intermediate Lessee
      Deposit Account and "SECURITY DEPOSIT ACCOUNT" shall mean any of them.

      "SECURITY PERIOD" means the period commencing on the date hereof and
      ending on the date upon which the Secured Obligations (exclusive of
      indemnities in respect of which no claims have been, or to the knowledge
      of the Security Trustee will be, asserted) shall have been paid in full.

      "SELLER" means AVSA S.A.R.L., a French societe a responsabilite limitee,
      duly organised and existing under the laws of the Republic of France and
      currently having its registered office at 2 Rond Point Maurice-Bellonte
      31700 Blagnac, France together with its successors and assigns.

      "STATE OF REGISTRATION" means, in relation to an Aircraft, any state or
      territory in which that Aircraft may for the time being be registered
      pursuant to a Lease, Sub-Lease or pursuant to this Agreement (as the case
      may be).

      "SUB-BORROWER" means, in respect of the delivery of a specific Aircraft,
      such person, as the Guarantor or the Borrower may determine or, as the
      case may be, after a Second Trigger Event approved by the Agent (acting on
      the instructions of the Instructing Group) in accordance with the
      provisions of Clause 3.3 (Sub-Borrowers/Intermediate Lessees) who shall
      take title to that Aircraft and being in each case, except for shares held
      by directors, trustees or nominees in order to meet local nationality or
      other local requirements and which do not have a Material Adverse Effect
      on the relevant Charge over Shares of Sub-Borrower, a wholly owned direct
      subsidiary of the Borrower.

      "SUB-BORROWER ACCOUNTS" means, in respect of a Sub-Borrower, collectively
      the Sub-Borrower Maintenance Reserve Account, the Sub-Borrower Rental
      Account and the Sub-Borrower Security Deposit Account.

      "SUB-BORROWER DEBENTURE" means, in respect of a Sub-Borrower, a debenture
      to be granted by such Sub-Borrower in favour of the Security Trustee in
      the Agreed Form.

      "SUB-BORROWER GUARANTEE" means, if title to the Aircraft is taken by a
      Sub-Borrower, each guarantee and indemnity to be entered into between the
      Sub-Borrower and the

                                      -28-
<PAGE>

      Security Trustee as the context requires in respect of all the Secured
      Obligations substantially in the Agreed Form.

      "SUB-BORROWER INTERMEDIATE LESSEE REGULAR JURISDICTION LETTER AGREEMENT"
      means the letter agreement dated on or before the first Utilisation Date
      entered into between the Guarantor, the Borrower and the Agent in relation
      to the settlement of pro forma documentation (including the form of Charge
      over Shares of Intermediate Lessee and form of Intermediate Lessee
      Debenture) with respect to a Sub-Borrower or an Intermediate Lessee
      organised in any of the Regular Jurisdictions (other than Bermuda) in a
      form acceptable to the Export Credit Agencies.

      "SUB-BORROWER MAINTENANCE RESERVE ACCOUNT" means, in respect of a
      Sub-Borrower, the Dollar account with JP Morgan Chase or Bank of America
      or such other account with another financial institution approved by the
      Security Trustee (such approval not to be unreasonably withheld).

      "SUB-BORROWER RENTAL ACCOUNT" means, in respect of a Sub-Borrower, the
      Dollar account with JP Morgan Chase or Bank of America or such other
      account with another financial institution approved by the Security
      Trustee (such approval not to be unreasonably withheld).

      "SUB-BORROWER SALE" means, in relation to a Sub-Borrower, the sale by the
      Borrower (including in each case a sale after an Acceleration Event by a
      Receiver on behalf of the Borrower, appointed under the Borrower
      Debenture), or by the Security Trustee against immediate payment in cash
      or for other consideration, whether through an agent on its behalf or
      otherwise, of all the Borrower's right, title and interest in and to the
      shares in such Sub-Borrower (including a sale to the relevant Lessee, the
      Guarantor and/or any other person other than the Borrower Parent, the
      Borrower or a Sub-Borrower or person who becomes the Borrower Parent, the
      Borrower or the Sub-Borrower in accordance with this Agreement and whether
      pursuant to the terms of the relevant Lease or otherwise howsoever).

      "SUB-BORROWER SALE PROCEEDS" means, in relation to a Sub-Borrower, the
      aggregate amount of:

      (a)   all consideration (whether cash or otherwise) received and retained
            by or on behalf of the Borrower (including a sale after an
            Acceleration Event by a Receiver on behalf of the Borrower appointed
            under the Borrower Debenture or the Security Trustee) upon or as a
            result of the Sub-Borrower Sale of the shares in such Sub-Borrower;

      (b)   any cash received and retained as a result of the sale by the
            Borrower (including a sale after an Acceleration Event by a Receiver
            on behalf of the Borrower appointed under the Borrower Debenture or
            the Security Trustee) of its right, title and interest in and to any
            agreement for the Sub-Borrower Sale of the shares in such
            Sub-Borrower or any non-cash consideration received by

                                      -29-
<PAGE>

            either of them as a result of the Sub-Borrower Sale of the shares in
            such Sub-Borrower;

      (c)   if a Sub-Borrower Sale proceeds to completion, any non-refundable
            deposit (not otherwise included under sub-paragraph (a) or (b)
            above) in relation to such Sub-Borrower Sale paid to or for the
            account of the Borrower (including a sale after an Acceleration
            Event by a Receiver on behalf of the Borrower appointed under the
            Borrower Debenture or the Security Trustee) by a person acquiring or
            proposing to acquire the shares in such Sub-Borrower under a
            contract or offer to purchase or otherwise acquire it which has been
            withdrawn, terminated or cancelled or has lapsed;

      (d)   if an Acceleration Event has occurred, any non-refundable deposit
            paid to or for the account of the Borrower (including a sale after
            an Acceleration Event by a Receiver on behalf of the Borrower
            appointed under the Borrower Debenture or the Security Trustee) by a
            person acquiring or proposing to acquire the shares in such
            Sub-Borrower under a contract or offer to purchase or otherwise
            acquire it which has been withdrawn, terminated or cancelled or has
            lapsed.

      "SUB-BORROWER SECURITY DEPOSIT ACCOUNT" means, in respect of a
      Sub-Borrower, such Dollar account with JP Morgan Chase or Bank of America
      or such other account with another financial institution approved by the
      Security Trustee (such approval not to be unreasonably withheld).

      "SUB-LEASE" means, in respect of an Aircraft, any sub-lease agreement
      entered into between a Lessee and a Sub-Lessee.

      "SUB-LESSEE" means, in respect of an Aircraft, the sub-lessee thereof as
      permitted by the terms of the relevant Lease.

      "SUBORDINATED LIABILITIES" means all present and future amounts,
      liabilities and obligations payable or owing by any Obligor (other than
      the Guarantor) to the Subordinated Lender or the Guarantor whatsoever
      (whether actual or contingent, jointly or severally or otherwise
      howsoever) other than any amounts, liabilities or obligations payable or
      owing by any Obligor (other than the Guarantor) to the Subordinated Lender
      by virtue of any right of subrogation or indemnity arising as a result of
      the making of a payment by the Guarantor under Clause 5 (Guarantee and
      Indemnity) of all or any part of any amount demanded under Clause 5
      (Guarantee and Indemnity) (in which case the provisions of Clause 5.7
      (Preservation Rights) shall apply) but including (a) all amounts owing
      under all intercompany loan arrangements between the Subordinated Lender
      and the Borrower or any other Obligor (other than the Guarantor) by reason
      of the Subordinated Lender (i) paying or being deemed to have been paid
      the balance of the Aircraft Purchase Price for each Aircraft pursuant to
      Clause 2.4 (Purpose), and (ii) making payments of principal and of
      interest on each Loan at the direction of the Borrower in or towards
      satisfaction of the Borrower's obligations under Clause 4 (Repayment and
      Prepayment) and (iii) paying any other

                                      -30-
<PAGE>

      amounts in or towards satisfaction of any other obligation of the Borrower
      or any other Obligor (other than the Guarantor) under the Transaction
      Documents, and (b) any dividend payable, on or other distribution in
      respect of, shares of the Borrower, any Sub-Borrower or any Intermediate
      Lessee (including any payment of surplus).

      "SUBSIDIARY" means any person of which or in which the applicable person
      and its other Subsidiaries own directly or indirectly more than 50% of:

      (a)   the combined voting power of all classes of stock having general
            voting power under ordinary circumstances to elect a majority of the
            board of directors of such person, if it is a corporation;

      (b)   the capital interest or profits interest of such person, if it is a
            partnership, limited liability company, joint venture or similar
            entity; or

      (c)   the beneficial interest of such person, if it is a trust,
            association or other unincorporated organisation.

      "SUBSTANTIVE LAW CHANGE" means, in each case after the date of this
      Agreement, the introduction, abolition, withdrawal or variation of any
      applicable law or regulation or any change in any interpretation, or the
      introduction or making of any new or further interpretation, by any court,
      tribunal, governmental, revenue, international, national, fiscal or other
      competent authority such as to affect any Master Opinion and so rendering
      it materially incorrect or misleading.

      "SUBSTITUTE CASH COLLATERAL ACCOUNT" has the meaning given to such term in
      Clause 4.7.6(a) (Timing of Substitution).

      "TAX" means all present and future taxes, charges, imposts, duties,
      levies, deductions, withholdings or fees of any kind whatsoever, or any
      amount payable on account of or as security for any of the foregoing,
      payable at the instance of or imposed by any statutory, governmental,
      international, state, federal, provincial, local or municipal authority,
      agency, body or department whatsoever, or European Union institution,
      together with any penalties, additions, whether fines, surcharges or
      interest relating thereto; and "TAXES" and "TAXATION" shall be construed
      accordingly.

      "TAX LIABILITY" means, in respect of:

      (a)   any liability or any increase in the liability of that person to
            make any payment or payments of or in respect of Tax;

      (b)   the loss or setting off against income, profits or gains or against
            any liability to make a payment or payments of or in respect of Tax
            of any relief, allowance, deduction or credit in respect of Tax (a
            "RELIEF") which would otherwise have been available to that person;
            and

      (c)   the loss or setting off against any liability to make a payment or
            payments of or in respect of Tax of a right to repayment of Tax
            which would otherwise have been available to that person,

                                      -31-
<PAGE>

      and in any case falling within sub-paragraph (b) or (c) above the amount
      that is to be treated as a Tax Liability shall be determined as follows:

      (i)   in a case which falls within sub-paragraph (b) above and where the
            Relief that was the subject of the loss or setting off was or would
            have been a deduction from or offset against Tax, the Tax Liability
            shall be the amount of that Relief;

      (ii)  in a case which falls within sub-paragraph (b) above and which
            involves the loss of a Relief which would otherwise have been
            available as a deduction from or offset against gross income,
            profits or gains the Tax Liability shall be the amount of Tax which
            would (on the basis of the Tax rates current at the date of the loss
            and assuming that the person has sufficient gross income, profits or
            gains to utilise the Relief) have been saved but for the loss of the
            Relief;

      (ii)  in a case which falls within sub-paragraph (b) above and which
            involves the setting off of a Relief which would otherwise have been
            available as a deduction from or offset against gross income,
            profits or gains, the Tax Liability shall be the amount of Tax which
            has been or will be saved in consequence of the setting off;

      (iii) in a case which falls within sub-paragraph (c) above, the Tax
            Liability shall be the amount of the repayment that would have been
            obtained but for the loss or setting off,

      and for the purposes of this definition any question of whether or not any
      relief, allowance, deduction, credit or right to repayment of Tax has been
      lost or set off, and, if so, the date on which that loss or set off took
      place, shall be certified by the relevant Lender or, as the case may be,
      the Representative.

      "TECHNICAL RECORDS" means, in respect of an Aircraft, all technical data,
      manuals, computer records, logbooks and other records required to be
      maintained pursuant to any law or regulation or any requirement for the
      time being of the applicable Aviation Authority and relating to that
      Aircraft or, any relevant Engine or Part.

      "TERMINATION EVENT" means each of the events set out in Clause 10.1
      (Termination Events).

      "THIRD PARTIES ACT" means the Contracts (Rights of Third Parties) Act
      1999.

      "TO LESSEE" shall have the meaning given thereto in Clause 7.2.2.

      "TOTAL COMMITMENTS" means the aggregate from time to time of all of the
      Commitments.

      "TOTAL LOSS" means any of the following in relation to the Aircraft or the
      Airframe and "TOTAL LOSS DATE" means the date set forth in parenthesis at
      the end of each sub-clause:

                                      -32-
<PAGE>

      (a)   destruction, damage beyond repair or being rendered permanently
            unfit for normal use for any reason (the date such event occurs or,
            if not known, one hundred and eighty (180) days after the date on
            which the Aircraft or Airframe was last heard of);

      (b)   constructive, compromised, arranged or agreed total loss (the date
            on which the insurers make payment of the full amount of the total
            loss proceeds on the basis of a total loss);

      (c)   requisition for title, or other compulsory acquisition of title for
            any reason (exclusive of requisition for use or hire) (the date on
            which the same takes effect);

      (d)   sequestration, confiscation, forfeiture, seizure, restraint,
            detention, hijacking or theft for any reason, in any case resulting
            in loss of possession by the Borrower, any Sub-Borrower, any
            Intermediate Lessee, the Lessee and the Sub-Lessee for a period
            being in excess of one hundred and eighty (180) consecutive days
            (the earlier of the date on which the insurers make payment of the
            Total Loss Proceeds on the basis of the total loss and the expiry of
            such one hundred and eighty (180) day period);

      (e)   requisition for use by a Government Entity (other than a Government
            Entity in the state of registration or in the jurisdiction in which
            the Lessee, a Sub-Lessee, Intermediate Lessee, the relevant
            Sub-Borrower or the Borrower has its principal place of business)
            for more than one hundred and eighty (180) consecutive days (the
            earlier of the date on which the insurers make payment of the Total
            Loss Proceeds on the basis of a total loss and the expiry of such
            one hundred and eighty (180) day period); or

      (f)   the completion or closing of any sale of the Aircraft in connection
            with overdue and unpaid Eurocontrol charges (the date on which the
            completion or closing of such sale occurs).

      "TOTAL LOSS PROCEEDS" means the proceeds of the hull Insurances in respect
      of an Aircraft or any compensation for a Compulsory Acquisition of an
      Aircraft, with respect to a Total Loss.

      "TRANSACTION" means the transaction contemplated by the Transaction
      Documents.

      "TRANSACTION DOCUMENTS" means, collectively the Facility Documents and the
      Aircraft Operative Documents in respect of each Aircraft financed (from
      time to time) under the Facility.

      "TRANSFER CERTIFICATE" means a certificate in the form set out in Schedule
      3.

      "TRANSFEREE" shall have the meaning given thereto in Clause 18.4 (Transfer
      Certificates).

                                      -33-
<PAGE>

      "TRANSFEROR" shall have the meaning given to such term in Clause 18.4
      (Transfer Certificates).

      "UNUTILISED FACILITY" means, at any time, the lesser of (i) the Total
      Commitments and (ii) the sum of two billion, six hundred and forty three
      million, six hundred and sixty thousand Dollars (US$2,643,660,000.00) and
      the total amount of the ECA Premiums payable to each of the Export Credit
      Agencies in respect of the Eligible Aircraft, (or such higher amount as
      the Lead Managers may, from time to time, agree acting on the instructions
      of the Instructing Group), as such amount may have been reduced by (a)
      subject to Clause 18.2.3 the amount of each Advance made before such time
      and (b) the amount of each reduction made to the Facility Amount pursuant
      to Clause 2.5.2 or 2.5.3 (Reduction and Cancellation of the Facility).

      "UTILISATION" means each utilisation of the Facility pursuant to Clause 3
      (Utilisation of the Facility) or, as the context may require, the amount
      referred to in a Utilisation Notice as being that part of the Facility
      Amount in Dollars allocated by the Borrower for financing of the Aircraft
      referred to in that Utilisation Notice.

      "UTILISATION DATE" means, in relation to a Utilisation, the Banking Day
      upon which the Advance relating to that Utilisation is made available to
      the Borrower in accordance with Clause 3.7 (Disbursement of the Loan),
      Clause 3.8 (Delivery on non-Banking Day) or Clause 3.9 (Reimbursement) and
      otherwise subject to the terms and conditions of this Agreement.

      "UTILISATION DOCUMENTATION" means, in respect of a Utilisation, all
      documents entered into by the relevant parties to give effect to the
      financing of the Aircraft the subject matter of the Utilisation as
      specified in Paragraph 2 Part A of Schedule 7.

      "UTILISATION NOTICE" means any notice given by the Borrower pursuant to
      Clause 3.1 (Utilisation Notices) and substantially in the form of Schedule
      4.

      "VALUE ADDED TAX" means value added tax as provided for in the United
      Kingdom Value Added Tax Act 1994 and legislation (whether delegated or
      otherwise) supplemental thereto or in any primary or subordinate
      legislation promulgated by the European Union or any body or agency
      thereof and any Tax similar or equivalent to value added tax imposed by
      any country other than the United Kingdom and any similar or turnover tax
      replacing or introduced in addition to any of the same.

      "WARRANTIES" means each of:

      (a)   the benefit of the rights with respect to the Aircraft under clause
            12 (Warranties and Service Life Policy) of the General Terms
            Agreement;

      (b)   the rights with respect to the Aircraft under clause 13 (Patent
            Indemnity) of the General Terms Agreement; and

      (c)   to the extent actually assigned by the Guarantor in its absolute
            discretion to the Borrower or relevant Sub-Borrower, as the case may
            be, the rights with

                                      -34-
<PAGE>

            respect to the Aircraft under the Product Support Agreement set
            forth in exhibit E to the General Terms Agreement applicable to the
            Purchase Agreement.

      "1999 FACILITY AGREEMENT" means the aircraft facility agreement dated 19
      January 1999 between (1) the banks and financial institutions named
      therein (2) Halifax plc (as agent and security trustee), (3) Sierra
      Leasing Limited, (4) Aircraft SPC-9, Inc. and (5) International Lease
      Finance Corporation (as guarantor and subordinated lender) as amended and
      supplemented from time to time.

1.2   Any and all other words and expressions defined in this Agreement shall,
      unless the context otherwise requires or there is express provision to the
      contrary, have the same meanings when used in any of the other Transaction
      Documents.

1.3   Clause headings and the table of contents are inserted for convenience of
      reference only and shall be ignored in the interpretation of this
      Agreement.

1.4   In this Agreement and each of the other Transaction Documents unless the
      context otherwise requires:

      1.4.1 references to Clauses, Articles, Schedules and Appendices are to be
            construed as references to the Clauses of, Articles of, Schedules
            to, and Appendices to this Agreement, each of the other Transaction
            Documents, as applicable, and references to this Agreement, each of
            the Transaction Documents including their respective Schedules and
            Appendices;

      1.4.2 references to (or to any specified provision of) this Agreement,
            each of the other Transaction Documents or any other document shall
            be construed as references to this Agreement, that other Transaction
            Document, that document or that provision as in force for the time
            being and as amended, supplemented, novated or substituted from time
            to time in accordance with the terms hereof or thereof;

      1.4.3 references to any law or enactment shall be deemed to include
            references to such law or enactment as re-enacted, amended,
            extended, consolidated or replaced and any orders, decrees,
            proclamations, regulations, instruments or other subordinate
            legislation made thereunder;

      1.4.4 words importing the plural shall include the singular and vice
            versa;

      1.4.5 words importing any gender shall be construed as including every
            gender;

      1.4.6 references to a person shall be construed as including references to
            an individual, company, corporation, firm, partnership, consortium,
            joint venture, association, organisation, authority or other
            unincorporated body of persons, trust or any state or government or
            international organisation or agency, European Union institution,
            committee or department, or any instrumentality, agency or political
            sub-division thereof or authority, board or

                                      -35-
<PAGE>

            body created or constituted thereby (in each case, whether or not
            having separate legal personality);

      1.4.7 the words "OTHER" and "OTHERWISE" shall not be construed ejusdem
            generis with any foregoing words where a wider construction is
            possible;

      1.4.8 the Borrower, each of the other Obligors, the Agent, the Security
            Trustee and each of the Lenders shall include their respective
            successors and permitted assigns and permitted transferees; and

      1.4.9 the words "INCLUDING" and "IN PARTICULAR" shall be construed as
            being by way of illustration or emphasis only and shall not be
            construed as, nor shall they take effect as limiting the generality
            of any foregoing words.

2.    AVAILABILITY

2.1   FACILITY

      Subject to the terms and conditions of this Agreement and in reliance on
      the representations and warranties of the Borrower, each Sub-Borrower, the
      Borrower Parent, each Intermediate Lessee and the Guarantor set out in
      Clause 6 (Representations and Warranties), the Lenders hereby severally
      grant and undertake to make available to the Borrower a loan facility in
      the maximum principal amount equal to the sum (or such higher amount as
      the Lead Managers may, from time to time, agree acting on the instructions
      of the Instructing Group) of (i) the lesser of (y) the aggregate of
      eighty-five per cent. (85%) of the Aircraft Purchase Price for each of the
      Eligible Aircraft and (z) two billion, six hundred and forty three
      million, six hundred and sixty thousand Dollars (US$2,643,660,000.00) and
      (ii) the total amount of the ECA Premium payable to each of the Export
      Credit Agencies in respect of the Eligible Aircraft (the "FACILITY
      AMOUNT").

2.2   AVAILABILITY PERIOD

      The Facility shall be available for drawdown at any time during the
      Availability Period on the terms and subject to the conditions of this
      Agreement.

2.3   NUMBER AND COMPOSITIONS OF ADVANCES

      2.3.1 The Facility shall be available in multiple Advances, each in
            respect of one Eligible Aircraft.

      2.3.2 The maximum amount of an Advance in respect of an Aircraft shall be
            the lesser of:

            (a)   the Unutilised Facility at the time when the Advance is made;
                  and

            (b)   the sum of (i) eighty-five per cent. (85%) of the Aircraft
                  Purchase Price relating to that Eligible Aircraft and (ii) the
                  amount of the ECA Premium relating to that Eligible Aircraft.
                  It is acknowledged that the Lenders shall be responsible for
                  making arrangements for the payment of the ECA Premium in
                  respect of a Loan to the respective ECAs on or before the
                  Drawdown Date, and, save as otherwise may be agreed by

                                      -36-
<PAGE>

                  the Borrower at such time, the Borrower shall not have any
                  liability for payment or repayment of the same other than,
                  following the actual making of the relevant Loan to the
                  Borrower by the Relevant Lender, by way of repayment of such
                  Loan to such Lender in accordance with the terms of this
                  Agreement.

      2.3.3 Subject to the terms and conditions of this Agreement and the
            relevant Loan Supplement, the British Lenders, the French Lenders
            and the German Lenders shall participate in each Advance through
            their respective Lending Offices in certain proportions, to be
            determined as follows:

            (a)   if the Eligible Aircraft and Engine type for each Utilisation
                  is as specified in Schedule 5 Part A, the proportions of each
                  Advance to be provided by the British Lenders, the French
                  Lenders and the German Lenders shall be as set out in the
                  columns headed "Assumed British Lenders' Portion", "Assumed
                  French Lenders' Portion" and "Assumed German Lenders' Portion"
                  (respectively) in Schedule 5 Part A; and

            (b)   if the Eligible Aircraft type or the Engine type in respect of
                  any Utilisation is not as specified in Schedule 5 Part A, the
                  proportions of the relevant Advance to be provided by the
                  British Lenders, the French Lenders and the German Lenders
                  shall be determined by agreement pursuant to Clause 3.2.2
                  (Loan Supplements) between the Lead Managers and the Export
                  Credit Agencies and the Agent shall notify the Borrower
                  thereof.

      2.3.4 To the extent that the ECA Premiums payable in respect of an
            Eligible Aircraft are funded by the Lenders, such Lenders shall have
            the right to deduct an amount corresponding to such ECA Premiums
            from the Advance actually made in respect of such Eligible Aircraft;
            provided that such Lenders actually pay such ECA Premiums with such
            amounts so deducted or such deduction is to reimburse such Lenders
            in respect of ECA Premiums previously paid in respect of such
            Eligible Aircraft.

2.4   PURPOSE

      2.4.1 Each Advance shall be used by the Borrower solely for the purpose of
            financing the acquisition, and contributing towards the Aircraft
            Purchase Price, of an Eligible Aircraft. The balance of the Aircraft
            Purchase Price for each Aircraft in excess of the relevant Advance
            shall be paid or shall have been paid directly to the Seller on or
            before the relevant Delivery Date in accordance with the relevant
            Purchase Agreement, which payment shall be funded or (to the extent
            that the relevant payment has already been made) deemed to have been
            funded by the Subordinated Lender whose rights in respect of the
            relevant payment shall form part of the Subordinated Liabilities.

      2.4.2 If a Sub-Borrower is to take title to an Aircraft, the Borrower will
            fund the Sub-Borrower's purchase of the Aircraft by way of an
            inter-company loan.

                                      -37-
<PAGE>

2.5   REDUCTION AND CANCELLATION OF THE FACILITY

      2.5.1 The availability of Utilisations has been predicated on the basis
            that each of the Eligible Aircraft will be delivered during the
            Scheduled Delivery Month for such Eligible Aircraft specified in
            Schedule 5 Part A and accordingly the Borrower shall promptly,
            following receipt of notice from or agreement with, the Seller,
            notify the Agent of any change in the Scheduled Delivery Month for
            an Eligible Aircraft. Upon receipt by the Agent of such notice, and
            PROVIDED THAT the new Scheduled Delivery Month falls within the
            Availability Period, the Scheduled Delivery Month for the relevant
            Eligible Aircraft shall be amended accordingly and thereafter
            Schedule 5 Part A shall be read and construed as so amended.

      2.5.2 Subject to Clause 3.8 (Delivery on non-Banking Day) and Clause 3.9
            (Reimbursement), if the Borrower fails to provide a Utilisation
            Notice with respect to an Eligible Aircraft before the relevant
            Delivery Date, the Facility Amount shall be reduced by an amount
            equal to the Assumed Financed Amount for that Eligible Aircraft.

      2.5.3 Without prejudice to the provisions of Clause 2.5.2, the Borrower
            may at any time and from time to time give notice to the Agent that
            it wishes to cancel the Facility in relation to any one or more of
            the Eligible Aircraft. Following receipt of such notice by the
            Agent, the Facility Amount shall be reduced by an amount equal to
            the Assumed Financed Amount for that Eligible Aircraft specified in
            the Borrower's notice and the Borrower shall not thereafter be
            entitled to serve a Utilisation Notice or receive an Advance in
            respect of any such Eligible Aircraft.

      2.5.4 Any reduction in the Facility Amount pursuant to Clauses 2.5.2 or
            2.5.3 shall reduce the Commitments of the British Lenders, the
            French Lenders and the German Lenders in relation to each relevant
            Eligible Aircraft.

      2.5.5 Upon the expiry of the Availability Period, the Unutilised Facility
            (if any) then remaining shall be cancelled.

2.6   CURRENCY

      The Advances shall be made available wholly in Dollars.

2.7   AMOUNT

      2.7.1 The British Lenders severally agree to advance the British Credits
            to the Borrower.

      2.7.2 The French Lenders severally agree to advance the French Credits to
            the Borrower.

      2.7.3 The German Lenders severally agree to advance the German Credits to
            the Borrower.

                                      -38-
<PAGE>

2.8   SEVERAL OBLIGATIONS

      2.8.1 The obligation of each Lender to make its Commitment or any part
            thereof available and to perform its obligations in respect of any
            Utilisation are several and not joint. The failure of any Lender to
            perform its obligations under this Agreement or any Loan Supplement
            shall neither:

            (a)   result in any of the Agent, the Security Trustee or any other
                  Lender assuming any additional obligation or liability
                  whatsoever; or

            (b)   relieve the Agent, the Security Trustee or any of the Lenders
                  from their respective obligations under any Transaction
                  Document.

            PROVIDED THAT:

            (a)   if a Lender fails to fund its Relevant Proportion of an
                  Advance at 10 a.m. (New York time) on the scheduled
                  Utilisation Date, the relevant Lead Manager shall use all
                  reasonable endeavours to persuade the Relevant Lender to fund
                  its Relevant Proportion of such Advance; and

            (b)   if, notwithstanding the reasonable endeavours of the relevant
                  Lead Manager, a Lender fails to fund its Relevant Proportion
                  of an Advance by 5pm (New York time) on the Utilisation Date
                  and such Advance has nevertheless been made available to the
                  Borrower either by the relevant Lead Manager (acting in its
                  absolute discretion) through the Agent or by the Agent with
                  the agreement of the relevant Lead Manager and unless that
                  Lender fails to fund its Advance in the interim (which it will
                  be obligated to do), the Borrower shall on the date which is
                  three (3) Business Days after receipt by the Borrower of the
                  Agent's first written demand, pay (without any LIBOR Break
                  Amount or Expenses or ECA Premiums) to the Agent an amount
                  equal to the defaulting Lender's Relevant Proportion of the
                  relevant Advance by way of prepayment and if appropriate the
                  Agent shall in turn remit the prepayment to the relevant Lead
                  Manager.

            Neither the foregoing nor any other provision hereof shall not be
            construed as relieving a defaulting Lender from liability for
            failure to perform its obligations hereunder and the Borrower shall
            have all rights and remedies available at law or in equity with
            respect to any Lender's failure to perform its obligations
            hereunder.

      2.8.2 Nothing contained in any Transaction Documents shall constitute a
            partnership, association, joint venture or other entity between any
            two or more of the Lenders or Representatives.

2.9   CONDITIONS PRECEDENT PRIOR TO FIRST UTILISATION

      2.9.1 The obligations of each of the Lenders, the Agent and the Security
            Trustee under this Agreement shall be subject to the following
            conditions precedent having been fulfilled to the satisfaction of,
            or waived in writing by, the Agent:

                                      -39-
<PAGE>

            (a)   on or before the date of this Agreement the Agent shall have
                  received:

                  (i)   evidence of the corporate existence of the Borrower;

            (b)   no later than five (5) Business Days before the first
                  Utilisation:

                  (i)   a certificate signed by a director of the Borrower
                        setting out the specimen signature of those persons
                        authorised to sign the Transaction Documents to which
                        the Borrower is or is to be a party and attaching and
                        certifying as true copies of the originals, copies of:

                        (1)   the Borrower's Constitutional Documents;

                        (2)   the resolutions of the board of directors of the
                              Borrower approving the execution and performance
                              by the Borrower of each Transaction Document to
                              which the Borrower will or may be a party; and

                        (3)   a power of attorney appointing those persons
                              authorised to sign on behalf of the Borrower each
                              Transaction Document to which the Borrower is, or
                              may, be a party;

                  (ii)  a secretary's or an assistant secretary's certificate of
                        the Guarantor setting out the specimen signature of
                        those persons authorised to sign the Transaction
                        Documents to which the Guarantor is a party and
                        attaching thereto, and certifying as true copies of the
                        originals:

                        (1)   the articles of incorporation and by-laws of the
                              Guarantor; and

                        (2)   the resolutions of the board of directors of the
                              Guarantor approving the entry into by the
                              Guarantor of the Transaction Documents to which
                              the Guarantor is or will be a party;

                  (iii) a certificate of the secretary or assistant secretary of
                        the Borrower Parent setting out the specimen signature
                        of those persons authorised to sign the Transaction
                        Documents to which the Borrower Parent is a party and
                        attaching thereto, and certifying as true copies of the
                        originals:

                        (1)   the articles of incorporation and by-laws of the
                              Borrower Parent; and

                        (2)   the resolutions of the board of the Borrower
                              Parent approving the entry into by the Borrower
                              Parent of the Facility Documents to which the
                              Borrower Parent is or is to be a party and the
                              entry into by the Borrower Parent of each of

                                      -40-
<PAGE>

                              the Aircraft Operative Documents to which the
                              Borrower Parent is or will be a party;

                  (iv)     extracts of the General Terms Agreement and the
                           Engine Agreements containing the Warranties and the
                           Engine Warranties respectively;

                  (v)      a duly executed original of the Charge Over Shares of
                           the Borrower, together with certified copies of the
                           minute books, and the share register (if any) of the
                           Borrower and the originals of the share certificates
                           of the Borrower as referred to therein and duly
                           executed originals of the undated letters of
                           resignation, letters of authorisation from the
                           officers of the Borrower and the Borrower Parent to
                           date the letters of resignation and share transfer
                           forms upon the occurrence and continuance of an
                           Acceleration Event, irrevocable proxy and undated
                           share transfer forms referred to therein;

                  (vi)     a duly executed original of the Borrower Debenture
                           (and the control agreements appended thereto), the
                           Lenders' Agreement and the other Facility Documents;

                  (vii)    a certificate of tax exemption in respect of the
                           Borrower from the appropriate Bermudan authorities;

                  (viii)   Bermuda Monetary Authority consent in respect of the
                           Charge Over Shares of the Borrower;

                  (ix)     evidence that each of the Borrower Accounts have been
                           opened and that ten Dollars (US$10) has been
                           deposited in each such Borrower Account;

                  (x)      the letter, in the form agreed with the Agent and
                           each Lead Manager, from the Borrower regarding
                           termination events and similar events arising as a
                           result of a change in the ownership of the Guarantor;

                  (xi)     a definitive draft of a legal opinion from Appleby,
                           Spurling & Hunter Bermudan counsel to the Lenders;

                  (xii)    a definitive draft of a legal opinion from Buchalter,
                           Nemar, Fields & Younger, Californian counsel to the
                           Lenders;

                  (xiii)   a definitive draft of a legal opinion from in house
                           counsel to the Guarantor;

                  (xiv)    a definitive draft of a legal opinion from Clifford
                           Chance LLP, English counsel to the Lenders; and

                                      -41-
<PAGE>

                  (xv)  each of the following being in the Agreed Form the:

                        (1)   Partial Purchase Agreement Assignment;

                        (2)   Deed of Assignment and Aircraft Mortgage;

                        (3)   Assignment Re Engine Warranties;

                        (4)   RR Engine Warranty Agreement;

                        (5)   BFE Bill of Sale

                        (6)   Aircraft Bill of Sale;

                        (7)   Sub-Borrower Charge over Shares

                        (8)   Sub-Borrower Guarantee;

                        (9)   Accession Deed;

                        (10)  Sub-Borrower Debenture;

                        (11)  Charge over Shares of Intermediate Lessee;

                        (12)  Intermediate Lessee Debenture;

                        (13)  Intermediate Lease Security Assignment;

                        (14)  Lease Security Assignment;

                        (15)  Replacement Bill of Sale; and

                        (16)  Notice of Charge.

2.10     MASTER OPINIONS

         2.10.1   It is acknowledged and agreed between the parties hereto
                  (including any subsequent acceding parties to any of the
                  Transaction Documents) that, subject to Clause 2.10.3, when a
                  Utilisation further to the first Utilisation (a "FURTHER
                  UTILISATION") is proposed to be drawn by the Borrower for the
                  purpose of financing the acquisition of an Eligible Aircraft
                  by the Borrower, or as the case may be, a Sub-Borrower on the
                  basis of Utilisation Documentation that is in the same form
                  (mutatis mutandis) as that which is the subject of the
                  relevant Master Opinion, then, PROVIDED THAT no Second Trigger
                  Event has occurred and is continuing and that the Borrower has
                  given its certificate in accordance with the provisions of
                  Clause 3.1.1(b) in relation to such Further Utilisation,
                  subject to paragraph 4 of Part A to Schedule 7, it will not be
                  a condition precedent to that Further Utilisation by the
                  Borrower that further legal opinions in relation to the
                  Utilisation Documentation which relates to that Further
                  Utilisation be provided on or before the relevant Utilisation
                  Date.

                                      -42-
<PAGE>

         2.10.2   Subject to Clause 2.10.3, the Borrower and the Agent shall
                  each use all reasonable endeavours to procure that its
                  respective counsel which are to be the providers of the Master
                  Opinions confirm in their relevant Master Opinion that in
                  relation to any Further Utilisation that if the Utilisation
                  Documentation which relates to the relevant Further
                  Utilisation ("FURTHER UTILISATION DOCUMENTATION") is in the
                  same form (mutatis mutandis) as the previous Utilisation which
                  was the subject of the relevant Master Opinion and the
                  Borrower gives its certificate in accordance with Clause
                  3.1.1(b) in relation to such Further Utilisation
                  Documentation, then the relevant Master Opinion (but subject
                  to the assumptions, reservations and qualifications therein
                  contained) shall be deemed to relate to such Further
                  Utilisation Documentation.

         2.10.3   If, with respect to a Further Utilisation:

                  (a)      there is a breach in the Guarantor's representation
                           and warranty contained in Clause 6.1.14 (Guarantor's
                           Representations and Warranties) which pursuant to
                           Clause 6.3 (Repetition) is deemed to be repeated on
                           the date of the relevant Utilisation Notice; or

                  (b)      the Borrower is unable to or fails to provide a
                           certificate which complies in full with Clause
                           3.1.1(b) (Utilisation Notices); or

                  (c)      the provider of any Master Opinion ("PROVIDER") at
                           any time from the date of the relevant Utilisation
                           Notice to (but including) the date on which the
                           filing or the registration of the relevant Mortgage
                           is completed in the jurisdiction of the Borrower or a
                           Sub-Borrower (as the case may be), notifies either
                           Representative that if the Provider were to issue a
                           legal opinion in the terms of its Master Opinion in
                           relation to the Further Utilisation, such opinion
                           would be materially incorrect or misleading as to the
                           legality, validity or enforceability of the relevant
                           Loan, any of the material rights of the Lenders
                           and/or Representatives thereunder or of a material
                           element of the relevant security package as
                           contemplated by the Aircraft Security Documents in
                           relation to the relevant Loan; or

                  (d)      any of the Utilisation Documentation proposed to be
                           used for the purposes of such Further Utilisation is
                           not in the same form (mutatis mutandis) as that which
                           is the subject of a Master Opinion,

                  then, in any such case, the relevant Master Opinion shall not
                  apply and, without prejudice to Clause 14.3 (Illegality), the
                  Borrower shall take all such steps within its control as are
                  reasonably required to enable the Provider to issue, on the
                  instructions of the Agent, its revised opinion (the Expense of
                  which shall be borne by the Borrower) in form and substance
                  satisfactory to the Agent. Until a new relevant opinion is
                  issued, the inapplicability of the relevant Master Opinion
                  shall constitute a failure of a condition precedent for that
                  Utilisation (if it has not then been made) and for future
                  Utilisations in relation to which the relevant Master Opinion
                  would (but for the operation of

                                      -43-
<PAGE>

                  this Clause 2.10.3) have applied for the purposes of Clause
                  2.10.1, by giving notice in writing to that effect to the
                  Borrower.

         2.10.4   If, in its good faith opinion, the Agent has reason to believe
                  that a Substantive Law Change has occurred since the date of
                  the applicable Master Opinion that would result in Clause 14.3
                  (Illegality) becoming applicable, the Agent may at any time
                  request in writing the Provider of the applicable Master
                  Opinion to provide it with a revised opinion as to the portion
                  of the Master Opinion affected by any such Substantive Law
                  Change in a form and substance reasonably satisfactory to the
                  Agent, and if such a Substantive Law Change has occurred and
                  if the Provider so provides such a revised opinion, the
                  Borrower shall pay the Expense of such revised opinion.
                  Subject to Clause 14.3 (Illegality) upon such occurrence, the
                  Agent shall be entitled to obtain the re-issue of all Master
                  Opinions affected by such revised opinion in replacement of
                  the existing Master Opinions and the Borrower shall pay the
                  Expense of such replacement Master Opinions so that they
                  relate to all affected Aircraft previously delivered (covered
                  by the original Master Opinions) as well as to Further
                  Utilisations.

3.       UTILISATION OF THE FACILITY

3.1      UTILISATION NOTICES

         3.1.1    In order to effect a Utilisation under this Agreement the
                  Borrower shall serve a Utilisation Notice upon the Agent:

                  (a)      identifying:

                           (i)      the proposed Utilisation Date which shall be
                                    a Business Day within the Availability
                                    Period not less than ten (10) Business Days
                                    (or such shorter period as the Instructing
                                    Group, in any particular case, may agree)
                                    after the date of service of such notice
                                    PROVIDED THAT (x) the Borrower shall have
                                    served a preliminary and purely indicative
                                    utilisation notice upon the Agent at least
                                    twenty (20) Business Days (or such shorter
                                    period as may be agreed by the Agent) prior
                                    to the proposed Utilisation Date setting out
                                    (on a provisional basis) information of the
                                    nature specified in Clauses 3.1.1(ii) to
                                    (vii) inclusive and (y) if a Sub-Borrower
                                    and/or an Intermediate Lessee is to be used
                                    in the structure for such Utilisation, the
                                    proposed Utilisation Notice shall be served
                                    upon the Agent at least twenty (20) Business
                                    Days (or such shorter period as may be
                                    agreed by the Agent) prior to the proposed
                                    Utilisation Date unless the proposed
                                    Sub-Borrower or Intermediate Lessee shall be
                                    established in a Regular Jurisdiction or the
                                    proposed Sub-Borrower or Intermediate Lessee
                                    has already acceded to this Agreement prior
                                    to the date of the Utilisation Notice, in
                                    which cases the Utilisation Notice shall be
                                    served on the Agent not less than ten (10)
                                    Business Days (or such shorter period

                                      -44-
<PAGE>

                                    as may be agreed by the Agent) prior to the
                                    proposed Utilisation Date;

                           (ii)     the amount of the proposed Advance;

                           (iii)    the relevant Eligible Aircraft (including
                                    its manufacturer's serial number, the
                                    proposed registration mark and the type and
                                    serial numbers of the Engines to be
                                    installed);

                           (iv)     if known, the identity of the proposed
                                    Lessee of the Aircraft and the jurisdiction
                                    in which the Aircraft shall be registered
                                    and the principal place of business of the
                                    Lessee;

                           (v)      subject to Clause 3.1.3, whether a
                                    Sub-Borrower and/or an Intermediate Lessee
                                    (as the case may be) will be in the
                                    structure and whether such Sub-Borrower or
                                    Intermediate Lessee will be established in a
                                    Regular Jurisdiction or an Irregular
                                    Jurisdiction. If a Sub-Borrower and/or an
                                    Intermediate Lessee (as the case may be) is
                                    required, the Borrower shall provide such
                                    details as it is then possible for the
                                    Borrower to provide as to the identity and
                                    jurisdiction of incorporation of such
                                    Sub-Borrower and/or an Intermediate Lessee
                                    (as the case may be) and shall request the
                                    consent of the Lead Managers and the
                                    Borrower thereto in accordance with Clause
                                    3.3.1 (Sub-Borrowers/Intermediate Lessees)
                                    if such Sub-Borrower or Intermediate Lessee
                                    is to be established in an Irregular
                                    Jurisdiction;

                           (vi)     the Aircraft Purchase Price; and

                           (vii)    the total amount of the Loan,

                           and having attached thereto a certified copy of the
                           latest draft (if any) (or, if the same is then
                           available, a certified copy of the executed version)
                           of the proposed Lease. A Utilisation Notice shall
                           become irrevocable if not revoked on or before the
                           third (3rd) Business Day prior to the proposed
                           Utilisation Date; and

                  (b)      certifying (by the signature of an officer or a
                           director of the Borrower) in the case of any Further
                           Utilisation that:

                           (i)      the board minutes of the Borrower and any
                                    other relevant Obligor which have previously
                                    been the subject of a Master Opinion in
                                    respect of a previous Utilisation each
                                    remain in effect for the relevant Further
                                    Utilisation or are each in the same form as
                                    board minutes which have previously been the
                                    subject of a Master Opinion;

                                      -45-
<PAGE>

                           (ii)     the resolutions contained in the minutes
                                    referred to in Clause 3.1.1(b)(i) were duly
                                    passed in accordance with the Borrower
                                    Constitutional Documents or, as the case may
                                    be, the constitutional documents of each
                                    other relevant Obligor and such resolutions
                                    will remain in full force and effect as of
                                    the relevant Utilisation Date and any later
                                    date on which any Aircraft Security Document
                                    is to be entered into in connection with
                                    such Further Utilisation; and

                           (iii)    the Transaction Documents in respect of such
                                    Further Utilisation will be signed by one of
                                    the officers or directors or attorneys in
                                    fact of the Borrower and of each other
                                    relevant Obligor as was authorised to sign
                                    the Transaction Documents in respect of a
                                    previous Utilisation which are the subject
                                    of a Master Opinion and the appointments of
                                    such officers or directors or attorneys in
                                    fact or his or her authority to sign the
                                    Transaction Documents in respect of the
                                    relevant Further Utilisation on behalf of
                                    the Borrower or any other relevant Obligor
                                    has not been or will not be terminated or
                                    restricted prior to the due execution of the
                                    Transaction Documents in respect of the
                                    relevant Utilisation to which the Borrower
                                    or, as the case may be, such other Obligor
                                    is or is to be party.

         3.1.2    The Borrower may not issue a Utilisation Notice:

                  (a)      if a Relevant Event or Termination Event has occurred
                           and is continuing or would result from the drawdown
                           of the relevant Advance;

                  (b)      in respect of any Eligible Aircraft if the delivery
                           of such Eligible Aircraft to the intended Lessee or
                           Sub-Lessee would cause the Borrower, or the relevant
                           Sub-Borrower, to breach Clause 7.2.2 (Leasing and
                           Insurance Covenants of Borrower, Sub-Borrower and
                           Intermediate Lessee);

                  (c)      if the Borrower, or as the case may be, the relevant
                           Sub-Borrower, intends that the Eligible Aircraft
                           which the Borrower proposes to be the subject of the
                           relevant Utilisation will be registered in a
                           Prohibited Country, or the jurisdiction of the
                           principal place of business of the intended TO Lessee
                           will be a Prohibited Country.

         3.1.3    The Borrower may issue a Utilisation Notice even if the
                  relevant Eligible Aircraft will not be the subject of a Lease
                  or Intermediate Lease on the Delivery Date, PROVIDED THAT the
                  provisions of Clause 7.2.1(b), (c) and (d) (Leasing and
                  Insurance Covenants of Borrower, Sub-Borrower and Intermediate
                  Lessee) shall apply to any such Lease or Intermediate Lease.

                                      -46-
<PAGE>

         3.1.4    The Agent shall:

                  (a)      send to each Relevant Lender or Approved Lender which
                           intends to participate in the relevant Loan a copy of
                           each Utilisation Notice received from the Borrower
                           which complies with Clause 3.1.1;

                  (b)      procure the preparation and circulation to each
                           Relevant Lender or Approved Lender which intends to
                           participate in the relevant Loan and the Borrower of
                           the relevant Utilisation Documentation at least five
                           (5) Business Days (or such shorter period as the
                           Agent may agree) prior to the proposed Utilisation
                           Date;

                  (c)      if a Sub-Borrower that has not previously acceded to
                           the Agreement is to take title to the Aircraft,
                           procure a definitive draft of an opinion from its
                           legal counsel in the jurisdiction of organisation of
                           such Sub-Borrower at least five (5) Business Days
                           prior to the proposed Utilisation Date regarding the
                           due execution and validity of the relevant Accession
                           Deed, of the relevant Aircraft Security Documents and
                           of other documents as the Representatives may require
                           pursuant to Clause 3.3.3(b)
                           (Sub-Borrowers/Intermediate Lessees); and

                  (d)      if an Intermediate Lessee that has not previously
                           acceded to the Agreement is to be incorporated in a
                           structure in relation to a particular Utilisation,
                           procure a definitive draft of an opinion from its
                           legal counsel in the jurisdiction of organisation of
                           such Intermediate Lessee regarding the due execution
                           and validity of the relevant Accession Deed, of the
                           relevant Aircraft Security documents and of other
                           documents as the Representatives may require pursuant
                           to Clause 3.3.3(b) (Sub-Borrowers/Intermediate
                           Lessees).

         3.1.5    The Borrower may, at any time on or prior to the Utilisation
                  Date, notify the Agent of any change to the registration mark
                  of the Aircraft or to the identity of the Lessee (including
                  notification that there will not be a Lessee), and any such
                  notification shall not affect the validity of the Utilisation
                  Notice.

         3.1.6    The Borrower shall provide the Agent with a certified copy of
                  the executed Lease (if any) and shall provide the Agent with
                  written confirmation of the Aircraft Purchase Price in each
                  case, as soon as the same becomes available from the Seller
                  and in any event not less than five (5) Business Days prior to
                  the proposed Utilisation Date.

3.2      LOAN SUPPLEMENTS

         3.2.1    The Agent shall prepare the Loan Supplement for each
                  Utilisation by adding the information contemplated as being
                  included therein in the form set out in Schedule 2.

         3.2.2    Not less than four (4) Business Days (or such shorter period
                  as the Agent may agree) before the proposed Utilisation Date
                  the Agent and the Lead Managers

                                      -47-
<PAGE>
                  shall (i) confirm to the Borrower and the Relevant Lenders the
                  proportions of the relevant Advance to be provided by the
                  British Lenders, the French Lenders and the German Lenders
                  respectively as set out for the relevant Aircraft in Schedule
                  5 Part A and (ii) confirm the applicable interest rate to be
                  provided for in the relevant Loan Supplement. The Agent shall
                  provide an execution version of the Loan Supplement to the
                  Borrower, the Security Trustee and each Relevant Lender at
                  least three (3) Business Days prior to the Utilisation Date.

         3.2.3    The Agent, the Security Trustee and each Relevant Lender, the
                  Borrower and any Sub-Borrower or any Intermediate Lessee (as
                  applicable) shall, not less than three (3) Business Days prior
                  to the proposed Utilisation Date, execute a Loan Supplement
                  and the other Utilisation Documents in respect of that
                  Utilisation.

         3.2.4    The Agent shall notify the Borrower if at any time the Agent
                  has determined that all the conditions precedent to funding a
                  particular Utilisation will not be satisfied or waived and in
                  such event will provide to the Borrower a description of the
                  items which remain to be fulfilled.

3.3      SUB-BORROWERS/INTERMEDIATE LESSEES

         3.3.1    In respect of the financing of a particular Eligible Aircraft
                  pursuant to the Facility, or the substitution of an Existing
                  Aircraft with a Replacement Aircraft, subject always, in each
                  case, to the provisions of Clause 3.7.4 (Disbursement of the
                  Loan), the Borrower shall be entitled to introduce a
                  Sub-Borrower (and shall be obliged to introduce a Sub-Borrower
                  if the Agent shall have notified the Borrower that the
                  Aircraft is to be leased into a jurisdiction in respect to
                  which neither the Agent nor the Export Credit Agencies have
                  previously formed a view that such jurisdiction does not
                  impose strict liability for losses on a non-operator owner of
                  aircraft the subject of a lease (if the Borrower does not wish
                  to introduce such Sub-Borrower it shall instead provide the
                  Agent with a satisfactory legal opinion from the Borrower's
                  counsel to the effect that such jurisdiction does not impose
                  such strict liability)):

                  (a)      to cause a Sub-Borrower (which is or is to be
                           established in a Regular Jurisdiction) to take title
                           to that Eligible Aircraft and/or that an Intermediate
                           Lessee (which is or is to be established in a Regular
                           Jurisdiction) be incorporated into the structure;

                  (b)      to request that a Sub-Borrower (which is or is to be
                           established in an Irregular Jurisdiction) take title
                           to that Eligible Aircraft and/or that an Intermediate
                           Lessee (which is or is to be established in an
                           Irregular Jurisdiction) be incorporated into the
                           structure.

                  Any such request under paragraph (b) shall be made by the
                  Borrower in the relevant Utilisation Notice and the Agent
                  (acting on the instructions of the

                                      -48-

<PAGE>

                  Instructing Group) shall approve a request under Clause
                  3.3.1(b) in principle or otherwise no later than ten (10)
                  Business Days prior to the proposed Utilisation Date. If the
                  proposed Sub-Borrower or Intermediate Lessee has already
                  acceded to this Agreement prior to the date of the relevant
                  Utilisation Notice, or is organised in a Regular Jurisdiction,
                  the approval of the Agent shall not be required.

         3.3.2    Each such Sub-Borrower and/or such Intermediate Lessee shall
                  be a company or trust capable of providing representations and
                  warranties and covenants having substantially the same effect
                  as those given by the Borrower in Clauses 6 (Representations
                  and Warranties) and 7 (Undertakings and Covenants) (including
                  on a non-recourse basis) and each shall be a wholly owned
                  direct Subsidiary of the Borrower, in the case of the
                  Sub-Borrower or a wholly owned direct Subsidiary of a
                  Sub-Borrower or the Borrower in the case of the Intermediate
                  Lessee (in each case, except for shares held by directors,
                  trustees or nominees in order to meet local nationality or
                  other local requirements and which do not have a Material
                  Adverse Effect on any of the Charges over Shares, in favour of
                  the Security Trustee). The Borrower shall use one Intermediate
                  Lessee in any one jurisdiction unless the Borrower has a
                  reason to do otherwise.

         3.3.3    If a Sub-Borrower or an Intermediate Lessee has not already
                  acceded to this Agreement and is to be incorporated into the
                  structure then on or prior to the relevant Advance being made:

                  (a)      each such Sub-Borrower and/or each such Intermediate
                           Lessee shall accede to this Agreement by executing an
                           Accession Deed and such other Transaction Documents
                           as the Agent in its good faith opinion considers
                           appropriate so that any such Sub-Borrower shall
                           become a party to this Agreement and such of the
                           other Transaction Documents as may be appropriate as
                           if named therein as a party;

                  (b)      if the Sub-Borrower or Intermediate Lessee is or will
                           be organised in an Irregular Jurisdiction, each of
                           the applicable Obligors and any such Sub-Borrower
                           organised in an Irregular Jurisdiction and/or any
                           such Intermediate Lessee organised in an Irregular
                           Jurisdiction shall enter into such other documents
                           and provide such security as the Security Trustee
                           may, in its good faith opinion (after taking legal
                           advice from counsel to the Lenders in the
                           jurisdiction of the relevant Sub-Borrower and/or the
                           relevant Intermediate Lessee), require in order to
                           ensure that (i) the Representatives and each of the
                           Lenders are in a position, having a substantially
                           similar effect (including as to their security
                           position) with respect to such Sub-Borrower and/or
                           Intermediate Lessee as they are in with respect to
                           other Sub-Borrowers or other Intermediate Lessees, as
                           the case may be, under the Transaction Documents and
                           (ii) the rights of the Representatives and the
                           Lenders are not materially different than

                                      -49-
<PAGE>


                           with respect to any Sub-Borrower and/or Intermediate
                           Lessee of a Regular Jurisdiction under the
                           Transaction Documents, it being acknowledged and
                           agreed for the purpose of determining the foregoing
                           matters that (i) any trustee in a United States
                           owner/voting trust will be party to the Transaction
                           Documents not in its individual capacity but solely
                           as trustee, (ii) common law jurisdictions are
                           acceptable and (iii) with respect to civil
                           jurisdictions, the Borrower and the Agent shall
                           negotiate in good faith, to the extent necessary,
                           alternative security to that available in common law
                           jurisdictions which is reasonably acceptable to the
                           Security Trustee, acting upon the instruction of the
                           Instructing Group;

                  (c)      upon receipt by the Agent of the Accession Deed
                           signed on behalf of the Borrower, Guarantor, Obligors
                           and by the proposed Intermediate Lessee or
                           Sub-Borrower (as the case may be), the Agent shall
                           sign the same for itself and on behalf of the Lenders
                           and shall as promptly as practicable give notice of
                           such execution to all of the parties to the Accession
                           Deed; and

                  (d)      upon execution of any such Accession Deed, it shall
                           take effect in accordance with, but subject to, the
                           terms hereof and thereof.

3.4      CONDITIONS PRECEDENT TO EACH ADVANCE

         Each Advance shall be subject to the conditions precedent set out in
         Parts A and B of Schedule 7.

3.5      CONDITIONS SUBSEQUENT

         Each Advance shall be subject to the conditions subsequent set out in
         Part C of Schedule 7.

3.6      REPAYMENT SCHEDULES

         3.6.1    Each Advance shall amortise as shown in Schedule 5 Part B so
                  that the amount outstanding in respect of the Advance
                  (expressed as a percentage of the Aircraft Purchase Price for
                  each Repayment Date) from time to time is (i) on the Delivery
                  Date of the relevant Aircraft, the amount shown opposite the
                  Delivery Date, and on a Repayment Date, the percentage shown
                  opposite the relevant Repayment Date number in column (3) in
                  Schedule 5 Part B and (ii) in the case of any date other than
                  the Delivery Date or a Repayment Date, the amount (expressed
                  as a percentage of the Aircraft Purchase Price) shown opposite
                  the Repayment Date number immediately preceding such date in
                  column (1) or, in the case of any date preceding the first
                  Repayment Date, the amount (expressed as a percentage of the
                  Aircraft Purchase Price) specified opposite the Delivery Date.

         3.6.2    The contents of Schedule 5 are provided for illustration
                  purposes only and are not intended to represent the initial
                  amounts, or the amortisation, of any

                                      -50-
<PAGE>

                  particular Advance. The repayment profile of each Advance
                  shall be as provided for in the relevant Loan Supplement.

         3.6.3    The repayment profiles shown in schedule 2 of the Loan
                  Supplement shall be calculated on the basis of twenty equal
                  repayments of principal on a semi-annual basis (except for the
                  first repayment of principal) together with interest
                  calculated on the relevant Loan outstanding on the relevant
                  Repayment Date at the Applicable Rate.

         3.6.4    Each Repayment Instalment determined in accordance with clause
                  3.6 and set out in schedule 2 to the relevant Loan Supplement
                  will be calculated on the assumption that (a) the Utilisation
                  Date will occur on the date specified in the relevant Loan
                  Supplement, (b) the interest rate for the relevant Loan is the
                  rate per annum specified in the Loan Supplement and (c) the
                  total amount of the relevant Loan to be made available to the
                  Borrower on the Utilisation Date will be the Advance. If any
                  such assumption proves to be incorrect, the Agent shall
                  prepare a substitute schedule 2 to the relevant Loan
                  Supplement to replace the existing schedule 2 on the same
                  basis as the initial schedule 2 but with reference to the
                  actual Utilisation Date, the actual rate of interest
                  applicable to the relevant Loan and the actual amount drawn
                  down in respect of the relevant Advance. Such substitute
                  schedule 2 shall be signed by the Agent (for itself and on
                  behalf of the Lenders and the Security Trustee) and the
                  Borrower in substitution for, and shall for all purposes
                  become, schedule 2 to the relevant Loan Supplement. Thereafter
                  all payments of principal in respect of the relevant Loan
                  shall be made in accordance with the substitute schedule 2 to
                  the relevant Loan Supplement.

3.7      DISBURSEMENT OF THE LOAN

         3.7.1    On the terms and subject to the conditions of this Agreement,
                  the Relevant Lenders party to a Loan Supplement severally
                  agree to advance the Loan referred to in such Loan Supplement
                  to the Borrower on the date set forth in the Utilisation
                  Notice as set out below:

                  (a)      the British Lenders severally agree to advance the
                           British Credits to the Borrower;

                  (b)      the French Lenders severally agree to advance the
                           French Credits to the Borrower; and

                  (c)      the German Lenders severally agree to advance the
                           German Credits to the Borrower.

         3.7.2    Subject to Clause 3.8 (Delivery on non-Banking Day), Clause
                  3.9 (Reimbursement) and Clause 3.7.6, each Loan shall be made
                  available in Dollars by payment to (i) the Seller (to such
                  account as the Seller may have specified to the Agent) on
                  behalf of the Borrower in respect of that portion of the
                  Advance equal to eighty five per cent. (85%) of the Aircraft
                  Purchase

                                      -51-
<PAGE>

                  Price and (ii) such person as the Agent, the Lead Managers and
                  the Borrower shall agree in respect of the balance of the
                  Advance.

         3.7.3    All payments by the Relevant Lenders in respect of a Loan
                  shall be effected on the Delivery Date and as between the
                  British Lenders, the French Lenders and the German Lenders, in
                  the proportions described in clause 2.3.3 (Number and
                  Composition of Advances) and provided for in the relevant Loan
                  Supplement.

         3.7.4    Subject to Parts A, B and C to Schedule 7, a Loan shall be
                  made available by each of the British Lenders, the French
                  Lenders and the German Lenders in their respective proportions
                  by payment to the relevant Lead Manager of its Relevant
                  Proportion of the Loan and the Lead Managers shall make the
                  Loan available by one disbursement, through the Agent by 10.00
                  am (New York time), on the date requested by the Borrower if:

                  (a)      such date is the Delivery Date and is a Banking Day
                           which falls during the Availability Period; and

                  (b)      the Agent shall have received a Utilisation Notice.

         3.7.5    Each of the Lead Managers shall send a facsimile to the Agent
                  two (2) Business Days prior to the proposed Utilisation Date
                  attaching a copy of its payment instructions regarding the
                  disbursement of the British Credits, the French Credits and
                  the German Credits (as the case may be).

         3.7.6    Subject to Clause 4.9 (Prepayment if Post-Delivery
                  Modifications not completed or Buyer Furnished Equipment not
                  installed within Post-Delivery Modification Period) to the
                  extent that any Buyer Furnished Equipment is to be installed
                  and/or any Post-Delivery Modifications are to be performed on
                  the Aircraft after the relevant Delivery Date in accordance
                  with the provisions hereof, in each case, to be funded by an
                  Advance hereunder, the Agent shall on the Utilisation Date
                  deduct from the amount of the Advance an amount equal to such
                  portion of the aggregate cost of such Buyer Furnished
                  Equipment and/or such Post-Delivery Modifications actually
                  financed by such Advance and place such amount in an interest
                  bearing account in the name of the Agent and such amount or
                  part thereof shall be held in escrow by the Agent only to be
                  released either (i) to the Seller or the Borrower in
                  accordance with the notice from the Guarantor delivered
                  pursuant to Clause 7.4.4 that such Buyer Furnished Equipment
                  and/or such Post-Delivery Modifications to which such amount
                  or part thereof relates have been installed and/or completed,
                  as the case may be, or (ii) in pre-payment of a portion of the
                  relevant Advance in accordance with Clause 4.9. For the
                  avoidance of doubt it is hereby expressly agreed that the
                  Agent shall be entitled to release funds under this Clause
                  3.7.6 upon receipt of notice from the Guarantor delivered
                  pursuant to Clause 7.4.4 without any further consent of the
                  other parties hereto.

                                      -52-
<PAGE>

3.8      DELIVERY ON NON-BANKING DAY

         Subject to the provisions of Clause 3.7 (Disbursement of the Loan) if
         Delivery of the relevant Aircraft is scheduled to occur on date other
         than a Banking Day or on a Banking Day but outside New York banking
         hours, and as a consequence the Loan cannot be advanced on the actual
         Delivery Date and, subject to the continued validity and accuracy of
         the conditions precedent set out in Part A of Schedule 7 and the
         satisfaction of the conditions precedent set out in Part B of Schedule
         7 and provided that in the meantime the Borrower, or as the case may
         be, the Sub-Borrower has acquired good and valid title to the Aircraft
         free and clear of all Liens (other than the Permitted Liens), such Loan
         shall, within three (3) Banking Days after the Delivery Date, be
         disbursed in accordance with the written instructions of the Borrower
         to either the Seller or in reimbursement to the Borrower. For the
         avoidance of doubt, the foregoing provisions of this Clause 3.8 are
         without prejudice to the provisions of Clause 13.3 when and if
         applicable as provided therein.

3.9      REIMBURSEMENT

         It is hereby acknowledged that the Borrower shall have the right to
         issue a Utilisation Notice in respect of an Aircraft to which the
         Borrower or, as the case may be, a Sub-Borrower will already have
         acquired title on the proposed Utilisation Date PROVIDED THAT the
         actual Utilisation Date occurs within three (3) Banking Days after the
         Delivery Date of such Aircraft and that on the actual Utilisation Date
         the Borrower or, as the case may be, the Sub-Borrower has acquired good
         and valid title to the Aircraft free and clear of all Liens (other than
         Permitted Liens). In such circumstances the Lenders shall disburse the
         Loan on the Utilisation Date (which shall be on or before the date
         falling three (3) Banking Days after the Delivery Date) in accordance
         with clause 3.7 (Disbursement of the Loan) (on the written instructions
         of the Borrower) to either the Borrower or the Seller. If for whatever
         reason the Borrower or, as the case may be, the Sub-Borrower has not
         acquired title to the Aircraft on the Utilisation Date then the
         Relevant Lender shall be under no obligation to disburse the Loan and
         the Borrower shall, on demand, pay to the Agent any LIBOR Break Amount
         and/or any Expenses incurred by the Agent and/or the Relevant Lender in
         connection with the proposed Loan.

3.10     NON-INVASIVE FEATURES

         3.10.1   None of the Transaction Documents (except after the occurrence

                  and during the continuation of a Second Trigger Event or a
                  Termination Event) shall be registered, recorded or otherwise
                  filed in any jurisdiction other than the jurisdiction of
                  organisation of the Borrower Parent, the Borrower, the
                  relevant Sub-Borrower or relevant Intermediate Lessee. Unless
                  and until a Second Trigger Event, a Material Termination Event
                  or an Acceleration Event shall have occurred and be continuing
                  (but without prejudice to the negative pledge provisions
                  contained in clause 4 of the Borrower Debenture of each
                  Sub-Borrower Debenture and of each Intermediate Lessee
                  Debenture and in clause 3.8 of each Mortgage), the Borrower,
                  any relevant Sub-Borrower or any relevant Intermediate Lessee
                  shall alone and without any requirement for consent from the
                  Security Trustee or any other person (but without prejudice

                                      -53-
<PAGE>
                  to Clause 7.4 (Guarantor Covenants)), have all rights, powers,
                  privileges, remedies and other benefits in respect of the
                  Leases, Intermediate Leases and Sub-leases, and the Warranties
                  and the Engine Warranties, including to amend, supplement,
                  waive or otherwise modify, enforce, extend or terminate a
                  Lease, an Intermediate Lease or a Sub-Lease or to enter into
                  or consent to a new Lease, Intermediate Lease or Sub-Lease or
                  to use, release or modify any Security Deposit, Maintenance
                  Reserves or other support or security, and, subject to the
                  provisions of this Agreement, sell or otherwise transfer any
                  Aircraft or any Sub-Borrower.

         3.10.2   Subject to Clause 9.2.1(f) each of the Representatives and the
                  Lenders covenant with the Borrower, any Sub-Borrower and any
                  Intermediate Lessee that, notwithstanding any other provision
                  of the Transaction Documents, at any time so long as no
                  Acceleration Event shall have occurred, not to take any action
                  or cause to be taken any action, or permit any person claiming
                  by, through or on behalf of it to take any action or cause any
                  action, that would interfere with the possession, use,
                  operation and quiet enjoyment of and other rights with respect
                  to any Aircraft and all rents, revenues, profits and income
                  therefrom, including, the right to enforce manufacturers'
                  warranties, the right to apply or obtain insurance proceeds
                  for damage to the Aircraft to the repair of the Aircraft and
                  the right to engage in pooling, leasing and similar actions,
                  in each case in accordance with the terms of this Agreement.

         3.10.3   The Security Trustee agrees to release any Lien it may have
                  upon any Engine upon (i) the Borrower providing the Security
                  Trustee with written notice of a transfer thereof promptly
                  after receipt of a notice thereof from the TO Lessee and with
                  a copy of any bill of sale or other instrument evidencing the
                  transfer of title of such Replacement Engine to the Borrower
                  or Sub-Borrower, as the case may be, if any is provided by the
                  TO Lessee to the Borrower, Sub-Borrower or Intermediate
                  Lessee, (ii) in the case of the transfer of title to an Engine
                  initiated by the Borrower, the Borrower providing the Security
                  Trustee with a certificate (substantially in the form agreed
                  prior to the date hereof) of such transfer, or (iii) upon the
                  Total Loss payment or Loan repayment being received (or
                  Replacement Aircraft being provided) in a case where the
                  Airframe, but not such Engine, was the subject of a Total
                  Loss. The Borrower or Sub-Borrower shall at the request of the
                  Security Trustee execute a supplement to the relevant Mortgage
                  to evidence that such Replacement Engine has become subject to
                  the Lien of the Mortgage and the Security Trustee shall, at
                  the request of the Borrower or Sub-Borrower, execute a
                  supplement to the relevant Mortgage to evidence the release of
                  the Engine being replaced from the Lien of the Security
                  Trustee.

         3.10.4   Following the occurrence of a Second Trigger Event (and so
                  long as the same is continuing), as a condition to any Engine
                  being replaced in the manner contemplated by Clause 3.10.3 and
                  the Security Trustee being obliged to release the Lien
                  constituted by the Mortgage on such Engine, the Borrower

                                      -54-
<PAGE>

                  shall procure that there is delivered to the Security Trustee,
                  at the cost of the Borrower, a certificate issued by an
                  appraiser of recognised standing reasonably acceptable to the
                  Security Trustee confirming that the transfer of title of such
                  Engine in exchange for the Replacement Engine does not in and
                  of itself cause the Fair Market Value of the relevant Aircraft
                  to fall below the amount of the outstanding Loan in respect of
                  such Aircraft at the date of such title exchange.
                  Notwithstanding the foregoing or any other provision herein,
                  there are no restrictions or requirements applicable to the
                  rotation of Engines without a title transfer.

         3.10.5   The Security Trustee agrees that it will cooperate with the
                  Borrower in changing the state of registration of any Aircraft
                  at the Borrower's cost and as the Borrower may request
                  provided that such request does not conflict with the
                  Borrower's obligations under this Agreement.

         3.10.6   The Security Trustee agrees that it will not claim, and upon
                  the request of the Borrower the Security Trustee will confirm
                  in writing that it does not claim, any right, title or
                  interest in any engine or part (including any audio visual,
                  telephonic, entertainment or similar equipment) that is
                  installed on an Aircraft which does not constitute an Engine
                  or Part.

         3.10.7   If, after the occurrence and during the continuance of a
                  Second Trigger Event and/or a Termination Event (and so long
                  as the same is continuing), in the State of Registration (or,
                  if different, the jurisdiction of incorporation and/or
                  principal place of business of the Lessee) there shall be, or
                  be brought into force, any legislative or other provisions
                  giving effect to the Cape Town Convention the Borrower shall
                  if requested by the Security Trustee at the Borrower's expense
                  do all such acts as may be necessary to perfect recognition of
                  the Security Trustee's interest in the Aircraft in accordance
                  with such legislative or other provisions PROVIDED THAT (i)
                  the cost of undertaking such registration (solely taking into
                  account registration fees, stamp duty and notarial fees) shall
                  not be more than nominal (unless the Security Trustee agrees
                  to pay any excess) and (ii) if and to the extent such
                  registration requires any consent of or co-operation on the
                  part of the Lessee, the Borrower (or a Sub-Borrower or
                  Intermediate Lessee as the case may be) shall have obtained
                  such consent or co-operation under the terms of the relevant
                  Lease.

3.11     ALTERNATIVE UTILISATIONS

         3.11.1   The Borrower may, from time to time and by notice to the
                  Agent, request that a Utilisation in respect of an Eligible
                  Aircraft be an Alternative Utilisation, in which case the
                  Borrower shall provide to the Agent such information as the
                  Agent may reasonably request concerning:

                  (a)      the financial structure of the proposed Alternative
                           Utilisation including the tenor, the proposed
                           amortisation schedule and details of the proposed
                           owner of the relevant Aircraft;

                                      -55-
<PAGE>

                  (b)      the proposed security structure, including details of
                           all Liens to be created in respect of the Aircraft or
                           any other property in favour of any relevant party;
                           and

                  (c)      the documents proposed to be entered into in relation
                           to such Alternative Utilisation.

         3.11.2   The Agent and the Lenders shall consider in good faith but
                  without obligation any request for an Alternative Utilisation
                  PROVIDED THAT the proposed structure confers on the Lenders,
                  the Representatives and the Export Credit Agencies rights
                  which are not materially different from their rights under the
                  Transaction Documents in respect of any other Utilisation
                  (including their respective rights under the relevant Aircraft
                  Security Documents and the ECA Guarantees and rights of
                  cross-acceleration and cross-collateralisation of Loans), and
                  the Borrower acknowledges that (a) no Lender or Representative
                  shall have any obligation to participate in any Alternative
                  Utilisation except to the extent expressly agreed in any
                  agreement entered into by such Lender or Representative in
                  connection with such Alternative Utilisation and (b) an Export
                  Credit Agency may be unable to support an Alternative
                  Utilisation which utilises tax benefits in its home
                  jurisdiction.

3.12     TAX LEASE

         The Agent and the Lenders will also consider in good faith, any tax
         lease proposed by the Borrower (under which the Borrower or
         Sub-Borrower would, under California law, still be the beneficial owner
         of the Aircraft) that does not involve an Alternative Utilisation but
         which may involve a Lien on the Aircraft, and if approved by the
         Instructing Group such tax lease shall be permitted hereunder and the
         representations, warranties and covenants in the Transaction Documents
         shall be deemed modified accordingly.

3.13     The Agent, the Lenders and the Export Credit Agencies shall be entitled
         to such additional period of time they reasonably require in order to
         consider any request made pursuant to Clauses 3.11 or 3.12, and it is
         expressly agreed that the time periods set out in Clause 3.1.1
         (Utilisation Notices) shall not apply to any request served pursuant to
         Clauses 3.11 or 3.12 and the Agent, the Lenders and the Export Credit
         Agencies agree to consider any such requirement promptly.

4.       REPAYMENT AND PREPAYMENT

4.1      PAYMENT OF INTEREST

         4.1.1    The Borrower shall pay interest on each Loan for each Interest
                  Period at the Applicable Rate specified in the relevant Loan
                  Supplement.

         4.1.2    Interest shall accrue from the Utilisation Date and shall be
                  calculated on the outstanding unpaid principal amount of each
                  Loan on the basis of a year of three hundred and sixty (360)
                  days and the actual number of days elapsed and shall be
                  payable in arrears on each Repayment Date.

                                      -56-
<PAGE>

4.2      REPAYMENT OF PRINCIPAL

         4.2.1    The Borrower shall repay each Loan in twenty (20) consecutive
                  semi-annual repayments. Each Repayment Instalment shall
                  comprise principal and accrued unpaid interest and the
                  principal portion thereof shall:

                  (a)      in the case of the British Credits be the aggregate
                           of the amounts set out opposite the relevant
                           Repayment Date in column 4 of Section A of Schedule
                           2, Part I to the relevant Loan Supplement;

                  (b)      in the case of the French Credits be the aggregate of
                           the amounts set out opposite the relevant Repayment
                           Date in column 4 of Section B of Schedule 2, Part I
                           to the relevant Loan Supplement; and

                  (c)      in the case of the German Credits be the aggregate of
                           the amounts set out opposite the relevant Repayment
                           Date in Column 4 of Section C of Schedule 2, Part I
                           to the relevant Loan Supplement,

                  it being understood that the first Repayment Date in relation
                  to each Loan shall be the first Business Day succeeding the
                  second Quarter Date following the Delivery Date for the
                  relevant Aircraft.

         4.2.2    The principal amount outstanding in respect of each Loan shall
                  amortise to zero in a straight line profile.

4.3      VOLUNTARY PREPAYMENT

         4.3.1    The Borrower may voluntarily prepay one or more of the Loans
                  at any time PROVIDED THAT:

                  (a)      the Agent shall have received from the Borrower not
                           less than three (3) Business Days' notice (which once
                           given shall be irrevocable) of its intention to make
                           such prepayment specifying the date on which such
                           prepayment is to be made;

                  (b)      any such prepayment shall be made in Dollars; and

                  (c)      the Borrower shall pay to the Agent (i) the unpaid
                           principal balance of each relevant Loan being
                           prepaid, (ii) all interest on each relevant Loan
                           being prepaid which has accrued to the date of actual
                           prepayment and is unpaid, (iii) the LIBOR Break
                           Amount in respect of the relevant Loan and (iv)
                           Expenses (if any) in respect of each relevant Loan
                           being prepaid as certified in writing by the Agent
                           (which certificate shall be conclusive save for
                           manifest error) providing reasonable details of the
                           computation of such LIBOR Break Amount and of the
                           Expenses (if any),

                  and the Agent shall no later than two (2) Business Days prior
                  to the date on which such prepayment is to be made inform each
                  of the Lead Managers of its receipt of the Borrower's notice
                  of prepayment.

         4.3.2    Subject to Clause 18.2.3, no amount prepaid may be
                  re-borrowed.

                                      -57-
<PAGE>

         4.3.3    The Borrower shall pay all amounts due under Clause 4.3.1(c)
                  into the Proceeds Account.

         4.3.4    Upon irrevocable receipt in full of the amounts set out in
                  Clause 4.2.1 or Clause 4.3.1 by the Agent, the Security
                  Trustee shall immediately release all the Aircraft Security
                  Documents relating to each relevant Loan (including, with
                  respect to any Sub-Borrower or Intermediate Lessee) and the
                  title to the relevant Aircraft shall immediately be
                  transferred by the Borrower or the relevant Sub-Borrower or
                  the shares in the relevant Sub-Borrower shall immediately be
                  transferred by the Borrower to the Guarantor or to another
                  person which is not a party to any of the Transaction
                  Documents (provided no amounts borrowed by a Sub-Borrower
                  through the Borrower from any Lender remain outstanding). If
                  the Borrower repays or prepays all the relevant Loans in
                  accordance with Clause 4.2.1 or Clause 4.3.1 and the Secured
                  Obligations (exclusive of indemnities in respect of which no
                  claims have been, or to the knowledge of the Security Trustee
                  will be, asserted) have been paid in full, the Security
                  Trustee shall release all the relevant Aircraft Security
                  Documents and the title to the relevant Aircraft shall
                  immediately be transferred by the Borrower or the relevant
                  Sub-Borrower or the shares in the relevant Sub-Borrower shall
                  immediately be transferred by the Borrower to the Guarantor or
                  to another person which is not a party to any of the
                  Transaction Documents.

4.4      PREPAYMENT FOLLOWING A TOTAL LOSS

         4.4.1    Subject to Clause 4.7 (Substitution of Aircraft), if at any
                  time a Total Loss occurs in relation to an Aircraft the
                  Borrower shall, at any time, as it may elect, on or prior to
                  the expiry of the period of two hundred and ten (210) days
                  commencing on the Total Loss Date (in this Clause 4.4 the
                  "TOTAL LOSS PAYMENT DATE"), either:

                  (a)      pay to the Agent the aggregate of (i) the unpaid
                           principal balance of the relevant Loan being prepaid,
                           (ii) all interest on the relevant Loan being prepaid
                           accrued to the date of prepayment that is unpaid and
                           (iii) the LIBOR Break Amount and Expenses (if any) in
                           respect of each relevant Loan being prepaid as
                           certified in writing by the Agent (which certificate
                           shall be conclusive save for manifest error)
                           providing reasonable details of the computation of
                           such LIBOR Break Amount and such Expenses (if any);
                           or

                  (b)      substitute the relevant Aircraft (or Sub-Borrower) in
                           accordance with Clause 4.7 (Substitution of Aircraft)
                           (upon which substitution the Security Trustee will
                           release any cash collateral relating to the relevant
                           Aircraft to the Borrower or Sub-Borrower),

                  and until such repayment or substitution (and, in the case of
                  a substitution, thereafter) the Borrower shall continue to
                  make all payments of principal and interest in respect of the
                  relevant Loan in accordance with this Agreement and

                                      -58-
<PAGE>

                  the relevant Loan Supplement; PROVIDED THAT if the Security
                  Trustee receives the Total Loss Proceeds prior to the Total
                  Loss Payment Date, the Security Trustee may hold such Total
                  Loss Proceeds up to the amount of the balance of the Loan as
                  cash collateral until the earlier of the Total Loss Payment
                  Date and the date of its receipt of a notice of prepayment,
                  whereupon the Security Trustee shall release its interest in
                  the Aircraft as provided below and the Borrower shall either
                  make the payment of the amounts set forth in sub-clause (a)
                  above (and such cash collateral shall be applied to such
                  payment and any excess remitted to the Borrower or
                  Sub-Borrower, as the case may be) or make the substitution set
                  forth in sub-clause (b) above (and such cash collateral shall
                  be remitted to the Borrower or Sub-Borrower, as the case may
                  be, in accordance with sub-clause (b) above), as applicable.

         4.4.2    The Borrower shall pay all amounts due under Clause 4.4.1(a)
                  or the proviso in Clause 4.4.1 or Clause 4.5.1(a) or the
                  proviso in Clause 4.5.1 or Clause 4.6.1(a) or the proviso in
                  Clause 4.6.1 into the Proceeds Account and immediately upon
                  irrevocable receipt of such funds, the Security Trustee shall
                  release the relevant Mortgage and the Borrower Debenture or
                  relevant Sub-Borrower Debenture (as the case may be) insofar
                  as it relates to the relevant Aircraft.

         4.4.3    If, at any time prior to the Total Loss Payment Date, an
                  Obligor regains possession of the Airframe after any event
                  within the definition of Total Loss and, provided the Aircraft
                  is repaired as soon as practicable thereafter, the Borrower
                  shall have the right to notify the Agent to continue the
                  Aircraft under this Facility as if the event giving rise to
                  the Total Loss had never occurred.

4.5      PREPAYMENT ON FINAL DISPOSITION

         4.5.1    Subject to Clause 4.7 (Substitution of Aircraft), if the
                  Borrower or, as the case may be, the relevant Sub-Borrower
                  wishes to sell an Aircraft, the Borrower shall, at any time,
                  as it may elect, on or before the date ninety (90) days after
                  completion of the Final Disposition, either:

                  (a)      pay to the Agent the aggregate of (i) the unpaid
                           principal balance of the relevant Loan being prepaid
                           (ii) all interest on the relevant Loan being prepaid
                           accrued to the actual date of prepayment that is
                           unpaid and (iii) the LIBOR Break Amount and Expenses
                           (if any) in respect of each relevant Loan being
                           prepaid as certified in writing by the Agent (which
                           certificate shall be conclusive save for manifest
                           error) providing reasonable details of the
                           computation of such LIBOR Break Amount and of the
                           Expenses (if any); or

                  (b)      substitute the relevant Aircraft (or Sub-Borrower) in
                           accordance with Clause 4.7 (Substitution of
                           Aircraft),

                                      -59-
<PAGE>

                  and until such repayment or substitution (and, in the case of
                  a substitution, thereafter) the Borrower shall continue to
                  make all payments of principal and interest in respect of the
                  relevant Loan in accordance with the terms of this Agreement
                  and the relevant Loan Supplement and, on the date of Final
                  Disposition, deposit cash with the Security Trustee in the
                  Substitute Collateral Cash Account in an amount equal to the
                  balance of the Loan as cash collateral to be released on
                  substitution in accordance with Clause 4.7 (Substitution of
                  Aircraft); provided that, if the Security Trustee receives the
                  proceeds of the Final Disposition prior to the date ninety
                  (90) days after completion of the Final Disposition, the
                  Security Trustee may hold such proceeds up to the amount of
                  the balance of the Loan as cash collateral until the earlier
                  of the date ninety (90) days after completion of the Final
                  Disposition and the date of its receipt of a notice of
                  prepayment, whereupon the Borrower shall either make the
                  payment of the amounts set forth in sub-clause (a) above (and
                  such cash collateral shall be applied to such payment and any
                  excess remitted to the Borrower or Sub-Borrower, as the case
                  may be) or make the substitution set forth in sub-clause (b)
                  above (and such cash collateral shall be remitted to the
                  Borrower or Sub-Borrower, as the case may be, in accordance
                  with sub-clause (b) above), as applicable.

         4.5.2    If there will be no substitution the Borrower shall pay all
                  amounts due under Clause 4.5.1(a) into the Proceeds Account
                  and immediately upon irrevocable receipt of such funds, the
                  Security Trustee shall release the relevant Mortgage and the
                  Borrower Debenture or relevant Sub-Borrower Debenture (as the
                  case may be) insofar as it relates to the relevant Aircraft.

4.6      PREPAYMENT ON A SUB-BORROWER SALE

         4.6.1    Subject to Clause 4.7 (Substitution of Aircraft), if the
                  Borrower wishes to sell the shares in a Sub-Borrower, the
                  Borrower shall, on or before the date ninety (90) days after
                  completion of the Sub-Borrower Sale, either:

                  (a)      pay to the Agent the aggregate of (i) the unpaid
                           principal balance of the relevant Loan being prepaid
                           (ii) all interest on the relevant Loan accrued to the
                           actual date of prepayment that is unpaid and (iii)
                           the LIBOR Break Amount and Expenses (if any) in
                           respect of each relevant Loan being prepaid as
                           certified in writing by the Agent (which certificate
                           shall be conclusive save for manifest error)
                           providing reasonable details of the computation of
                           such LIBOR Break Amount and of the Expenses (if any);
                           or

                  (b)      substitute the relevant Aircraft (or Sub-Borrower) in
                           accordance with Clause 4.7 (Substitution of
                           Aircraft),

                  and until such repayment or substitution (and, in the case of
                  a substitution, thereafter) the Borrower shall continue to
                  make all payments of principal and interest in respect of the
                  relevant Loan in accordance with the terms of this Agreement
                  and the relevant Loan Supplement and on the date of completion
                  of

                                      -60-
<PAGE>

                  the Sub-Borrower Sale deposit cash with the Security Trustee
                  in the Substitute Cash Collateral Account in an amount equal
                  to the balance of the Loan as cash collateral to be released
                  on substitution in accordance with Clause 4.7 (Substitution of
                  Aircraft); provided that, if the Security Trustee receives the
                  proceeds of the Sub-Borrower Sale prior to the date ninety
                  (90) days after completion of the Sub-Borrower Sale, the
                  Security Trustee may hold such proceeds up to the amount of
                  the balance of the Loan as cash collateral until the earlier
                  of the date ninety (90) days after completion of the
                  Sub-Borrower Sale and the date of its receipt of a notice of
                  prepayment, whereupon the Borrower shall either make the
                  payment of the amounts set forth in sub-clause (a) above (and
                  such cash collateral shall be applied to such payment and any
                  excess remitted to the Borrower or Sub-Borrower, as the case
                  may be) or make the substitution set forth in sub-clause (b)
                  above (and such cash collateral shall be remitted to the
                  Borrower or Sub-Borrower, as the case may be, in accordance
                  with sub-clause (b) above), as applicable.

         4.6.2    If there will be no substitution, the Borrower shall pay all
                  amounts due under Clause 4.6.1(a) into the Proceeds Account
                  and immediately upon irrevocable receipt of such funds, the
                  Security Trustee shall release the Mortgage in relation to the
                  Aircraft owned by the Sub-Borrower, the relevant Sub-Borrower
                  Debenture insofar as it relates to the relevant Aircraft and,
                  to the extent the Sub-Borrower holds title to only such
                  Aircraft, the relevant Charge over Shares of Sub-Borrower.

4.7      SUBSTITUTION OF AIRCRAFT

         4.7.1    Subject to no Relevant Event or Termination Event having
                  occurred and continuing, if a Total Loss or a Final
                  Disposition occurs in respect of an Aircraft, or the Borrower
                  sells the shares in a Sub-Borrower, the Borrower or any
                  Sub-Borrower (as the case may be) may, within the time periods
                  specified in Clauses 4.7.6(a) and 4.7.6(b) (Timing of
                  Substitution), substitute for such Aircraft or, as the case
                  may be, the relevant Aircraft owned by such Sub-Borrower (the
                  "EXISTING AIRCRAFT") one other Airbus aircraft (the
                  "REPLACEMENT AIRCRAFT") (including by use of a Sub-Borrower)
                  subject always to the provisions of this Clause 4.7.

         4.7.2    The Borrower shall give the Security Trustee written notice of
                  its intention to substitute an Existing Aircraft at least
                  twenty (20) Business Days prior to such substitution and, upon
                  receipt of such notice, the Security Trustee shall give a copy
                  of it to the Lead Managers. Such notice shall specify the age
                  of the Replacement Aircraft since delivery by the Manufacturer
                  and whether a Sub-Borrower or an Intermediate Lessee is to be
                  incorporated into the structure.

         4.7.3    Each Replacement Aircraft shall (i) be an Airbus aircraft of
                  same or newer year of manufacture than the Existing Aircraft,
                  (ii) belong to the same family of Airbus aircraft as the
                  Existing Aircraft meaning the A318 family, the

                                      -61-
<PAGE>

                  A319/A320/A321 family, the A330 family or the A340 family and
                  (iii) have a Fair Market Value and utility at least equal to
                  that of the Existing Aircraft. If a Replacement Aircraft is
                  one year old or less, then its fair market value will be
                  deemed to be its Aircraft Purchase Price, and if (x) a
                  Replacement Aircraft is more than one year old and the
                  Borrower and the Security Trustee (acting reasonably) are
                  unable to agree the Fair Market Value of such Replacement
                  Aircraft or (y) a Second Trigger Event has occurred and is
                  continuing, the Security Trustee may by written notice request
                  the Borrower to appoint a reputable independent aircraft
                  appraiser acceptable to the Security Trustee (acting
                  reasonably) to assess the Fair Market Value of such
                  Replacement Aircraft without reference to the amount of gross
                  sale proceeds payable to or received by the Borrower or a
                  Sub-Borrower (as the case may be). The assessment of any such
                  appraiser appointed by the Borrower shall be conclusive and
                  binding on the Borrower and the Security Trustee.

         4.7.4    The Borrower shall enter into or shall procure that the
                  relevant Sub-Borrower (if any) or relevant Intermediate Lessee
                  (if any) enters into all such documents as are required in
                  order for the Replacement Aircraft to be an Aircraft including
                  Aircraft Security Documents relating to the substitution of
                  the Existing Aircraft and for the Loan in respect of the
                  Existing Aircraft to relate to the Replacement Aircraft.

         4.7.5    The effectiveness of the substitution of the Replacement
                  Aircraft shall be subject to receipt by the Agent of the
                  following conditions precedent in form and substance
                  satisfactory to the Agent:

                  (a)      evidence satisfactory to the Security Trustee
                           (including a legal opinion from counsel to the
                           Lenders in the jurisdiction in which transfer of the
                           Replacement Aircraft takes place) that the Borrower
                           or the relevant Sub-Borrower (as the case may be) has
                           obtained title to the Replacement Aircraft free and
                           clear of any Liens other than Permitted Liens
                           including a certified copy of a Replacement Bill of
                           Sale for the Replacement Aircraft, free of any Liens,
                           other than Permitted Liens;

                  (b)      a Mortgage, if applicable, or an alternative security
                           satisfactory to the Security Trustee, acting upon the
                           instructions of the Instructing Group with respect to
                           the Replacement Aircraft to be executed by the
                           Borrower or the Sub-Borrower (as the case may be) and
                           the Security Trustee;

                  (c)      the relevant legal opinions from counsel to the
                           Lenders as provided in paragraph 4 of Part A to
                           Schedule 7.

                  (d)      a legal opinion from counsel to the Lenders in the
                           jurisdiction in which the Borrower or the relevant
                           Sub-Borrower (as the case may be) is organised
                           concerning the filing or registration and perfection
                           in that jurisdiction of the Mortgage (or alternative
                           security) with respect to the Replacement Aircraft,
                           the Charge over Shares of Sub-Borrower (if any) and
                           any other Aircraft Security Documents which will be
                           entered into by the Borrower and/or the relevant
                           Sub-Borrower (if any)

                                      -62-
<PAGE>

                           and the validity of the replacement Sub-Borrower
                           Guarantee;

                  (e)      evidence of insurance having been effected in respect
                           of the Aircraft with the Security Trustee named as a
                           contract party (on behalf of itself, the Agent and
                           the Relevant Lenders) or additional insured with
                           respect to liability insurance and (to the extent
                           possible under AVN67B, or such other endorsement as
                           may be applicable) the Security Trustee having been
                           named as loss payee;

                  (f)      if applicable, copies of the certificate of
                           registration of the Replacement Aircraft and
                           airworthiness issued by the Aviation Authority;

                  (g)      evidence that the existing ECA Guarantees relating to
                           the Existing Aircraft shall have been amended or
                           replaced to such extent (if any) as may be necessary
                           to reflect its substitution by the Replacement
                           Aircraft;

                  (h)      if a Sub-Borrower or Intermediate Lessee is
                           introduced upon a substitution into the structure,
                           the following documents:

                           (i)      Accession Deed (if such person has not
                                    previously acceded to the Transaction
                                    Documents);

                           (ii)     Sub-Borrower Guarantee (if applicable);

                           (iii)    Sub-Borrower Debenture (if applicable);

                           (iv)     Intermediate Lessee Debenture (if
                                    applicable);

                           (v)      Charge Over Shares of Sub-Borrower (if
                                    applicable);

                           (vi)     Charge Over Shares of Intermediate Lessee
                                    (if applicable);

                           (vii)    Lease Security Assignment (if applicable);

                           (viii)   Intermediate Lease Security Agreement (if
                                    applicable); and

                  (i)      if applicable, evidence to the Security Trustee that
                           the Sub-Borrower Accounts or the Intermediate Lessee
                           Accounts (as the case may be) have been opened and
                           that ten Dollars (US$10) has been deposited in each
                           of the Sub-Borrower Accounts or Intermediate Lessee
                           Accounts (as the case may be) as a condition
                           precedent to the release of the Mortgage over the
                           Existing Aircraft.

         4.7.6    TIMING OF SUBSTITUTION

                  (a)      If a substitution is proposed as a result of the
                           Total Loss of an Existing Aircraft, such substitution
                           shall occur within two hundred and ten (210) days of
                           the Total Loss Date for that Aircraft. In the event
                           that the

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                           Security Trustee receives Total Loss Proceeds in
                           respect of an Existing Aircraft prior to the
                           expiration of such two hundred and ten (210) day
                           period, at the Borrower's request, all or part of
                           such Total Loss Proceeds (up to the amount of the
                           relevant Loan) shall be held by the Security Trustee
                           in an interest bearing account at the cost of the
                           Borrower in the jurisdiction chosen by the Borrower
                           ("SUBSTITUTE CASH COLLATERAL ACCOUNT"), until such
                           substitution is effected, whereupon such cash deposit
                           will be released with such interest as may have
                           accrued thereon since such deposit in the Substitute
                           Cash Collateral Account to the Borrower. If such
                           substitution is not effected as provided above within
                           such two hundred and ten (210) day period such cash
                           deposit and such interest shall be applied to the
                           prepayment of the amounts set out in Clause 4.4.1
                           (Prepayment following a Total Loss).

                  (b)      If a substitution is proposed as a result of the
                           Final Disposition of an Aircraft or the sale of the
                           Shares in a Sub-Borrower, such substitution shall
                           occur within ninety (90) days after the date of
                           completion of the Final Disposition for that Aircraft
                           or the sale of the Shares in a Sub-Borrower. The
                           Borrower shall procure that upon the Final
                           Disposition of an Aircraft or the sale of the shares
                           of a Sub-Borrower, an amount of the proceeds of such
                           Final Disposition or sale of shares equal to the
                           amount of the relevant Loan is forthwith paid to the
                           Security Trustee and the Security Trustee shall hold
                           the same in a Substitute Cash Collateral Account, at
                           the cost of the Borrower, until such substitution is
                           effected, whereupon such cash deposit will be
                           released with such interest as may have accrued
                           thereon since such deposit in the Substitute Cash
                           Collateral Account to the Borrower. If such
                           substitution is not effected as provided above within
                           such ninety (90) day period such cash deposit and
                           such interest shall be applied to the prepayment of
                           the amounts set out in Clause 4.5.1(a) or 4.6.1(a) as
                           the case may be.

                  (c)      The Security Trustee shall release the relevant
                           Aircraft Security Documents insofar as they relate to
                           the Existing Aircraft immediately upon the earliest
                           of the deposit into the Substitute Cash Collateral
                           Account, prepayment of the relevant Loan or
                           substitution of the shares of a replacement
                           Sub-Borrower or a Replacement Aircraft for the
                           existing Sub-Borrower or for the Existing Aircraft
                           (as the case may be);

                  (d)      The Borrower undertakes to indemnify the Security
                           Trustee for any Expenses incurred by the Security
                           Trustee under this Clause 4.7.6.

         4.7.7    Upon the deposit of the funds described above or as soon as a
                  substitution has occurred, whichever shall occur first, the
                  Existing Aircraft shall no longer be an Aircraft under the
                  Transaction Documents and, if there has been a substitution,
                  the Replacement Aircraft shall be an Aircraft under the
                  Transaction Documents and the Transaction Documents shall be
                  construed

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<PAGE>

                  accordingly. The Loan in respect of the Existing Aircraft
                  shall relate to the Replacement Aircraft and shall amortise in
                  accordance with schedule 2 to the relevant Loan Supplement. If
                  the shares in a Sub-Borrower are sold by the Borrower and the
                  Sub-Borrower is not an owner of any other Aircraft financed
                  hereunder, such Sub-Borrower shall no longer be a Sub-Borrower
                  under the Transaction Documents.

         4.7.8    The Borrower shall pay for the cost of obtaining the
                  appraisals referred to in Clause 4.7.3 and shall pay all
                  Expenses incurred by the relevant parties in connection with
                  the execution of and any amendment of the Transaction
                  Documents required as a result of the provisions of this
                  Clause 4.7.

4.8      PREPAYMENT IF NOT LEASED

         4.8.1    Without prejudice to Clause 4.8.2, if an Aircraft is not
                  delivered to a Lessee pursuant to a Lease within one hundred
                  and eighty (180) days after the relevant Delivery Date, the
                  Borrower shall, on the first Banking Day following the expiry
                  of such one hundred and eighty (180) day period, pay into the
                  Proceeds Account the aggregate of (i) the unpaid principal
                  balance of the relevant Loan being prepaid, (ii) all interest
                  on the relevant Loan accrued to the actual date of prepayment
                  that is unpaid, (iii) Expenses (if any) and (iv) the LIBOR
                  Break Amount (if any) in respect of the relevant Loan being
                  prepaid as certified in writing by the Agent (which
                  certificate shall be conclusive save for manifest error)
                  providing reasonable details of the computation of such LIBOR
                  Break Amount (if any) and of the Expenses (if any); and
                  immediately upon irrevocable receipt of such funds payable
                  under this Clause 4.8.1 in the Proceeds Account, the Security
                  Trustee shall release the relevant Mortgage and the Borrower
                  Debenture or relevant Sub-Borrower Debenture (as the case may
                  be) insofar as the same relate to the relevant Aircraft.

         4.8.2    The Borrower may, subject to paragraphs (a), (b), (c) and (d)
                  of Clause 7.2.1 (Leasing and Insurance Covenants of Borrower,
                  Sub-Borrower and Intermediate Lessee), lease an Aircraft to a
                  Subsidiary of the Guarantor incorporated outside the United
                  States of America to avoid having to prepay the relevant Loan
                  pursuant to Clause 4.8.1.

4.9      PREPAYMENT IF POST-DELIVERY MODIFICATIONS NOT COMPLETED OR BUYER
         FURNISHED EQUIPMENT NOT INSTALLED WITHIN THE POST-DELIVERY MODIFICATION
         PERIOD

         If any Post-Delivery Modifications and/or Buyer Furnished Equipment in
         respect of an Aircraft, that have been financed by an Advance
         hereunder, the proceeds of which have been retained by the Agent
         pursuant to Clause 3.7.6 are not carried out and/or installed within
         the relevant Post-Delivery Modification Period, the Agent shall apply
         such amounts standing to the credit of the account to be maintained
         pursuant to Clause 3.7.6 and which relate to such Post-Delivery
         Modifications and/or Buyer Furnished Equipment (together with any
         interest which may have accrued thereon) to repay the portion of the
         Loan relating thereto and interest accrued thereon or, on the first

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<PAGE>

         Banking Day following the expiry of the relevant Post-Delivery
         Modification Period repay into the Proceeds Account the proportion of
         the relevant Loan relating to such Post-Delivery Modifications not
         carried out and/or such Buyer Furnished Equipment not installed
         together with all interest accrued and unpaid thereon to be applied on
         the Repayment Date occurring therewith or the next Repayment Date
         (unless the Borrower agrees to an earlier application or the LIBOR
         Break Amount is negligible), Expenses (if any) and the LIBOR Break
         Amount (if any) as certified in writing by the Agent (which shall be
         conclusive save for manifest error) providing reasonable details of the
         computation of such LIBOR Break Amount and of the Expenses (if any)
         (but without any ECA Premium).

4.10     MANDATORY PREPAYMENT EVENT

         4.10.1   A mandatory prepayment event in respect of a particular Loan
                  shall exist if:

                  (a)      the conditions set out in sub-paragraphs (a) or (b)
                           of paragraph (A) of Part C to Schedule 7 have not
                           been fulfilled; or

                  (b)      the Borrower has failed to comply with the provisions
                           of Clause 9.1.1 (First Trigger Event) in relation to
                           such Loan within the period stipulated in Clause
                           9.1.2.

                  If the mandatory prepayment event shall occur and be
                  continuing the Security Trustee may, without having to resort
                  to any legal procedure, demand immediate repayment of the
                  relevant Loan, whereupon the same shall become immediately due
                  and payable together with all interest accrued thereon,
                  Expenses (if any) and the LIBOR Break Amount (as certified in
                  writing by the Agent (which shall be conclusive save for
                  manifest error)); and immediately upon irrevocable receipt of
                  such funds payable under this Clause 4.10.1 in the Proceeds
                  Account, the Security Trustee shall release the relevant
                  Aircraft Security Documents, insofar as each relates to the
                  relevant Aircraft. Failure to pay the amounts referred to in
                  this Clause 4.10.1 shall constitute a Termination Event in
                  accordance with Clause 10.1.1 (Termination Events).

         4.10.2   The Borrower shall pay sums due under this Clause 4.10 into
                  the Proceeds Account.

4.11     OVERDUE PAYMENTS

         4.11.1   If the Borrower fails to pay on the due date any sum payable
                  by the Borrower to a Lender or Representative under any
                  Transaction Document (or fails to pay on demand any sum which
                  is expressed to be payable by the Borrower on demand) the
                  Borrower shall pay interest to the Agent for the account of
                  the relevant Lender or Representative on such unpaid amount
                  from (and including) the due date or, as the case may be, the
                  date of demand to (but excluding) the date of actual payment
                  (after as well as before judgement) at the Default Rate for
                  each Default Interest Period.

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<PAGE>

         4.11.2   Interest at the Default Rate for each Default Interest Period
                  shall be calculated on the basis of a year of three hundred
                  and sixty (360) days and the actual number of days elapsed and
                  shall accrue from day to day and be due and payable on the
                  last day of each Default Interest Period and, if not paid,
                  shall, to the extent permitted by applicable law, be
                  compounded on such date.

         4.11.3   The payment of interest by the Borrower pursuant to Clause
                  4.11.1 shall in no way preclude any Lender or Representative
                  from making any other claim or pursuing any other right or
                  remedy that may be available to it or otherwise prejudice any
                  such claim, right or remedy.

4.12     DEDUCTIONS AND WITHHOLDINGS

         4.12.1   All sums payable to the Agent, the Security Trustee and the
                  Lenders pursuant to or in connection with any Transaction
                  Document shall be paid in full without any set-off or
                  counterclaim whatsoever and free and clear of all deductions
                  or withholdings of or on account of Tax whatsoever imposed by
                  Bermuda or the United States of America, or, with respect to a
                  Sub-Borrower, by the jurisdiction of its incorporation or
                  organisation (save only as may be required by law).

         4.12.2   Without limiting the Borrower's obligations under this Clause
                  4.12 each party which is organised under the laws of a
                  jurisdiction outside the United States of America shall, and
                  in the case of each initial Lender and each Representative, on
                  or prior to the date of its execution and delivery of this
                  Agreement and, in the case of each Transferee, on the date of
                  execution of each Loan Supplement pursuant to which it becomes
                  a Lender and in each tax year thereafter, provide the Borrower
                  with the United States of America Internal Revenue Service
                  form W-8BEN, W-8ECI or W-9 (and, to the extent applicable,
                  where any Lender is, including the Original Lender, considered
                  an intermediary or flow-through entity for United States tax
                  purposes a properly completed Form W-8IMY and a withholding
                  statement containing all required information along with the
                  appropriate Forms W-8BEN, W-8ECI or W-9 for every person for
                  whom documentation has been received by such Lender), or any
                  successor or other form prescribed by the Internal Revenue
                  Service of the United States of America (the "INTERNAL REVENUE
                  SERVICE FORMS") as appropriate certifying that such party is
                  exempt from United States withholding tax on all payments
                  pursuant to this Agreement or in connection with any
                  Transaction Document.

         4.12.3   If any deduction or withholding is required by law and is
                  imposed by Bermuda, the United States of America or the
                  jurisdiction of incorporation or organisation of a
                  Sub-Borrower in respect of any payment due (other than
                  payments covered by Clause 4.12.4) to the Agent, the Security
                  Trustee or any Lender pursuant to or in connection with any
                  Transaction Document, the Borrower or the Guarantor or any
                  other Obligor shall:

                                      -67-
<PAGE>

                  (a)      (if the payment is to be made by the Borrower or the
                           Guarantor or any other Obligor), ensure that the
                           deduction or withholding is made and that it does not
                           exceed the minimum legal requirement therefor;

                  (b)      (if the payment is to be made by the Borrower or the
                           Guarantor or any other Obligor), procure the payment
                           of the full amount deducted or withheld to the
                           relevant Taxation or other authority in accordance
                           with the applicable law;

                  (c)      (if the payment is to be made by the Borrower or the
                           Guarantor or any other Obligor), increase (subject to
                           Clause 4.12.5) the payment in respect of which the
                           deduction or withholding is required so that the net
                           amount received by the relevant Lender or
                           Representative (as the case may be) after the
                           deduction or withholding has been made (and after
                           taking account of any further deduction or
                           withholding which is required to be made as a
                           consequence of the increase) shall equal the amount
                           which that Lender, Representative or Export Credit
                           Agency would have been entitled to receive in the
                           absence of any requirement to make a deduction or
                           withholding;

                  (d)      (if the payment is to be made by any person other
                           than the Borrower or the Guarantor or any other
                           Obligor), the Borrower shall pay (subject to Clause
                           4.12.5) directly to the Agent for the account of the
                           relevant Representative or the relevant Lender or the
                           relevant Export Credit Agency (as the case may be)
                           such sum (a "COMPENSATING SUM") as will, after taking
                           into account any deduction or withholding, which the
                           payer is obliged to make from the compensating sum,
                           enable the relevant Representative, Lender or the
                           relevant Export Credit Agency (as the case may be) to
                           receive, on the due date for payment, a net sum equal
                           to the sum which it would have received in the
                           absence of any requirement to make a deduction or
                           withholding; and

                  (e)      (if the payment is to be made by the Borrower or the
                           Guarantor or any other Obligor), promptly deliver to
                           the Agent or procure the delivery of appropriate
                           receipts evidencing the deduction or withholding
                           which has been made,

                  PROVIDED THAT where the Guarantor makes any payment on behalf
                  of the Borrower and/or any other Obligor in applying Clause
                  4.12.3(d) above, any withholding or deduction arising as a
                  result of the payment being due from any of the Obligors and
                  any deduction or withholding arising as a result of the
                  payment being made by the Guarantor in its capacity as
                  guarantor of the Guaranteed Obligations will be taken into
                  account in determining the compensating sum.

         4.12.4   If a Representative is obliged to make any deduction or
                  withholding from any payment to a Lender (an "AGENCY PAYMENT")
                  which relates to an amount

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<PAGE>

                  received by that Representative on a payment from the
                  Borrower, the Guarantor or the Sub-Borrower hereunder, for the
                  account of that Lender pursuant to this Agreement or any of
                  the Aircraft Operative Documents and such deduction or
                  withholding is on account of a Tax imposed by Bermuda, the
                  United States of America or the jurisdiction of incorporation
                  of a Sub-Borrower, the Borrower or the Guarantor or any other
                  Obligor shall, subject to Clause 4.12.5, pay directly to the
                  Lender such sum (a "COMPENSATING SUM") as will, after taking
                  into account any deduction or withholding which the Borrower
                  is obliged to make from the compensating sum, enable the
                  Lender to receive, on the due date for payment of the agency
                  payment, an amount equal to the agency payment which the
                  Lender would have received in the absence of any requirement
                  to make a deduction or withholding.

         4.12.5   The Borrower shall not be obliged to make payment of an
                  increased amount pursuant to Clause 4.12.3(c) or a
                  compensating sum pursuant to (and as defined in) Clause
                  4.12.3(d) or Clause 4.12.4 on account of any Tax or Tax
                  Liability to the extent that such Tax or Tax Liability:

                  (a)      is imposed by the United States of America or Bermuda
                           and does not arise as a result of a Change in Law
                           occurring after the date of this Agreement;

                  (b)      arises from any action or omission which constitutes
                           wilful misconduct, fraud or gross negligence on the
                           part of such Indemnitee;

                  (c)      is caused by such Indemnitee's breach of any express
                           representation made by it in any Transaction Document
                           or of any express obligation under any Transaction
                           Document (but excluding any such breach or failure in
                           consequence (directly or indirectly) of a breach by
                           the Borrower or any other Obligor of any
                           representation or warranty contained in or of their
                           respective obligations under any Transaction
                           Document);

                  (d)      comprises a Tax on the overall net income, profit or
                           capital gains of any Indemnitee (or, in the case of
                           any Indemnitee acting through a branch outside the
                           main jurisdiction in which it is resident for Tax
                           purposes, comprises a Tax on the overall net income,
                           profit or capital gains of that Indemnitee in the
                           jurisdiction to which that Indemnitee's interest in
                           the Transaction is properly attributable for Tax
                           purposes) attributable to any sums receivable by any
                           Indemnitee pursuant to any Transaction Document;

                  (e)      comprises any penalty, addition to Tax, fine or
                           interest on or in respect of a Tax or Tax Liability
                           which would not have arisen but for avoidable delay
                           or failure by such Indemnitee in the filing of Tax
                           returns which such Indemnitee was obliged to file by
                           any law of the jurisdiction of

                                      -69-
<PAGE>

                           incorporation or, in the case of a Lender, the
                           jurisdiction in which its Lending Office is located,
                           and which such Indemnitee ought reasonably to have
                           been aware it was so obliged to file in connection
                           with the Transaction or the payment of Taxes other
                           than any such delay or failure in consequence
                           (directly or indirectly) of a request by the Borrower
                           or any Obligor or a delay of or failure by the
                           Borrower or any Obligor duly and punctually to
                           perform any of their respective obligations under the
                           Transaction Documents or in consequence of any event
                           or circumstance outside the reasonable control of
                           such Indemnitee or otherwise caused (directly or
                           indirectly) by the Borrower or any Obligor;

                  (f)      is imposed by a jurisdiction other than the main
                           jurisdiction in which such Indemnitee is resident for
                           Tax purposes to the extent that it gives rise to a
                           corresponding credit which such Indemnitee has
                           retained and utilised against any Tax Liability
                           imposed in the main jurisdiction in which such
                           Indemnitee is so resident;

                  (g)      would not have arisen but for:

                           (i)      any failure by such Indemnitee to file any
                                    relevant Tax return or Tax computation which
                                    such Indemnitee was obliged to file by any
                                    law of the jurisdiction of incorporation or,
                                    in the case of a Lender, the jurisdiction in
                                    which its Lending Office is located or any
                                    documents which such Lender is obliged to
                                    file as a result of any applicable law,
                                    regulation, practice, concession, official
                                    directive, ruling, request, notice,
                                    guideline, statement of policy or practice
                                    statement by the Bank of England, the
                                    Financial Services Authority, the Banque de
                                    France, the Deutsche Bundesbank, the
                                    European Central Bank, the Federal Reserve
                                    Bank of New York, the European Union or any
                                    central bank, Tax, fiscal, governmental,
                                    local, international, national or other
                                    competent authority or agency (whether or
                                    not having the force of law but in respect
                                    of which compliance by banks or other
                                    financial institutions or other persons in
                                    the relevant jurisdiction is customary) and
                                    in each case which such Indemnitee ought
                                    reasonably to have been aware it was so
                                    obliged to file in connection with the
                                    Transaction except for any such failure
                                    caused (directly or indirectly) by any
                                    action or inaction of the Borrower or any
                                    Obligor or any event or circumstance outside
                                    the reasonable control of such Indemnitee;
                                    or

                           (ii)     any failure (subject to the same exceptions
                                    and exclusions as set out in Clause
                                    4.12.5(g)(i)) to file or provide the
                                    Borrower or the relevant Lessee with any Tax
                                    claims, forms (including the Internal
                                    Revenue Service Forms), affidavits,
                                    declarations or other like documents which
                                    the Borrower or the relevant Lessee has
                                    reasonably requested such Indemnitee in
                                    writing to file or provide

                                      -70-
<PAGE>
                                    (any such request containing sufficient
                                    detail to enable such Indemnitee to
                                    comply with the terms thereof) unless:

                                    (1)      except with respect to the Internal
                                             Revenue Service Forms, such
                                             Indemnitee determines acting in
                                             good faith but nevertheless in its
                                             sole discretion that it is unable
                                             to file or provide or that it would
                                             be illegal or contrary to any
                                             applicable law, official
                                             regulation, practice, concession,
                                             directive, ruling, request, notice,
                                             guideline, statement of policy or
                                             practice statement by the Bank of
                                             England, the Financial Services
                                             Authority, the Banque de France,
                                             the Deutsche Bundesbank, the
                                             European Central Bank, the Federal
                                             Reserve Bank of New York, the
                                             European Union or any central bank,
                                             Tax, fiscal, governmental, local,
                                             international, national or other
                                             competent authority or agency
                                             (whether or not having the force of
                                             law but in respect of which
                                             compliance by banks or other
                                             financial institutions or other
                                             persons in the relevant
                                             jurisdiction is customary) for such
                                             Indemnitee so to do or so to do
                                             would or may result in the breach
                                             of any agreement or confidentiality
                                             undertaking or the disclosure of
                                             any information about such
                                             Indemnitee's Tax affairs which such
                                             Indemnitee considers (in its bona
                                             fide opinion) to be of a
                                             confidential nature; or

                                    (2)      in the case of the Internal Revenue
                                             Service Forms, such failure is due
                                             to a Change in Law occurring
                                             subsequent to the date on which any
                                             of the Internal Revenue Service
                                             Forms was originally required to be
                                             provided; or

                           (iii)    is on or arises from any transfer by a
                                    Lender of any of its rights, benefits and/or
                                    obligations hereunder other than pursuant to
                                    Clause 15.2 (Prepayment of Affected Loans
                                    and Replacement of Affected Lender).

         4.12.6   TAX BENEFIT

                  If a Lender or Representative (except to the extent that an
                  Export Credit Agency becomes a Lender) determines, in its
                  absolute discretion, that it has received, realised, utilised
                  and retained a Tax benefit by reason of any deduction or
                  withholding in respect of which the Borrower has made an
                  increased payment or paid a compensating sum under this Clause
                  4.12, such Lender or Representative shall, provided it has
                  received all amounts which are then due and payable by the
                  Borrower, and each of the Obligors under the Transaction
                  Documents or, to the extent that the Tax benefit exceeds the
                  amounts then due and payable, has set-off such amounts against
                  the Tax benefit, pay to the Borrower (to the extent that the
                  Lender or Representative can do so without prejudicing the
                  amount of such benefit or repayment and the

                                      -71-
<PAGE>

                  right of such Lender or Representative to obtain any other
                  benefit, relief or allowance which may be available to it)
                  such amount, if any, as such Lender or Representative in its
                  bona fide opinion shall determine will leave such Lender or
                  Representative in no worse position than such Lender or
                  Representative would have been in if the deduction or
                  withholding had not been required (and taking into account any
                  set-off as referred to above) PROVIDED THAT:

                  (a)      each Lender and Representative shall have an absolute
                           discretion as to the time at which and the order and
                           manner in which it realises or utilises any Tax
                           benefit and shall not be obliged to arrange its
                           business or its Tax affairs in any particular way in
                           order to be eligible for any Tax benefit;

                  (b)      no Lender or Representative shall be obliged to
                           disclose any information regarding its business, Tax
                           affairs or Tax computations;

                  (c)      if any Lender or Representative has made a payment to
                           the Borrower pursuant to this Clause 4.12 on account
                           of any Tax benefit and it subsequently transpires
                           that such Lender or Representative did not receive
                           that Tax benefit, or received a lesser Tax benefit or
                           has lost or been denied such Tax benefit, the
                           Borrower shall pay on written demand to such Lender
                           or Representative such sum as such Lender or
                           Representative may determine as being necessary to
                           restore the after Tax position of the Lender or
                           Representative to that which it would have been had
                           no adjustment under this proviso I been necessary;
                           and

                  (d)      the Lender or Representative shall not be obliged to
                           make any payment under this Clause 4.12 if, by doing
                           so, it would contravene the terms of any applicable
                           law or any notice, direction or requirement of any
                           governmental or regulatory authority (whether or not
                           having the force of law but in respect of which
                           compliance by banks or other financial institutions
                           or other persons in the relevant jurisdiction is
                           generally customary).

4.13     CURRENCY OF PAYMENT

         All amounts payable to the Agent, the Security Trustee and/or the
         Lenders pursuant to or in connection with this Agreement or any of the
         Aircraft Operative Documents shall, unless otherwise provided in the
         relevant notice or demand for payment, be paid in Dollars to the Agent
         (where appropriate, for the account of the relevant Lender or the
         Security Trustee).

4.14     PERFORMANCE PROCEDURE

         4.14.1   On each date on which an amount is due from the Borrower in
                  connection with any Loan pursuant to this Agreement or any of
                  the Aircraft Operative Documents, the Borrower shall no later
                  than 1.00 pm (New York time) on such due date make such amount
                  available to the Agent by payment in Dollars

                                      -72-
<PAGE>

                  in same day funds (or such other funds as may from time to
                  time be customary for the settlement in New York City of
                  international banking transactions in Dollars) to the Agent's
                  account with Bank of Scotland International Services (SWIFT:
                  BOFSGB2S), Account Title: Corporate Banking Halifax Cash
                  Settlement, Account No. 99524USD01 (US Dollar Correspondent
                  Bank, Bank of New York, New York, (SWIFT: IRVTUS3N)) (or to
                  such other account in New York City as the Agent may upon not
                  less than five (5) Banking Days' written notice from time to
                  time designate), or, if the payment is to be made in a
                  currency other than Dollars, to such account as may from time
                  to time be nominated in writing by the Agent by not less than
                  five (5) Banking Days' notice.

         4.14.2   Upon receipt by the Agent of an amount referred to in Clause
                  4.14.1 the Agent shall if such amount is received by 1.00 pm
                  (New York time) on the due date make available on such due
                  date (and otherwise on the next Banking Day) to the relevant
                  Lead Manager such portion of the amount so received as
                  represents the aggregate of the entitlement of the British
                  Lenders, the French Lenders or the German Lenders in respect
                  of the relevant Loan (as the case may be) of such amount in
                  such funds as are received by the Agent by payment to such
                  account as the relevant Lead Manager may have specified in
                  writing.

         4.14.3   Without prejudice to the provisions of Clause 4.14.2 the Agent
                  shall not be obliged to make available to any Lead Manager or
                  any Lender any sum which it is expecting to receive for the
                  account of such Lead Manager or such Lender pursuant to this
                  Agreement or any of the Aircraft Operative Documents until it
                  has been able to establish that it has received that sum from
                  the Borrower. If and to the extent that the Agent does pay
                  such sum to a Lead Manager but it subsequently transpires that
                  the Agent had not received the relevant sum:

                  (a)      the relevant Lead Manager shall on request by the
                           Agent refund such sum to the Agent; and

                  (b)      the relevant Lead Manager shall on request by the
                           Agent pay to the Agent the amount (as certified by
                           the Agent) which will indemnify the Agent against any
                           funding or other cost, loss, expense or liability as
                           a result of making available or paying out that sum
                           before receiving it; and

                  (c)      each Lender shall indemnify the relevant Lead Manager
                           in respect of its Relevant Proportion of the amounts
                           referred to in paragraphs (a) and (b) above.

         4.14.4   If any amount in respect of principal or interest on a Loan
                  falls due to be paid to the Agent, the Security Trustee or any
                  Lender pursuant to or in connection with this Agreement or any
                  of the other Transaction Documents on a day which is not a
                  Banking Day, then it shall be due and payable on the

                                      -73-
<PAGE>

                  immediately succeeding Banking Day unless such Repayment Date
                  falls in the calendar month next succeeding that in which it
                  would otherwise have fallen in which case it shall fall on the
                  immediately preceding Banking Day and the amount shall not be
                  adjusted.

5.       GUARANTEE AND INDEMNITY

5.1      GUARANTEE AND INDEMNITY

         5.1.1    In consideration of the Lenders agreeing to make available the
                  Facility to the Borrower, the Guarantor:

                  (a)      as primary obligor and not as surety only, hereby
                           unconditionally and irrevocably guarantees to each
                           Representative and each Lender the due and punctual
                           observance and performance by any or all of the
                           Obligors of all of the Guaranteed Obligations;

                  (b)      hereby unconditionally covenants with and undertakes
                           to each Representative and each Lender that in the
                           event of a default by any or all of the Obligors in
                           the observance or performance for whatever reason of
                           any of their respective Guaranteed Obligations, the
                           Guarantor shall on demand perform such Guaranteed
                           Obligation, or cause such Guaranteed Obligation to be
                           performed, punctually as if such Guaranteed
                           Obligation were performed by the relevant Obligor;
                           and

                  (c)      as a primary obligation, undertakes to indemnify each
                           Representative and each Lender on demand and on a
                           full indemnity basis from and against any and all
                           Losses including, without duplication, any LIBOR
                           Break Amount or Expenses incurred or sustained by any
                           Representative and/or any Lender as a result of the
                           whole or any part of the Guaranteed Obligations being
                           or becoming void, voidable, unenforceable or
                           ineffective as against any or all of the Obligors for
                           any reason whatsoever irrespective of whether such
                           reason or any related fact or circumstance was known
                           or ought to have been known to either of the
                           Representatives, any of the Lenders or any of their
                           respective officers, employees, agents or advisers.

         5.1.2    Any demand under Clause 5.1.1 shall be in writing and may be
                  made by the relevant Lender or Representative or by the Agent
                  on its behalf and shall not be made before the last day of the
                  relevant grace period of three (3) Business Days or seven (7)
                  Business Days referred to in Clause 10.1.1 (Termination
                  Events) and the Guarantor shall not be in default hereunder
                  for its failure to pay or perform such Guaranteed Obligation,
                  as demanded hereunder, unless and until expiration of the
                  applicable grace period in Clause 10.1.1 (Termination Events).

                                      -74-
<PAGE>

5.2      PRINCIPAL DEBTOR

         As a separate and alternative stipulation in addition to its
         liabilities in Clause 5.1, the Guarantor hereby agrees that any part of
         the Guaranteed Obligations which is expressed to be performed by any or
         all of the Obligors under the Transaction Documents but which may not
         be recoverable from, or capable of performance by, the Guarantor on the
         footing of a guarantee (whether by reason of the dissolution of any or
         all of the Obligors or any reconstruction or amalgamation in which or
         as a consequence of which any or all of the Obligors loses its separate
         corporate identity or any other fact or circumstance whatsoever and
         whether or not such fact or circumstance was known or ought to have
         been known to either Representative and/or any of the Lenders or any of
         their respective officers, employees, agents or advisers, other than by
         reason of the payment or performance thereof in full) shall
         nevertheless be recoverable from, or capable of performance by, the
         Guarantor as provided in Clause 5.1 above as if it were the principal
         debtor.

5.3      LIABILITY FOR INTEREST

         In addition to its liabilities under Clauses 5.1 and 5.2 above, the
         Guarantor hereby agrees to pay or cause to be paid to the Agent on
         demand (i) interest (including compound interest and both before and
         after judgement) on the amount or any part thereof for the time being
         unpaid and due to either Representative and/or the Lenders under this
         Clause 5, together with any interest, which but for the application of
         bankruptcy or insolvency laws, would have accrued on the amounts in
         question, from the date of demand on the Guarantor for payment until
         payment is made at the Default Rate (unless interest at the Default
         Rate continues to be charged to any or all of the Obligors in respect
         of that same amount under the Transaction Documents and is thereby
         payable by the Guarantor pursuant to Clause 5.1 or 5.2), and (ii) all
         legal and other costs, charges and expenses (on a full indemnity basis)
         incurred by or on behalf of either Representative and/or any of the
         Lenders following an Acceleration Event in enforcing or endeavouring to
         enforce the payment of any sums due under this Clause 5.

5.4      CONTINUING GUARANTEE

         The Guarantor's obligations under this Clause 5 shall constitute a
         continuing guarantee and accordingly:

         5.4.1    shall not be discharged by any partial payment or performance
                  by any Obligor or any other person in respect of the
                  Guaranteed Obligations (except to the extent of such partial
                  payment or performance);

         5.4.2    shall extend to cover the balance due at any time from any
                  Obligor to any Lender or Representative in respect of any
                  Guaranteed Obligations;

         5.4.3    shall be in addition to and not in substitution for or
                  derogation of any other security which any Lender or
                  Representative may at any time hold in respect of the
                  Guaranteed Obligations; and

                                      -75-
<PAGE>

         5.4.4    shall not be discharged or in any way affected by any action
                  taken or not taken by any Lender or Representative.

5.5      WAIVER OF DEFENCES

         5.5.1    Any Lender or Representative may, from time to time, whether
                  before or after any demand for payment under Clause 5.1.1 and
                  without discharging or in any way affecting the Guarantor's
                  liability hereunder, do all or any of the following:

                  (a)      terminate or amend any Transaction Document (in
                           accordance with the terms thereof) in any manner
                           whatsoever;

                  (b)      grant to any Obligor or to any other person any time
                           or indulgence;

                  (c)      deal with, exchange, renew, vary, release, modify or
                           abstain from perfecting or enforcing any securities,
                           guarantees or rights which any Lender or
                           Representative may now or hereafter have from or
                           against any Obligor in respect of the Guaranteed
                           Obligations or otherwise in respect of the
                           Transaction Documents;

                  (d)      compound with, discharge or vary the liability of any
                           Obligor or concur in, accept or vary any compromise,
                           arrangement or settlement with any Obligor or concur
                           in or vary any deed of arrangement or deed of
                           assignment for the benefit of creditors of any
                           Obligor;

                  (e)      omit to prove or fail to maintain any right of proof
                           for or to claim or enforce payment of any dividend or
                           composition; and

                  (f)      take or omit to take any security from any Obligor or
                           any other person or guarantor in respect of the
                           Guaranteed Obligations or otherwise in respect of the
                           Transaction Documents.

         5.5.2    The Guarantor waives and agrees not to enforce or claim the
                  benefit of any right it has or may from time to time have as
                  surety under any applicable law which is or may be
                  inconsistent with any of the provisions of this Clause 5.

5.6      IMMEDIATE RECOURSE: NO OBLIGATION TO TAKE ACTION

         No Lender or Representative shall be obliged, before making a demand
         under or taking steps to enforce this Agreement:

         5.6.1    to take action or obtain judgment against any Obligor or any
                  other person in any court or tribunal; or

         5.6.2    to make or file any claim in a bankruptcy or liquidation of
                  any Obligor or any other person; or

         5.6.3    to exercise diligence against any Obligor or any other person
                  under any Transaction Document.

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<PAGE>

5.7      PRESERVATION OF RIGHTS

         From the date or dates upon which any demand is properly made against
         the Guarantor under this Agreement, until such time as each
         Representative and the Lenders have received payment of the Guaranteed
         Obligations in full (exclusive of indemnities in respect of which no
         claims have been, or to the knowledge of the Security Trustee will be,
         asserted) the Guarantor shall not:

         5.7.1    claim any set-off or counterclaim against any one or more of
                  the Obligors in respect of any payment by the Guarantor under
                  this Clause 5 or in respect of any outstanding actual or
                  contingent liability between the Guarantor any one or more of
                  the Obligors; or

         5.7.2    make or enforce any claim or right (including a right of
                  subrogation or contribution) against any one or more of the
                  Obligors or prove in competition with either Representative
                  and/or any of the Lenders, in the event of the liquidation or
                  winding-up of any one or more of the Obligors in respect of
                  any payment by the Guarantor under this Clause 5 or in respect
                  of any outstanding actual or contingent liability between the
                  Guarantor and any one or more of the Obligors; or

         5.7.3    in competition with either Representative and/or the Lenders,
                  claim the benefit of any security or guarantee now or
                  hereafter held by either Representative and/or the Lenders,
                  for any money or liabilities due or incurred by any one or
                  more of the Obligors to each Representative and/or the
                  Lenders, or any share therein.

5.8      SECURITIES REALISED ACCOUNT

         For the purpose of enabling each Representative and/or the Lenders to
         sue any one or more of the Obligors or to prove in the liquidation or
         insolvency of any one or more of the Obligors or in any similar
         proceedings for any monies due but unpaid by any one or more of the
         Obligors to either Representative and/or the Lenders under any of the
         Transaction Documents, each Representative or the Lenders may at any
         time and for such time as it may think fit place any monies received or
         recovered under this Clause 5 after an Acceleration Event to the credit
         of a securities realised account or accounts (subject to the accrual
         thereon of interest at market rates as conclusively determined by the
         Agent which interest shall be credited to the relevant account) without
         any obligation on the part of the Representative or the Lenders to
         apply the same or any part thereof in or towards the discharge of the
         indebtedness and liabilities of the Guarantor. Upon each Representative
         or the Lenders (as the case may be) reasonably considering the further
         retention of such monies to be unnecessary, the amount standing to the
         credit of the relevant account or accounts shall be paid to the
         Guarantor.

5.9      REINSTATEMENT

         Where any discharge (whether in respect of the obligations of any
         Obligor, any security for such obligations or otherwise) is made in
         whole or in part or any arrangement is made on the faith of any
         payment, security or other disposition which is

                                      -77-
<PAGE>

         avoided or must be repaid on insolvency, administration, liquidation or
         otherwise without limitation, the liability of the Guarantors under
         this Clause 5 shall continue as if there had been no such discharge or
         arrangement. Each Representative and each Lender shall be entitled to
         concede or compromise any claim that any such payment, security or
         other disposition is liable to avoidance or repayment.

5.10     ADDITIONAL SECURITY

         The Guarantor's obligations under this Clause 5 are in addition to and
         shall not be prejudiced by any other guarantee or security for the
         Guaranteed Obligations now or hereafter held by any Lender or
         Representative and it shall not be necessary for any Lender or
         Representative before claiming payment under this Clause 5, to resort
         to or seek to enforce any other guarantee or security in respect of the
         Guaranteed Obligations.

6.       REPRESENTATIONS AND WARRANTIES

6.1      GUARANTOR'S REPRESENTATIONS AND WARRANTIES

         To induce the Lenders and the Representatives to enter into the
         Transaction Documents, the Guarantor represents and warrants to the
         Lenders and the Representatives that:

         6.1.1    it is a corporation duly incorporated and validly existing and
                  in good standing under the laws of the State of California (or
                  any jurisdiction in which it may subsequently be incorporated)
                  and has full power, authority and legal right to own its
                  property and carry on its business as presently conducted;

         6.1.2    it has the power and capacity to execute and deliver, and to
                  perform its obligations under the Transaction Documents to
                  which it is or will be a party and all necessary action has
                  been taken to authorise the execution, delivery and
                  performance of the same;

         6.1.3    it has taken all necessary legal action to authorise the
                  person or persons who execute and deliver the Transaction
                  Documents to which it is or will be a party to execute and
                  deliver the same and thereby bind the Guarantor to all the
                  terms and conditions hereof and thereof and to act for and on
                  behalf of the Guarantor as contemplated hereby and thereby;

         6.1.4    the Transaction Documents to which it is or will be a party
                  constitute (or will when executed constitute) legal, valid and
                  binding obligations of the Guarantor enforceable in accordance
                  with their respective terms subject only to the qualifications
                  set out in the legal opinions to be provided to the Lenders in
                  accordance with the provisions of Clause 2.9 (Conditions
                  Precedent prior to First Utilisation) (in respect of the
                  Transaction Documents) and Clause 3.1.4 (Utilisation Notices)
                  and Schedule 7 (in respect of the relevant Aircraft Operative
                  Documents);

         6.1.5    the execution and delivery of, the performance of its
                  obligations under, and compliance with the provisions of, the
                  Transaction Documents to which it is

                                      -78-
<PAGE>

                  or will be a party will not (i) contravene any existing
                  applicable law to which the Guarantor is subject, (ii)
                  conflict with, or result in any breach of any of the terms of,
                  or constitute a default under, any document, instrument or
                  agreement to which the Guarantor is a party or is subject or
                  by which it or any of its assets may be bound which would be
                  reasonably expected to have a material adverse effect on its
                  financial condition or its payment obligations under the
                  Transaction Documents, (iii) contravene or conflict with any
                  provision of its constitutional documents, or (iv) result in
                  the creation or imposition of, or oblige it to create, any
                  Lien on or over any of its assets (other than the Liens
                  created pursuant to the Transaction Documents);

         6.1.6    every consent, registration, licence and qualification
                  required by the Guarantor to enable it to carry on its
                  business has been duly obtained or made and is in full force
                  and effect and there has been no default in the observance or
                  performance of any of the conditions or restrictions (if any)
                  imposed on, or in connection with, any such consent,
                  registration, licence or qualification, in each case, which
                  would be reasonably expected to have a material adverse effect
                  on its financial condition or its payment obligations under
                  the Transaction Documents;

         6.1.7    except as set forth in Clause 3.10 (Non-Invasive Features),
                  every consent, registration, licence and qualification
                  required by the Guarantor to authorise, or required by it in
                  connection with, the execution, delivery, legality, validity,
                  priority, enforceability, admissibility in evidence or
                  effectiveness of the Transaction Documents to which it is or
                  will be a party has been duly obtained or made and is in full
                  force and effect and there has been no default in the
                  observance or performance of any of the conditions or
                  restrictions (if any) imposed on, or in connection with, any
                  such consent, licence, registration or qualification, in each
                  case, which would be reasonably expected to have a material
                  adverse effect on the financial condition of the Guarantor or
                  its payment obligations under the Transaction Documents or the
                  legality, validity, priority, enforceability, admissibility in
                  evidence or effectiveness of such Transaction Documents;

         6.1.8    no litigation, arbitration or administrative proceeding is
                  taking place, pending or, to the actual knowledge of its
                  officers, threatened against it, or against any of its assets,
                  which in any such case would be reasonably expected to have a
                  material adverse effect on its financial condition or its
                  payment obligations under the Transaction Documents;

         6.1.9    the Guarantor has not taken any action nor, to its knowledge
                  or the knowledge of its officers, have any filings been made
                  in any court or legal proceedings been started in any
                  jurisdiction for any insolvency-related winding-up,
                  dissolution or re-organisation or for the appointment of a
                  receiver or administrative receiver, or an administrator,
                  trustee or similar officer of it or

                                      -79-
<PAGE>

                  of any of its assets with respect to which the Agent
                  reasonably determines would have a material possibility of
                  success;

         6.1.10   the obligations of the Guarantor under the Transaction
                  Documents to which it is or will be a party are, or will when
                  the same are executed be, direct, general and unconditional
                  obligations of the Guarantor and rank or will rank at least
                  pari passu with all other present and future unsecured and
                  unsubordinated obligations of the Guarantor save for
                  obligations mandatorily preferred by law;

         6.1.11   no Relevant Event or Termination Event has occurred and is
                  continuing;

         6.1.12   the audited consolidated financial statements of the Guarantor
                  for the period ending on 31 December 2002 have been prepared
                  in accordance with generally accepted accounting principles
                  and standards applicable in the United States of America and
                  in conjunction with the notes thereto, fairly present the
                  financial position of the Guarantor and its Subsidiaries as at
                  31 December 2002;

         6.1.13   the Guarantor or a Subsidiary of the Guarantor is the legal
                  and beneficial owner of the entire share capital of the
                  Borrower Parent;

         6.1.14   there have been no amendments or supplements to the articles
                  of incorporation and by-laws of the Guarantor from the form of
                  those documents last seen by the Agent that could reasonably
                  be expected to have a Material Adverse Effect; and

         6.1.15   except as otherwise disclosed in writing to the Agent, the
                  board resolutions supplied by the Guarantor to the Agent
                  pursuant to the provisions of Clause 2.9 (Conditions
                  Precedent) of this Agreement remain in full force and effect
                  and have not been amended, supplemented, varied or revoked, in
                  whole or in part since it was entered into and the authority
                  therein given to the persons therein named to agree and
                  execute on behalf of the Guarantor the Transaction Documents
                  remains in full force and effect and has not been revoked,
                  amended, supplemented or varied, in whole or in part.

6.2      REPRESENTATIONS AND WARRANTIES OF THE BORROWER, EACH SUB-BORROWER, THE
         BORROWER PARENT AND EACH INTERMEDIATE LESSEE

         To induce each of the Lenders and the Representatives to enter into the
         Transaction Documents, the Borrower, each Sub-Borrower, each
         Intermediate Lessee and the Borrower Parent represents and warrants to
         the Lenders and the Representatives separately and severally that:

         6.2.1    it is duly organised and validly existing under the laws of
                  Bermuda (in the case of the Borrower), the State of California
                  (in the case of the Borrower Parent) and the jurisdiction
                  referred to in paragraph 2.1(d) of the relevant Accession Deed
                  (in the case of each Sub-Borrower and each Intermediate
                  Lessee), or in each case in the jurisdiction in which it may
                  subsequently be

                                      -80-
<PAGE>

                  incorporated, and has full power, authority and legal right to
                  own its property and carry on its business as presently
                  conducted;

         6.2.2    it has the power and capacity to execute and deliver, and to
                  perform its obligations under the Transaction Documents to
                  which it is or will be a party and all necessary action has
                  been taken to authorise the execution, delivery and
                  performance of the same;

         6.2.3    it has taken all necessary legal action to authorise the
                  person or persons who execute and deliver the Transaction
                  Documents to which it is or will be a party to execute and
                  deliver the same and thereby bind it to all the terms and
                  conditions hereof and thereof and to act for and on behalf of
                  it as contemplated hereby and thereby;

         6.2.4    the Transaction Documents to which it is or will be a party
                  constitute or will when executed constitute its legal, valid
                  and binding obligations enforceable in accordance with their
                  terms subject only to the qualifications set out in the legal
                  opinions to be provided to the Lenders in accordance with the
                  provisions of Clause 2.9 (Conditions Precedent) (in respect of
                  the Aircraft) and Schedule 7 (in respect of the Aircraft
                  Operative Documents);

         6.2.5    the execution and delivery by it of, the performance of its
                  obligations under, and compliance with the provisions of, the
                  Transaction Documents to which it is or will be a party will
                  not (i) contravene any existing applicable law to which it is
                  subject, (ii) conflict with, or result in any breach of any of
                  the terms of, or constitute a default under, any document,
                  instrument or agreement to which it is a party or is subject
                  or by which it or any of its assets may be bound, (iii)
                  contravene or conflict with any provision of its
                  constitutional documents, or (iv) result in the creation or
                  imposition of, or oblige it to create, any Lien on or over any
                  of its assets other than those created pursuant to the
                  Transaction Documents;

         6.2.6    every consent, registration, licence and qualification
                  required by it to enable it to carry on its business has been
                  duly obtained or made and is in full force and effect and
                  there has been no default in the observance or performance of
                  any of the conditions or restrictions (if any) imposed on, or
                  in connection with, any such consent, registration, licence
                  and/or qualification in each case which could have a material
                  adverse effect on its ability to perform its obligations under
                  any of the Transaction Documents to which it is or will be a
                  party;

         6.2.7    except as provided in the parenthetical proviso in Clause
                  7.1.6 (General Covenants of the Borrower, Sub-Borrower and
                  Intermediate Lessee), and except for those that are not
                  customary practice in applicable jurisdictions to obtain or
                  make at such time, and except as provided in Clause 3.10
                  (Non-Invasive Features) every consent, registration, licence
                  and qualification required by it to authorise, or required by
                  it in connection with, the execution, delivery, legality,
                  validity, priority, enforceability, admissibility in evidence

                                      -81-
<PAGE>

                  or effectiveness of the Transaction Documents to which it is
                  or will be a party has been duly obtained or made and is in
                  full force and effect and there has been no default in the
                  observance or performance of any of the conditions or
                  restrictions (if any) imposed on, or in connection with, any
                  such consent, licence, registration and/or qualification, in
                  each case, which could have a material adverse effect on its
                  ability to perform its obligations under this Agreement or the
                  legality, validity, priority, enforceability, admissibility in
                  evidence or effectiveness of such Transaction Documents;

         6.2.8    no litigation, arbitration or administrative proceeding is
                  taking place, pending or, to the actual knowledge of its
                  officers, threatened against it, or against any of its assets,
                  which in any such case could have a material adverse effect on
                  its ability to perform its obligations under any of the
                  Transaction Documents to which it is or will be a party;

         6.2.9    it has not taken any action nor, to its knowledge or the
                  knowledge of its officers, have any filings been made in any
                  court or legal proceedings been started in any jurisdiction
                  for any insolvency related winding-up, dissolution or
                  re-organisation or for the appointment of a receiver or
                  administrative receiver, or an administrator, trustee or
                  similar officer of it or of any or all of its assets with
                  respect to which the Agent reasonably determines would have a
                  material possibility of success;

         6.2.10   its obligations under the Transaction Documents to which it is
                  or will be a party are, or will when the same are executed be,
                  its direct, general and unconditional obligations and rank at
                  least pari passu with all other present and future unsecured
                  and unsubordinated obligations save for obligations
                  mandatorily preferred by law;

         6.2.11   no Relevant Event or Termination Event has occurred and is
                  continuing;

         6.2.12   it has not, prior to entering into the Transaction Documents
                  engaged in any business or transaction or entered into any
                  contract or agreement with any person or otherwise created or
                  incurred any liability to, or acquired any asset from, any
                  person, other than any such transactions, contracts,
                  agreements or liabilities or acquisitions of assets as (i)
                  have been necessary solely in order for it to establish itself
                  as a company duly organised and validly existing under the
                  laws of its state of organisation or (ii) have occurred
                  pursuant to any other Transaction Document or (iii) have been
                  necessary to enable the Borrower Parent to become the legal
                  and beneficial owner of the shares in the Borrower, any
                  Sub-Borrower or any Intermediate Lessee or to enable the
                  Borrower to become the legal and beneficial owner of the
                  shares in any Sub-Borrower or any Intermediate Lessee;

         6.2.13   except as otherwise permitted hereunder, there have been no
                  amendments or supplements to its memorandum of association and
                  by-laws or, as the case may be, articles of association or
                  certificate of formation or incorporation

                                      -82-
<PAGE>

                  from the form of those documents last seen by the Agent and
                  the memorandum of association and by-laws or, as the case may
                  be, articles of association or certificate of formation or
                  incorporation in the form last seen by the Agent remain in
                  full force and effect;

         6.2.14   except as otherwise disclosed in writing to the Agent, the
                  board resolutions and, if applicable, power of attorney
                  supplied by it to the Agent pursuant to the provisions of
                  Clause 2.9 (Conditions Precedent) of this Agreement or
                  pursuant to Schedule 7 (as the case may be) remain in full
                  force and effect and have not been amended, supplemented,
                  varied or revoked, in whole or in part since they were entered
                  into and the authority therein given to the persons therein
                  named to agree and execute on its behalf the Transaction
                  Documents remains in full force and effect and has not been
                  revoked, amended, supplemented or varied, in whole or in part;

         6.2.15   except as otherwise disclosed in writing to the Agent, no
                  First Trigger Event has occurred and is continuing;

         6.2.16   the Borrower Parent further represents that it is the legal
                  and beneficial Owner of the entire issued share capital of the
                  Borrower; and

         6.2.17   the Borrower Parent, the Borrower or the Sub-Borrower, as
                  applicable, is the sole legal and beneficial owner of all of
                  the shares (except for shares held by directors, trustees or
                  nominees in order to meet local nationality or other local
                  requirement and which do not have a Material Adverse Effect on
                  the relevant Charge Over Shares) comprised in the Existing
                  Securities (as defined in each of the Charges over Shares to
                  which it is a party) being the entire issued shares in the
                  capital of the Borrower (in the case of the Borrower Parent),
                  each Sub-Borrower (in the case of the Borrower) and the
                  relevant Intermediate Lessees (in the case of the Borrower and
                  the Sub-Borrower), that the Existing Securities (as defined in
                  each of the Charges over Shares to which it is a party) are
                  fully paid up and are not subject to any options and none of
                  the Charged Property (as defined in each of the Charges over
                  Shares to which it is a party) is subject to any Lien other
                  than as created pursuant to the relevant Charge over Shares.

6.3      REPETITION

         The representations and warranties set out in Clauses 6.1 and 6.2 shall
         be deemed to be repeated by the relevant party on each date the
         Borrower serves a Utilisation Notice pursuant to Clause 3.1.1
         (Utilisation Notices) and on each Utilisation Date in each case in
         relation to the Eligible Aircraft which is the subject of the relevant
         Utilisation Notice in respect thereof as though made on each such date
         with reference to the facts and circumstances then existing on such
         date.

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7.       UNDERTAKINGS AND COVENANTS

7.1      GENERAL COVENANTS OF BORROWER, SUB-BORROWER AND INTERMEDIATE LESSEE

         Until all of the Secured Obligations (exclusive of indemnities in
         respect of which no claims have been, or to the knowledge of the
         Security Trustee will be, asserted) have been paid in full, the
         Borrower, each Sub-Borrower and each Intermediate Lessee hereby
         undertakes and covenants with each of the Lenders and the
         Representatives separately and severally that from the date of this
         Agreement:

         7.1.1    except as provided in Clause 18.1 (Transfers by Obligors), it
                  shall remain duly incorporated and validly existing under the
                  laws of Bermuda (in the case of the Borrower) and the laws of
                  the jurisdiction stated in paragraph 2.1(d) of the relevant
                  Accession Deed (in the case of each Sub-Borrower and each
                  Intermediate Lessee);

         7.1.2    at all times, it shall comply and procure the compliance with
                  all laws and regulations applicable to it and which are
                  necessary in relation to the conduct of its business
                  generally, and it shall obtain, maintain in full force and
                  effect and comply in all material respects with, any present
                  or future authorisations (governmental or otherwise),
                  approvals, licences and consents and do, or cause to be done,
                  all other acts and things which, in each case, may from time
                  to time be necessary for the continued due performance of its
                  obligations under the Transaction Documents;

         7.1.3    it shall inform the Agent of any Termination Event or Trigger
                  Event promptly upon becoming aware of the same and shall
                  provide the Agent with full details of any steps which it is
                  taking, or is considering taking, in order to remedy or
                  mitigate the effect of any Termination Event or otherwise in
                  connection therewith;

         7.1.4    it shall pay and discharge all material Taxes and governmental
                  charges, which if unpaid would have a Material Adverse Effect,
                  prior to the date on which the same become overdue unless, and
                  only to the extent that, such Taxes and charges shall be
                  contested in good faith by appropriate proceedings, pending
                  determination of which payment may lawfully be withheld, and
                  there shall be set aside adequate reserves with respect to any
                  such Taxes or charges so contested (if required in accordance
                  with generally accepted accounting principles);

         7.1.5    it shall comply with its constitutional documents and neither
                  the Borrower Parent nor the Borrower nor any Sub-Borrower
                  shall amend any provision of the constitutional documents of
                  the Borrower, any Sub-Borrower or any Intermediate Lessee
                  respectively except as provided in Clause 18.1 (Transfers by
                  Obligors), or with the consent of the Security Trustee (not to
                  be unreasonably withheld);

         7.1.6    promptly, upon being requested so to do by either
                  Representatives take all such steps and enter into and execute
                  all such documents of whatsoever nature

                                      -84-
<PAGE>

                  in order to enable the relevant Representative to effect any
                  registration, recording, filing, notarisation or any other
                  action in respect of any of the Transaction Documents, in each
                  case, which is required by law or reasonably requested by
                  either Representative (PROVIDED THAT notwithstanding any other
                  provision of the Transaction Documents the Borrower, the
                  relevant Sub-Borrower or the relevant Intermediate Lessee
                  shall not be required to do any act or thing or take any step
                  in connection with the registration, recording or filing of
                  any instrument creating or evidencing a Lien over an Aircraft,
                  any Lease or any Sub-Lease in the register of the Aviation
                  Authority where such Aircraft is registered, or any other
                  registration, recording or filing outside the jurisdiction of
                  organisation of the Borrower or, if applicable, any
                  Sub-Borrower or any Intermediate Lessee or the Borrower
                  Parent, or any actions with respect to the Lessee or any
                  Sub-Lessee (other than any registration, recording or filing
                  of a Lien over an Aircraft within the jurisdiction of
                  organisation of the Borrower or, if applicable, any
                  Sub-Borrower or any Intermediate Lessee) or with respect to
                  its jurisdiction of organisation or principal place of
                  business, unless a Second Trigger Event or Termination Event
                  has occurred and is continuing) to ensure the validity,
                  enforceability or priority of the liabilities and obligations
                  of the Borrower, the relevant Sub-Borrower or the relevant
                  Intermediate Lessee or the rights of each Representative
                  and/or each of the Lenders under any of the Transaction
                  Documents;

         7.1.7    not, without the prior written consent of the Agent, conduct
                  any business other than the acquisition, leasing and sale of
                  the Aircraft and the transactions contemplated by the
                  Transaction Documents to which it is a party and such
                  activities and matter incidental to any of the foregoing;

         7.1.8    not, without the prior written consent of the Security Trustee
                  acting on the instructions of the Instructing Group, incur any
                  liability to any person, other than:

                  (a)      a liability for Tax or other charges arising under
                           applicable law to a Government Entity; or

                  (b)      a liability to the Subordinated Lender in respect of
                           the Subordinated Liabilities; or

                  (c)      a liability to a Lessee under a Lease or a liability
                           to an Intermediate Lessee under an Intermediate Lease
                           or a liability to a Sub-Lessee under a Sub-Lease; or

                  (d)      any liability under the Transaction Documents; or

                  (e)      any liability that is an ordinary operating cost or
                           overhead expense or is otherwise in the ordinary
                           course of its permitted business;

                                      -85-
<PAGE>

         7.1.9    ensure that at all times its obligations under the Transaction
                  Documents rank at least pari passu with its obligations owed
                  to all its unsecured creditors save for obligations
                  mandatorily preferred by law;

         7.1.10   it shall not create or acquiesce in the creation or permit to
                  exist any Lien (other than any Permitted Lien) on or affecting
                  the Aircraft, the Insurances, the Warranties, the Engine
                  Warranties in relation to any Aircraft (or any relevant Engine
                  or Part);

         7.1.11   not (without the prior written consent of the Security
                  Trustee, which consent shall be exercisable at the discretion
                  of the Security Trustee acting on the instructions of the
                  Instructing Group) issue any shares (other than to comply with
                  nationally or other local requirements as described in Clause
                  3.3.2 (Sub-Borrowers/Intermediate Lessees) other than to the
                  Guarantor or any Subsidiary on terms that any such shares are
                  immediately charged to the Security Trustee on terms
                  substantially the same as those contained in the Charge Over
                  Shares of the Borrower, the relevant Charge Over Shares of
                  Sub-Borrower or the relevant Charge Over Shares of
                  Intermediate Lessee (as the case may be) or on such terms as
                  may otherwise be agreed by the Security Trustee) or pay any
                  dividends on any shares issued by it or redeem any shares
                  except as permitted by Clause 8.1 (Subordination);

         7.1.12   deliver to the Agent sufficient copies for distribution to
                  each of the Lenders of its audited annual financial statements
                  for each of its financial years (which shall be prepared in
                  accordance with generally accepted accounting principles and
                  practices in the United States of America for those Obligors
                  incorporated in the United States of America or Bermuda (other
                  than principles and practices related to consolidation of
                  accounts) and which shall present fairly the profits and
                  losses of the Borrower, the relevant Sub-Borrower or the
                  relevant Intermediate Lessee (as the case may be) for the
                  relevant financial year at the end of such financial year) as
                  soon as practicable and not later than one hundred and eighty
                  (180) days after the end of the financial year to which they
                  relate;

         7.1.13   it shall procure that at all times a majority of the members
                  of its board of directors shall be officers or employees of
                  the Guarantor, a Subsidiary, AIG or an AIG Group Company
                  (unless such requirement is contrary to local requirements in
                  its jurisdiction of incorporation and such requirement is not
                  likely to have a Material Adverse Effect on the relevant
                  Charge over Shares, in which case, it shall comply with the
                  requirements of its jurisdiction of incorporation) and it
                  shall procure further that no member of its board of directors
                  shall be replaced or substituted (other than by another
                  officer or employee of the Guarantor, a Subsidiary, AIG or an
                  AIG Group Company) without the prior written consent of the
                  Security Trustee (which consent shall be exercisable in the
                  reasonable discretion of the Security Trustee) unless such
                  substitution is required in order to comply with the
                  requirement of its

                                      -86-
<PAGE>

                  jurisdiction of incorporation and such substitution is not
                  likely to have a Material Adverse Effect on the relevant
                  Charge over Shares;

         7.1.14   inform the Representatives:

                  (a)      of any proposed Final Disposition of an Aircraft or
                           sale of a Sub-Borrower, no less than seven (7)
                           Business Days before the proposed date for completion
                           of such Final Disposition (it being understood that
                           such Final Disposition may not occur at all or on the
                           date notified); and

                  (b)      promptly after it becomes aware of the Total Loss of
                           any Aircraft or of any occurrence which, with the
                           lapse of time, would or would be likely to constitute
                           a Total Loss of any Aircraft, the Borrower, the
                           relevant Sub-Borrower or the relevant Intermediate
                           Lessee (as the case may be) shall provide such
                           details of such Total Loss or other occurrence as
                           each Representative may reasonably request;

         7.1.15   inform the Representative promptly after it becomes aware of
                  any:

                  (a)      Lien which has arisen over or in respect of any of
                           the Aircraft or any Part thereof other than any
                           Permitted Lien; or

                  (b)      any steps being taken by the holders of any Lien
                           (including any Permitted Lien) to exercise or enforce
                           that Lien or any rights in respect thereof;

         7.1.16   it shall not voluntarily wind itself up except in connection
                  with its solvent liquidation into another Obligor pursuant to
                  Clause 18.1 (Transfers by Obligors);

         7.1.17   the Borrower shall remain a wholly owned Subsidiary of the
                  Borrower Parent, each Sub-Borrower shall remain a wholly owned
                  Subsidiary of the Borrower and each Intermediate Lessee shall
                  remain a wholly owned Subsidiary of the Borrower or a
                  Sub-Borrower (as the case may be), subject always to the
                  provisions of Clause 3.3 (Sub-Borrower/Intermediate Lessees);

         7.1.18   inform the Representatives and the Lenders promptly after its
                  officers are notified in writing of any transfer of title in
                  respect of an Engine or of any filings or legal proceedings of
                  the nature described in Clauses 6.1.9, 6.2.9 or 10.1.7.

7.2      LEASING AND INSURANCE COVENANTS OF BORROWER, SUB-BORROWER AND
         INTERMEDIATE LESSEE

         7.2.1    Until all of the Secured Obligations (exclusive of indemnities
                  in respect of which no claims have been, or to the knowledge
                  of the Security Trustee will be, asserted) have been paid in
                  full, the Borrower, each Sub-Borrower and each Intermediate
                  Lessee hereby undertakes and covenants with each of the

                                      -87-
<PAGE>

                  Lenders and the Representatives separately and severally from
                  the date of this Agreement that it shall:

                  (a)      ensure that each Lease is in English;

                  (b)      not deliver an Aircraft to a TO Lessee (as defined in
                           Clause 7.2.2) directly under a Lease or indirectly
                           under a Sub-Lease which is incorporated or has its
                           principal place of business in the United States of
                           America within two (2) years after the Delivery Date
                           of that Aircraft (unless the Export Credit Agencies
                           agree to a shorter period in their sole discretion);

                  (c)      ensure at the time such Lease is entered into that
                           such Aircraft is not registered in or leased to a
                           Lessee or a Sub-Lessee whose principal place of
                           business is in a Prohibited Country;

                  (d)      ensure that no Aircraft is subject to any instalment
                           sale agreement, conditional sale agreement or other
                           lease-purchase agreement conferring upon the bailee
                           any ownership right, title or interest to or in the
                           relevant Aircraft, including, without limitation, by
                           means of a purchase option at a nominal price,
                           without obtaining the prior written approval of the
                           Security Trustee, acting on the instructions of the
                           Instructing Group;

                  (e)      ensure that if a Lease contains, or any Aircraft is
                           subject to, a purchase option, such purchase option
                           shall be at a price that is either for fair market
                           value or at a fixed price at or above one hundred and
                           ten per cent. (110%) of the outstanding principal
                           under the relevant Loan at the time of Final
                           Disposition (which purchase price is acknowledged and
                           agreed as not being nominal within the meaning or
                           otherwise in violation of Clause 7.2.1(d));

                  (f)      each Aircraft shall, unless in or imminently
                           scheduled for major maintenance or modification or as
                           otherwise agreed between the Borrower or a
                           Sub-Borrower (as the case may be) and the Security
                           Trustee, be registered in the jurisdiction of
                           incorporation of:

                           (i)      the Borrower or a Sub-Borrower, whichever is
                                    the owner of the Aircraft (including in the
                                    name of an owner trust in the United States
                                    of America which is a Sub-Borrower or of
                                    which the Borrower or a Sub-Borrower is the
                                    sole beneficiary); or

                           (ii)     an Intermediate Lessee; or

                           (iii)    a Lessee; or

                           (iv)     any Sub-Lessee,

                                      -88-
<PAGE>

                           in each case with the interests of the Borrower or
                           relevant Sub-Borrower as owner noted on the register
                           of the relevant Aviation Authority to the extent
                           permitted by applicable law;

                  (g)      the Borrower shall (at its own cost) take all steps,
                           or procure that all steps are taken, which are
                           required by law in the State of Registration and the
                           jurisdiction in which the Lessee or any Sub-Lessee
                           has its principal place of business to protect and
                           perfect the Borrower's or the Sub-Borrower's (as the
                           case may be) legal and beneficial ownership interest
                           in the Aircraft;

                  (h)      ensure that each Lease provides that except during a
                           period of storage or modification or maintenance (y)
                           for the relevant Aircraft to be maintained in
                           accordance with the maintenance programme described
                           in the relevant Lease and approved by the relevant
                           Aviation Authority and (z) that all airworthiness
                           directives issued by the relevant Aviation Authority
                           are complied with, as stated in such airworthiness
                           directive to the extent required during the term of
                           the relevant Lease;

                  (i)      ensure that each Lease provides that, in relation to
                           each Aircraft, all documentation regarding repairs,
                           maintenance, overhauls and modifications is
                           maintained in accordance with the requirements of the
                           relevant Aviation Authority;

                  (j)      subject to the rights of the Security Trustee upon
                           the occurrence and continuation of a Second Trigger
                           Event, ensure that the terms of any Lease, insofar as
                           they relate to operations, engine title transfers,
                           maintenance and insurance shall be no less favourable
                           than, or substantially similar in substance to, those
                           customarily used by the Guarantor for the leasing of
                           similar aircraft in its portfolio to lessees of
                           similar credit standing, similar geographic location
                           and under similar circumstances.

         7.2.2    Save as the Lead Managers (acting on the instructions of the
                  Instructing Group) may agree from time to time, the Borrower
                  and (as the case may be) each Sub-Borrower shall not and shall
                  not permit an Intermediate Lessee, to deliver an Aircraft to a
                  Lessee (if it is a technical operator of aircraft) or a
                  Sub-Lessee (if the Lessee is not a technical operator of
                  aircraft and the Sub Lessee is a technical operator of
                  aircraft) (a "TO LESSEE") directly under a Lease, indirectly
                  under a Sub-Lease or substitute an Aircraft under Clause 4.7
                  (Substitution of Aircraft) if such delivery or substitution is
                  to a TO Lessee which is either (a) the first TO Lessee of such
                  Aircraft or (b) the second or subsequent TO Lessee of such
                  Aircraft if the Lease or, as the case may be, the Sub-Lease to
                  such TO Lessee commences prior to the second anniversary of
                  the Delivery Date of the relevant Aircraft, and if as a result
                  of delivery of that Aircraft to that TO Lessee or as a result
                  of such substitution (if the substitute aircraft has never
                  been previously leased or sub-leased) more than twenty five

                                      -89-
<PAGE>

                  per cent. (25%) of the aggregate of the Aircraft then (i)
                  financed under the Facility (rounded down to the nearest whole
                  number and determined by number and not by value) and (ii) as
                  to which the Borrower has indicatively committed to finance
                  under the Facility pursuant to Clause 3.1.1(a)(i)(x) during
                  the succeeding period of one (1) month PROVIDED THAT such
                  Aircraft are actually delivered and financed under the
                  Facility during such period of one (1) month would be Home
                  Country Aircraft (unless the reason for such non-delivery is
                  an event or circumstance that is beyond the control of the
                  Borrower or the Borrower Parent or otherwise relates to any
                  "force majeure", excusable or non-excusable delay or similar
                  events or arises out of any act or omission of a Lessee or any
                  Manufacturer, or any of their Affiliates, in which case the
                  determination would be made by reference to the succeeding
                  period of three (3) months).

         7.2.3    The restrictions set out in Clause 7.2.2 and 7.2.1(b) shall
                  not:

                  (a)      prevent the delivery of an Aircraft to a TO Lessee
                           which is not the first TO Lessee of that Aircraft
                           since its Delivery Date provided that in the case of
                           a Lease or Sub-Lease of an Aircraft to a TO Lessee
                           incorporated or which has its principal place of
                           business in the United States, the Lease or Sub-Lease
                           to such TO Lessee commences on or after the second
                           anniversary of the Delivery Date of such Aircraft; or

                  (b)      prevent the delivery of an Aircraft to a TO Lessee in
                           breach of any such limit following the bona fide
                           repossession of such Aircraft by, or the delivery or
                           redelivery of such Aircraft to, the Borrower, any
                           Sub-Borrower or any Intermediate Lessee (as the case
                           may be) as a result of the termination of the leasing
                           of such Aircraft under a previous Lease Agreement
                           prior to its scheduled expiry date (other than by
                           reason of the exercise by the relevant Lessee of a
                           voluntary right of early Termination); or

                  (c)      require the prepayment of a Loan in respect of a Home
                           Country Aircraft if any such limit is breached as a
                           result of (i) the prepayment of a Loan in respect of
                           another Aircraft which is not a Home Country Aircraft
                           (by reason of the Final Disposition or Total Loss of
                           such Aircraft or a Sub-Borrower Sale in relation to
                           such Aircraft or for any other reason), or (ii) the
                           termination or expiry of the leasing of another
                           Aircraft which is not a Home Country Aircraft.

         7.2.4    In determining, for the purposes of Clause 7.2.2, whether or
                  not a TO Lessee is the first TO Lessee of an Aircraft:

                  (a)      no account shall be taken of a previous Lessee or
                           Sub-Lessee of that Aircraft:

                                      -90-
<PAGE>

                           (i)      under a Lease with a Subsidiary contemplated
                                    by Clause 4.8.2 (Prepayment if not leased)
                                    and entered into to avoid an obligation to
                                    prepay the relevant Loan under Clause 4.8.1
                                    (Prepayment if not leased); or

                           (ii)     except as provided in Clause 7.2.3(b) above,
                                    under a Lease or Sub-Lease which terminates
                                    on or before delivery of the relevant
                                    Aircraft occurs thereunder; and

                  (b)      in the case of a Replacement Aircraft, the TO Lessee
                           of the Existing Aircraft which it replaced shall be
                           treated as having been a previous TO Lessee of that
                           Replacement Aircraft.

         7.2.5    The Borrower, the relevant Sub-Borrower or the relevant
                  Intermediate Lessee (as the case may be) shall deliver to the
                  Agent a certified true copy of:

                  (a)      each Lease (and each side letter or other document
                           amending or supplementing the terms of any Lease)
                           from time to time entered into by the Borrower, the
                           relevant Sub-Borrower or the relevant Intermediate
                           Lessee (as the case may be) in respect of an Eligible
                           Aircraft; and

                  (b)      each legal opinion (if any) provided to the Borrower,
                           the relevant Sub-Borrower or the relevant
                           Intermediate Lessee (as the case may be) in
                           connection with any such Lease (or in connection with
                           any amendment thereto) from legal counsel in the
                           jurisdiction in which the relevant Lessee is
                           incorporated or in which the Aircraft is or will be
                           registered,

                  in each case within thirty (30) days after the later of (i)
                  the relevant Utilisation Date and (ii) the date on which such
                  Lease (or the relevant side letter or other document), has
                  been entered into or, as the case may be, the date on which
                  such legal opinion was provided to the Borrower, the relevant
                  Sub-Borrower or the relevant Intermediate Lessee (as the case
                  may be).

         7.2.6    The Borrower, the relevant Sub-Borrower or the relevant
                  Intermediate Lessee (as the case may be) shall maintain, or
                  procure that the relevant Lessee or the relevant Sub-Lessee
                  (as the case may be) maintains, hull and third party liability
                  insurance policies in respect of each Aircraft in accordance
                  with the terms of Schedule 9.

         7.2.7    The Borrower, the relevant Sub-Borrower or the relevant
                  Intermediate Lessee (as the case may be) shall deliver or
                  cause to be delivered to the Agent (i) a certificate
                  evidencing the insurance (and, if applicable, reinsurance)
                  policies required by Clause 7.2.6 on or before the Delivery
                  Date of the relevant Aircraft and (in the case of a
                  replacement certificate) promptly after receipt thereof and
                  (ii) any insurance broker's and reinsurance broker's (if
                  applicable) letter of undertaking.

                                      -91-
<PAGE>

         7.2.8    The Borrower or the relevant Sub-Borrower (as the case may be)
                  shall deliver a notice to the Agent (addressed also to the
                  Export Credit Agencies) as soon as practicable after the
                  Delivery Date of each Aircraft specifying the stated country
                  of origin of each item of Buyer Furnished Equipment that is
                  financed hereunder and that is installed on each Aircraft and
                  certifying that the cost of all the Buyer Furnished Equipment
                  installed or to be installed on the relevant Aircraft and
                  financed by the relevant Loan does not exceed five per cent.
                  (5%) of the final contract price of such Aircraft (net of the
                  cost of such Buyer Furnished Equipment) net of any and all
                  credit memoranda.

         7.2.9    Each of the Borrower, the relevant Sub-Borrower or the
                  relevant Intermediate Lessee (as the case may be) and the
                  Security Trustee shall, immediately following the delivery of
                  an Aircraft to a Lessee or a Sub-Lessee (as the case may be)
                  execute a Notice of Charge and the Security Trustee shall
                  serve such Notice of Charge on the Lessee or if not the
                  technical operator of the relevant Aircraft to the first
                  technical operator of the relevant Aircraft and, if the
                  Borrower so requests, to any other permitted sub-lessee.

         7.2.10   CHANGE OF TITLE HOLDER OF AIRCRAFT OR INTRODUCTION OF AN
                  INTERMEDIATE LESSEE

                  (a)      In respect of the leasing of an Aircraft at any time
                           during the Security Period (PROVIDED THAT no Relevant
                           Event or Termination Event has occurred and is
                           continuing), the Borrower shall be entitled by giving
                           notice (a "STRUCTURAL CHANGE NOTICE") to the Agent
                           and the Security Trustee:

                           (i)      to cause itself or a Sub-Borrower (which is
                                    established in a Regular Jurisdiction) to
                                    take title to that Aircraft and/or to
                                    incorporate an Intermediate Lessee (which is
                                    established in a Regular Jurisdiction) into
                                    the structure; or

                           (ii)     to request that a Sub-Borrower (which is or
                                    is to be established in an Irregular
                                    Jurisdiction) take title to that Aircraft
                                    and/or that an Intermediate Lessee (which is
                                    or is to be established in an Irregular
                                    Jurisdiction) be incorporated into the
                                    structure.

                  (b)      Any such Structural Change Notice that constitutes a
                           request under Clause 7.2.10(a)(i) shall be served at
                           least twenty (20) Business Days prior to the proposed
                           transfer of title to the Aircraft or such lesser
                           period as the Agent (acting reasonably) shall agree
                           and the Agent (acting on the instructions of the
                           Instructing Group) shall approve such request in
                           principle or otherwise no later than ten (10)
                           Business Days prior to the proposed transfer of
                           title.

                  (c)      If the proposed Sub-Borrower or Intermediate Lessee
                           has already acceded to this Agreement prior to the
                           date of the relevant Structural

                                      -92-
<PAGE>

                           Change Notice, or is in a Regular Jurisdiction, the
                           approval of the Agent shall not be required. Any such
                           other Structural Change Notice that applies to a
                           person that has not acceded to this Agreement shall
                           be served at least ten (10) Business Days prior to
                           the proposed transfer of title to the Aircraft or
                           such lesser period as the Agent shall agree. All
                           other Structural Change Notices shall be served at
                           least five (5) Business Days prior to the proposed
                           transfer of title to the Aircraft.

                  (d)      Each such Sub-Borrower and/or such Intermediate
                           Lessee shall be a company or trust capable of
                           providing representations and warranties and
                           covenants (even if only on a non-recourse basis)
                           having substantially the same effect as those given
                           by the Borrower in Clauses 6 (Representations and
                           Warranties) and 7 (Undertakings and Covenants) and
                           each shall be a wholly owned direct Subsidiary of the
                           Borrower, in the case of a Sub-Borrower, or a wholly
                           owned direct Subsidiary of a Sub-Borrower or the
                           Borrower, in the case of an Intermediate Lessee (in
                           each case, except for shares held by directors,
                           trustees or nominees in order to meet local
                           nationality or other local requirements and which do
                           not have a Material Adverse Effect on any of the
                           Charges over Shares, in favour of the Security
                           Trustee). The Borrower shall use one Intermediate
                           Lessee in any one jurisdiction unless the Borrower
                           has a reason or is under an obligation to do
                           otherwise.

                  (e)      If a Sub-Borrower or an Intermediate Lessee has not
                           already acceded to this Agreement and is to be
                           incorporated into the structure then on or prior to
                           the Security Trustee releasing the relevant Aircraft
                           Security Documents (insofar as they relate to the
                           Aircraft) granted by the Borrower or the relevant
                           Sub-Borrower (as the case may be) whichever is the
                           title holder to the Aircraft:

                           (i)      each such Sub-Borrower and/or each such
                                    Intermediate Lessee shall accede to this
                                    Agreement by executing an Accession Deed and
                                    such other Transaction Documents as the
                                    Agent in its good faith opinion considers
                                    appropriate so that any such Sub-Borrower
                                    shall be deemed to be a party to this
                                    Agreement and such of the other Transaction
                                    Documents as may be appropriate as if named
                                    therein as a party;

                           (ii)     if the Sub-Borrower or Intermediate Lessee
                                    is or will be organised in an Irregular
                                    Jurisdiction, each of the applicable Obligor
                                    parties to this Agreement and any such
                                    Sub-Borrower organised in an Irregular
                                    Jurisdiction and/or such Intermediate Lessee
                                    organised in an Irregular Jurisdiction shall
                                    enter into such other documents and provide
                                    such security as the Security Trustee may,
                                    in its good faith opinion (after taking
                                    legal advice from counsel to the Lenders in
                                    the jurisdiction of the relevant
                                    Sub-Borrower and/or relevant

                                      -93-
<PAGE>

                                    Intermediate Lessee), require in order to
                                    ensure that (i) the Representatives and each
                                    of the Lenders are in a position having a
                                    substantially similar effect (including as
                                    to their security position) with respect to
                                    such Sub-Borrower and/or such Intermediate
                                    Lessee as they are in with respect to other
                                    Sub-Borrowers or other Intermediate Lessees,
                                    as the case may be, under the Transaction
                                    Documents and (ii) the rights of the
                                    Representatives and the Lenders is not
                                    materially different than with respect to
                                    any Sub-Borrower and/or Intermediate Lessee
                                    of a Regular Jurisdiction under the
                                    Transaction Documents, it being acknowledged
                                    and agreed for the purpose of determining
                                    the foregoing matters that (i) any trustee
                                    in a United States owner/voting trust will
                                    be party to the Transaction Documents not in
                                    its individual capacity but solely as
                                    trustee, (ii) common law jurisdictions are
                                    acceptable and (iii) with respect to civil
                                    jurisdictions, the Borrower and the Agent
                                    shall negotiate in good faith, to the extent
                                    necessary, alternative security to that
                                    available in common law jurisdictions which
                                    is acceptable to the Security Trustee,
                                    acting upon the instruction of the
                                    Instructing Group;

                           (iii)    upon receipt by the Agent of the Accession
                                    Deed signed on behalf of the Borrower,
                                    Guarantors, Obligors and by the proposed
                                    Intermediate Lessee or Sub-Borrower (as the
                                    case may be), the Agent shall sign the same
                                    for itself and on behalf of the Lenders and
                                    shall as promptly as practicable give notice
                                    of such execution to all of the parties to
                                    the Accession Deed;

                           (iv)     upon execution of any such Accession Deed it
                                    shall take effect in accordance with, but
                                    subject to, the terms hereof and thereof.

                  (f)      The effectiveness of the change of title holder to
                           the Aircraft or the introduction of an Intermediate
                           Lessee shall be subject to receipt by the Agent of
                           the following conditions precedent in form and
                           substance satisfactory to the Agent:

                           (i)      evidence satisfactory to the Security
                                    Trustee that the Borrower or the relevant
                                    Sub-Borrower (as the case may be) has
                                    obtained title to the Aircraft free and
                                    clear of any Liens other than Permitted
                                    Liens including a certified copy of the Bill
                                    of Sale to the Borrower or the relevant
                                    Sub-Borrower (as the case may be);

                           (ii)     a legal opinion from counsel to the Lenders
                                    in the jurisdiction in which the Borrower or
                                    the relevant Sub-Borrower, as the case may
                                    be, is organised concerning the assignment
                                    of the Mortgage, the filing or registration
                                    and perfection in that jurisdiction of the
                                    Mortgage (or alternative security) with
                                    respect to the Aircraft, the Charge over
                                    Shares of Sub-Borrower (if any) and any
                                    other

                                      -94-
<PAGE>

                                    Aircraft Security Documents which will be
                                    entered into by the Borrower or the relevant
                                    Sub-Borrower (as the case may be) and the
                                    validity of the relevant Sub-Borrower's
                                    guarantee and indemnity (if any) in favour
                                    of the Security Trustee;

                           (iii)    the relevant legal opinions from counsel to
                                    the Lenders as provided in paragraph 4 of
                                    Part A to Schedule 7;

                           (iv)     evidence of insurance having been effected
                                    in respect of the Aircraft with the Security
                                    Trustee named as a contract party (for and
                                    on behalf of itself, the Agent and the
                                    Relevant Lenders) or additional insured
                                    under the liability policy and (to the
                                    extent possible under AVN67B, or such other
                                    endorsement as may be applicable) the
                                    Security Trustee named as loss payee under
                                    the hull policy;

                           (v)      if applicable, copies of the certificate of
                                    registration of the Replacement Aircraft and
                                    airworthiness issued by the Aviation
                                    Authority;

                           (vi)     if a Sub-Borrower or Intermediate Lessee is
                                    introduced into the structure, the following
                                    signed documents:

                                    (1)      Accession Deed (if such person has
                                             not previously acceded to the
                                             Transaction Documents);

                                    (2)      the assignment of the Mortgage (if
                                             applicable) or alternative security
                                             satisfactory to the Security
                                             Trustee, acting upon the
                                             instructions of the Instructing
                                             Group;

                                    (3)      the assignment of the Warranties
                                             (to the extent assignable);

                                    (4)      the assignment of the Engine
                                             Warranties (to the extent
                                             assignable);

                                    (5)      Sub-Borrower Guarantee (if
                                             applicable);

                                    (6)      Sub-Borrower Debenture (if
                                             applicable);

                                    (7)      Intermediate Lessee Debenture (if
                                             applicable);

                                    (8)      Charge Over Shares of Sub-Borrower
                                             (if applicable);

                                    (9)      Charge Over Shares of Intermediate
                                             Lessee (if applicable);

                                    (10)     Lease Security Assignment (if
                                             applicable);

                                    (11)     Intermediate Lease Security
                                             Agreement (if applicable);

                                      -95-
<PAGE>

                                    (12)     Notice of Charge as amended to
                                             record change of title holder or
                                             the introduction of an Intermediate
                                             Lessee as the case may be;

                           (vii)    evidence to the Security Trustee that the
                                    Sub-Borrower Accounts or the Intermediate
                                    Lessee Accounts (as the case may be) have
                                    been opened and that US$10 has been
                                    deposited in each of the Sub-Borrower
                                    Accounts or Intermediate Lessee Accounts (as
                                    the case may be).

7.3      BORROWER PARENT COVENANTS

         Until all of the Secured Obligations (exclusive of indemnities in
         respect of which no claims have been, or to the knowledge of the
         Security Trustee will be, asserted) have been paid in full, the
         Borrower Parent hereby undertakes and covenants with each of the
         Lenders, the Agent and the Security Trustee separately and severally
         that from the date of this Agreement:

         7.3.1    except as provided in Clause 18.1 (Transfers by Obligors), it
                  shall remain duly organised and validly existing under the
                  laws of the State of California and shall not, without the
                  prior written consent of the Security Trustee (which shall not
                  be unreasonably withheld), make any amendment to the
                  constitutional documents of the Borrower;

         7.3.2    at all times, it shall comply and procure the compliance with
                  all laws and regulations applicable to it and which are
                  necessary in relation to the conduct of its businesses
                  generally, and it shall obtain, maintain in full force and
                  effect and comply in all material respects with, any present
                  or future authorisations (governmental or otherwise)
                  approvals, licences and consents and do, or cause to be done,
                  all other acts and things, in each case which may from time to
                  time be necessary for the continued due performance of its
                  obligations under the Transaction Documents;

         7.3.3    it shall inform the Agent of any Termination Event promptly
                  upon becoming aware of the same and shall provide the Agent
                  with full details of any steps which it is taking, or is
                  considering taking, in order to remedy or mitigate the effect
                  of any Termination Event or otherwise in connection therewith;

         7.3.4    it shall pay and discharge all Taxes and governmental charges
                  which if unpaid would have a Material Adverse Effect prior to
                  the date on which the same become overdue unless, and only to
                  the extent that, such Taxes and charges shall be contested in
                  good faith by appropriate proceedings, pending determination
                  of which payment may lawfully be withheld, and there shall be
                  set aside adequate reserves with respect to any such Taxes or
                  charges so contested (if required in accordance with generally
                  accepted accounting principles);

                                      -96-
<PAGE>

         7.3.5    it shall comply with its constitutional documents and shall
                  not amend any provision of its constitutional documents except
                  as provided in Clause 18.1 (Transfer by Obligors) or with the
                  consent of the Security Trustee (not to be unreasonably
                  withheld);

         7.3.6    it shall promptly, upon being requested so to do by the Agent
                  and/or the Security Trustee take all such steps and enter into
                  and execute all such documents and/or agreements of whatsoever
                  nature in order to enable the Agent or, as the case may be,
                  the Security Trustee to effect any registration, recording,
                  filing, notarisation or any other action in respect of any of
                  the Transaction Documents, in each case, which are required by
                  law or reasonably requested by the Agent, or as the case may
                  be, the Security Trustee (PROVIDED THAT notwithstanding any of
                  the provisions of the Transaction Documents the Borrower
                  Parent shall not be required to do any act or thing or take
                  any step in connection with the registration, recording or
                  filing of any instrument creating or evidencing a Lien over an
                  Aircraft, any Lease or any Sub-Lease in the register of the
                  Aviation Authority where such Aircraft is registered, or any
                  other registration, recording or filing outside California or
                  any actions with respect to a Lessee or Sub-Lessee or with
                  respect to its jurisdiction of organisation or principal place
                  of business unless a Second Trigger Event or Termination Event
                  has occurred and is continuing) to ensure the validity,
                  enforceability or priority of the liabilities and obligations
                  of any or all of the Obligors or the rights of the Borrower,
                  the Agent, the Security Trustee and/or each of the Lenders
                  under any of the Transaction Documents;

         7.3.7    the only business of the Borrower Parent shall be the legal
                  ownership of the issued shares in the Borrower, and entering
                  into the Charge Over Shares of the Borrower and the documents
                  incidental thereto and the transactions contemplated by the
                  Transaction Documents to which it is, or is to be, a party and
                  such activities and matters incidental to any of the foregoing
                  and the Borrower Parent covenants that it shall not, without
                  the prior written consent of the Security Trustee (such
                  consent to be exercisable in the absolute discretion of the
                  Security Trustee) engage in any other business or transaction;

         7.3.8    it shall not without the prior written consent of the Security
                  Trustee acting on the instructions of the Instructing Group
                  incur any liability to any person, other than (a) any
                  Subordinated Liabilities and (b) such liabilities with respect
                  to Taxes, ordinary operating costs and overhead expenses or as
                  have arisen or may arise in the ordinary course of carrying on
                  its business as referred to in Clause 7.3.7;

         7.3.9    it shall ensure that at all times its obligations under the
                  Transaction Documents rank at least pari passu with its
                  obligations owed to all its unsecured creditors save for
                  obligations mandatorily preferred by law;

                                      -97-
<PAGE>

         7.3.10   it shall not create any Lien on or with respect to the Charged
                  Property (as that term is defined in the Charge Over Shares of
                  the Borrower);

         7.3.11   it shall not (without the prior written consent of the
                  Security Trustee acting on the instructions of the Instructing
                  Group), issue any shares (other than to comply with nationally
                  or other local requirements as described in Clause 3.3.2
                  (Sub-Borrowers/Intermediate Lessees) or to the Guarantor or a
                  Subsidiary of the Guarantor) and the Borrower Parent shall not
                  (other than pursuant to the Charge Over Shares of the
                  Borrower) sell, transfer or dispose of, encumber or create any
                  Lien over or alter the rights attaching to any of its shares
                  in the Borrower which are owned by the Borrower Parent or pay
                  any dividends on any shares issued by it or redeem any shares
                  except as permitted by Clause 8 (Subordination);

         7.3.12   it shall procure that at all times a majority of the members
                  of its board of directors shall be officers or employees of
                  the Guarantor, a Subsidiary, AIG or an AIG Group Company and
                  it shall procure further that no member of its board of
                  directors shall be replaced or substituted (other than by
                  another officer or employee of the Guarantor, a Subsidiary,
                  AIG or an AIG Group Company) without the prior written consent
                  of the Security Trustee (which consent shall be exercisable in
                  the absolute discretion of the Security Trustee); and

         7.3.13   it shall inform the Representatives promptly after its
                  officers are notified in writing of any filings or legal
                  proceedings of the nature contemplated in Clauses 6.1.9, 6.2.9
                  or 10.1.7.

7.4      GUARANTOR COVENANTS

         Until all of the Secured Obligations (exclusive of indemnities in
         respect of which no claims have been, or to the knowledge of the
         Security Trustee will be, asserted) have been paid in full, the
         Guarantor hereby undertakes and covenants with each of the Lenders, the
         Agent and the Security Trustee separately and severally from the date
         of this Agreement in the terms set out in Schedule 6 and that:

         7.4.1    subject to the provisions of Clause 9 (Trigger Events) it
                  shall ensure that the Borrower, each Sub-Borrower and each
                  Intermediate Lessee enter into Leases and Sub-Leases in
                  respect of any Aircraft whose terms in respect of maintenance,
                  inspection, insurance, engine title transfers and operations
                  are substantially similar in substance to those which are
                  customarily used by the Guarantor for the leasing of similar
                  aircraft in its portfolio and leased to lessees of similar
                  credit standing, similar geographic location and under similar
                  circumstances; and shall administer such Leases and Sub-Leases
                  (including carrying out inspections of the Aircraft) in a
                  manner consistent with those standards applied by it with
                  respect to its other owned and/or financed aircraft;

                                      -98-
<PAGE>

         7.4.2    subject to the provisions of Clause 9 (Trigger Events), the
                  Guarantor shall procure that, when an Aircraft is not the
                  subject of a Lease, the Borrower, each Sub-Borrower and each
                  Intermediate Lessee shall manage such Aircraft in respect of
                  maintenance and insurance consistently with other similar
                  aircraft owned and not leased by the Guarantor or any
                  Subsidiary;

         7.4.3    the Guarantor shall ensure that:

                  (a)      the Borrower Parent remains a wholly owned direct or
                           indirect Subsidiary of the Guarantor;

                  (b)      that the Borrower remains a wholly owned direct
                           Subsidiary of the Borrower Parent;

                  (c)      each Sub-Borrower remains a wholly owned direct
                           Subsidiary of the Borrower (subject to the provisions
                           of Clause 3.3.2 (Sub-Borrower/Intermediate Lessees));
                           and

                  (d)      that each Intermediate Lessee remains a wholly owned
                           direct Subsidiary of the Borrower or a Sub-Borrower
                           (subject to the provisions of Clause 3.3.2
                           (Sub-Borrower/Intermediate Lessees));

         7.4.4    promptly after all Post-Delivery Modifications and/or Buyer
                  Furnished Equipment (to the extent these are to be installed
                  after the Delivery Date) covered by an Advance in respect of
                  an Aircraft have been completed and/or installed, the
                  Guarantor shall provide a written notice to the Security
                  Trustee confirming that such Post-Delivery Modifications
                  and/or Buyer Furnished Equipment have been completed and/or
                  installed and setting out payment instructions in relation to
                  the portion of the relevant Advance held in escrow by the
                  Agent and relating to such Post-Delivery Modifications and/or
                  such Buyer Furnished Equipment in accordance with Clause
                  3.7.6, and the Security Trustee shall, in turn, give a copy of
                  such notice to the Lead Managers. If Post Delivery
                  Modifications and/or Buyer Furnished Equipment covered by an
                  Advance in respect of an Aircraft are not carried out and/or
                  installed within the Post-Delivery Modification Period the
                  provisions of Clause 4.9 (Prepayment if Post-Delivery
                  Modifications not completed or Buyer Furnished Equipment not
                  installed within the Post-Delivery Modification Period) shall
                  apply.

         7.4.5    it shall inform the Representatives promptly after its
                  officers are notified in writing of any filings or legal
                  proceedings of the notice described in Clauses 6.1.9, 6.2.9 or
                  10.1.7.

8.       SUBORDINATION

8.1      Until all Security Obligations (exclusive of indemnities in respect of
         which no claims have been, or to the knowledge of the Security Trustee
         will be, asserted) have been paid in full, the Subordinated Lender
         hereby agrees with each of the Lenders, the

                                      -99-
<PAGE>

         Agent and the Security Trustee that the rights and remedies of the
         Subordinated Lender in respect of any of the Subordinated Liabilities
         shall, except as provided in Clauses 8.2 and 8.4, be subject and
         subordinate as provided in this Clause 8 to all rights and claims, now
         or hereafter existing, which the Agent, the Security Trustee or any
         Lender may have pursuant to or in connection with any Transaction
         Document.

8.2      Whilst and so long as no Second Trigger Event or Termination Event has
         occurred and is continuing and no Acceleration Event has occurred, and
         no Relevant Event would result therefrom, the Subordinated Lender shall
         be entitled from time to time to make demand on the Borrower or any
         other Obligor (other than the Guarantor) in respect of, and receive
         (free from the Lien of any Aircraft Security Document) from the
         Borrower or any other Obligor (other than the Guarantor), amounts up to
         (but not exceeding) such amounts (comprising all or any part of the
         Subordinated Liabilities) as are actually received or otherwise held by
         or for the credit of such Obligor.

8.3      To the maximum extent permitted by law, the Subordinated Lender shall
         not file or join in any petition to commence any insolvency or
         bankruptcy proceedings against any Obligor (other than the Guarantor)
         until all amounts owing by the Borrower to the Lenders, the Agent and
         the Security Trustee under or in connection with the Transaction
         Documents have been satisfied in full.

8.4      Whilst and so long as no Second Trigger Event or Termination Event has
         occurred and is continuing or no Acceleration Event has occurred, the
         rights of the Subordinated Lender to the payment of any amount of the
         Subordinated Liabilities shall rank pari passu to all rights and
         claims, now or hereafter existing, which the Agent, the Security
         Trustee or any Lender may have pursuant to or in connection with any
         Transaction Document and there are no restrictions whatsoever on the
         payment (free from the Lien of any Aircraft Security Document) or other
         actions in respect of any Subordinated Liabilities save as otherwise
         set out in Clauses 5 (Guarantee and Indemnity), 9.2 (Second Trigger
         Event) and 10 (Termination Event) PROVIDED THAT:

         8.4.1    the Subordinated Lender shall not at any time assign or
                  transfer to any person the whole or any part of the
                  Subordinated Liabilities without the prior written consent of
                  the Security Trustee acting upon the instructions of the
                  Instructing Group, other than to an AIG Group Company that
                  agrees to be bound by the provisions of this Clause 8 by
                  executing an Accession Deed on terms acceptable to the
                  Security Trustee and simultaneously provides a legal opinion
                  addressed to the Security Trustee (such opinion to be
                  satisfactory to the Security Trustee, acting reasonably) as to
                  the binding nature of such Accession Deed on the acceding
                  party, which transfers shall not require such consent, or

         8.4.2    obtain or otherwise have the benefit of any Lien for or in
                  respect of the Subordinated Liabilities other than on the
                  terms reasonably specified by the Agent.

                                     -100-
<PAGE>

8.5      The Subordinated Lender hereby agrees with the Lenders, the Agent and
         the Security Trustee that upon and following the occurrence of a Second
         Trigger Event or Termination Event and for so long as either continues
         or upon the occurrence of an Acceleration Event and until all amounts
         owing to the Lenders, the Agent and the Security Trustee under or in
         connection with the Transaction Documents have been satisfied in full
         the Subordinated Lender shall not:

         8.5.1    sue upon or collect or receive payment of any moneys (whether
                  principal, interest or otherwise) now or hereafter comprising
                  all or any part of the Subordinated Liabilities;

         8.5.2    assign or transfer to any person the whole or any part of the
                  Subordinated Liabilities, other than to an AIG Group Company
                  that agrees to be bound by the provisions of this Clause 8,
                  which transfers shall not require such consent;

         8.5.3    obtain or otherwise have the benefit of any Lien for or in
                  respect of any of the Subordinated Liabilities;

         8.5.4    exercise or assert any right of set-off or counterclaim
                  against any Obligor (other than the Guarantor) in respect of
                  all or any part of the Subordinated Liabilities;

         8.5.5    take any other action whereby the subordination of the
                  Subordinated Liabilities or any part thereof to the rights and
                  claims of the Lenders, the Agent and the Security Trustee
                  pursuant to and in connection with any Transaction Document
                  might be terminated, impaired or adversely affected;

         8.5.6    make any demand in respect of or attempt to obtain repayment
                  of any of the Subordinated Liabilities.

8.6      In any bankruptcy or insolvency proceeding of any Obligor (other than
         the Guarantor) any amount payable to the Subordinated Lender in respect
         of any amount of the Subordinated Liabilities shall be subordinated to
         the claims of the Lenders, the Agent and the Security Trustee against
         any Obligor (other than the Guarantor) until such claims have been
         satisfied in full in cash and the Subordinated Lender shall promptly
         pay to the Security Trustee (on behalf of the Lenders) any amount
         received by it on account of any of the Subordinated Liabilities in
         breach of this Clause 8.6.

8.7      This Agreement, inter alia, is a continuing agreement of subordination
         and shall apply notwithstanding any intermediate payment in whole or in
         part of all amounts owing to the Lenders, the Agent and the Security
         Trustee under or in connection with the Transaction Documents.
         Following a Second Trigger Event or Termination Event and so long as
         either continues or upon the occurrence of an Acceleration Event, the
         Subordinated Lender shall not by virtue of any payment or distribution
         or other benefit in respect of the Subordinated Liabilities and
         received by any Lender, the Agent or the Security Trustee be entitled
         to exercise any right of subrogation until all amounts owing by the
         Borrower to the Lenders, the Agent and the Security Trustee under or in
         connection with the Transaction Documents have been satisfied in full.

                                     -101-
<PAGE>

8.8      The Subordinated Lender undertakes that upon and following the
         occurrence of a Second Trigger Event or Termination Event and for so
         long as either continues or upon an Acceleration Event it shall
         promptly pay over to the Security Trustee an amount equal to any sums
         it receives thereafter from any Obligor (other than the Guarantor) in
         contravention of this Clause 8.

8.9      The Subordinated Lender acknowledges that upon and at any time after
         the occurrence of an Acceleration Event, any Proceeds shall be applied
         in accordance with Clause 12.7 (Application of Proceeds following an
         Acceleration Event).

8.10     None of the Obligors (other than the Guarantor) shall, without the
         prior written consent of the Security Trustee acting on the
         instructions of the Instructing Group:

         8.10.1   secure all or any part of the Subordinated Liabilities;

         8.10.2   redeem, purchase or otherwise acquire any of the Subordinated
                  Liabilities other than to the extent permitted by Clause 8.2
                  or Clause 8.4;

         8.10.3   repay any of the Subordinated Liabilities otherwise than in
                  accordance with this Agreement; or

         8.10.4   take any action whereby the subordination of the Subordinated
                  Liabilities or any part thereof to the rights and claims of
                  the Lenders and the Representatives pursuant to and in
                  connection with any Transaction Document might be terminated,
                  impaired or adversely affected.

9.       TRIGGER EVENTS

9.1      FIRST TRIGGER EVENT

         9.1.1    If a First Trigger Event occurs, upon the request of the
                  Security Trustee (acting on the instructions of the
                  Instructing Group), the Borrower shall pay or shall cause to
                  be paid:

                  (a)      an amount equal to each Security Deposit then held by
                           the Borrower, each Sub-Borrower and each Intermediate
                           Lessee into the relevant Security Deposit Account.
                           The Borrower, the relevant Sub-Borrower and the
                           relevant Intermediate Lessee shall procure that a
                           separate ledger entry in the relevant Security
                           Deposit Account is maintained in relation to each
                           Aircraft (if applicable). All Security Deposits
                           received by the Borrower, each Sub-Borrower and each
                           Intermediate Lessee after the occurrence of a First
                           Trigger Event shall be paid into the relevant
                           Security Deposit Account;

                  (b)      an amount equal to the Maintenance Reserves then held
                           by the Borrower, each Sub-Borrower and each
                           Intermediate Lessee into the relevant Maintenance
                           Reserve Account. All Maintenance Reserves received by
                           the Borrower, each Sub-Borrower and each Intermediate
                           Lessee after the occurrence of a First Trigger Event
                           shall be paid into the relevant Maintenance Reserve
                           Account. The Borrower, the relevant

                                     -102-
<PAGE>

                           Sub-Borrower and the relevant Intermediate Lessee
                           shall procure that a separate ledger is maintained in
                           relation to each Aircraft (if applicable) in the
                           relevant Maintenance Reserve Account; and

                  the Borrower, the relevant Sub-Borrower and the relevant
                  Intermediate Lessee shall not remove any sums standing to the
                  credit of either the relevant Security Deposit Account or the
                  relevant Maintenance Reserve Account for the purpose of
                  co-mingling such sums with the general funds of the Guarantor
                  and/or its Subsidiaries (but shall otherwise have sole and
                  absolute control over such sums until the occurrence and
                  continuation of a Second Trigger Event).

         9.1.2    If the payments set out in Clause 9.1.1 are not made in
                  relation to a particular Loan to the applicable accounts
                  within ninety (90) days of the Security Trustee's request, the
                  Security Trustee may, acting on the instructions of the
                  Instructing Group, demand immediate repayment of the relevant
                  Loan, whereupon the same shall become immediately due and
                  payable and the Borrower shall prepay the amount referred to
                  in Clause 4.10 (Mandatory Prepayment Event) relating to the
                  First Trigger Event.

         9.1.3    If a First Trigger Event ceases by reason of the credit rating
                  of the Guarantor for long term debt rising to or above A- if
                  and as rated by Standard and Poor's Corporation and A3 if and
                  as rated by Moody's Investor Service Inc., or an equivalent by
                  an alternative service of equivalent recognition (if neither
                  Standard and Poor's Corporation nor Moody's Investor Service
                  Inc. has assigned any rating) the Borrower's obligation to
                  deposit the amounts set out in Clause 9.1.1 shall cease.

9.2      SECOND TRIGGER EVENT

         9.2.1    Upon the occurrence of a Second Trigger Event and for so long
                  as it continues:

                  (a)      the provisions of Clause 8 (Subordination) (other
                           than the provisions of Clauses 8.3, 8.6, 8.7 and 8.10
                           which shall apply in any event) shall apply to the
                           Subordinated Liabilities;

                  (b)      (i) the Borrower shall pay or shall procure the
                           payment of an amount equal to the relevant
                           Maintenance Reserves then held by it and pay all
                           future Maintenance Reserves received by it into the
                           Borrower Maintenance Reserves Account and an amount
                           equal to the relevant Security Deposit then held by
                           it and pay all future Security Deposits received by
                           it into the Borrower Security Deposit Account if the
                           relevant Aircraft is to be leased by the Borrower,
                           (ii) each Sub-Borrower shall pay or procure the
                           payment of an amount equal to the relevant
                           Maintenance Reserves then held by it and pay all
                           future Maintenance Reserves received by it into the
                           relevant Sub-Borrower Maintenance Reserves Account
                           and the relevant Security Deposit then held by it and
                           pay all future Security Deposits received by it into
                           the relevant

                                     -103-
<PAGE>

                           Sub-Borrower Security Deposit Account if the Aircraft
                           is to be leased by a Sub-Borrower and (iii) each
                           Intermediate Lessee shall pay or procure the payment
                           of an amount equal to the relevant Maintenance
                           Reserves then held by it and pay all future
                           Maintenance Reserves received by it into the relevant
                           Intermediate Lessee Maintenance Reserve Account and
                           an amount equal to the relevant Security Deposit then
                           held by it and pay all future Security Deposits
                           received by it into the relevant Intermediate Lessee
                           Security Deposit Account if the relevant Aircraft is
                           to be leased by an Intermediate Lessee. The Borrower,
                           the relevant Sub-Borrower and the relevant
                           Intermediate Lessee shall ensure that a separate
                           ledger is maintained in relation to each Aircraft (if
                           applicable) in the relevant Maintenance Reserve
                           Account;

                  (c)      the provisions of clause 7.1 (Conversion of Floating
                           Charge) of the Borrower Debenture, each Sub-Borrower
                           Debenture and each Intermediate Lessee Debenture
                           shall apply to all Debts and Credit Balances (as such
                           terms are defined in the Borrower Debenture, each
                           Sub-Borrower Debenture and each Intermediate Lessee
                           Debenture (as the case may be)) and the sums standing
                           to the credit of either the relevant Security Deposit
                           Account or the relevant Maintenance Reserve Account
                           shall not be withdrawn without the prior consent of
                           the Security Trustee, such consent not to be withheld
                           if the Security Trustee is satisfied that such
                           withdrawal is for the purposes of administering the
                           relevant Lease or maintaining the relevant Aircraft;

                  (d)      the Borrower, each Sub-Borrower and each Intermediate
                           Lessee shall or shall procure that all Rentals and
                           other amounts relating to the use or requisition or
                           hull insurance of an Aircraft payable under the
                           relevant Lease received by the Borrower, each
                           Sub-Borrower and each Intermediate Lessee on or after
                           the occurrence of a Second Trigger Event shall be
                           paid (i) into the relevant Rental Account or (ii)
                           where a Material Termination Event or Acceleration
                           Event has occurred and is continuing, at the Security
                           Trustee's election (acting on the instructions of the
                           Instructing Group) to an account of the Security
                           Trustee designated in writing by the Security Trustee
                           (the "DESIGNATED ACCOUNT"). In the event of the
                           aforementioned (i) the sums standing to the credit of
                           the relevant Rental Account shall not be withdrawn
                           without the prior consent of the Security Trustee,
                           such consent not to be withheld if such withdrawal is
                           for the purpose of paying any Secured Obligation. In
                           the event of the aforementioned (ii) the sums
                           standing in the credit of the Designated Account
                           shall be applied to the Secured Obligations by the
                           Security Trustee in accordance with Clause 12
                           (Application of Sums Received by the Lenders). The
                           Borrower, the Intermediate Lessee or the Sub-Borrower
                           (as the case may be (in respect of the Rental
                           Account)) and the Security Trustee (in respect of the

                                     -104-
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                           Designated Account) shall ensure that a separate
                           ledger entry in the relevant account is maintained in
                           respect of each Aircraft;

                  (e)      the Borrower and each Sub-Borrower shall enter into a
                           Lease Security Assignment in accordance with the
                           provisions of clause 3.2 of each Mortgage and each
                           Intermediate Lessee shall enter into an Intermediate
                           Lease Security Assignment in accordance with the
                           provisions of paragraph 2.1 (g) of the relevant
                           Accession Deed;

                  (f)      if, notwithstanding the occurrence of such Second
                           Trigger Event, the Security Trustee elects not to
                           give a Cancellation Notice, (i) any Aircraft which
                           the Borrower proposes is to be the subject of a
                           proposed Utilisation is subject to a Lease or an
                           Intermediate Lease, (ii) the Security Trustee, acting
                           on the instructions of the Instructing Group, is
                           satisfied as to the level of Rentals, Security
                           Deposit (if any) and Maintenance Reserves (if any)
                           payable under the Lease or an Intermediate Lease,
                           (iii) the Borrower, each Sub-Borrower and each
                           Intermediate Lessee shall enter into a Lease Security
                           Assignment and, as the case may be, an Intermediate
                           Lease Security Assignment on the Delivery Date of
                           each further Aircraft financed pursuant to the
                           Facility and delivered following the occurrence of
                           such Second Trigger Event and (iv) if the Borrower
                           notifies the Representatives that such Lessee
                           requires a quiet enjoyment covenant to be given to
                           it, it shall be a condition precedent that in the
                           case of any new Lease in respect of a previously
                           delivered Aircraft with a term (including any option
                           to extend) in excess of three (3) years that the
                           total amount of Rentals payable during the term of
                           the Lease (including any option to extend) shall be
                           at least equal to seventy five per cent. (75%) of the
                           principal portion of Repayment Instalments due in
                           respect of the relevant Loan properly allocable to
                           the period of the term of the Lease (including any
                           option to renew);

                  (g)      if an Aircraft is not leased to a Lessee, then:

                           (i)      unless the Security Trustee otherwise agrees
                                    (in its sole discretion), the relevant
                                    Aircraft shall be registered in the name of
                                    the Borrower, or a Sub-Borrower or an
                                    Intermediate Lessee in the United States,
                                    the United Kingdom, Bermuda, the Cayman
                                    Islands, the Federal Territory of Labuan,
                                    Malaysia or Ireland (in accordance with the
                                    provisions of the Sub-Borrower Intermediate
                                    Lessee Regular Jurisdiction Letter
                                    Agreement) and to the extent permitted by
                                    applicable law, the relevant Mortgage shall
                                    be registered in the aircraft mortgage
                                    register with the Aviation Authority;

                           (ii)     the Borrower shall ensure that the relevant
                                    Aircraft has a valid certificate of
                                    airworthiness issued by the Aviation
                                    Authority and

                                     -105-
<PAGE>

                                    that the Aircraft has been maintained in
                                    accordance with the maintenance programme
                                    approved by that Aviation Authority unless
                                    the Aircraft is then undergoing or scheduled
                                    for imminent major maintenance or major
                                    modifications or is in storage and would not
                                    be eligible for an airworthiness certificate
                                    from the relevant Aviation Authority and/or
                                    the maintenance programme is inapplicable;
                                    in which event the Borrower shall if
                                    requested by the Security Trustee transfer
                                    title to a US owner/voting trust so that the
                                    Aircraft is US registered for the duration
                                    of the major maintenance or major
                                    modifications or is in storage even though
                                    the Aircraft may not be eligible for an FAA
                                    certificate of airworthiness during such
                                    major maintenance or major modifications or
                                    is in storage;

                  (h)      the Agent acting on the instructions of the
                           Instructing Group shall be entitled to give a written
                           notice to the Borrower (copied to the Guarantor)
                           declaring that a Second Trigger Event has occurred,
                           in which case if the Agent so specifies in the notice
                           (whereupon such notice will be deemed a "CANCELLATION
                           NOTICE") the right of the Borrower to serve a
                           Utilisation Notice or to require any Advance to be
                           made in relation to any Utilisation shall be
                           suspended until the rating of the Guarantor for long
                           term debt rises in accordance with Clause 9.2.2
                           whereupon the Unutilised Facility shall become
                           available for further Utilisation on the terms and
                           subject to the conditions of this Agreement;

                  (i)      the Security Trustee, acting on the instructions of
                           the Instructing Group, shall be entitled to notify
                           the Guarantor that, in order to keep the Facility in
                           effect, the Instructing Group requires that the
                           Guarantor shall perfect the Liens created by the
                           Aircraft Security Documents (including without
                           limitation any Mortgage) and the receipt of a
                           satisfactory legal opinion from counsel in the state
                           of registration of the Aircraft and, if different, in
                           the state in which the Intermediate Lessee, the
                           Lessee or a Sub-Lessee (as the case may be) has its
                           principal place of business as to the recognition in
                           those relevant jurisdictions of the Liens created by
                           the Aircraft Security Documents so perfected in the
                           jurisdiction of incorporation of the parties to the
                           Aircraft Security Documents (other than the Security
                           Trustee);

                  (j)      the provisions of Clause 3.10.4 shall apply.

         9.2.2    If a Second Trigger Event ceases by reason of the credit
                  rating of the Guarantor for long term debt rising to or above
                  BBB (if and as rated by Standard & Poor's Corporation) and
                  Baa2 (if and as rated by Moodys Investor Service Inc.) or an
                  equivalent by an alternative service of an equivalent
                  recognition (if neither Standard and Poor's Corporation nor
                  Moody's Investor Service Inc. has assigned any rating) the
                  Borrower shall thereafter be entitled

                                     -106-
<PAGE>

                  to issue further Utilisation Notices and the provisions of
                  Clause 3 (Utilisation of the Facility) shall apply to such
                  Utilisation Notices; and the restrictions set forth above
                  shall cease, and if requested by the Borrower the Security
                  Trustee shall promptly release, reassign and return (if the
                  Borrower so requests) any Lease Security Assignments
                  previously perfected and any Mortgages registered in the
                  jurisdiction of organisation or principal place of business of
                  the relevant Lessee. The Borrower shall pay or promptly
                  reimburse the Security Trustee for its expenses incurred in
                  respect of such release, reassignment and return.

10.      DEFAULT

10.1     TERMINATION EVENTS

         A Termination Event shall occur if:

         10.1.1   Non-payment: the Borrower or the Guarantor fails to pay any
                  Repayment Instalment payable by it hereunder within three (3)
                  Business Days of the due date (other than in the case of the
                  Guarantor following a demand made under and in accordance with
                  Clause 5 (Guarantee and Indemnity), in which case no further
                  grace period shall apply) or, in the case of other amounts due
                  under any Transaction Document on demand, the Borrower or the
                  Guarantor fails to make such payment within seven (7) Business
                  Days after the due date thereof (other than in the case of the
                  Guarantor following a demand made under and in accordance with
                  Clause 5 (Guarantee and Indemnity) in which case no further
                  grace period shall apply); or

         10.1.2   Breach: the Borrower, any Sub-Borrower, any Intermediate
                  Lessee, the Borrower Parent or the Guarantor fails to observe
                  or perform its obligations under any of the Transaction
                  Documents (including, without limitation, in the case of the
                  Guarantor the financial covenant contained in paragraph 2.7 of
                  Schedule 6) and, but only if such default is capable of
                  remedy, such default shall continue for more than thirty (30)
                  days after receipt of notice thereof from the Agent without
                  being remedied to the satisfaction of the Agent or if at the
                  end of such thirty (30) day period such failure has not been
                  so remedied but the Borrower, the Borrower Parent, the
                  relevant Intermediate Lessee, the relevant Sub-Borrower or the
                  Guarantor (as the case may be) has demonstrated to the
                  reasonable satisfaction of the Agent that there is a
                  reasonable prospect of remedying such failure and the
                  Borrower, the Borrower Parent, the relevant Intermediate
                  Lessee, the relevant Sub-Borrower or the Guarantor (as the
                  case may be) is acting in good faith is using all reasonable
                  efforts to remedy such failure within such other period as the
                  Agent agrees acting reasonably; or

         10.1.3   Representation: any representation or warranty made by the
                  Borrower, any Sub-Borrower, any Intermediate Lessee, the
                  Borrower Parent or the Guarantor in writing herein or in any
                  of the Transaction Documents or in any certificate furnished
                  by any of them under or in connection with any of the

                                     -107-
<PAGE>

                  Transaction Documents shall prove to have been misleading or
                  incorrect in any material respect on the date when made with
                  reference to the facts and circumstances then subsisting and,
                  which in the opinion of the Agent would materially and
                  adversely affect the interests or rights of the Lenders, the
                  Agent or the Security Trustee hereunder or thereunder and such
                  material adverse effect is incapable of being remedied, or, if
                  capable of being remedied within thirty (30) days after notice
                  from the Security Trustee or the Agent; or

         10.1.4   Insurance: the required Insurances or governmental
                  indemnities, (as the case may be) in respect of the relevant
                  Aircraft cease to be in full force and effect as to the
                  Security Trustee (on behalf of itself, the Agent and the
                  Relevant Lenders), the Borrower, the relevant Sub-Borrower or
                  the relevant Intermediate Lessee; or

         10.1.5   Repudiation of Guarantee: any of the terms contained in Clause
                  5 (Guarantee and Indemnity) are repudiated by the Guarantor;

         10.1.6   Insolvency: the Borrower, the Guarantor, any Sub-Borrower, the
                  Borrower Parent or any Intermediate Lessee (in this Clause
                  10.1.6, the "PARTY") shall (i) admit in writing its inability
                  to pay its debts generally as they become due, (ii) file a
                  voluntary petition in bankruptcy or a voluntary petition or an
                  answer seeking reorganisation in a proceeding under any
                  bankruptcy laws (as now or hereafter in effect) or an answer
                  admitting the material allegations of a petition filed against
                  the Party shall by voluntary petition, answer or consent, seek
                  relief under the provisions of any other now existing or
                  future bankruptcy or other similar law providing for the
                  reorganisation or winding-up of corporations, or providing for
                  an agreement, composition, extension or adjustment with its
                  creditors, (iii) make a general assignment for the benefit of
                  creditors, or (iv) consent to the appointment of a receiver,
                  administrator, administrative receiver, trustee, liquidator or
                  the like of itself or substantially all of its property; or

         10.1.7   Appointment of Trustee etc: proceedings or a case shall
                  commence or be commenced in any Relevant Jurisdiction, without
                  the application or consent of the Borrower, the Guarantor, the
                  relevant Sub-Borrower, the relevant Intermediate Lessee or the
                  Borrower Parent (in this Clause 10.1.7, the "PARTY"), in any
                  court of competent jurisdiction, which shall not be struck out
                  within sixty (60) days of commencement and which seeks (i) the
                  liquidation, reorganisation, dissolution, winding-up, or
                  composition or readjustment of debts of the Party, (ii)
                  appointment of a trustee, receiver, administrator,
                  administrative receiver, custodian, liquidator or the like of
                  the Party or substantially all of the property or assets of
                  the Party, or (iii) similar relief in respect of the Party
                  under any law providing for the relief of debtors, or any
                  order for relief against the Party shall be entered in an
                  involuntary case under such bankruptcy law or such proceedings
                  or case shall commence or be

                                     -108-
<PAGE>

                  commenced in any other jurisdiction with respect to which the
                  Agent reasonably determines would have a material possibility
                  of success; or

         10.1.8   Analogous events: any event analogous to any of the events
                  specified in Clause 10.1.6 or 10.1.7 in any jurisdiction shall
                  occur; or

         10.1.9   Change or cessation of business: the Borrower, any
                  Sub-Borrower, any Intermediate Lessee and/or the Guarantor:

                  (a)      materially changes the nature or scope of its
                           aircraft operating leasing and aircraft trading
                           business or aircraft operating leasing ceases to be a
                           core activity of its business; or

                  (b)      suspends a substantial part of its aircraft operating
                           leasing and aircraft trading business operations
                           (other than suspensions of a temporary nature
                           resulting from (i) a strike or (ii) a similar event
                           not within the control of the Borrower, the relevant
                           Sub-Borrower, the relevant Intermediate Lessee or the
                           Guarantor (as the case may be) which it now conducts
                           directly; or

                  (c)      ceases, or threatens to cease, to carry on all or a
                           substantial part of its aircraft operating leasing
                           and aircraft trading business; or

         10.1.10  Cross acceleration of Financial Indebtedness: any Financial
                  Indebtedness of the Guarantor (other than Financial
                  Indebtedness of the Guarantor to a Subsidiary of the
                  Guarantor) exceeding one per cent. (1%) of the Financial
                  Indebtedness of the Guarantor in aggregate (or the equivalent
                  thereof, as determined by the Agent by reference to prevailing
                  market exchange rates from time to time, in any other
                  currency) is declared to be due or otherwise becomes due and
                  payable before its stated maturity by reason of a default by
                  the Guarantor or an event of default (howsoever described)
                  under the document relating to that Financial Indebtedness; or

         10.1.11  Cross acceleration of ECA facilities: a "TERMINATION EVENT"
                  (as that term is defined in the 1999 Facility Agreement shall
                  occur and be continuing or any other termination event
                  (howsoever described) shall occur and be continuing in respect
                  of any other loan facility to the Guarantor or any Subsidiary
                  which may be granted from time to time after the date of this
                  Agreement and which is supported by the Export Credit
                  Agencies, and in each case a declaration of acceleration shall
                  have been made in respect thereof; or

         10.1.12  Cross default of ECA facilities: a "TERMINATION EVENT" (as
                  that term is defined in the 1999 Facility Agreement) in
                  respect of the non-payment of principal and/or interest under
                  any loan advanced under the 1999 Facility Agreement shall
                  occur and be continuing or any termination event (howsoever
                  described) in respect of the non-payment of principal and/or
                  interest shall occur and be continuing in respect of any other
                  loan facility to the Guarantor or any Subsidiary which may be
                  granted from time to time after the date of

                                     -109-
<PAGE>

                  this Agreement and which is supported by the Export Credit
                  Agencies (or any one or more of them), and in each case a
                  declaration of default shall have been made in respect
                  thereof; or

         10.1.13  Uninsured use: the Borrower, any Sub-Borrower or any
                  Intermediate Lessee uses or operates or knowingly permits or
                  causes to be used or operated any Aircraft outside the cover
                  provided by any of the Insurances (including governmental
                  indemnities, as the case may be) except in connection with a
                  repossession, hijacking, act of war, impoundment (other than
                  for unpaid charges), emergency or similar event and to ferry
                  the Aircraft to a jurisdiction where such Insurances (or
                  governmental indemnities) will be in effect.

10.2     RIGHTS FOLLOWING A TERMINATION EVENT

         Without prejudice to any other rights of the Lenders (whether under the
         Transaction Documents or otherwise), at any time after the occurrence
         of a Termination Event and thereafter for so long as any Termination
         Event is continuing, the Agent may (acting upon the instructions of the
         Instructing Group) by notice to the Borrower from time to time to any
         or all of the following:

         10.2.1   cancel the Commitment of each Lender in respect of each
                  Aircraft whereupon they shall immediately be cancelled and
                  reduced to zero; and/or

         10.2.2   declare that all of the conditions, stipulations and
                  requirements specified in Clause 9.2 shall apply forthwith as
                  if a Second Trigger Event had occurred and was continuing;
                  and/or

         10.2.3   declare that the principal amount of each Loan then
                  outstanding and all interest accrued thereon, Expenses (if
                  any) and the LIBOR Break Amount (if any) in respect of each
                  Loan (which shall be specified in such notice) shall become
                  immediately due and payable and the Borrower shall immediately
                  pay the same (any notice of the nature referred to in this
                  Clause 10.2.3 being referred to as an "ACCELERATION NOTICE");
                  and/or

         10.2.4   (following the service of an Acceleration Notice) each of the
                  Representatives may enforce its rights and those of the
                  Lenders under all or any of the Transaction Documents and
                  under applicable law; and/or

         10.2.5   to the extent such event constitutes a Material Termination
                  Event the provisions of Clause 9.2.1(d) shall apply.

11.      PROCEEDS ACCOUNT

11.1     On or before the occurrence of any event which will result in the
         payment of any Proceeds or promptly thereafter the Security Trustee
         shall open the Proceeds Account in respect of each Aircraft and shall
         promptly notify all parties to this Agreement of such details of such
         account as they may require in order to comply with their obligations
         under Clause 11.3. Such account shall be held in the name of the
         Security Trustee and all monies from time to time standing to the
         credit thereof shall be the

                                     -110-
<PAGE>

         property of the Security Trustee and no party hereto other than the
         Security Trustee shall have any proprietary interests in such account
         or any such monies.

11.2     Any sum received by any party hereto which is required by any provision
         hereof to be paid to the Security Trustee for credit to the Proceeds
         Account shall be received by such party on trust for the Security
         Trustee; provided that in respect of any Total Loss Proceeds,
         Requisition Proceeds, Final Disposition Proceeds or Sub-Borrower Sale
         Proceeds, or cash collateral received by the Borrower or a Sub-Borrower
         prior to a Material Termination Event or Acceleration Event such
         amounts shall not be received in trust or be paid to the Proceeds
         Account but the Borrower or such Sub-Borrower shall pay as provided
         herein the amounts set out in Clauses 4.4.1 (Prepayment following a
         Total Loss), 4.5.1(a) (Prepayment on Final Disposition) and 4.6.1(a)
         (Prepayment on Sub-Borrower Sale) to the Security Trustee for credit to
         the Proceeds Account or provide a Replacement Aircraft as provided
         herein.

11.3     Each Representative and each Lender shall from time to time pay any
         Proceeds (other than any such amounts as may be received by way of
         distribution from the Proceeds Account) to the Security Trustee
         promptly upon receipt thereof for application in accordance with the
         terms of this Agreement.

11.4     Except as provided in Clause 11.2, all Proceeds received by the
         Security Trustee (otherwise than by way of distribution from the
         Proceeds Account) shall, if received in Dollars, be promptly credited
         to the Proceeds Account.

11.5     If any Proceeds are received by the Security Trustee (otherwise than by
         way of distribution from the Proceeds Account) in any currency other
         than Dollars, then they shall be applied in purchase of Dollars at the
         spot rate of exchange available to the Security Trustee (in the
         ordinary course of business) in the London foreign exchange market on
         the date of receipt (or, if it is not practicable to effect such
         purchase, on such date, the immediately following day on which banks in
         London are generally open for the transaction of such foreign exchange
         business), and the net amount of Dollars so purchased (after the
         deduction by the Security Trustee of any reasonable costs of exchange
         incurred by it in connection with such purchase) shall be credited to
         the Proceeds Account.

11.6     Each Representative or Lender hereto agrees for the benefit of the
         others that it shall promptly pay, without any set-off or counterclaim
         and free and clear of and without any withholding or deduction
         whatsoever (except as required by compulsion of law) to the Security
         Trustee, in the currency of receipt, all Proceeds received by it for
         application by the Security Trustee in accordance with the terms of
         this Agreement (but if any such deduction or withholding is required by
         law then the party affected by such requirement (the "AFFECTED PARTY")
         agrees that it shall consult in good faith with the parties to this
         Agreement who may be affected thereby with a view to mitigating the
         effect of any such deduction or withholding provided that the affected
         party shall not be obliged to incur any additional expense, nor to take
         any course of action other than it would do in relation to any
         counterparty to any of its similar contracts who would be affected by
         the same or any similar legal requirement).

                                     -111-
<PAGE>

11.7     Interest shall accrue from day to day on the amounts of all Proceeds
         received by the Security Trustee and from time to time standing to the
         credit of the Proceeds Account at the rate or rates and for such
         interest periods and in the manner which the Security Trustee shall
         reasonably select from time to time. Any such interest shall be
         credited to the Proceeds Account at the end of each interest period so
         agreed.

12.      APPLICATION OF SUMS RECEIVED BY THE LENDERS

12.1     APPLICATION OF PRINCIPAL AND INTEREST PRIOR TO THE OCCURRENCE OF AN
         ACCELERATION EVENT

         Upon receipt by the Agent of the amounts referred to in Clause 4.14.1
         (Performance Procedure) in respect of the relevant Loan, the Agent
         shall make the same available in accordance with the provisions of
         Clause 4.14.2 (Performance Procedure) to each of the Lead Managers in
         the proportions specified in the relevant Loan Supplement for
         application by each Lead Manager in or towards the payment of interest
         and principal outstanding to the Relevant Lenders in respect of the
         Loan relating to such Aircraft; such application by each Lead Manager
         to be in accordance with the terms agreed between that Lead Manager,
         the Relevant Lenders and the relevant Export Credit Agency.

12.2     APPLICATION OF AMOUNTS RECEIVED IN RESPECT OF INDEMNITY OBLIGATIONS

         Any and all monies received by the Agent or, as the case may be, the
         Security Trustee, from the Borrower, in respect of any indemnity
         obligations of the Borrower, shall be paid by the Agent or, as the case
         may be, the Security Trustee, promptly upon receipt thereof to the
         relevant Lender or, as the case may be, the relevant Representative in
         respect of whom the indemnity claim was made up to the total amount
         owing to that relevant Lender or the relevant Representative in respect
         of that indemnity claim.

12.3     APPLICATION OF INSURANCE PROCEEDS (OTHER THAN IN RESPECT OF A TOTAL
         LOSS)

         12.3.1   Any insurance proceeds in respect of any loss of or damage to
                  an Aircraft not amounting to a Total Loss of such Aircraft
                  which are received by the Security Trustee pursuant to
                  Schedule 9, together with such amount of interest as may have
                  accrued thereon, shall be paid over to the relevant
                  Sub-Borrower or the Borrower or to the relevant Lessee or
                  Sub-Lessee, as instructed by the Borrower or the relevant
                  Sub-Borrower, as the case may be and as soon as practicable
                  thereafter, the Borrower or such Sub-Borrower shall furnish
                  evidence reasonably satisfactory to the Security Trustee that
                  all damage has been properly repaired.

         12.3.2   Any insurance proceeds received in respect of a Total Loss of
                  an Engine shall be paid to the Borrower or the relevant
                  Sub-Borrower, or as it may instruct, and the Borrower or
                  relevant Sub-Borrower shall as soon as reasonably practicable
                  thereafter obtain title to a Replacement Engine.

         12.3.3   Any monies paid under liability insurances shall be paid to
                  the person, firm or company to which the liability (or alleged
                  liability) covered by such insurances was incurred or if the
                  liability (or alleged liability) to such persons has been
                  previously discharged, such monies shall be paid to the person
                  who has

                                     -112-
<PAGE>

                  discharged such liability in reimbursement of the monies so
                  expended by it in satisfaction of such liability or alleged
                  liability.

12.4     APPLICATION OF TOTAL LOSS PROCEEDS

         12.4.1   If any Total Loss Proceeds in respect of a Total Loss of an
                  Aircraft are received prior to the occurrence of an
                  Acceleration Event and such Aircraft has been substituted in
                  accordance with the provisions of Clause 4.7 (Substitution of
                  Aircraft) such Total Loss Proceeds together with interest
                  thereon as provided in Clause 4.7.6(a) (Timing of
                  Substitution) shall be paid promptly following receipt by the
                  Security Trustee to the Borrower or the relevant Sub-Borrower
                  or their respective designee nominated in writing to the
                  Security Trustee. If any Total Loss Proceeds in respect of a
                  Total Loss of an Aircraft are received prior to the occurrence
                  of an Acceleration Event and the Borrower or relevant
                  Sub-Borrower (as the case may be) intends to substitute such
                  Aircraft in accordance with the provisions of Clause 4.7
                  (Substitution of Aircraft), a portion of such Total Loss
                  Proceeds up to the principal amount of the relevant Loan shall
                  be retained by the Security Trustee in the Substitute Cash
                  Collateral Account and the balance shall be paid to the
                  Borrower or Sub-Borrower (as the case may be), unless such
                  portion shall have already been deposited therein by the
                  Borrower or the relevant Sub-Borrower with the Security
                  Trustee, in which case the entire amount of such Total Loss
                  Proceeds shall be paid to the Borrower or relevant
                  Sub-Borrower.

         12.4.2   If any Total Loss Proceeds in respect of a Total Loss of an
                  Aircraft are received prior to the occurrence of an
                  Acceleration Event and such Aircraft has not been and will not
                  be so substituted, such Total Loss Proceeds, together with
                  such amount of interest as may have accrued thereon, shall be
                  applied promptly following receipt by the Security Trustee in
                  the following order:

                  (a)      in reimbursement of the Representatives and the
                           Relevant Lenders of any and all Expenses incurred by
                           them as a group and approved by the Guarantor (acting
                           reasonably) in collecting such Total Loss Proceeds
                           together with interest thereon at LIBOR from the date
                           of payment of such Expenses;

                  (b)      an amount of up to the total amount of principal and
                           interest outstanding in respect of the Loan relating
                           to such Aircraft to each of the Lead Managers in the
                           proportions specified in the Loan Supplement relating
                           to the relevant Aircraft for application by each Lead
                           Manager in or towards payment of interest and
                           principal outstanding to the Relevant Lenders in
                           respect of the Loan relating to such Aircraft, such
                           application by each Lead Manager to be in accordance
                           with the terms agreed between that Lead Manager, the
                           Relevant Lenders and the relevant Export Credit
                           Agency;

                  (c)      the LIBOR Break Amount, if any, to each of the
                           Representatives and each of the Lead Managers on
                           behalf of the Relevant Lenders;

                                     -113-
<PAGE>

                  (d)      any balance shall be paid to the Borrower.

         12.4.3   If the Total Loss Proceeds are received after the occurrence
                  of an Acceleration Event, the Total Loss Proceeds, together
                  with such amount of interest as may have accrued thereon
                  whilst held in the Security Trustee's bank account, shall be
                  applied in accordance with Clause 12.7 below.

12.5     APPLICATION OF REQUISITION PROCEEDS

         12.5.1   If any Requisition Proceeds (other than as a result of a Total
                  Loss of an Aircraft) or similar proceeds in respect of an
                  Engine are received prior to the occurrence of an Acceleration
                  Event such Requisition Proceeds, together with such amount of
                  interest as may have accrued thereon, shall be paid promptly
                  following receipt by the Security Trustee to the Borrower or
                  any relevant Sub-Borrower.

         12.5.2   If the Requisition Proceeds (other than as a result of a Total
                  Loss of an Aircraft) or similar proceeds in respect of an
                  Engine are received after the occurrence of an Acceleration
                  Event the Requisition Proceeds shall be applied in accordance
                  with Clause 12.7 below subject to the Lessee's or the
                  Sub-Lessee's quiet enjoyment rights to any of such Requisition
                  Proceeds or similar proceeds.

12.6     APPLICATION OF SUB-BORROWER SALE PROCEEDS AND FINAL DISPOSITION
         PROCEEDS

         12.6.1   If any Final Disposition Proceeds in respect of a Final
                  Disposition of an Aircraft or any Sub-Borrower Sale Proceeds
                  in respect of a Sub-Borrower Sale (as the case may be) are
                  received prior to the occurrence of an Acceleration Event and
                  such Aircraft has been substituted in accordance with Clause
                  4.7 (Substitution of Aircraft) such Final Disposition Proceeds
                  or such Sub-Borrower Sale Proceeds (as the case may be),
                  together with such amount of interest as may have accrued
                  thereon, shall be paid promptly following receipt by the
                  Security Trustee to the Borrower or the relevant Sub-Borrower
                  or their respective designee nominated in writing to the
                  Security Trustee. If any Final Disposition Proceeds in respect
                  of a Final Disposition of an Aircraft or any Sub-Borrower Sale
                  Proceeds in respect of a Sub-Borrower Sale (as the case may
                  be) are received prior to the occurrence of an Acceleration
                  Event and the Borrower or relevant Sub-Borrower (as the case
                  may be) intends to substitute such Aircraft in accordance with
                  the provisions of Clause 4.7 (Substitution of Aircraft), a
                  portion of such Final Disposition Proceeds up to the principal
                  amount of the relevant Loan shall be retained by the Security
                  Trustee in the Substitute Cash Collateral Account and the
                  balance shall be paid to the Borrower or Sub-Borrower (as the
                  case may be), unless such portion shall have already been
                  deposited therein by the Borrower or the relevant Sub-Borrower
                  with the Security Trustee, in which case the entire amount of
                  such Final Disposition Proceeds shall be paid to the Borrower
                  or relevant Sub-Borrower.

         12.6.2   If any Final Disposition Proceeds in respect of a Final
                  Disposition of an Aircraft or any Sub-Borrower Sale Proceeds
                  in respect of a Sub-Borrower Sale (as the case may be) are
                  received prior to the occurrence of an Acceleration Event and
                  there will be no substitution of the relevant Aircraft, such
                  Final Disposition Proceeds or Sub-Borrower Sale Proceeds (as
                  the case may be), together with such amount of interest as may
                  have accrued thereon, shall be applied promptly following
                  receipt by the Security Trustee in the following order:

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                  (a)      in reimbursement of the Representatives and the
                           Relevant Lenders of any and all Expenses incurred by
                           them as a group and approved by the Guarantor acting
                           reasonably in collecting such Final Disposition
                           Proceeds or Sub-Borrower Sale Proceeds (as the case
                           may be) together with interest thereon at LIBOR from
                           the date of payment of such Expenses;

                  (b)      an amount of up to the total amount of principal and
                           interest outstanding in respect of the Loan relating
                           to such Aircraft to each of the Lead Managers in the
                           proportions specified in the Loan Supplement relating
                           to the relevant Aircraft for application by each Lead
                           Manager in or towards payment of interest and
                           principal outstanding to the Relevant Lenders in
                           respect of the Loan relating to such Aircraft, such
                           application by each Lead Manager to be in accordance
                           with the terms agreed between that Lead Manager, the
                           Relevant Lenders and the relevant Export Credit
                           Agency;

                  (c)      the LIBOR Break Amount (if any) to each
                           Representative and each of the Lead Managers on
                           behalf of the Relevant Lenders;

                  (d)      any balance shall be paid to the Borrower.

         12.6.3   If the Final Disposition Proceeds or Sub-Borrower Sale
                  Proceeds (as the case may be) are received after the
                  occurrence of an Acceleration Event, the Final Disposition
                  Proceeds or Sub-Borrower Sale Proceeds (as the case may be),
                  together with such amount of interest as may have accrued
                  thereon whilst held in the Security Trustee's bank account,
                  shall be applied in accordance with Clause 12.7.

12.7     APPLICATION OF PROCEEDS FOLLOWING AN ACCELERATION EVENT

         Any Proceeds in the Proceeds Account or Rentals and other amounts
         relating to an Aircraft or otherwise received by the Security Trustee
         at the time of an Acceleration Event, or at any time thereafter,
         together with such amount of interest as may have accrued thereon shall
         be applied by the Security Trustee forthwith or, as the case may be,
         forthwith upon receipt by the Security Trustee as follows:

         12.7.1   First, in or towards reimbursing each of the Representatives,
                  and/or any Receiver for any Expenses for which the
                  Representatives, and/or any Receiver shall not previously have
                  been reimbursed or indemnified together with interest thereon
                  at LIBOR from the date of payment of such Expenses and in or
                  towards payment of any debts or claims which are by statute
                  payable in preference to the amounts due to the
                  Representatives and/or the Lenders (but only to the extent
                  such debts or claims have such preference);

         12.7.2   second, an amount of up to the total principal and interest
                  outstanding in respect of the Loan relating to the relevant
                  Aircraft to each of the Lead Managers in the proportions
                  specified in the Loan Supplement relating to such Aircraft for
                  application by each Lead Manager in or towards the payment of
                  interest and principal outstanding to the Relevant Lenders in
                  respect of the Loan relating to such Aircraft, such
                  application by each Lead Manager to be in accordance with

                                     -115-
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                  the terms agreed between that Lead Manager, the Relevant
                  Lenders and the relevant Export Credit Agency;

         12.7.3   third, in payment of any other amount owing to any of the
                  Representatives, the Lead Managers or the Relevant Lenders in
                  respect of any Loan;

         12.7.4   fourth, any remaining Proceeds relating to the Aircraft shall
                  be distributed pro rata to the persons, in the order and in
                  respect of the matters referred to in Clauses 12.7.1, 12.7.2
                  and 12.7.3 of this Clause 12.7 in relation to each of the
                  other Aircraft;

         12.7.5   fifth, to the extent that following a Material Termination
                  Event or an Acceleration Event Rentals are being paid to the
                  Security Trustee in accordance with Clause 9.2.1(d) any
                  remaining Proceeds after the distributions referred to in
                  Clauses 12.7.1 to 12.7.4 shall be applied in or towards
                  prepayment of the Loan relating to the relevant Aircraft, such
                  prepayment to be applied in inverse chronological order (and,
                  if applicable, the Agent may elect one-month Interest Periods
                  to minimize LIBOR Break Amounts);

         12.7.6   sixth, once all of the amounts referred to in sub-clauses
                  12.7.1 to 12.7.4 inclusive above have been satisfied and
                  discharged in full, any balance shall be paid to the
                  Subordinated Lender;

         12.7.7   seventh, once all of the amounts referred to in sub-clauses
                  12.7.1 to 12.7.5 inclusive above have been satisfied and
                  discharged in full, any balance shall be paid to the Borrower.

12.8     APPLICATION BY LEAD MANAGERS

         Any application by a Lead Manager of funds received from the Security
         Trustee by way of distribution from the Proceeds Account pursuant to
         any provision of this Clause 12 shall be effected in accordance with
         the terms agreed between that Lead Manager, the Relevant Lenders and
         the relevant Export Credit Agency, and each Lead Manager shall inform
         each other party hereto, upon such party's request, of the effect of
         such

                                     -116-
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         application on the remaining principal and interest due on the relevant
         national portion of the relevant Loan.

13.      INDEMNITIES

13.1     OPERATIONAL INDEMNITY

         13.1.1   The Borrower shall indemnify each Indemnitee (within ten (10)
                  Business Days of demand accompanied by supporting particulars
                  in reasonable detail from the applicable Indemnitee) for, each
                  Loss and each Expense which may from time to time be imposed
                  on, incurred or suffered by or asserted against any Indemnitee
                  (whether or not such Loss or Expense is also indemnified or
                  insured against by any other person, but subject to Clause
                  13.6 (No Double Counting)) resulting from the financing of the
                  Borrower's or any Sub-Borrower's acquisition and ownership of
                  any Aircraft or from the leasing by the Borrower, any
                  Sub-Borrower or any Intermediate Lessee to the relevant Lessee
                  of, or the leasing by the relevant Lessee to any other person
                  of, any Aircraft, or in connection with or arising directly or
                  indirectly out of or in any way connected with the
                  manufacture, acceptance, purchase, delivery, any delay in or
                  postponement of delivery, non-delivery, ownership, possession,
                  charter, use, leasing, sub-leasing, presence, operation,
                  condition, storage, packing, freight, shipping,
                  transportation, modification, alteration, maintenance,
                  insurance, overhaul, replacement, refurbishment, remarketing,
                  management, sale, registration, de-registration, redelivery,
                  servicing or repair of any Aircraft or in connection with or
                  arising from any Indemnitee having or being deemed to have any
                  interest in any Aircraft, whether or not such claim may be
                  attributable to any defect in any Aircraft and regardless of
                  when the same shall arise and whether or not such Aircraft is
                  in the possession or control of the Borrower or Sub-Borrower
                  or any other person.

         13.1.2   The Indemnities contained in Clause 13.1.1 shall not extend to
                  any Loss or Expense of any Indemnitee to the extent that such
                  Loss or Expense:

                  (a)      is caused by the wilful misconduct, fraud or gross
                           negligence on the part of such Indemnitee;

                  (b)      is a Loss or Expense for which such Indemnitee has
                           received and is entitled to retain a payment pursuant
                           to another provision of any Transaction Document or
                           an insurance payment pursuant to the Insurances;

                  (c)      is required to be paid or borne by such Indemnitee
                           pursuant to the terms of any Transaction Document;

                  (d)      is caused by such Indemnitee's breach of any express
                           representation made by it in any Transaction Document
                           or of any express obligation under any Transaction
                           Document (but excluding any such breach in
                           consequence (directly or indirectly) of a breach by
                           the Borrower or any

                                     -117-
<PAGE>

                           other Obligor of any representation or warranty
                           contained in or of their respective obligations under
                           any Transaction Document); or

                  (e)      is upon or is caused by any voluntary transfer of an
                           Indemnitee of any of its rights, benefits or
                           obligation hereunder other than pursuant to Clause
                           15.2 (Prepayment of Affected Loans and Replacement of
                           Affected Lender).

         13.1.3   All payments by way of indemnity under Clause 13.1.1 shall be
                  made in the currency of the relevant Loss or Expense.

         13.1.4   If a written claim is made against an Indemnitee which is the
                  subject of an indemnity by the Borrower under this Clause
                  13.1, such Indemnitee shall promptly notify the Borrower. The
                  Borrower (including a Lessee or Sub-Lessee on any Obligor's
                  behalf) at its sole cost and expense, except as provided
                  herein, shall have the right to control, investigate and
                  prosecute the entire defence and compromise of any Loss or
                  Expense for which indemnification is sought (PROVIDED THAT
                  such compromise imposes no additional payment obligations on
                  an Indemnitee, which is not otherwise indemnified under this
                  Clause 13); provided, if reasonably requested by the Borrower
                  in writing within thirty (30) days following receipt by the
                  Borrower of such notice or thereafter if the Borrower shall
                  have acknowledged its duty to indemnify such Indemnitee
                  hereunder, such Indemnitee shall, at the expense of the
                  Borrower, in good faith contest in the name of such Indemnitee
                  the validity, applicability and amount of such Loss in
                  appropriate administrative and judicial proceedings. If the
                  Borrower (or a Lessee or Sub-Lessee) shall, at its sole
                  expense, assume the defence of any Loss, each Indemnitee shall
                  cooperate with it at the Borrower's expense, in defending such
                  Loss. Each Indemnitee shall supply the Borrower (or a Lessee
                  or Sub-Lessee) with such information as is requested and as is
                  necessary or advisable for the Borrower (or a Lessee or
                  Sub-Lessee) to control or participate in any proceeding. The
                  Borrower (or a Lessee or Sub-Lessee) shall not have the right
                  to control, investigate, prosecute and comprise such Loss so
                  long as a Termination Event shall have occurred and be
                  continuing provided, however, that the Borrower (or a Lessee
                  or Sub-Lessee) shall have the right to control, investigate,
                  prosecute and compromise such Loss in an cases when required
                  by the terms of the insurance or insurer applicable thereto.
                  An Indemnitee may participate at its own expense and with its
                  own counsel in any judicial proceedings defended by the
                  Borrower (or a Lessee or Sub-Lessee) pursuant to the preceding
                  provisions so long as such participation does not, in the
                  reasonable opinion of the Borrower when the Borrower (or a
                  Lessee or Sub-Lessee) has chosen to assume the defence of any
                  Loss, materially impair such defence. So long as the Borrower
                  (or a Lessee or Sub-Lessee) shall have acknowledged in writing
                  its duty to indemnify an Indemnitee hereunder, no such
                  Indemnitee shall enter into a settlement or other compromise
                  with respect to any such Loss without the prior written
                  consent of the Borrower.

                                      -118-
<PAGE>

         13.1.5   Upon the making of any claim for any Loss by an Indemnitee
                  pursuant to this Clause 13.1, and PROVIDED THAT the Borrower
                  either pays such Loss or, if such Indemnitee has not been
                  required to make any payment in respect thereof, the Borrower
                  confirms its indemnification obligations with respect thereto
                  in writing, the Borrower, without any further action, shall be
                  subrogated to any claims, rights and remedies the Indemnitee
                  may have relating thereto (except claims under such
                  Indemnitee's own insurance policies). Each Indemnitee agrees,
                  at the Borrower's expense, to give such further assurances or
                  agreements and to cooperate with the Borrower to permit the
                  Borrower to pursue such Loss, if any, to the extent reasonably
                  requested by the Borrower. In the event that the Borrower
                  shall have paid an amount to an Indemnitee pursuant to this
                  Clause 13.1.5, and such Indemnitee subsequently shall be
                  reimbursed in respect of such indemnified amount from any
                  other person, such Indemnitee shall, so long as no Termination
                  Event has occurred and is continuing, promptly pay the
                  Borrower, but not before the Borrower shall have made all
                  payments then due to such Indemnitee pursuant to this Clause
                  13.1.5 an amount equal to the sum of (a) the amount of such
                  reimbursement, including interest actually received
                  attributable thereto, net of taxes required to be paid by such
                  Indemnitee as a result of any refund received and (b) any tax
                  benefit realised by such Indemnitee as a result of the
                  deductibility for tax purposes of any payment by such
                  Indemnitee made pursuant to this sentence.

         13.1.6   If any Export Credit Agency were to become a Lender, the
                  provisions of Clause 13.1.4 shall not apply to such Export
                  Credit Agency.

13.2     DOCUMENTARY TAXES

         13.2.1   Subject to Clause 13.2.2, the Borrower shall pay, and shall
                  indemnify each Indemnitee within ten (10) Business Days of a
                  demand accompanied with supported particulars in reasonable
                  detail for, all present and future stamp, documentary or
                  similar duties or registration taxes or fees or charges,
                  including any penalties, additions, fines or interest relating
                  thereto at any time payable in respect of any of the
                  Transaction Documents and/or the ECA Guarantees to a
                  Government Entity in Bermuda, the United States or the
                  jurisdiction of organisation of a Sub-Borrower or an
                  Intermediate Lessor or any transaction hereunder or thereunder
                  imposed by Bermuda, the United States of America or the
                  jurisdiction of incorporation of the Sub-Borrower or after an
                  Acceleration Event has occurred, by the jurisdiction in which
                  enforcement of the applicable Transaction Document is sought
                  and shall indemnify within ten (10) Business Days on demand
                  accompanied with supporting particular in reasonable detail
                  each Indemnitee against any liability arising by reason of any
                  delay or omission by the Borrower to pay on written demand any
                  such duties, taxes, fees or charges.

         13.2.2   The Borrower shall not have any obligation under Clause 13.2.1
                  in respect of any duty, tax, fee or charge to the extent the
                  same is:

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<PAGE>

                  (a)      imposed on or as a result of any transfer (including
                           any partial transfer or agreement to transfer) by a
                           Lender, the Agent or the Security Trustee other than
                           where such transfer (i) takes place at the request of
                           the Borrower or the Guarantor or, (ii) is not
                           undertaken voluntarily (and, for the avoidance of
                           doubt, the provisions concerning voluntary transfer
                           set out in Clause 18 (Assignments and Transfers)
                           shall apply for the purposes of this Clause 13.2); or

                  (b)      imposed as a result of any action or omission of the
                           relevant Indemnitee which constitutes wilful
                           misconduct, fraud or gross negligence on the part of
                           such Indemnitee; or

                  (c)      to the extent applicable imposed as a result of a
                           Representative or Lender bringing a document into the
                           jurisdiction of its Facility Office otherwise than,
                           after a Termination Event, for the purposes of
                           enforcement of the Representatives' or the Lenders'
                           rights under any of the Aircraft Operative Documents;
                           or

                  (d)      caused by the relevant Indemnitee's breach of any
                           express representation made by it in any Transaction
                           Document or of any express obligations under any of
                           the Transaction Document (but excluding any such
                           breach in consequence (directly or indirectly) of a
                           breach by the Borrower or any other Obligor of any
                           representation or warranty contained in or of their
                           respective obligations under any Transaction
                           Document).

         13.2.3   If any duty, tax, fee or charge referred to in Clause 13.2.1
                  arises and no such means referred to in Clause 15.1.3
                  (Mitigation of Documentary Taxes) is agreed as a result of the
                  consultation procedure referred to in Clause 15.3.1 then
                  (provided no Relevant Event has occurred and is continuing),
                  the Borrower may, having given notice in writing to the Agent
                  and the relevant Lender (in this Clause 13.2.3 the "AFFECTED
                  LENDER") require such Affected Lender to transfer its rights,
                  benefits and obligations pursuant to Clause 18 (Assignment and
                  Transfers) or prepay to the Agent (for the account of the
                  Affected Lender) an amount equal to all amounts outstanding
                  (whether of principal, interest, Expenses (if any)) and the
                  LIBOR Break Amount (if any) in respect of the Affected
                  Lender's Relevant Proportion of each Loan affected by such
                  circumstances.

13.3     FUNDING INDEMNITIES

         13.3.1   If for any reason other than a breach by the relevant Lender
                  of its obligations hereunder:

                  (a)      the Utilisation Date for a Loan is postponed or
                           cancelled for any reason whatsoever; or

                  (b)      a Loan is not advanced (including pursuant to the
                           provisions of Clause 3.7 (Disbursement of the Loan))
                           to the Borrower on the Delivery

                                     -120-
<PAGE>

                           Date as a result of any condition precedent to be
                           fulfilled or procured by an Obligor provided for
                           herein not being fulfilled to the satisfaction of the
                           Agent or by reason of the operation of Clause 2.5.5,

                  then the Borrower shall indemnify the Security Trustee, the
                  Agent and each Relevant Lender within five (5) Business Days
                  of a demand accompanied with supporting particulars in
                  reasonable detail (which demand, at the Borrower's request in
                  expectation of delivery of the Aircraft, the Security Trustee
                  will delay making on the Borrower for a period not exceeding
                  ten (10) Business Days after the Scheduled Delivery Date)
                  against all Losses and Expenses which the Security Trustee,
                  the Agent or any Relevant Lender may suffer, sustain or incur
                  as a consequence thereof (and, in the case of postponement, as
                  a consequence of remaining in readiness for and acting in
                  accordance with such postponed Utilisation Date) in respect of
                  funds borrowed or mobilised by the Security Trustee, the Agent
                  or such Relevant Lender in connection with the financing or
                  funding of the relevant Loan, the liquidation or redeployment
                  of any deposits taken or made and funding costs in relation to
                  any interest exchange or other hedging arrangements entered
                  into in connection with its participation in the relevant Loan
                  or any part thereof or in connection with any foreign exchange
                  business transacted for such purpose, the substitute
                  investment (for the then current Interest Period) of such
                  funds with a return lower than the cost of such funds or the
                  prepayment of such funds to the source from which they were
                  borrowed or mobilised, including, if delivery of the Aircraft
                  does occur after but not on the Scheduled Delivery Date the
                  Relevant Lenders' actual cost of financing or funding the
                  relevant Loan with respect to the period from (and including)
                  the Scheduled Delivery Date to (but excluding) the Delivery
                  Date.

                  The Agent shall keep the relevant British Credits, French
                  Credits and German Credits from the Scheduled Delivery Date
                  proposed in the Utilisation Notice in an interest bearing
                  account as agreed between the Agent and the Borrower and
                  shall, if delivery of the relevant Aircraft occurs within ten
                  (10) Business Days after the Scheduled Delivery Date and after
                  first having received any payment due under the indemnity in
                  this Clause 13.3.1 pay to the Borrower all amounts of interest
                  actually accrued thereon from (and including) the Scheduled
                  Delivery Date to (but excluding) the Delivery Date.

         13.3.2   Any profit or gain realised by any Lender in respect of its
                  funding arrangements as a result of the circumstances
                  contemplated in sub-paragraph (a) or (b) of Clause 13.3.1
                  shall be for the account of and, subject to the provisions of
                  Clause 19 (Set Off and Pro Rata Payments) be paid to the
                  Borrower.

         13.3.3   The Borrower shall indemnify the Security Trustee, the Agent
                  and each Relevant Lender within ten (10) Business Days of
                  demand (accompanied by supporting particulars in reasonable
                  detail) for all amounts which the Security

                                     -121-
<PAGE>

                  Trustee, the Agent or such Lender certifies to be necessary to
                  compensate it for any Loss (exclusive of margin or any profit)
                  or Expense suffered or incurred by it as a consequence of or
                  in connection with:

                  (a)      any prepayment of a Loan or any part thereof or any
                           interest accrued thereon;

                  (b)      any amount of principal or interest on a Loan payable
                           by the Borrower hereunder being paid otherwise than
                           on the due date (excluding any grace period in
                           relation to the relevant due date); or

                  (c)      the occurrence of an Acceleration Event,

                  PROVIDED THAT this Clause 13.3.3 shall not require double
                  payment of any of the amounts described above to the extent
                  that any Loss or Expense form part of the LIBOR Break Amount,
                  and the Borrower shall have no liability under this Clause
                  13.3.3 following payment in full on the due date of the
                  aggregate of (i) the Loan, (ii) all interest on the Loan
                  accrued to the date of actual payment, (iii) the LIBOR Break
                  Amount and (iv) Expenses (if any).

13.4     CURRENCY INDEMNITY

         13.4.1   Any amount received or recovered by the Agent, the Security
                  Trustee or any Lender in respect of any monies due from the
                  Borrower or any other Obligor under any of the Transaction
                  Documents (whether as a result of any judgment or order of any
                  court (including enforcement thereof) or in the bankruptcy,
                  reorganisation, liquidation or dissolution of any of the
                  Borrower or any other Obligor (including making or filing a
                  claim or proof against the Borrower) or by way of damages for
                  any breach of any obligation to make any payment to the Agent,
                  the Security Trustee or such Lender) in a currency (the
                  "CURRENCY OF PAYMENT") other than the currency in which the
                  payment should have been made pursuant to the relevant
                  Transaction Document (the "CURRENCY OF OBLIGATION") in
                  whatever circumstances and for whatever reason shall only
                  constitute a discharge to the Borrower or any other Obligor to
                  the extent of the amount of the Currency of Obligation which
                  the Agent, the Security Trustee or such Lender, as the case
                  may be, is able or would have been able, on the date or dates
                  of receipt by it of such payment or payments in the Currency
                  of Payment (or, in the case of any such date which is not a
                  Banking Day, on the next succeeding Banking Day) to purchase
                  in the foreign exchange market of its choice with the amount
                  or amounts of the Currency of Payment so received.

         13.4.2   If the amount of the Currency of Obligation which the Agent,
                  the Security Trustee or the relevant Lender is so able to
                  purchase falls short of the amount originally due to such
                  party hereunder, the Borrower shall indemnify such party on
                  demand against any loss or damage arising as a result of
                  paying to such party that amount in the Currency of Obligation
                  certified by such party as necessary to indemnify and hold it
                  harmless.

                                     -122-
<PAGE>

13.5     TAX TREATMENT OF INDEMNITY PAYMENTS

         13.5.1   Where the Borrower or any other Obligor has an obligation to
                  indemnify or reimburse any Lender or Representative in respect
                  of any Loss or Expense under Clause 13.1.1 (Operational
                  Indemnity), the calculation of the amount payable by way of
                  indemnity or reimbursement shall be based upon the likely Tax
                  treatment in the hands of the Lender or the Representative (as
                  determined by the Lender or the Representative in its bona
                  fide opinion) of the amount payable by way of indemnity or
                  reimbursement and of the Loss or Expense under Clause 13.1.1
                  (Operational Indemnity) in respect of which that amount is
                  payable so as to leave the Lender or the Representative in the
                  same after-Tax position (the "AFTER-TAX NEUTRAL POSITION") as
                  it would have been in had the payment made to the Lender or
                  the Representative not given rise to a Tax Liability and had
                  the Loss or Expense incurred or payment made by the Lender or
                  the Representative not been deductible in the accounting
                  period in which that Loss, Expense or payment was incurred or
                  made.

         13.5.2   If a Lender or Representative determines, in its good faith
                  opinion, that as a result of the application of Clause 13.5.1,
                  it has received and retained an amount in excess of that
                  required to preserve its After Tax Neutral Position, such
                  Lender or, as the case may be, Representative shall, provided
                  it has received all amounts which are then due and payable by
                  the Borrower or any other Obligor under any of the provisions
                  of the Transaction Documents, pay to the Borrower or any other
                  Obligor (to the extent that the Lender or, as the case may be,
                  Representative can do so without prejudicing its After Tax
                  Neutral Position and the right of such Lender or, as the case
                  may be, Representative to obtain any other benefit, relief or
                  allowance which may be available to it) such amount, if any,
                  as such Lender or, as the case may be, Representative in its
                  absolute discretion shall determine will restore such Lender's
                  or, as the case may be, Representative's After-Tax Neutral
                  Position PROVIDED THAT:

                  (a)      each Lender and Representative shall have an absolute
                           discretion as to the time at which and the order and
                           manner in which it realises or utilises any Tax
                           benefit and shall not be obliged to arrange its
                           business or its Tax affairs in any particular way in
                           order to be eligible for any Tax benefit;

                  (b)      no Lender or Representative shall be obliged to
                           disclose any information regarding its business, Tax
                           affairs or Tax computations;

                  (c)      if any Lender or Representative has made a payment to
                           the Borrower pursuant to this Clause 13.5.2 to
                           restore that person's After-Tax Neutral Position and
                           it subsequently transpires that the After Tax Neutral
                           Position of such Lender or Representative was not so
                           restored, the Borrower shall pay on demand to such
                           Lender or Representative such sum as such Lender or
                           Representative may determine as being necessary

                                     -123-
<PAGE>

                           to restore the After Tax Neutral Position of the
                           Lender or Representative to that which it would have
                           been had no adjustment under this paragraph (c) been
                           necessary; and

                  (d)      the Lender or Representative shall not be obliged to
                           make any payment under this Clause 13.5.2 if, by
                           doing so, it would contravene the terms of any
                           applicable law or any notice, direction or
                           requirement of any governmental or regulatory
                           authority (whether or not having the force of law but
                           in respect of which compliance by banks or other
                           financial institutions or other persons in the
                           relevant jurisdictions is generally customary),
                           PROVIDED THAT the provisions of this Clause 13.5
                           shall not apply to any Export Credit Agency which may
                           at any time become a Lender.

13.6     NO DOUBLE-COUNTING

         No Lender or Representative shall be entitled, pursuant to the terms of
         any of the Transaction Documents, to recover by way of indemnity any
         Loss, Expense, Tax Liability to the extent that payment has previously
         been received and retained by it in respect of such Loss, Expense, Tax
         Liability under any other provision of any Transaction Document.

13.7     SURVIVAL OF INDEMNITIES AND OTHER OBLIGATIONS

         The indemnities contained in this Agreement shall constitute a separate
         and independent obligation from the other obligations contained in this
         Agreement; shall give rise to a separate and independent cause of
         action; shall apply irrespective of any indulgence granted by the
         Agent, the Security Trustee or any Lender from time to time and shall
         continue in full force and effect notwithstanding (a) the termination
         or expiry of this Agreement or (b) the satisfaction in full of all
         amounts owing to the Security Trustee, the Agent and each Lender under
         the Transaction Documents or (c) any judgment or order for a liquidated
         sum or sums in respect of amounts due hereunder or under any such
         judgment or order.

13.8     VALUE ADDED TAX

         13.8.1   If any Indemnitee makes any supply to the Borrower or
                  Representatives for Value Added Tax purposes pursuant to or in
                  connection with any of the Transaction Documents, the Borrower
                  shall (save to the extent that the relevant Indemnitee is
                  entitled to be indemnified in respect of Value Added Tax by an
                  increased payment under Clause 13.8.2) pay to the relevant
                  Indemnitee within ten (10) Business Days of demand
                  (accompanied by supporting particulars in reasonable detail)
                  an amount equal to any Value Added Tax which is payable under
                  the laws of Bermuda, the United States of America or the
                  jurisdiction of organisation of a Sub-Borrower or to the
                  extent provided in Expenses in respect of that supply.

         13.8.2   All payments made by the Borrower under the Transaction
                  Documents are calculated without regard to Value Added Tax. If
                  any such payment constitutes the whole or any part of the
                  consideration for a taxable or deemed

                                     -124-
<PAGE>

                  taxable supply to the Borrower or Representatives by any
                  Indemnitee under the laws of Bermuda, the United States of
                  America or the jurisdiction of organisation of a Sub-Borrower
                  or to the extent provided in Expenses the amount of that
                  payment shall be increased by an amount equal to the amount of
                  Value Added Tax which is chargeable in respect of the taxable
                  supply in question. The Borrower's obligations under this
                  Clause 13.8.2 shall be subject to the delivery on or before
                  the due date for that payment to the Borrower of an invoice
                  for Value Added Tax purposes made out in accordance with the
                  applicable regulations.

         13.8.3   No payment or other consideration to be made or furnished by
                  any Indemnitee to the Borrower or Representatives pursuant to
                  or in connection with any of the Transaction Documents may be
                  increased or added to by reference to (or as a result of any
                  increase in the rate any Value Added Tax which shall be or may
                  become chargeable in respect of the taxable supply in
                  question.

         13.8.4   If any Indemnitee makes any payment under, or as contemplated
                  in, any of the Transaction Documents to the Representatives
                  which under the laws of Bermuda, the United States of America
                  or the jurisdiction of organisation of a Sub-Borrower or to
                  the extent provided in Expenses bears or includes Value Added
                  Tax which such Indemnitee determines to be irrecoverable by
                  it, the Borrower shall within ten (10) Business Days of demand
                  (accompanied by supporting particulars in reasonable detail)
                  indemnify such Indemnitee for such Value Added Tax.

14.      CHANGE IN CIRCUMSTANCES

14.1     INCREASED COSTS

         14.1.1 If a Change in Law shall:

                  (a)      subject any Lender to any Tax in connection with its
                           commitment to or participation in the Transaction or
                           any part thereof (except for changes in the rate of
                           Tax on the overall net income of such Lender or
                           Representative or such Lender's Lending Office
                           imposed by any Government Entity of the country in
                           which such Lender or Representative is incorporated
                           or in which such Lender's Lending Office is located);
                           or

                  (b)      change the basis of Taxation of any Lender in respect
                           of payments of principal, interest or any other
                           amount payable to any Lender in connection with the
                           Transaction (except for changes in the rate of Tax on
                           the overall net income of such Lender or
                           Representative or such Lender's Lending Office
                           imposed by any Government Entity of the country in
                           which such Lender or Representative is incorporated
                           or in which such Lender's Lending Office is located)
                           (or the treatment for Taxation purposes of such
                           payments); or

                                     -125-
<PAGE>

                  (c)      impose or modify any reserve, cash ratio, special
                           deposit, capital adequacy, liquidity or any other
                           analogous requirement, or require the making of any
                           special deposit, against or in respect of any assets
                           or liabilities of, or deposit with or for the account
                           of, or loan or commitment by, any Lender in relation
                           to the Transaction; or

                  (d)      change the manner in which any Lender is required by
                           any regulatory authority to allocate capital
                           resources in relation to the Transaction; or

                  (e)      impose on any Lender any other condition directly
                           affecting its participation in the Transaction,

                  and the result of any of the foregoing is or will be (i) to
                  increase the cost to such Lender of funding, making available
                  or maintaining its participation in the Transaction or any 0
                  part thereof or of funding, making or maintaining its
                  participation in any Loan or (ii) to render such Lender unable
                  to obtain the rate of return on its overall capital reasonably
                  allocated to its obligations hereunder which it would have
                  been able to obtain but for such Change in Law or (iii) to
                  reduce any amount payable to such Lender by the Borrower
                  hereunder or to reduce its return from the Transaction or any
                  part thereof, then and in any such case:

                  (y)      such Lender shall notify the Borrower (through the
                           Agent);

                  (z)      the Borrower shall (subject to Clause 14.1.2) pay
                           from time to time to the Agent (for the account of
                           that Lender) within ten (10) Business Days of demand
                           (accompanied by supporting particulars in reasonable
                           detail) all amounts which that Lender certifies are
                           necessary to compensate that Lender or Representative
                           for such charge to Tax or increase in cost or
                           reduction in return or reduction in the amount
                           payable.

         14.1.2   The provisions of Clause 14.1.1 shall not apply in respect of
                  any charge to Tax, increased cost, reduction in the rate of
                  return or reduction in an amount payable to the extent that
                  the same:

                  (a)      arises from any action or omission of an Indemnitee
                           which constitutes wilful misconduct, fraud or gross
                           negligence on the part of such Indemnitee; or

                  (b)      is caused by such Indemnitee's breach of any express
                           representation made by it in any Transaction Document
                           or of any express obligation under any Transaction
                           Document (but excluding any such breach in
                           consequence (directly or indirectly) of a breach by
                           the Borrower or any other Obligor of any
                           representation or warranty contained in or of their
                           respective obligations under any Transaction
                           Document); or

                  (c)      is a deduction or withholding Tax, Value Added Tax or
                           documentary Tax (it being agreed that such Taxes are
                           exclusively provided for

                                     -126-
<PAGE>

                           elsewhere in this Agreement and are not covered by
                           Clause 14.1.1) or a charge to Tax for which such
                           Indemnitee has received and retained a payment
                           pursuant to other indemnity provision of any
                           Transaction Document; or

                  (d)      is on or arises from any transfer by a Lender of any
                           of its rights, benefits and/or obligations hereunder
                           other than pursuant to Clause 15.2 (Prepayment of
                           Affected Loans and Replacement of Affected Lender);
                           or

                  (e)      arises prior to the date of the relevant notice
                           thereof to the Borrower; or

                  (f)      arises out of such Indemnitee's own credit or risk
                           based capital rating or otherwise due to its own
                           financial condition; or

                  (g)      is not charged to the other borrower customers of
                           such Lender; or

                  (h)      comprises a Tax on the overall net income, profit or
                           capital gains of any Indemnitee (or, in the case of
                           any Indemnitee acting through a branch outside the
                           main jurisdiction in which it is resident for Tax
                           purposes, comprises a Tax on the overall net income,
                           profit or capital gains of that Indemnitee in the
                           jurisdiction to which that Indemnitee's interest in
                           the Transaction is properly attributable for Tax
                           purposes) attributable to any sums receivable by any
                           Indemnitee pursuant to any Transaction Document; or

                  (i)      comprises any penalty, addition to Tax, fine or
                           interest on or in respect of a Tax or Tax Liability
                           which would not have arisen but for avoidable delay
                           or failure by such Indemnitee in the filing of Tax
                           returns which such Indemnitee was obliged to file by
                           any law of the jurisdiction of incorporation or, in
                           the case of a Lender, the jurisdiction in which its
                           Lending Office is located, and which such Indemnitee
                           ought reasonably to have been aware it was so obliged
                           to file in connection with the Transaction or the
                           payment of Taxes other than any such delay or failure
                           in consequence (directly or indirectly) of a request
                           by the Borrower or any Obligor or a delay of or
                           failure by the Borrower or any Obligor duly and
                           punctually to perform any of their respective
                           obligations under the Transaction Documents or in
                           consequence of any event or circumstance outside the
                           reasonable control of such Indemnitee or otherwise
                           caused (directly or indirectly) by the Borrower or
                           any Obligor; or

                  (j)      is imposed by a jurisdiction other than the main
                           jurisdiction in which such Indemnitee is resident for
                           Tax purposes to the extent that it gives rise to a
                           corresponding credit which such Indemnitee has
                           retained and utilised against any Tax Liability
                           imposed in the main jurisdiction in which such
                           Indemnitee is so resident; or

                                     -127-
<PAGE>

                  (k)      would not have arisen but for:

                           (i)      any failure by such Indemnitee to file any
                                    relevant Tax return or Tax computation which
                                    such Indemnitee was obliged to file by any
                                    law of the jurisdiction of incorporation or,
                                    in the case of a Lender, the jurisdiction in
                                    which its Lending Office is located or any
                                    documents which such Lender is obliged to
                                    file as a result of any applicable law,
                                    regulation, practice, concession, official
                                    directive, ruling, request, notice,
                                    guideline, statement of policy or practice
                                    statement by the Bank of England, the
                                    Financial Services Authority, the Banque de
                                    France, the Deutsche Bundesbank, the
                                    European Central Bank, the Federal Reserve
                                    Bank of New York, the European Union or any
                                    central bank, Tax, fiscal, governmental,
                                    local, international, national or other
                                    competent authority or agency (whether or
                                    not having the force of law but in respect
                                    of which compliance by banks or other
                                    financial institutions or other persons in
                                    the relevant jurisdiction is customary) and
                                    in each case which such Indemnitee ought
                                    reasonably to have been aware it was so
                                    obliged to file in connection with the
                                    Transaction except for any such failure
                                    caused (directly or indirectly) by any
                                    action or inaction of the Borrower or any
                                    Obligor or any event or circumstance outside
                                    the reasonable control of such Indemnitee;
                                    or

                           (ii)     subject to Clause 15.1 (Mitigation), any
                                    failure (subject to the same exceptions and
                                    exclusions as set out in Clause
                                    4.12.5(g)(i)) to file or provide the
                                    Borrower or the relevant Lessee with any Tax
                                    claims, forms (including the Internal
                                    Revenue Service Forms), affidavits,
                                    declarations or other like documents which
                                    the Borrower or the relevant Lessee has
                                    reasonably requested such Indemnitee in
                                    writing to file or provide (any such request
                                    containing sufficient detail to enable such
                                    Indemnitee to comply with the terms thereof)
                                    unless:

                                    (1)      except with respect to the Internal
                                             Revenue Service Forms, such
                                             Indemnitee determines acting in
                                             good faith but nevertheless in its
                                             sole discretion that it is unable
                                             to file or provide or that it would
                                             be illegal or contrary to any
                                             applicable law, official
                                             regulation, practice, concession,
                                             directive, ruling, request, notice,
                                             guideline, statement of policy or
                                             practice statement by the Bank of
                                             England, the Financial Services
                                             Authority, the Banque de France,
                                             the Deutsche Bundesbank, the
                                             European Central Bank, the Federal
                                             Reserve Bank of New York, the
                                             European Union or any central bank,
                                             Tax, fiscal, governmental, local,
                                             international, national or other
                                             competent authority or agency
                                             (whether or not having the force of
                                             law but in respect of

                                     -128-
<PAGE>

                                             which compliance by banks or other
                                             financial institutions or other
                                             persons in the relevant
                                             jurisdiction is customary) for such
                                             Indemnitee so to do or so to do
                                             would or may result in the breach
                                             of any agreement or confidentiality
                                             undertaking or the disclosure of
                                             any information about such
                                             Indemnitee's Tax affairs which such
                                             Indemnitee considers (in its bona
                                             fide opinion) to be of a
                                             confidential nature; or

                                    (2)      in the case of the Internal Revenue
                                             Service Forms, such failure is due
                                             to a Change in Law occurring
                                             subsequent to the date on which any
                                             of the Internal Revenue Service
                                             Forms as originally required to be
                                             provided.

14.2     MARKET DISRUPTION

         14.2.1   If, in relation to any Interest Period or other relevant
                  period:

                  (a)      the Agent is notified by any Lender (in this Clause
                           14.2 the "AFFECTED LENDER") that deposits in Dollars
                           in amounts sufficient to fund such affected Lender's
                           participation in the relevant Loan are not, in the
                           ordinary course of business, available in the London
                           inter-bank market for a period equal to the relevant
                           Interest Period or other relevant period; or

                  (b)      the Agent determines that, by reason of circumstances
                           affecting the London interbank market generally,
                           reasonable and adequate means do not or will not
                           exist for ascertaining LIBOR in relation to such
                           Interest Period or other relevant period,

                  then:

                           (i)      the Agent shall promptly give a notice to
                                    the Borrower and each Lender in writing
                                    advising of such event;

                           (ii)     subject to Clause 15.1 (Mitigation), the
                                    Borrower shall on each subsequent Repayment
                                    Date for so long as such circumstances
                                    continue pay to the Agent for the account of
                                    the Affected Lender an amount equal to
                                    interest on the Affected Lender's Relevant
                                    Proportion of the relevant Loan at the rate
                                    which is agreed between the Borrower and
                                    such Lender, each acting in good faith, and
                                    if no agreement can be reached, equal to the
                                    cost to such Affected Lender (as certified
                                    by such Affected Lender and notified to the
                                    Agent) of obtaining Dollars from whatever
                                    source or sources it may in good faith but
                                    otherwise in its absolute discretion select
                                    for funding its Relevant Proportion of the
                                    Loan during such Interest Period or other
                                    relevant period.

                                     -129-
<PAGE>

14.3     ILLEGALITY

         14.3.1   If, at any time as a result of a Change in Law it is or it
                  will become unlawful for any Lender (the "AFFECTED LENDER"),
                  to make, fund or allow to remain outstanding any part of its
                  Commitment or its participation in the Facility or any Loan,
                  then any Affected Lender may deliver to the Borrower through
                  the Agent a notice to that effect, whereupon subject to Clause
                  15.1 (Mitigation) the Borrower shall, on or before the date
                  the Agent notifies the Borrower that the Affected Lender's
                  obligations hereunder are unlawful, prepay each Loan affected
                  by the relevant circumstances together with all interest
                  accrued thereon, the LIBOR Break Amount and Expenses (if any)
                  to the Affected Lender pursuant to this Agreement or any
                  relevant Aircraft Operative Document.

         14.3.2   If at any time as a result of a Substantive Law Change any
                  Loan or the repayment of any Loan or the payment of interest
                  at the stated non-default rate on any Loan or the guarantee by
                  the Guarantor hereunder or any material element of the
                  security package as contemplated by the Aircraft Security
                  Documents in relation to any Loan shall become illegal or
                  unenforceable, then the Agent may deliver to the Borrower a
                  notice to that effect, whereupon, subject to Clause 15.1.3
                  (Mitigation), the Borrower shall forthwith prepay each Loan to
                  which such relevant circumstances apply together with all
                  interest accrued thereon, the LIBOR Break Amount, if any, and
                  Expenses (if any) pursuant to this Agreement or any relevant
                  Aircraft Operative Document.

15.      MITIGATION AND CONTEST RIGHTS

15.1     MITIGATION

         15.1.1   If circumstances arise in respect of any Lender which would,
                  or upon the giving of notice would result in the operation of
                  Clause 4.12 (Deductions and Withholdings), 14.1 (Increased
                  Costs), 14.2 (Market Disruption) or 14.3 (Illegality) to the
                  detriment of the Borrower:

                  (a)      each such Lender shall promptly upon becoming aware
                           of the same notify the Borrower and upon the written
                           request of the Borrower shall negotiate in good faith
                           with the Borrower for a period not exceeding
                           forty-five (45) days with a view to avoiding or
                           minimising the relevant duty, tax, fee or charge
                           including, in the case of a Lender, a change in its
                           Lending Office or a transfer of its participation in
                           the Loans and its Commitments to another bank or
                           financial institution or in the case a
                           Representative, including resignation in accordance
                           with the provisions of the Lenders' Agreement; and

                  (b)      at the request of the Borrower, such Representative
                           will negotiate in good faith with the Borrower with a
                           view to avoiding or minimising the consequences of
                           such including resigning in accordance with the
                           provisions of the Lenders' Agreement.

                                     -130-
<PAGE>

         15.1.2   Without limiting or reducing the obligations of the Obligors
                  (or any of them) under Clause 4.12 (Deductions and
                  Withholdings), Clause 14.1 (Increased Costs), Clause 14.2
                  (Market Disruption), or Clause 14.3 (Illegality), in relation
                  to Clauses 4.12 (Deductions and Withholdings), 14.1 (Increased
                  Costs), 14.2 (Market Disruption) and 14.3 (Illegality) no
                  Lender or Representative shall have any obligation to take any
                  action under Clause 15.1.1 if, in its good faith opinion, to
                  do so would be likely to (a) have a material adverse effect
                  upon its business, operation or financial condition, or (b)
                  result in its rights, interests, anticipated financial return
                  or position under or in relation to any of the Transaction
                  Documents being materially less favourable to it than would
                  have been the case in the absence of such action unless
                  indemnified or secured to its satisfaction in respect thereof,
                  or (c) involve it in any unlawful act or activity or any act
                  or activity that is contrary to any official directive,
                  concession, guideline, request or requirement of any competent
                  authority (whether or not having the force of law but, in the
                  case only of any of the same not having the force of law, in
                  respect of which compliance by banks or other institutions of
                  a similar nature to the relevant Lender or Representative, as
                  the case may be, is generally considered mandatory), or (d)
                  (unless indemnified or secured to its satisfaction) involve it
                  in any Tax Liability or any expense which is significant in
                  such Lender's or Representative's bona fide opinion or (e)
                  unless protected by confidentiality procedures involve it in
                  any disclosure of any document or information relating to its
                  business or affairs which it considers (in its good faith
                  opinion) to be of a confidential nature.

         15.1.3   If the circumstances referred to in Clause 14.3.2 (Illegality)
                  arise, upon the written request of either the Borrower or the
                  Agent, the Borrower and the Representatives shall negotiate in
                  good faith for a period not exceeding sixty (60) days (or such
                  shorter period as may be required by law) with a view to
                  restructuring each affected Loan and rectifying and amending
                  the relevant Transaction Documents in order to mitigate the
                  effect of the relevant Substantive Law Change and the Borrower
                  shall pay for the Expenses incurred by the Representatives (as
                  a group) for such negotiations as well as (if alternative
                  arrangements are agreed) to complete all steps required to
                  implement such restructuring and all rectifications and
                  amendments to the relevant Transaction Documents in relation
                  to each Loan affected by the circumstances referred to in
                  Clause 14.3.2 (Illegality). If a resolution acceptable to the
                  Borrower and the Representatives is obtained as a result of
                  this mitigation procedure, the Borrower shall implement the
                  rectification and amendments referred to in Clause 15.1.3 to
                  the relevant Transaction Documents, to the satisfaction of the
                  Agent, within sixty (60) days from the earlier of the date
                  when such resolution is reached and the date upon which the
                  period of sixty (60) days (or such shorter period as required
                  by law) is referred to in Clause 15.1.3 expires. If the
                  Borrower fails to implement such rectification and amendment
                  to the relevant Transaction Documents within

                                     -131-
<PAGE>

                  such period the Borrower shall prepay each Loan to which
                  Clause 14.3.2 (Illegality) applies as aforesaid.

         15.1.4   If any Export Credit Agency were to become a Lender after an
                  Acceleration Event, the provisions of Clause 14 (Change of
                  Circumstances) and this Clause 15 shall not apply to such
                  Export Credit Agency.

15.2     PREPAYMENT OF AFFECTED LOANS AND REPLACEMENT OF AFFECTED LENDER

         15.2.1   If the circumstances referred to in Clauses 4.12 (Deductions
                  and Withholdings), 14.1 (Increased Costs), 14.2 (Market
                  Disruption) and 14.3 (Illegality) arise, and no resolution
                  acceptable to the parties is obtained as a result of the
                  mitigation procedure referred to in Clause 15.1 (Mitigation
                  and Contest Rights), or if a Lender has defaulted on its
                  obligations hereunder (also an "AFFECTED LENDER"):

                  (a)      if requested by the Borrower, the Agent will consult
                           with the Borrower with a view to identifying and
                           approaching bank(s) and financial institution(s)
                           acceptable to the Borrower (acting reasonably) which
                           may be willing to become a party to this Agreement as
                           "Lender(s)" ("REPLACEMENT LENDER") in replacement of
                           the Affected Lender, subject to the approval of the
                           relevant Export Credit Agency. Once a suitable
                           Replacement Lender has been found and is approved by
                           the relevant Export Credit Agency, each Affected
                           Lender shall transfer its Relevant Proportion of each
                           Loan affected by such circumstances and its right,
                           benefits and obligations under the Transaction
                           Documents to another bank which is not affected by
                           such circumstances in accordance with the terms of
                           Clause 18 (Assignment and Transfers). The Borrower
                           shall indemnify the Affected Lender (except in the
                           case of a defaulting Lender) and the Agent for all
                           Expenses incurred by the Affected Lender and the
                           Agent in relation to such transfer; and

                  (b)      if the Borrower does not so request, the Borrower may
                           (and in the case of Clause 14.3 (Illegality) shall)
                           pay to the Agent (for the account of each Affected
                           Lender (the "AFFECTED LENDER")) each Affected
                           Lender's Relevant Proportion of each Loan affected by
                           such circumstances together with all accrued interest
                           thereon and, except in the case of a defaulting
                           Lender, the LIBOR Break Amount, if any, and Expenses,
                           if any, owing to the Affected Lender in connection
                           with any such Loan or under this Agreement or the
                           relevant Aircraft Operative Documents.

         15.2.2

                  (a)      Except in the case of a defaulting Lender, if the
                           Borrower wishes to make any payment referred to in
                           Clause 15.2.1(b), such payment shall be treated as a
                           voluntary prepayment and accordingly the provisions
                           of Clause 4.3 (Voluntary Prepayment) shall apply and
                           in particular the Borrower should comply with
                           provisions of Clause 4.3.1 and 4.3.2 in relation to
                           any such payment referred to in Clause 15.2.1.

                                     -132-
<PAGE>

                  (b)      The Agent shall as soon as reasonably practicable
                           after receipt of the Borrower's prepayment notice,
                           unless the Borrower elects to prepay the entire Loan
                           in relation to an Aircraft, prepare a substitute
                           schedule for schedule 2 to the relevant Loan
                           Supplement showing new amounts for the repayment of
                           the relevant Loan for the period following such
                           prepayment calculated on the same basis and
                           assumptions (other than the assumption as to the
                           total principal amount of the relevant Loan) as were
                           used for the purpose of preparing the original
                           schedule 2 to such Loan Supplement. Upon the Borrower
                           and each Export Credit Agency, agreeing to the same,
                           such substitute Schedules shall become for all
                           purposes schedule 2 to the relevant Loan Supplement
                           and shall be binding on all parties with effect from
                           the date of the prepayment.

15.3     MITIGATION OF DOCUMENTARY TAXES

         15.3.1   Without prejudice to the provisions of Clause 13.2
                  (Documentary Taxes), if (in the opinion of any Lender or
                  Representative) any duties, taxes, fees or charges referred to
                  in Clause 13.2 arise and the Borrower so requests, the
                  relevant Lender or Representative shall consult for a period
                  not exceeding thirty (30) days with the Borrower (at the
                  Borrower's cost) with a view to agreeing a means for reducing
                  or avoiding the relevant duty, tax, fee or charge (including,
                  in the case of a Lender by transferring its rights and
                  obligations under the Transaction Documents to another Lending
                  Office or another person or, in the case of a Representative,
                  by resigning in accordance with the provisions of the Lenders'
                  Agreement once a suitable Replacement Lender has been found
                  and approved by the Export Credit Agencies).

         15.3.2   Without limiting or reducing the obligations of the Obligors
                  (or any of them) under Clause 13.2 (Documentary Taxes), no
                  Lender or Representative shall have any obligation to take any
                  action under Clause 15.3.1 if, in its good faith opinion, to
                  do so would be likely to (a) have a material adverse effect
                  upon its business, operation or financial condition, or (b)
                  result in its rights, interests, anticipated financial return
                  or position under or in relation to any of the Transaction
                  Documents being materially less favourable to it than would
                  have been the case in the absence of the relevant duty, tax,
                  fee or charge unless indemnified or secured to its
                  satisfaction in respect thereof, or (c) involve it in any
                  unlawful act or activity or any act or activity that is
                  contrary to any official directive, concession, guideline,
                  request or requirement of any competent authority (whether or
                  not having the force of law but, in the case only of any of
                  the same not having the force of law, in respect of which
                  compliance by banks or other institutions of a similar nature
                  to the relevant Lender or Representative, as the case may be,
                  is generally considered mandatory), or (d) (unless indemnified
                  or secured to its satisfaction) unless protected by
                  confidentiality procedures involve it in any Tax Liability or
                  any expense which is significant in such Lender's or
                  Representative's bona fide opinion or (e) involve it in any
                  disclosure of any document or information

                                     -133-
<PAGE>

                  relating to its business or affairs which it considers (in its
                  good faith opinion) to be of a confidential nature.

15.4     CONTEST RIGHTS

         If requested by the Borrower in a written notice to the relevant
         Indemnitee and the Agent, following a demand by such Indemnitee (or by
         the Agent on its behalf) pursuant to Clause 4.12 (Deductions and
         Withholdings) or Clause 13.2 (Documentary Taxes) in respect of a Tax
         Liability of such Indemnitee, such Indemnitee shall, to the extent that
         (a) it is able and entitled to do so, (b) it is not illegal or contrary
         to any official directive or policy for it to do so, (c) it is
         commercially reasonable for it to do so and (d) to do so would not
         adversely affect its business, operation or financial condition, take
         such action as the Borrower may reasonably request to contest
         (including pursuing all administrative appeals) the validity,
         applicability or amount of such Taxes and shall (x) seek postponement
         of payment thereof if available and practicable, (y) pay the same only
         under protest, if payment under protest is a permitted alternative
         under the laws and procedures of the relevant taxation authority and is
         in the circumstances, reasonable or (z) if payment must be or shall
         have been made, seek a refund thereof in appropriate administrative or
         judicial proceedings PROVIDED THAT:

         15.4.1   the Borrower shall indemnify such Indemnitee (and prior to
                  taking such action shall if requested by such Indemnitee,
                  acting reasonably, provide to such Indemnitee security
                  reasonably satisfactory to such Indemnitee in respect of any
                  amounts so payable) against all losses, damages, costs and
                  expenses which such Indemnitee may incur in connection with or
                  as a result of contesting such claim or taking such action
                  (including, without limitation, reasonable costs and expenses
                  of legal counsel and tax advisors) as well as any Tax
                  Liability arising thereon or in connection therewith and the
                  amount of any interest or penalties which may be payable and
                  any other loss or damage whatsoever which may be incurred as a
                  result of contesting such claim or taking such action;

         15.4.2   if such contest is to be initiated by the payment of, and the
                  claiming of a refund for, such Taxes, the Borrower shall have
                  advanced to such Indemnitee sufficient funds (on an
                  interest-free basis and, if such advance results in taxable
                  income to such Indemnitee, on an after-tax basis taking into
                  account the timing and incidence of tax payments) to make such
                  payment; and

         15.4.3   nothing herein shall require any Indemnitee to disclose any
                  information or provide any document such Indemnitee, acting in
                  good faith, considers confidential to it, or to take or
                  refrain from taking any action or doing anything which would
                  (or might), in the opinion of such Indemnitee, acting in good
                  faith, materially adversely affect any of the business or
                  commercial interests of such Indemnitee.

                                     -134-
<PAGE>

16.      FEES AND EXPENSES

16.1     TRANSACTION EXPENSES

         The Borrower shall pay to the Agent within ten (10) Business Days of
         demand and supported by the relevant invoices or receipts in reasonable
         detail (whether or not any Utilisation Documentation is entered into
         and/or any amount is disbursed under the Agreement) all Expenses
         incurred by the Representatives, the Lenders and the Export Credit
         Agencies as a group:

         16.1.1   in connection with the negotiation, preparation, execution,
                  registration and implementation of each of the Transaction
                  Documents and the other documents contemplated hereby or
                  thereby or at any time hereafter (including the agreed or, if
                  not agreed, the reasonable expenses of the Agent's legal
                  counsel in connection with the preparation of each Aircraft
                  Operative Document and the collection of the conditions
                  precedent listed on Schedule 7, in respect of each
                  Utilisation);

         16.1.2   in connection with the granting of any release, waiver or
                  consent in connection with any of the Transaction Documents
                  PROVIDED THAT the Borrower shall not be liable for the costs
                  and expenses of the Agent, the Security Trustee or the Lenders
                  arising in relation to the granting of any release, waiver or
                  consent requested by the Lenders (other than any such release,
                  waiver or consent required by any of the Export Credit
                  Agencies or as a result of or in consequence of a Change in
                  Law or of a Substantive Law Change or as a result of the
                  Borrower or any other Obligor being in breach of their
                  respective obligations hereunder or under any of the other
                  Transaction Documents); and

         16.1.3   in connection with any variation, amendment, supplement,
                  restructuring, novation, discharge or reassignment of any of
                  the Transaction Documents, PROVIDED THAT the Borrower shall
                  not be liable for the costs and expenses of the Agent, the
                  Security Trustee or the Lenders arising in relation to a
                  variation, amendment, supplement, restructuring, novation,
                  discharge or reassignment requested by the Lenders (other than
                  any such variation, amendment, supplement, novation, discharge
                  or reassignment required by any of the Export Credit Agencies
                  or as a result of or in consequence of a Change in Law or of a
                  Substantive Law Change or as a result of the Borrower or any
                  Obligor being in breach of any of their respective obligations
                  under any of the Transaction Documents).

16.2     ENFORCEMENT EXPENSES

         The Borrower shall pay to the Agent within ten (10) Business Days of
         demand and supported by the relevant invoices or receipts in reasonable
         detail all Expenses incurred or sustained by the Representatives, the
         Lenders and the Export Credit Agencies (PROVIDED THAT in the case of
         legal expense, they shall only be incurred as a group) in connection
         with, after a Termination Event, the enforcement, or preservation or
         attempted enforcement or preservation of their respective rights,
         powers or duties

                                     -135-
<PAGE>

         under this Agreement and/or any of the other Transaction Documents or
         (in the event of a claim against an Export Credit Agency arising as a
         result of an Acceleration Event) under any of the ECA Guarantees.

17.      CHANGE OF AGENT AND SECURITY TRUSTEE

17.1     Each Representative and each Lender undertakes with the Borrower that
         any bank or financial institution appointed as Agent or Security
         Trustee pursuant to the Lenders' Agreement shall be so appointed in
         respect of all of the Transaction Documents.

17.2     If, in accordance with the Lenders' Agreement, the Agent or the
         Security Trustee gives notice of its resignation or is dismissed, then
         the Instructing Group (after consultation with the Borrower) may
         appoint any reputable and experienced bank or other financial
         institution approved by the Borrower (such approval not to be
         unreasonably withheld) as a successor to the Agent or, as the case may
         be, the Security Trustee.

17.3     The Borrower shall not be under any obligation to pay any greater
         amount under this Agreement as a result of a change in the Agent or the
         Security Trustee if, in the circumstances existing at the time of such
         change, such greater amount would not have been payable but for the
         change unless and until a Substantive Law Change or Change in Law
         occurs and as a result of such Substantive Law Change or Change in Law
         (excluding any Substantive Law Change or Change in Law which occurs or
         the intended implementation of which is officially announced or
         proposed before the date of such transfer or change in Lending Office),
         PROVIDED THAT the provisions of this Clause 17.3 shall not apply if the
         Agent or the Security Trustee is required by any Export Credit Agency
         to transfer its functions to an Export Credit Agency or to another bank
         or financial institution or if such transfer is made pursuant to Clause
         15 (Mitigation and Contest Rights).

17.4     The Lenders and the Representatives represent and warrant to the
         Obligors and agree with the Obligors that the provisions of the
         Lenders' Agreement are not and will not be inconsistent with the
         provisions of the Transaction Documents including with respect to the
         identity of the Agent or Security Trustee or the voting or any other
         making of determinations by the Instructing Group, the Agent or the
         Security Trustee as provided under the Transaction Documents.

18.      ASSIGNMENTS AND TRANSFERS

18.1     TRANSFERS BY OBLIGORS

         None of the Obligors shall assign any rights or transfer any
         obligations arising from this Agreement without the prior written
         consent of the Security Trustee (acting on the instructions of the
         Instructing Group), except that (i) the Borrower or any Sub-Borrower
         may transfer for the purposes of merger or solvent liquidation or
         contractually or by operation of law its rights and obligations to a
         person that becomes the Borrower or a Sub-Borrower, and the Borrower
         Parent or an Intermediate Lessee may transfer for the purposes of
         merger or solvent liquidation or contractually or by operation of law
         its rights and obligations to a person that becomes the Borrower

                                     -136-
<PAGE>
         Parent or an Intermediate Lessee, as the case may be, and is a
         Subsidiary of the Guarantor (not incorporated in the United States
         except in the case of the Borrower Parent or which in the case of the
         Sub-Borrower or Intermediate Lessee is an owner trust and/or voting
         trust) and (ii) in the case of the Guarantor, to a successor or assign
         permitted under Schedule 6, (in each case the "TRANSFEREE") PROVIDED
         THAT any such transfer is subject to the conditions precedent that:

         18.1.1   no Relevant Event or Termination Event has occurred and is
                  continuing;

         18.1.2   where the Transferee is the Guarantor, a Sub-Borrower or an
                  Intermediate Lessee organised in a Regular Jurisdiction, the
                  Transferee shall accede to this Agreement by executing an
                  Accession Deed (which shall, in the case of the Guarantor, be
                  appropriately amended to the satisfaction of the Agent) and
                  such other Transaction Documents as the Agent, in its good
                  faith opinion, considers appropriate so that such Transferee
                  shall become a party to this Agreement and such of the other
                  Transaction Documents as may be appropriate as if named
                  therein as a party;

         18.1.3   if Clause 18.1.2 does not apply (including if the Transferee
                  is organised in an Irregular Jurisdiction, if applicable) each
                  of the remaining Obligors and, such Transferee shall enter
                  into such other documents and provide such security as the
                  Security Trustee may, in its good faith opinion (after taking
                  legal advice from counsel to the Lenders in the jurisdiction
                  of the relevant Transferee), require in order to ensure that
                  (i) the Representatives and each of the Lenders are in a
                  position, having a substantially similar effect (including as
                  to their security position) with respect to such Transferee as
                  they were with respect to the transferor under the Transaction
                  Documents and (ii) the rights of the Representatives and the
                  Lenders are not materially different than with respect to the
                  relevant transferor under the Transaction Documents, it being
                  acknowledged and agreed for the purpose of determining the
                  foregoing matters that (i) any trustee in a United States
                  owner/voting trust will be party to the relevant Transaction
                  Documents not in its individual capacity but solely as
                  trustee, (ii) common law jurisdictions are acceptable and
                  (iii) with respect to civil jurisdictions, the Borrower and
                  the Agent shall negotiate in good faith, to the extent
                  necessary, alternative security to that available in common
                  law jurisdictions which is acceptable to the Security Trustee,
                  acting upon the instruction of the Instructing Group;

         18.1.4   upon receipt by the Agent of the Accession Deed signed on
                  behalf of the Borrower, Guarantor, other Obligors and by the
                  proposed Transferee, the Agent shall sign the same for itself
                  and on behalf of the Lenders and shall as promptly as
                  practicable give notice of such execution to all of the
                  parties to the Accession Deed;

         18.1.5   upon execution of any such Accession Deed, the transfer shall
                  take effect in accordance with, but subject to, the terms
                  hereof and thereof;

                                     -137-
<PAGE>

         18.1.6   evidence satisfactory to the Security Trustee (including a
                  legal opinion from counsel to the Lenders in the jurisdiction
                  in which transfer of title to the Aircraft takes place) that
                  the Transferee (as the case may be) has obtained title to the
                  Aircraft free and clear of any Liens other than Permitted
                  Liens including a certified copy of the Bill of Sale in
                  relation to each Aircraft, if applicable, to the Transferee;

         18.1.7   a legal opinion from counsel to the Lenders in the
                  jurisdiction in which the Transferee is organised which is
                  satisfactory to the Security Trustee concerning the relevant
                  Accession Deed or, an adaptation thereof pursuant to
                  subparagraphs 18.1.2 or 18.1.3 above, any assignment of the
                  Mortgage or, if applicable, the relevant Mortgages, the filing
                  or registration and perfection in that jurisdiction of the
                  Mortgage or, if applicable, the relevant Mortgages, (or
                  alternative security) with respect to the Aircraft, the Charge
                  over Shares of Sub-Borrower (if any) and any other Aircraft
                  Security Documents which will be entered into by the
                  Transferee and the validity of a guarantee and indemnity to be
                  entered into by the Transferee (if other than the Guarantor)
                  in place of the Sub-Borrower Guarantor (if the Transferor is a
                  Sub-Borrower) in favour of the Security Trustee;

         18.1.8   where the Transferee assumes the obligations of the Guarantor
                  under this Agreement, a legal opinion from in-house counsel to
                  the Transferee and from external counsel to the Transferee in
                  the jurisdiction in which the Transferee is organised in
                  favour of the Security Trustee in a form acceptable to it
                  concerning the Accession Deed entered into by the Transferee
                  as appropriately amended in accordance with sub-paragraph
                  18.1.2 above;

         18.1.9   the relevant legal opinions from counsel to the Lenders as
                  provided in paragraph 4 of Part A to Schedule 7;

         18.1.10  evidence of insurance having been effected in respect of the
                  Aircraft with the Security Trustee named as a contract party
                  (on behalf of itself, the Agent and the Relevant Lenders) or
                  additional insured under the liability insurance and (to the
                  extent possible under AVN67B, or such other endorsement as may
                  be applicable) the Security Trustee named as a loss payee
                  under the hull insurance;

         18.1.11  if applicable, copies of the certificate of registration of
                  the Replacement Aircraft and airworthiness issued by the
                  Aviation Authority;

         18.1.12  the following signed documents:

                  (a)      Accession Deed or an adaptation thereof pursuant to
                           sub-paragraphs 18.1.2 or 18.1.3 above (if applicable)
                           (if such person has not previously acceded to the
                           Transaction Documents);

                                     -138-
<PAGE>

                  (b)      the assignment of the Mortgages (if applicable) or
                           alternative security satisfactory to the Security
                           Trustee, acting upon the instructions of the
                           Instructing Group;

                  (c)      assignment of the Warranties (to the extent
                           assignable);

                  (d)      the assignment of the Engine Warranties (to the
                           extent assignable);

                  (e)      Sub-Borrower Debenture (if applicable);

                  (f)      Intermediate Lessee Debenture (if applicable);

                  (g)      Charge Over Shares of Sub-Borrower (if applicable);

                  (h)      Charge Over Shares of Intermediate Lessee (if
                           applicable);

                  (i)      Lease Security Assignment (if applicable);

                  (j)      Intermediate Lease Security Agreement (if
                           applicable);

                  (k)      Notice of Charge as amended to record transfer of
                           title to the Aircraft to the Transferee;

         18.1.13  evidence to the Security Trustee that a maintenance reserve
                  account, a rental account and a security deposit account have
                  been opened in the name of the Transferee with a financial
                  institution acceptable to the Security Trustee and that US$10
                  has been deposited in each of such accounts.

18.2     TRANSFER BY ORIGINAL LENDER PRIOR TO DELIVERY DATE

         18.2.1   The Original Lender may at any time prior to the Delivery Date
                  of an Aircraft transfer all of its rights, benefits and
                  obligations under this Agreement relating to the Advance to be
                  made in respect of such Aircraft to an Approved Lender
                  PROVIDED THAT:

                  (a)      prior to the transfer to an Approved Lender, the
                           Original Lender gives notice to the Guarantor (with a
                           copy to the Agent) of the identity of the Approved
                           Lender and the jurisdiction of tax residence of the
                           Approved Lender and the jurisdiction of tax residence
                           of the persons controlling the Approved Lender;

                  (b)      the Approved Lender shall be able to file for US tax
                           treaty benefits on a zero rate of withholding tax and
                           shall provide the applicable Internal Revenue Service
                           Forms to the Agent and the Borrower, or the Approved
                           Lender shall be able to file for exemption from
                           withholding tax on income of a lender effectively
                           connected with the conduct of a trade or business in
                           the United States and shall provide the applicable US
                           Internal Revenue Service Forms to the Agent and the
                           Borrower;

                  (c)      all reasonable and approved out of pocket Expenses of
                           such transfer shall be borne by the Borrower; and

                                     -139-
<PAGE>

                  (d)      such transfer does not violate any applicable
                           securities or other law.

         18.2.2   Contemporaneously with the execution and delivery of a
                  Transfer Certificate in respect of any transfer by the
                  Original Lender of a part of its Commitment pursuant to Clause
                  18.2.1 the Original Lender shall procure that the Transferee
                  enters into the relevant Loan Supplement(s) in respect of the
                  Advances to which such transfer of Commitment relates.

         18.2.3   Upon the execution and delivery of a Transfer Certificate by
                  the Original Lender as contemplated by Clause 18.2.2 the
                  Commitment of the Original Lender as set out in Schedule 1
                  shall not be reduced (and if any reduction is effected by
                  operation of the terms of this Agreement the amount of the
                  Commitment of the Original Lender so reduced shall be
                  reinstated and form part of its Commitment hereunder) unless:

                  (a)      the amount of the Unutilised Facility (after
                           subtracting the amount of the Commitment so
                           transferred) is less than or equal to the amount set
                           out in a letter agreement dated 4 February 2004
                           between the Original Lender and the Guarantor, in
                           which case the amount of the Commitment of the
                           Original Lender shall be reduced by the amount so
                           transferred; or

                  (b)      the Original Lender and the Borrower otherwise agree
                           in writing.

18.3     TRANSFERS BY LENDERS

         Any Lender may at any time after the Availability Period has expired
         transfer all or any of its rights, benefits and obligations under this
         Agreement in respect of one or more Loans following the Delivery Date
         of the Aircraft to which such Loan(s) relate or change its Lending
         Office (whether in the same or a different jurisdiction) PROVIDED THAT:

         18.3.1   prior to the transfer or change in Lending Office becoming
                  effective, the relevant Lender gives notice to the Guarantor
                  (with a copy to the Agent) of the identity of the Transferee
                  or, as the case may be, the new Lending Office and the
                  jurisdiction of tax residence of the Transferee or, as the
                  case may be, the new Lending Office and the jurisdiction of
                  tax residence of the persons controlling the Transferee;

         18.3.2   the Transferee is eligible for support from each of the Export
                  Credit Agencies and has been approved by the Borrower (such
                  approval not to be unreasonably withheld) or is designated by
                  an Export Credit Agency, and, except only in the case of such
                  a designation by an Export Credit Agency after an Acceleration
                  Event, in each case has a credit rating with Standard and
                  Poor's Corporation of at least BBB or a credit rating with
                  Moody's Investor Service Inc. of at least Baa2 or, in each
                  case, the equivalent successor rating, and is not on negative
                  credit watch to fall below such rating;

         18.3.3   the Transferee shall be able to file for US tax treaty
                  benefits on a zero rate of withholding tax and shall provide
                  the applicable Internal Revenue Service

                                     -140-
<PAGE>

                  Forms to the Agent and the Borrower, or the Transferee shall
                  be able to file for exemption from withholding tax on income
                  of a lender effectively connected with the conduct of a trade
                  or business in the United States and shall provide the
                  applicable Internal Revenue Service Forms to the Agent and the
                  Borrower;

         18.3.4   all costs and expenses of the Transfer shall be borne by the
                  transferring Lender and no Obligor shall be under any
                  obligation to pay any greater amount or suffer any other
                  material increase in liabilities or material diminution in
                  right or benefit under the Transaction Documents following and
                  as a consequence (directly or indirectly) of any such transfer
                  or change in Lending Office unless and until a Change in Law
                  occurs and as a result of such Change in Law (excluding any
                  Change in Law which occurs, or the intended implementation of
                  which is officially announced or proposed before the date of
                  such transfer or change in Lending Office);

         18.3.5   such Transfer does not violate any applicable securities or
                  other law; and

         18.3.6   the Lender provides the Borrower with the applicable Internal
                  Revenue Forms in which the Lender claims an exemption from
                  United States withholding tax with respect to any new Lending
                  Office,

         provided further that the provisos set out above shall not apply to the
         extent that any Lender has so assigned or transferred its Relevant
         Proportion of any Loan or changed its Lending Office in relation to any
         Loan pursuant to Clause 15 (Mitigation and Contest Rights).

18.4     TRANSFER CERTIFICATES

         18.4.1   If any Lender (including the Original Lender pursuant to
                  Clause 18.2) (the "TRANSFEROR") transfers all or any part of
                  its rights, benefits and/or obligations to another bank or
                  financial institution (the "TRANSFEREE") such transfer shall
                  be effected by way of a novation by the delivery to, and the
                  execution by, the Agent of a duly completed Transfer
                  Certificate or in such other manner as all parties hereto may
                  agree.

         18.4.2   On the date specified in the Transfer Certificate:

                  (a)      to the extent that in the Transfer Certificate the
                           Transferor seeks to transfer its rights and
                           obligations hereunder the Borrower, each of the
                           Obligors and the Transferor shall each be released
                           from further obligations to each other under this
                           Agreement and their respective rights against each
                           other shall be cancelled (such rights and obligations
                           being referred to in this Clause 18.4 as "DISCHARGED
                           RIGHTS AND OBLIGATIONS");

                  (b)      the Borrower, the Agent, the Security Trustee, each
                           of the Obligors and the Transferee shall each assume
                           obligations towards each other and/or acquire rights
                           against each other which, subject to Clause 18.3
                           above,

                                     -141-
<PAGE>

                           differ from the Discharged Rights and Obligations
                           only insofar as the Borrower, each of the Obligors,
                           and the Transferee have assumed and/or acquired the
                           same in place of the Borrower, each of the Obligors
                           and the Transferor;

                  (c)      the Agent, the Security Trustee, each of the
                           Obligors, the Borrower, the Transferee and the other
                           Lenders shall acquire the same rights and assume the
                           same obligations among themselves as they would have
                           acquired and assumed had the Transferee originally
                           been a party hereunder as a Lender with the rights
                           and/or the obligations acquired or assumed by it as a
                           result of the transfer; and

                  (d)      the Transferee, the Agent, the Security Trustee and
                           each of the other Lenders shall acquire the same
                           rights and assume the same obligations amongst
                           themselves in respect of the Lenders' Agreement as
                           they would have acquired and assumed had the
                           Transferee originally been a party to the Lenders'
                           Agreement as a Lender in the place of the Transferor.

         18.4.3   Each of the Obligors (other than the Borrower) each with
                  respect to itself hereby confirm that the execution of any
                  such Transfer Certificate by the Borrower, for and on behalf
                  of, inter alia, each of the other Obligors shall be binding
                  upon and enforceable against each of the other Obligors as if
                  each of the other Obligors had each executed the Transfer
                  Certificate itself.

         18.4.4   The Agent and the Borrower shall each promptly complete
                  Transfer Certificates on written request by a Transferor. Each
                  of the Lenders hereby irrevocably authorises the Agent and
                  each Obligor (other than the Borrower) hereby irrevocably
                  authorises the Borrower to execute any duly completed Transfer
                  Certificate on its behalf PROVIDED THAT such authorisation
                  does not extend to the execution of a Transfer Certificate on
                  behalf of either the Transferor or the Transferee named
                  therein.

18.5     COSTS AND EXPENSES

         In relation to any transfer contemplated by Clauses 18.2 or 18.3 which
         is undertaken voluntarily by any Lender, the costs and expenses thereby
         incurred by the Borrower, the Agent, the Security Trustee and each
         Lender shall be for the account of the Transferee or the Transferor (as
         they may agree between themselves). In relation to any other transfer,
         the Borrower shall pay within ten (10) Business Days of demand
         supported by the relevant invoices or receipts in reasonable detail all
         reasonable out-of-pocket Expenses incurred by the Agent, the Security
         Trustee and each Lender in connection with any transfer contemplated by
         this Clause 18. For the purposes of Clause 18.5, a voluntary transfer
         by any Lender shall mean any transfer except a transfer by a
         non-defaulting Lender pursuant to Clause 15 (Mitigation and Contest
         Rights).

                                     -142-
<PAGE>

19.      SET-OFF AND PRO RATA PAYMENTS

19.1     SET-OFF

         19.1.1   Each Lender and each of the Representatives may, at any time
                  during the continuance of a Termination Event, set off from
                  any sum payable by it to any one or more of the Obligors under
                  any of the Transaction Documents any sum due and unpaid by the
                  relevant Obligor to such Lender or Representative in each case
                  under or in relation to any of the Transaction Documents and
                  any document or agreement entered into pursuant to or in
                  connection with any of the Transaction Documents.

         19.1.2   The Borrower shall not be entitled to deduct any sum which may
                  be due to the Borrower from the Lenders (or any of them)
                  howsoever arising from any sum payable by the Borrower under
                  or in connection with any of the Transaction Documents.

         19.1.3   No Obligor shall be entitled to refuse or to postpone
                  performance of any payment or other obligation under any of
                  the Transaction Documents by reason of any claim which it may
                  have or may consider that it has against (i) the Lenders (or
                  any of them) under or in connection with any of the
                  Transaction Documents, or any other agreement with any of the
                  Lenders and/or (ii) any other party under or in connection
                  with any of the Transaction Documents (it being agreed,
                  however, that the foregoing shall not prejudice such Obligor's
                  right to bring any such claim separately against any Lender).

19.2     PRO-RATA SHARING

         19.2.1   Provided that no Acceleration Event has occurred and is
                  continuing, if any Lender (the "SHARING LENDER") shall at any
                  time obtain (whether by way of voluntary or involuntary
                  payment, right of set-off, or otherwise) a proportion of its
                  Loan in any sum due from the Borrower or a proportion in
                  respect of its participation in any sum due from any one or
                  more of the Obligors under any of the Transaction Documents
                  which is greater than the proportion obtained by the Lender or
                  Lenders respectively obtaining the smallest proportion of its
                  Loan, or as the case may be, its participation therein,
                  including a nil receipt, (the amount so obtained by the
                  Sharing Lender which is attributable to such excess being here
                  called "THE EXCESS AMOUNT"), then:

                  (a)      the Sharing Lender shall promptly pay to the Agent,
                           for the account of the Lenders, an amount equal to
                           the excess amount, whereupon the Agent shall notify
                           the Borrower or, as the case may be, the relevant
                           Obligor of such amount and its receipt by the Agent;

                  (b)      the Agent shall treat such payment as if it were a
                           payment by the Borrower or, as the case may be, the
                           relevant Obligor on account of sums owed to the
                           Lenders; and

                  (c)      as between the Borrower or, as the case may be, the
                           relevant Obligor and the Sharing Lender the excess
                           amount shall be treated as not having

                                     -143-
<PAGE>

                           been paid, while as between the Borrower or, as the
                           case may be, the relevant Obligor and each Lender it
                           shall be treated as having been paid to the extent
                           any moneys are received by such Lender.

         19.2.2   Each Lender shall forthwith notify the Agent of any such
                  receipt or recovery by it other than by payment through the
                  Agent.

         19.2.3   If any excess amount subsequently has to be wholly or partly
                  refunded to the Borrower or, as the case may be, the relevant
                  Obligor by any Sharing Lender which has paid an amount equal
                  thereto to the Agent under (a) above, each Lender to which any
                  part of that amount was distributed shall on request from the
                  Sharing Lender repay to the Sharing Lender such Lender's pro
                  rata share of the amount which has to be so refunded by the
                  Sharing Lender. Each Lender shall on request supply to the
                  Agent such information as the Agent may from time to time
                  request for the purpose of this Clause 19. Notwithstanding the
                  foregoing provisions of this Clause 19, (i) no Sharing Lender
                  shall be obliged to share any excess amount which it receives
                  or recovers pursuant to legal proceedings taken by it to
                  recover any sums owing to it under any of the Transaction
                  Documents with any other party which has a legal right to, but
                  does not, either join in such proceedings or commence and
                  diligently pursue separate proceedings to enforce its rights
                  in the same or another court, unless the proceedings
                  instituted by the Sharing Lender are instituted by it without
                  prior notice having been given to such party through the Agent
                  and (ii) no Lender shall be obliged to exercise any right of
                  set-off it may have against any or all of the Borrower or any
                  of the Obligors at any time, or to set-off against any
                  obligations of the Borrower, or any of the Obligors in
                  relation to the Transaction Documents any sum which such
                  Lender may hold on deposit or otherwise from the Borrower or
                  any Obligor, or any other right against the Borrower or any
                  Obligor in favour of such Lender which sum has been received
                  or right has arisen unrelated to and independent from the
                  Transaction.

20.      RIGHTS CUMULATIVE, WAIVERS, SEVERABILITY

20.1     CUMULATIVE RIGHTS

         The respective rights of the Agent, the Security Trustee and the
         Lenders pursuant to this Agreement and the other Transaction Documents:

         20.1.1   are cumulative, may be exercised as often as they consider
                  appropriate and are in addition to their respective rights
                  under the general law; and

         20.1.2   shall not be capable of being waived or varied otherwise than
                  by an express waiver or variation in writing.

20.2     WAIVERS

         Any failure to exercise, or any delay in exercising, on the part of any
         Representative or Lender any right under any Transaction Document shall
         not operate as a waiver or

                                     -144-
<PAGE>

         variation of that or any other right and any defective or partial
         exercise of any such right shall not preclude any other or further
         exercise of that or any other right, and no act or course of conduct or
         negotiation shall in any way preclude any party hereto from exercising
         any such right or constitute a suspension or any variation of any such
         right.

20.3     SEVERABILITY

         If at any time any provision hereof is or becomes illegal, invalid or
         unenforceable in any respect under the law of any jurisdiction, neither
         the legality, validity nor the enforceability of the remaining
         provisions hereof nor the legality, validity or enforceability of such
         provision under the law of any other jurisdiction shall in any way be
         affected or impaired.

21.      FURTHER ASSURANCE

         The Borrower and each other Obligor shall from time to time and at its
         own cost promptly sign, seal, execute, acknowledge, deliver, tile and
         register all such additional documents, instruments, agreements,
         certificates, consents and assurances and do all such other acts and
         things as may be required by law or reasonably requested by the Agent
         from time to time in order to give full effect to each Transaction
         Document or to establish, maintain, protect or preserve the rights of
         the Security Trustee, the Agent and the Lenders under the Transaction
         Documents or to enable any of them to obtain the full benefit of each
         Transaction Document and to exercise and enforce their respective
         rights and remedies under the Transaction Documents PROVIDED THAT no
         Obligor shall be required to do any act or thing or take any step in
         connection with the registration, recording or filing of any instrument
         creating or evidencing a Lien over an Aircraft in the register of the
         Aviation Authority where such Aircraft is registered, or any other
         registration, recording or filing outside the jurisdiction of
         organisation of the Borrower or, if applicable, any Sub-Borrower or any
         Intermediate Lessee, or any actions with respect to the Lessee or any
         Sub-Lessee (other than any registration, recording or filing of a Lien
         over an Aircraft within the jurisdiction of organisation of the
         Borrower or, if applicable, any Sub-Borrower or any Intermediate Lessee
         or the Borrower Parent) or with respect to its jurisdiction of
         organisation or principal place of business, unless a Second Trigger
         Event or Termination Event has occurred and is continuing.

22.      NOTICES

22.1     Unless otherwise expressly provided herein, all notices, requests,
         demands or other communications to or upon the respective parties
         hereto in connection with any Transaction Document, the Facility, any
         Utilisation or any Aircraft shall:

         22.1.1   in order to be valid be in English and in writing;

         22.1.2   be deemed to have been duly served on, given to or made in
                  relation to a party if it is:

                                     -145-
<PAGE>

                  (a)      delivered to the address of that party set out
                           herein or at such other address as that party may
                           notify to the other parties hereto in writing from
                           time to time; or

                  (b)      sent by facsimile to the facsimile number of that
                           party set out herein or to such other number as that
                           party may notify to the other parties hereto from
                           time to time;

         22.1.3   be sufficient if:

                  (a)      executed under the seal of the party giving, serving
                           or making the same; or

                  (b)      signed or sent on behalf of the party giving,
                           serving or making the same by any attorney, director,
                           secretary, agent or other duly authorized
                           representative of such party;

         22.1.4   be effective:

                  (a)      in the case of a letter, when delivered to the
                           address referred to in Clause 22.1.2(a); and

                  (b)      in the case of a facsimile transmission, when receipt
                           is confirmed by return facsimile or by telephone (or
                           on actual receipt if not so confirmed);

22.2     For the purposes of this Clause 22, all notices, requests, demands or
         other communications shall be given or made by being addressed as
         follows:

         22.2.1   if to the Borrower to:

                  Whitney Leasing Limited
                  American International Building
                  29 Richmond Road
                  Pembroke HM 08
                  Bermuda

                  Facsimile No: +441 295 6983
                  Attention:    L. Michael Murphy

                  with a copy to the Guarantor

                                     -146-
<PAGE>

         22.2.2   if to the Borrower Parent to:

                  Aircraft SPC-12, Inc.
                  c/o International Lease Finance Corporation
                  10250 Constellation Boulevard
                  34th Floor
                  Los Angeles
                  CA 90067
                  United States of America

                  Tel:          +1 310 788 1999
                  Facsimile No: +1 310 788 1990
                  Attention:    Legal Department and Chief Financial Officer

                  with a copy to the Guarantor

         22.2.3   if to the Guarantor or the Subordinated Lender to:

                  International Lease Finance Corporation
                  10250 Constellation Boulevard
                  34th Floor
                  Los Angeles
                  CA 90067
                  United States of America

                  Tel:          +1 310 788 1999
                  Facsimile No: +1 310 788 1990
                  Attention:    Legal Department and Chief Financial Officer

         22.2.4   if to the Agent or the Security Trustee to:

                  The Governor and Company of the Bank of Scotland, London
                  Branch
                  PO Box No. 39900
                  Level 7, Bishopsgate Exchange
                  155 Bishopsgate
                  London
                  EC2M 3YB

                  Tel:          +44 (0)20 7012 9289/9287
                  Facsimile No: +44 (0)20 7012 9455
                  Attention:    Mike Gear/Simon Middleton

         22.2.5   if to a Lender from any of the Obligors, then to such Lender
                  care of the Agent;

         22.2.6   if to a Lead Manager, then to the address and/or facsimile
                  number set out opposite the name of such Lead Manager in the
                  relevant Part of Schedule 1.

                                     -147-
<PAGE>

23.      GOVERNING LAW AND JURISDICTION

23.1     This Agreement shall be governed and construed in accordance with
         English law.

23.2     The Borrower and each other Obligor irrevocably agrees for the benefit
         of each of the Agent, the Security Trustee and the Lenders, and each of
         the Agent, the Security Trustee and each of the Lenders irrevocably
         agree for the benefit of each Obligor, that the courts of England,
         located in London, shall have jurisdiction to hear and determine any
         suit, action or proceeding, and to settle any disputes which may arise
         out of or in connection with this Agreement or any other Transaction
         Document and, for such purposes, irrevocably submits to the
         jurisdiction of such courts.

23.3     Each party irrevocably waives any objection which it might now or
         hereafter have to the courts referred to in Clause 23.2 being nominated
         as the forum to hear and determine any suit, action or proceeding, and
         to settle any disputes, which may arise out of or in connection with
         this Agreement or any other Transaction Document and agrees not to
         claim that any such court is not a convenient or appropriate forum in
         each case whether on the grounds of venue or forum non conveniens or
         any similar grounds or otherwise.

23.4     For the purpose of any suit, action, proceeding or settlement of
         dispute in the English courts (whether under this Agreement or any
         other Transaction Document), the Borrower and each Obligor and each
         Lender and Representative which is not incorporated in England (or
         registered as an overseas company pursuant to the Companies Act 1985):

         23.4.1   appoints the agent specified in Schedule 8 or specified in the
                  relevant Loan Supplement or Transfer Certificate pursuant to
                  which it becomes a party hereto, as the case may be, to accept
                  service of process in respect of any such suit, action,
                  proceeding or settlement of dispute;

         23.4.2   confirms that such agent is willing to accept service of such
                  process on its behalf in respect of this Agreement and the
                  other Transaction Documents; and

         23.4.3   if the agent specified in Schedule 8 or specified in the
                  relevant Loan Supplement or Transfer Certificate pursuant to
                  which it becomes a party hereto, as the case may be, no longer
                  serves as its agent, shall promptly appoint another such agent
                  acceptable to the Agent and advise the Agent thereof.

23.5     The submission to the jurisdiction of the courts referred to in Clause
         23.2 shall not (and shall not be construed so as to) limit the right of
         any party to take proceedings against any other party in any other
         court of competent jurisdiction nor shall the taking of proceedings in
         any one or more jurisdictions preclude the taking of proceedings in any
         other jurisdiction, whether concurrently or not.

23.6     To the extent that the Borrower or any other Obligor or any of the
         property of the Borrower or any other Obligor is or becomes entitled at
         any time to any immunity on

                                     -148-
<PAGE>

         the grounds of sovereignty or otherwise from any legal action, suit or
         proceeding, from set-off or counterclaim, from the jurisdiction of any
         competent court, from service of process, from attachment prior to
         judgment, from attachment in aid of execution, or from execution prior
         to judgment, or other legal process in any jurisdiction, the Borrower
         and each other Obligor, for itself and its property, hereby irrevocably
         and unconditionally waives, and agrees not to plead or claim, any such
         immunity with respect to its obligations, liabilities or any other
         matter under or arising out of or in collection with any of the
         Transaction Documents.

24.      MISCELLANEOUS

24.1     A certificate given by the Agent, the Security Trustee or any Lender as
         to the amount of any sum required to be paid to it under any provisions
         of this Agreement or any of the other Transaction Documents shall, save
         as otherwise provided for in this Agreement or any of the other
         Transaction Documents and save in the case of manifest error, be
         conclusive evidence of the amounts therein stated for all purposes or
         this Agreement or, as the case may be, any of the other Transaction
         Documents. Any such certificate shall contain a reasonable explanation
         of the way in which the sum required to be paid was calculated,
         together with reasonable supporting evidence, provided that in
         providing such a reasonable explanation and such evidence, neither the
         Agent nor the Security Trustee nor any of the Lenders shall be required
         to disclose any documents and/or information relating to its business
         or affairs which it considers (in its bona fide opinion) to be of a
         confidential nature.

24.2     The parties hereto agree and acknowledge that this Agreement shall
         continue in full force and effect for all purposes until all Secured
         Obligations (exclusive of indemnities in respect of which no claims
         have been, or to the knowledge of the Security Trustee will be,
         asserted) have been paid in full notwithstanding that the Commitments
         may at any time be reduced to zero.

24.3     Each of the parties hereto agrees that no amendments, variations,
         supplements or modifications may be made to any of the Transaction
         Documents other than by an instrument in writing executed by the
         applicable Obligor(s) and the Agent or the Security Trustee as provided
         in the applicable Transaction Document, or where expressly provided in
         the applicable Transaction Document, the Agent on behalf and on the
         instructions of the Instructing Group (which consent shall not be
         unreasonably withheld).

24.4     Each of the Borrower, the Guarantor and the Borrower Parent hereby
         acknowledges and accepts that under the ECA Guarantees the Export
         Credit Agencies have certain rights to require the Lenders, the Agent
         and/or the Security Trustee to act, or to omit to act, in accordance
         with the instructions of the Export Credit Agencies. Accordingly, each
         of the Borrower, the Guarantor and the Borrower Parent hereby
         acknowledges and accepts that if any of the Lenders, the Agent and/or,
         as the case may be, the Security Trustee have to exercise a right,
         discretion or power under any of the Transaction Documents
         "reasonably", "in good faith" or "bona fide" or with any other
         restriction of whatsoever nature then such Lender, the Agent and/or, as
         the case may

                                     -149-
<PAGE>

      be, the Security Trustee have to exercise a right, discretion or power
      under any of the Transaction Documents "reasonably", "in good faith" or
      "bona fide" or with any other restriction of whatsoever nature then such
      Lender, the Agent and/or, as the case may be, the Security Trustee will be
      deemed to be acting "reasonably", "in good faith" or "bona fide" or in
      accordance with such other restrictions (as the case may be) if such
      Lender, the Agent and/or the Security Trustee exercises, or refrains from
      exercising, such right, discretion or power in accordance with the
      instructions of the relevant Export Credit Agency.

25.   CONFIDENTIALITY

25.1  At all times during the Security Period and after the Termination thereof,
      each party hereto shall use all reasonable endeavours to ensure that its
      respective officers, directors, employees and agents shall keep secret and
      confidential and not, without the prior written consent of the Borrower,
      the Guarantor, the Agent and the Security Trustee, disclose to any third
      party the terms of any of the Transaction Documents, any Lease, Sub-Lease,
      Insurances, Purchase Agreements or Engine Agreements or any of the
      information, reports, invoices, or documents supplied by or on behalf of
      any of the other parties hereto, save that any such party shall be
      entitled to disclose any such terms, information, reports or documents:

      25.1.1 in connection with any proceedings arising out of or in connection
             with any of the Transaction Documents to the extent that such party
             may consider necessary to protect its interest; or

      25.1.2 to any potential permitted assignee or transferee of all or any of
             such party's rights under any of the Transaction Documents or any
             other permitted person proposing to enter into contractual
             arrangements with such party in relation to or in connection with
             the transactions contemplated by any of the Transaction Documents,
             subject to it obtaining an undertaking from such potential
             permitted assignee or permitted other person in the terms similar
             to this Clause 25.1; or

      25.1.3 if required to do so by an order of a court of competent
             jurisdiction whether in pursuance of any procedure for discovering
             documents or otherwise; or

      25.1.4 pursuant to any law or regulation having the force of law
             (including, without limitation, SEC filing requirements); or

      25.1.5 to any fiscal, monetary, tax, insurance, governmental or other
             competent authority; or

      25.1.6 to its auditors, bankers, rating agencies, legal or other
             professional advisers (which are under an ethical obligation to or
             agree to hold such information confidential); or

      25.1.7 to any of the Export Credit Agencies; or

      25.1.8 in any manner contemplated by any of the Transaction Documents.

25.2  In addition, any party shall be entitled to disclose or use any such
      information, reports or documents if the information contained therein
      shall have emanated in conditions

                                     -150-
<PAGE>

      free from confidentiality bona fide from some person other than the
      relevant party hereto and such party would, but for the preceding
      provisions of this Clause 25 have been free to disclose or use the same.

25.3  Notwithstanding anything to the contrary set forth herein or in any other
      agreement to which the parties hereto are parties or by which they are
      bound, the obligations of confidentiality contained herein and therein, as
      they relate to the Transaction, shall not apply to the US federal tax
      structure or US federal tax treatment of the Transaction, and each party
      hereto (and any employee, representative, or agent of any party hereto)
      may disclose to any and all persons, without limitation of any kind, the
      US federal tax structure and US federal tax treatment of the Transaction.
      The preceding sentence is intended to cause the transaction to be treated
      as not having been offered under conditions of confidentiality for
      purposes of Section 1.6011-4(b)(3) (or any successor provision) of the
      Treasury Regulations promulgated under Section 6011 of the Internal
      Revenue Code of 1986, as amended, and shall be construed in a manner
      consistent with such purpose. In addition, each party hereto acknowledges
      that it has no proprietary or exclusive rights to the US federal tax
      structure of the Transaction or any US federal tax matter or US federal
      tax idea related to the Transaction.

25.4  Each party may, notwithstanding any other provision of this Clause
      25, release to any potential assignee or transferee (permitted in each
      case pursuant hereto or to the relevant Transaction Document), or other
      person proposing to enter into permitted contractual arrangements with
      such party in relation to or in connection with the transactions
      contemplated by any of the Transaction Documents, a copy of any of the
      Transaction Documents, provided that each such potential assignee or
      transferee or other person confirms in writing to the other parties to
      this Agreement that it is bound by the terms of this Clause 25 as if it
      had been a party to this Agreement.

26.   COUNTERPARTS AND DELIVERY BY FACSIMILE

26.1  This Agreement may be executed in any number of counterparts and by
      different parties thereto on separate counterparts and any single
      counterpart or set of counterparts signed, in either case, by all the
      parties hereto shall be deemed to constitute a full and original agreement
      for all purposes but all counterparts shall constitute but one and the
      same instrument.

26.2  Delivery of an executed counterpart of this Agreement by facsimile will be
      deemed as effective as delivery of an originally executed counterpart. Any
      party delivering an executed counterpart of this Agreement will also
      deliver an originally executed counterpart, but the failure of any party
      to deliver an originally executed counterpart of this Agreement will not
      affect the validity or effectiveness of this Agreement.

27.   THIRD PARTIES RIGHTS

      A person who is not a party to this Agreement has no right under the Third
      Parties Act to enforce any provision of this Agreement but this does not
      affect any right or remedy of a third party that exists or is available
      apart from under the Third Parties Act.

                                     -151-
<PAGE>

      IN WITNESS whereof this Agreement has been executed by the duly authorised
      representatives of the parties hereto (other than the Guarantor) under
      hand, and has been executed by the Guarantor as a Deed with the intention
      that it be delivered on the day and year first above written.

                                     -152-
<PAGE>

                                   SCHEDULE 1
                                     LENDERS

LENDER                                              COMMITMENT

Halifax plc                          As set out in a letter agreement dated 4
                                     February 2004 between the Original
                                     Lender and the Guarantor.

NOTES:

1.    The Lender's Commitment will be allocated to the British Lenders, the
      French Lenders and the German Lenders in each Loan Supplement pursuant to
      Clause 2.3.3.

2.    The transfer by the Original Lender of part of its Commitment is subject
      to the provisions of Clause 18.2.

                                     -153-
<PAGE>

                                   SCHEDULE 2
                             FORM OF LOAN SUPPLEMENT

                                  DATED [-]

                             WHITNEY LEASING LIMITED
                                   as Borrower

         THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND, LONDON BRANCH
                                    as Agent

         THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND, LONDON BRANCH
                               as Security Trustee

                                       and

                     THE FINANCIAL INSTITUTIONS NAMED HEREIN
                               as Relevant Lenders


                            LOAN SUPPLEMENT NO. [-]
                          relating to the financing of
                         ONE (1) AIRBUS A3[-] AIRCRAFT
                       MANUFACTURER'S SERIAL NUMBER [-]


                                     -154-
<PAGE>

                                    CONTENTS

<TABLE>
<CAPTION>
CLAUSE                                                                                PAGE NO.
<S>                                                                                   <C>
1.     INTERPRETATION............................................................       156

2.     AMOUNT OF CREDITS.........................................................       158

3.     REPAYMENT OF ADVANCE......................................................       158

4.     APPLICABLE RATE...........................................................       158

5.     UTILISATION DATE..........................................................       159

6.     GOVERNING LAW AND JURISDICTION............................................       159

7.     MISCELLANEOUS.............................................................       160

Schedule 1.......................................................................       161

       Part A        The British Lender(s).......................................       161

       Part B        The French Lender(s)........................................       162

       Part C        The German Lender(s)........................................       163

Schedule 2(1)        Repayment Schedule..........................................       164

       Part A        The British Lender(s).......................................       164

       Part B        The French Lender(s)........................................       165

       Part C        The German Lender(s)........................................       166

Schedule 2(2)        Repayment Schedule Summary..................................       167
</TABLE>

                                     -155-
<PAGE>

THIS LOAN SUPPLEMENT is made the [-] day of [-]

BETWEEN:

(1)   WHITNEY LEASING LIMITED, a company organised and existing under the laws
      of Bermuda and having its registered office at American International
      Building, 29 Richmond Road, Pembroke HM 08, Bermuda (herein called the
      "BORROWER");

(2)   THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND, LONDON BRANCH, a banking
      institution established under the laws of Scotland acting for the purposes
      of this Loan Supplement through its offices at PO Box No. 39900 Level 7,
      Bishopsgate Exchange, 155 Bishopsgate, London EC2M 3YB, in its capacity as
      agent for and on behalf of itself and each of the Lenders (herein in such
      capacity called the "AGENT"); [and]

(3)   THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND, LONDON BRANCH, a banking
      institution established under the laws of Scotland acting for the purpose
      of this Loan Supplement through its offices at PO Box No. 39900 Level 7,
      Bishopsgate Exchange, 155 Bishopsgate, London EC2M 3YB, in its capacity as
      security trustee for and on behalf of itself and each of the Lenders
      (herein in such capacity called the "SECURITY TRUSTEE")[.][; and]

(4)   THE FINANCIAL INSTITUTIONS NAMED IN SCHEDULE I HERETO (each a "RELEVANT
      LENDER" and collectively the "RELEVANT LENDERS").

WHEREAS

(A)   Pursuant to the Facility Agreement, the Lenders have agreed to make
      available to the Borrower a credit facility in respect of the Airbus
      aircraft described therein.

(B)   A Utilisation Notice has been served in respect of the Aircraft.

(C)   [Pursuant to the Transfer Certificate[s], the Original Lender transferred
      to the Relevant Lender[(s)] all its rights, benefits and obligations under
      the Facility Agreement relating to the Advance to be made in respect of
      the Aircraft.]

(D)   This Loan Supplement is supplemental to the provisions of the Facility
      Agreement which relate to each Advance.

NOW IT IS HEREBY AGREED as follows:

1.    INTERPRETATION

1.1   Words and expressions defined in the Facility Agreement shall, unless
      otherwise specifically defined herein or unless the context otherwise
      requires, have the same respective meanings when used in this Loan
      Supplement (including the Recitals and the Schedules).

1.2   In this Loan Supplement (including the Recitals and the Schedules) the
      following words and expressions have, unless the context otherwise
      requires, the following meanings:

                                     -156-
<PAGE>

      "ADVANCE" means the aggregate principal amount of the British Credits, the
      French Credits and the German Credits advanced, or to be advanced, as the
      context may require, by the Relevant Lender(s) to the Borrower under the
      Facility Agreement in respect of the Aircraft.

      "AIRCRAFT" means the Airbus A3[-] Aircraft with manufacturer's serial
      number [-] more particularly described in the Mortgage.

      ["APPLICABLE MARGIN" shall have the meaning given to such term in Clause
      4.]

      "BORROWER" means Whitney Leasing Limited.

      ["SUB-BORROWER" means [-].]

      "BRITISH CREDITS" shall have the meaning given thereto in Clause 2.1.2.

      "BRITISH LENDERS" means the Lenders set out in Schedule 1 Part A.

      "FACILITY AGREEMENT" means the aircraft facility agreement dated [-] May
      2004 between (1) the banks and financial institutions named therein (as
      Lenders), (2) The Governor and Company of the Bank of Scotland, London
      Branch (as Agent), (3) The Governor and Company of the Bank of Scotland,
      London Branch (as Security Trustee), (4) the Borrower, (5) Aircraft
      SPC-12, Inc. (as Borrower Parent), (6) International Lease Finance
      Corporation (as Guarantor) and (7) International Lease Finance Corporation
      (as Subordinated Lender) as amended, supplemented and acceded to from time
      to time.

      "FRENCH CREDITS" shall have the meaning given thereto in Clause 2.1.3.

      "FRENCH LENDERS" means the Lenders set out in Schedule 1 Part B.

      "GERMAN CREDITS" shall have the meaning given thereto in Clause 2.1.4.

      "GERMAN LENDERS" means the Lenders set out in Schedule 1 Part C.

      "MORTGAGE" means the deed of assignment and aircraft mortgage in respect
      of the Aircraft dated [-] between the [Borrower] [Sub-Borrower] and the
      Security Trustee.

      "ORIGINAL LENDER" means Halifax plc.

      ["TRANSFER CERTIFICATE" means the transfer certificate[s] dated [-] in
      respect of the Advance entered into between the Relevant Lender[s] and the
      Original Lender pursuant to Clause 18.2 (Transfer by Original Lender prior
      to Delivery Date) of the Facility Agreement.]

1.3   Clauses 1.3 and 1.4 of the Facility Agreement shall be deemed to be
      incorporated herein, mutatis mutandis, as if reference therein to "this
      Facility Agreement" were references to "this Loan Supplement".

                                     -157-
<PAGE>

2.    AMOUNT OF CREDITS

2.1

      2.1.1 The aggregate amount of the Advance to be made by the Relevant
            Lender(s) in respect of the Aircraft shall be [-] Dollars (US$[- ]).

      2.1.2 The aggregate amount of the Advance to be made by the British
            Lender(s) in respect of the Aircraft shall be [-] Dollars (US$[-])
            (herein called the "BRITISH CREDITS") (and comprising (i) [-]
            Dollars (US$[-]) in respect of the Aircraft Purchase Price and (ii)
            [-] Dollars (US$[-]) in respect of the ECA Premium).

      2.1.3 The aggregate amount of the Advance to be made by the French
            Lender(s) in respect of the Aircraft shall be [-] Dollars (US$[-])
            (herein called the "FRENCH CREDITS") (and comprising (i) [-] Dollars
            (US$[-]) in respect of the Aircraft Purchase Price and (ii) [-]
            Dollars (US$[-]) in respect of the ECA Premium).

      2.1.4 The aggregate amount of the Advance to be made by the German
            Lender(s) in respect of the Aircraft shall be [-] Dollars (US$[- ])
            (herein called the "GERMAN CREDITS") (and comprising (i) [-] Dollars
            (US$[-]) in respect of the Aircraft Purchase Price and (ii) [-]
            Dollars (US$[-]) in respect of the ECA Premium).

2.2   Each of the British Lender(s) shall only be responsible for the portion of
      the British Credits specified opposite its name in Schedule 1, Part A,
      each of the French Lender(s) shall only be responsible for the portion of
      the French Credits specified opposite its name in Schedule 1, Part B and
      each of the German Lender(s) shall only be responsible for the portion of
      the German Credits specified opposite its name in Schedule 1, Part C.

2.3   The Relevant Lender[s] agree[s] to be bound by and perform [their] [its]
      obligations under the Facility Agreement and the other Transaction
      Documents to which [they are] [it is] a party.

3.    REPAYMENT OF ADVANCE

      Attached hereto as Schedule 2(1) are the repayment schedules for each of
      the British Lender(s), the French Lender(s) and the German Lender(s)
      referred to in clause 3.6 (Repayment Schedules) of the Facility Agreement.

4.    APPLICABLE RATE

      Interest shall accrue on the outstanding unpaid amount of the Advance at
      the rate of [-](1) (the "APPLICABLE RATE").

(1) Specify applicable base rate (e.g. LIBOR) and Applicable Margin (positive or
    negative) (to be defined), if any.

                                     -158-
<PAGE>

5.    UTILISATION DATE

      For the purposes of clause 3.1 (Utilisation Notices) of the Facility
      Agreement, the assumed Utilisation Date shall be [-].

6.    GOVERNING LAW AND JURISDICTION

6.1   This Loan Supplement shall be governed by and construed in accordance with
      English law.

6.2   The Borrower hereby irrevocably agrees for the benefit of the Agent and
      the Security Trustee that the courts of England located in London shall
      have jurisdiction to hear and determine any suit, action or proceeding,
      and to settle any disputes, which may arise out of or in connection with
      this Loan Supplement and, for such purposes, irrevocably submits to the
      jurisdiction of such courts.

6.3   The Borrower hereby irrevocably waives any objection which it might now or
      hereafter have to the courts referred to in Clause 6.2 being nominated as
      the forum to hear and determine any suit, action or proceeding, and to
      settle any disputes, which may arise out of or in connection with this
      Loan Supplement and agrees not to claim that any such court is not a
      convenient or appropriate forum in each case whether on the grounds of
      venue or forum non conveniens or any similar grounds or otherwise.

6.4   The Borrower hereby designates, appoints and empowers Paul, Hastings,
      Administrative Services Limited of 88 Wood Street, London EC2V 7AJ to
      accept service of process in respect of any suit, action, proceeding or
      settlement under this Loan Supplement. If for any reason such process
      agent no longer serves as agent to receive service of process in England
      hereunder, the Borrower shall promptly appoint such other agent acceptable
      to the Security Trustee.

6.5   The submission to the jurisdiction of the courts referred to in Clause 6.2
      shall not (and shall not be construed so as to) limit the right of the
      Agent or the Security Trustee to take proceedings against the Borrower in
      any other court of competent jurisdiction nor shall the taking of
      proceedings by the Agent or the Security Trustee in any one or more
      jurisdictions preclude the taking of proceedings by the Agent or the
      Security Trustee in any other jurisdiction, whether concurrently or not.

6.6   To the extent that the Borrower or any of the property of the Borrower is
      or becomes entitled at any time to any immunity on the grounds of
      sovereignty or otherwise from any legal action, suit or proceeding, from
      set-off or counterclaim, from the jurisdiction of any competent court,
      from service of process, from attachment prior to judgment, from
      attachment in aid of execution, or from execution prior to judgment, or
      other legal process in any jurisdiction, the Borrower for itself and its
      property does hereby irrevocably and unconditionally waive, and agrees not
      to plead or claim, any such immunity with respect to its obligations,
      liabilities or any other matter under or arising out of or in connection
      with any of this Loan Supplement or the subject matter hereof.

                                     -159-
<PAGE>

7.    MISCELLANEOUS

7.1   This Loan Supplement may be executed in any number of counterparts and by
      different parties hereto on separate counterparts each of which when
      executed and delivered shall constitute an original but all counterparts
      shall together constitute but one and the same instrument.

7.2   All amendments to this Loan Supplement shall be made in writing and in
      accordance with the provisions of clause 24 (Miscellaneous) of the
      Facility Agreement.

7.3   This Loan Supplement is supplemental to the Facility Agreement and the
      Advance referred to herein is made in accordance with and shall be
      regulated by the terms and conditions of the Facility Agreement, the other
      Facility Documents and the relevant Aircraft Operative Documents.

7.4   A person who is not a party to this Loan Supplement has no right under the
      Contracts (Rights of Third Parties) Act 1999 to enforce any provision of
      the Loan Supplement but this does not affect any right or remedy of a
      third party that exists or is available apart from under the Third Parties
      Act.

AS WITNESS the hands of the duly authorised representatives of the parties
hereto on the date first-before written.

                                     -160-
<PAGE>

                                   SCHEDULE 1

                                     PART A
                              THE BRITISH LENDER(S)

LENDER     LENDING    ADDRESS FOR     JURISDICTION OF         PORTION OF THE
           OFFICE     NOTICES         INCORPORATION           CREDITS (US$)

[-]        [-]        [-]             [-]                     [-]

                                     -161-
<PAGE>

                                     PART B
                              THE FRENCH LENDER(S)

LENDER     LENDING    ADDRESS FOR     JURISDICTION OF       PORTION OF THE
           OFFICE     NOTICES         INCORPORATION         CREDITS (US$)

[-]        [-]        [-]             [-]                   [-]

                                     -162-
<PAGE>

                                     PART C
                              THE GERMAN LENDER(S)

LENDER     LENDING    ADDRESS FOR     JURISDICTION OF     PORTION OF THE
           OFFICE     NOTICES         INCORPORATION       CREDITS (US$)

[-]        [-]        [-]             [-]                 [-]

                                     -163-
<PAGE>

                                  SCHEDULE 2(1)
                               REPAYMENT SCHEDULE

                                     PART A
                              THE BRITISH LENDER(S)

Based on a purchase price of US$ [-] with a percentage split as follows:

UK      - [-]%

France  - [-]%

Germany - [-]%

       [1]              [2]             [3]             [4]             [5]
     NUMBER            DATES            DAYS         PRINCIPAL       PRINCIPAL
                                                     REPAYMENTS        AMOUNT
                                                                    OUTSTANDING

                                     -164-
<PAGE>

                                     PART B
                              THE FRENCH LENDER(S)

Based on a purchase price of US$ [-] with a percentage split as follows:

UK      - [-]%

France  - [-]%

Germany - [-]%

       [1]              [2]             [3]             [4]             [5]
     NUMBER            DATES            DAYS         PRINCIPAL       PRINCIPAL
                                                     REPAYMENTS        AMOUNT
                                                                    OUTSTANDING

                                     -165-
<PAGE>

                                     PART C
                              THE GERMAN LENDER(S)

Based on a purchase price of US$ [-] with a percentage split as follows:

UK      - [-]%

France  - [-]%

Germany - [-]%

       [1]              [2]             [3]             [4]             [5]
     NUMBER            DATES            DAYS         PRINCIPAL       PRINCIPAL
                                                     REPAYMENTS        AMOUNT
                                                                    OUTSTANDING

                                     -166-
<PAGE>

                                  SCHEDULE 2(2)
                           REPAYMENT SCHEDULE SUMMARY

Based on a purchase price of US$ [-] with a percentage split as follows:

UK      - [-]%

France  - [-]%

Germany - [-]%

       [1]               [2]             [3]                [4]
     NUMBER             DATES            DAYS            PRINCIPAL
                                                           AMOUNT
                                                        OUTSTANDING

                                     -167-
<PAGE>

                                   SIGNATURES

THE BORROWER

THE COMMON SEAL of      )
BORROWER                )
was hereunto affixed    )
in the presence of:     )

                        Director

                        Director/Secretary

THE AGENT

THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND,
LONDON BRANCH

By:    ____________________________________

Name:  ____________________________________

Title: ____________________________________

THE SECURITY TRUSTEE

THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND,
LONDON BRANCH

By:    ____________________________________

Name:  ____________________________________

Title: ____________________________________

                                     -168-
<PAGE>

[THE RELEVANT LENDER]

[-]

By:    ___________________________________

Name:  ___________________________________

Title: ___________________________________

                                     -169-
<PAGE>

                                   SCHEDULE 3

                          FORM OF TRANSFER CERTIFICATE

To:   [Agent]

                              TRANSFER CERTIFICATE

This transfer certificate ("TRANSFER CERTIFICATE") relates to a Facility
Agreement dated 18 May 2004 and made between (1) the banks and financial
institutions named therein as Lenders, (2) The Governor and Company of the Bank
of Scotland, London Branch as Agent, (3) The Governor and Company of the Bank of
Scotland, London Branch as Security Trustee, (4) Whitney Leasing Limited (the
"BORROWER"), (5) Aircraft SPC-12, Inc. (the "BORROWER PARENT"), (6)
International Lease Finance Corporation as guarantor (the "GUARANTOR") and (7)
International Lease Finance Corporation as subordinated lender (the
"SUBORDINATED LENDER") (the "AGREEMENT" which term shall include any amendments
or supplements thereto) and, if appropriate, to each of the Loan Supplements
made between the Transferor, Agent, the Security Trustee and the Borrower in
respect of an Advance under the Agreement as specified in the Schedule hereto.

Terms defined or incorporated by reference in the Agreement shall, unless
otherwise defined, have the same meanings when used in this Transfer
Certificate.

1.    [Details of the Transferor] (the "TRANSFEROR"):

1.1   confirms that to the extent that details appear in the Schedule to this
      Transfer Certificate under the headings "Transferor's Commitment", "Amount
      of Commitment Transferred and the Related Rights and Obligations of the
      Transferor to be Transferred", "Transferor's Participation" and "Amount of
      Transferor's Participation Transferred and Related Rights and Obligations
      of the Transferor to be Transferred", those details accurately summarise
      its Commitment and its participation in the Facility and its participation
      in one or more of the Advances already made all or part of which is to be
      transferred (as more particularly described in the relevant Loan
      Supplements to which the Transferor is a party (the "RELEVANT LOAN
      SUPPLEMENT(s)");

1.2   requests [Details of Transferee] (the "TRANSFEREE") to accept and procure,
      in accordance with Clause 18.4 (Transfer Certificates) of the Agreement,
      the substitution of the Transferor by the Transferee in respect of the
      amount specified in the Schedule hereto of its Commitment and its
      participation in the Facility and its participation in one or more of the
      Advances already made or to be made (as more particularly described in the
      Relevant Loan Supplement(s)) by signing this Transfer Certificate.

2.    The Transferee hereby requests each of the Obligors, the Lenders, the
      Borrower, the Agent and the Security Trustee to accept this executed
      Transfer Certificate as being delivered under and for the purposes of
      Clause 18.2 (Transfer by Original Lender prior to Delivery Date) or Clause
      18.4 (Transfer Certificates), as the case may be, of the Agreement so as
      to take effect in accordance with the terms thereof on the Transfer

                                     -170-
<PAGE>

      Date (as set out in the Schedule to this Transfer Certificate) or on such
      later date as may be determined in accordance with the terms thereof.

3.    The Transferee:

3.1   represents that it has received a copy of the Agreement and copies of the
      Relevant Loan Supplement(s) together with such other documents and
      information as it has requested in connection with this transaction and
      acknowledges and agrees to the terms thereof;

3.2   represents that it has not relied and will not rely on the Transferor to
      check or enquire on its behalf into the legality, validity, effectiveness,
      adequacy, accuracy or completeness of any such documents or information;

3.3   agrees that it has not relied and will not rely on any of the Transferor,
      the Agent or any of the Lenders to assess or keep under review on its
      behalf the financial condition, creditworthiness, condition, affairs,
      status or nature of any party to any of the Transaction Documents or the
      legality, validity, priority, adequacy, effectiveness or enforceability of
      any of the Transaction Documents;

3.4   [represents that its has a credit rating with Standard and Poor's
      Corporation of at least BBB or a credit rating with Moody's Investor
      Service Inc. of at least Baa2 or, in each case, the equivalent successor
      rating, and is not on negative credit watch to fall below such rating;](1)

3.5   represents that it is able to file for either (i) US tax treaty benefits
      on a zero rate of withholding tax and agrees to provide the applicable US
      Internal Revenue Service Forms to the Agent and the Borrower or (ii)
      exemption from withholding tax on income effectively connected with the
      conduct of a trade or business in the United States and agrees to provide
      the applicable US Internal Revenue Service Forms to the Agent and the
      Borrower;

3.6   represents that it is acquiring the Transferor's right, title and interest
      hereunder in the ordinary course of its lending business and not with any
      present view to the distribution thereof in violation of the registration
      requirements of the U.S. Securities Act of 1933, as amended, and that the
      transfer is in compliance with all applicable securities and other laws
      (if any); and

3.7   agrees that it will be bound by the provisions of the Facility Agreement
      and the other Transaction Documents and will perform in accordance with
      the terms of the Facility Agreement and the other Transaction Documents
      the obligations which by their terms are required to be performed by a
      Lender.

4.    The Transferee undertakes with the Transferor and each of the other
      parties to the Agreement that it shall perform in accordance with their
      terms all those obligations which by the terms of Clause 5 of this
      Transfer Certificate will be assumed by it upon

(1)   Note: not applicable where transfer to designee of ECAs following an
      acceleration event.

                                     -171-
<PAGE>

      delivery of the executed copy of this Transfer Certificate to the Agent
      and further undertakes with the Transferor, each of the other Lenders, the
      Agent and the Security Trustee that it shall perform in accordance with
      their terms all of the obligations of the Transferor under the Lenders'
      Agreement as if the Transferee had originally been a party to the Lenders'
      Agreement and each of the other Lenders, the Agent and the Security
      Trustee undertake with the Transferee to perform their obligations under
      the Lenders' Agreement to the Transferor in favour of the Transferee as if
      the Transferee had originally been a party to the Lenders' Agreement.

5.    With effect from the Transfer Date as specified in the Schedule hereto the
      parties hereto (including in particular but without limitation the
      Transferee) agree that:

5.1   to the extent of the Transferor's rights and obligations under the
      Agreement and the other Transaction Documents in respect of the
      participation, the Borrower and the Transferor shall each be released from
      further obligations to each other under the Agreement and the other
      Transaction Documents and their respective rights against each other shall
      be cancelled (such rights and obligations being referred to in this Clause
      5 as "DISCHARGED RIGHTS AND OBLIGATIONS");

5.2   the Borrower, the Agent, the Security Trustee and the Transferee shall
      each assume obligations towards each other and/or acquire rights against
      each other in respect of the participation which differ from the
      Discharged Rights and Obligations only insofar as the Borrower and the
      Transferee have assumed and/or acquired the same in place of the Borrower
      and the Transferor;

5.3   the Agent, the Security Trustee, the Borrower, the Transferee and the
      other Lenders shall acquire the same rights and assume the same
      obligations among themselves as they would have acquired and assumed had
      the Transferee originally been a party to the Agreement and the other
      Transaction Documents as a Lender in respect of the participation;

5.4   the Transferee, the Agent, the Security Trustee and each of the other
      Lenders shall acquire the same rights and assume the same obligations
      amongst themselves in respect of the Lenders' Agreement as they would have
      acquired and assumed had the Transferee originally been a party to the
      Lenders' Agreement as a Lender in respect of the Participation in the
      place of the Transferor; and

5.5   all costs and expenses of the transfer hereunder shall be borne by the
      Transferor or Transferee, as the case may be, and no Obligor shall be
      under any obligation to pay any greater amount or suffer any other
      material increase in liabilities or material diminution in right or
      benefit under the Transaction Documents following and as a consequence
      (directly or indirectly) of any such transfer or change in Lending Office
      unless and until a Change in Law occurs and as a result of such Change in
      Law (excluding any Change in Law which occurs, or the intended
      implementation of which is officially announced or proposed before the
      date of such transfer or change in Lending Office).

                                     -172-
<PAGE>

6.    None of the Transferor, any of the Lenders, the Agent, the Security
      Trustee or the Borrower:

6.1   makes any representation or warranty or assumes any responsibility with
      respect to the legality, validity, effectiveness, adequacy or
      enforceability of the Agreement; or

6.2   assumes any responsibility for the financial condition of any of the
      Obligors or for the performance and observance by any of the Obligors or
      any other party to any of the Transaction Documents or any other document
      relating thereto of any of the Obligor's or such other party's obligations
      under any of the Transaction Documents or any document relating thereto
      and any and all conditions and warranties, whether express or implied by
      law or otherwise, are excluded.

7.    None of the Obligors assumes any responsibility for the financial
      condition of any party, or for the performance or observance by any party,
      other than with respect to itself, of any of the Transaction Documents or
      any other document relating thereto or such party's obligations under the
      Agreement or any document relating thereto (other than those of the
      Obligors) and any and all conditions and warranties whether express or
      implied by law or otherwise, are excluded (other than in relation to the
      performance or observance of the Obligors).

8.    The Transferee confirms that its Lending Office, jurisdiction of tax
      residence and address for notices for the purposes of the Agreement are as
      set out in the Schedule hereto.

9.

9.1   The Transferor hereby gives notice to the Transferee (and the Transferee
      hereby acknowledges and agrees with the Transferor) that the Transferor is
      under no obligation to re-purchase (or in any other manner to assume,
      undertake or discharge any obligation or liability in relation to) the
      transferred Commitment, and/or transferred participation in the Advances
      already made (as more particularly described in the Relevant Loan
      Supplements) and/or the transferred rights and/or obligations at any time
      after this Transfer Certificate shall have taken effect.

9.2   Following the date upon which this Transfer Certificate shall have taken
      effect, without limiting the provisions hereof, each of the Transferee and
      the Transferor hereby acknowledges and confirms to the other that in
      relation to the relative Commitment/participation in the Advances already
      made (as more particularly described in the Relevant Loan Supplements) and
      the rights and/or obligations under the Agreement assumed by the
      Transferee (or part thereof), variations, amendments or alterations to any
      of the terms of the Agreement and/or any of the Relevant Loan Supplements
      arising in connection with any renegotiation or re-scheduling of the
      obligations hereunder shall apply to and be binding on the Transferee
      alone.

10.   The Transferor hereby gives notice that nothing herein or in the Agreement
      (or any document relating thereto) shall oblige the Lender to (i) accept a
      re-transfer from the Transferee of the whole or any part of its rights,
      benefits and/or obligations under the

                                     -173-
<PAGE>

      Agreement transferred pursuant hereto or (ii) support any losses directly
      or indirectly sustained or incurred by the Transferee for any reason
      whatsoever including, without limitation, the non-performance by any other
      party to the Agreement (or any document relating thereto) of its
      obligations under any such document. The Transferee hereby acknowledges
      the absence of any such obligation as is referred to in (i) or (ii) above.

11.   The Transferee hereby confirms, pursuant to and in accordance with the
      provisions of Clause 23.4 (Governing Law and Jurisdiction) of the
      Agreement, that its agent for service of process in England is as set out
      in the Schedule to this Transfer Certificate and confirms that such agent
      is willing to accept service of such process as is described in Clause
      23.4 of the Agreement on behalf of the Transferee in respect of the
      Agreement and any other Transaction Document.

12.   This Transfer Certificate shall be governed by and construed in accordance
      with English Law.

[TRANSFEREE]

By:    __________________________________

Title: __________________________________

[TRANSFEROR]

By:    ___________________________________

Title: ___________________________________

The Agent on behalf of itself and all other parties to the Agreement (other than
the Transferor and the Obligors).

By:    ___________________________________

Title: ____________________________________

The Borrower on behalf of itself and all the other Obligors

By:    ____________________________________

Title: ____________________________________

Dated: [-]

                                     -174-
<PAGE>

                      SCHEDULE TO THE TRANSFER CERTIFICATE

Loans already advanced:   [detail Loans, Relevant Loan Supplements and amounts]

Loans to be advanced:(1)  [detail amount of Commitment transferred and Aircraft
                          to which advances are to be made]

Date:

[TRANSFEREE]

Lending Office:                      Address for notices:

[-]                                  [-]

                                     Tel:  [-]
                                     Fax:  [-]

JURISDICTION OF INCORPORATION:

[-]

Jurisdiction of Tax Residence:

[-]

English Process Agent:

[-]

Transfer Date:

[-]

(1)   in the case of transfers by Original Lender only

                                     -175-
<PAGE>

                                   SCHEDULE 4

                           FORM OF UTILISATION NOTICE

To:   The Governor and Company of the Bank of Scotland (as Agent)

      PO Box No. 39900
      Level 7, Bishopsgate Exchange
      155 Bishopsgate
      London
      EC2M 3YB

      Facsimile No:   +44 (0)20 7012 9455
      Tel No:         +44 (0)20 7012 9289/9287
      Attention:      Mike Gear/Simon Middleton

From: Whitney Leasing Limited (the "BORROWER")

                                                                      Date: [-]

AIRCRAFT FACILITY AGREEMENT DATED [-] MAY 2004 AND MADE BETWEEN THE BANKS AND
FINANCIAL INSTITUTIONS NAMED THEREIN AS LENDERS, THE GOVERNOR AND COMPANY OF THE
BANK OF SCOTLAND AS AGENT AND SECURITY TRUSTEE, THE BORROWER, AIRCRAFT SPC-12,
INC. AS BORROWER PARENT AND INTERNATIONAL LEASE FINANCE CORPORATION AS GUARANTOR
AND SUBORDINATED LENDER AS AMENDED, SUPPLEMENTED OR ACCEDED TO FROM TIME TO TIME
(THE "AGREEMENT")

The Borrower hereby gives notice in accordance with Clause 3.1.1 of the
Agreement that:

(i)   the Borrower desires to effect a Utilisation [on/within three (3) Banking
      Days after] the Delivery Date, which is currently scheduled to be [-];

(ii)  the requested amount of the proposed Advance is [-] Dollars (US$ [-]);

(iii) the Aircraft the subject of the Utilisation is one Airbus
      [A318/A319/A320/A321/A330/ A340] Aircraft with manufacturer's serial
      number [-], proposed [-] Registration Mark [-] and [-] installed Engines;

(iv)  [the proposed [Lessee][Sub-Lessee] of the Aircraft the subject of the
      Utilisation is [-], a company incorporated in [-] and having its principal
      place of business in [-] and it is proposed that the Aircraft shall be
      [registered] in [-]. The Lessee will [and the Sub-Lessee] [will] [will
      not] require quiet enjoyment covenants from the Borrower and the Security
      Trustee in the form agreed between the Borrower, the Security Trustee and
      the Guarantor.]

      [A certified copy of the [executed Lease] (latest draft of the proposed
      Lease) is attached hereto;]

(v)   [the Borrower confirms that [-], as Sub-Borrower, shall be the owner of
      the Aircraft;]

                                     -176-
<PAGE>

(vi)  the Borrower desires the Lenders to disburse the Loan on [-]; and

(vii) The Aircraft Purchase Price is [-] Dollars (US$ [-]);

The account into which the Loan should be paid is account no. [-] with [-].

The Borrower hereby certifies that as at the date of this notice no Relevant
Event, Termination Event, and except as disclosed to the Agent, no Second
Trigger Event has occurred and is continuing or would result from the drawdown
of the Advance, the subject of this Utilisation.

The Borrower hereby certifies that all representations and warranties on its
part contained in Clause 6.2 of the Facility Agreement remain true and correct
at the date of this notice and shall remain true and correct on the Utilisation
Date (and the Delivery Date to the extent Clause 3.8 is applicable) and no event
has occurred which constitutes or, with the passing of time or the giving of
notice or the making of any determination or any combination thereof would
constitute, a Termination Event.

Capitalised terms used herein defined in the Agreement have the same meanings
herein.

WHITNEY LEASING LIMITED

By:      _______________________

Name:    _______________________

Title:   _______________________

                                     -177-
<PAGE>

                                   SCHEDULE 5

                                     PART A
   DETAILS OF PROPOSED AIRCRAFT AND PROPOSED AIRCRAFT DELIVERY SCHEDULE (1234)

<TABLE>
<CAPTION>
                                         SCHEDULED                                             ASSUMED
AIRCRAFT                                  DELIVERY                            PROPOSED         FINANCED
 NUMBER        AIRCRAFT TYPE    MSN        MONTH          ENGINE TYPE      INITIAL LESSEE       AMOUNT
--------------------------------------------------------------------------------------------------------
<S>            <C>              <C>      <C>              <C>              <C>                <C>
   1.             A319-100      2213       May-04          CFM56-5B7/P           AFR          31,500,000
   2.             A319-100      2228       May-04          CFM56-5B7/P           AFR          30,500,000
   3.             A319-100      2203       May-04         IAE V2524-A5                        32,000,000
   4.             A319-100      2200       May-04         IAE V2524-A5                        30,200,000
   5.             A319-100      2232       May-04                                             30,000,000
   6.             A320-200      2199       May-04         CFM 56-5B4/P           CES          34,000,000
   7.             A320-200      2206       May-04         IAE V2527-A5                        36,500,000
   8.             A321-200      2216       May-04         IAE V2533-A5           NVR          40,500,000
   9.             A320-200                 Jun-04                                             36,500,000
   10.            A330-200                 Jul-04          TRENT 772B            LDI          80,000,000
   11.            A319-100                 Sep-04         IAE V2524-A5                        31,500,000
   12.            A319-100                 Oct-04         IAE V2524-A5           AFR          31,500,000
   13.            A320-200                 Oct-04         CFM 56-5B4/P           AMC          38,000,000
   14.            A321-200      2278       Oct-04          CFM56-584/P           ABY          42,000,000
   15.            A330-200      0625       Oct-04          TRENT 772B            IYE          80,000,000
   16.            A330-200      0624       Oct-04          TRENT 772B            LDI          80,000,000
   17.            A319-100      0627       Nov-04          CFM56-5B5/P           AMC          31,500,000
   18.            A330-200      0632       Nov-04          TRENT 772B            IYE          80,000,000
   19.            A320-200                 Nov-04                              Air New        34,750,000
                                                                               Zealand
   20.            A330-200                 Nov-04                               Star          80,000,000
   21.            A320-200                 Jan-05             CFMI           Air Arabia       34,750,000
   22.            A319-100                 Jan-05              IAE              China         28,710,000
                                                                              Northern
   23.            A320-200                 Feb-05             CFMI           Aer Lingus       34,750,000
   24.            A319-100                 Feb-05             CFMI            Air Malta       28,710,000
   25.            A319-100                 Feb-05              IAE             British        28,710,000
                                                                               Midland
   26.            A340-600       617       Feb-05              RR              Iberia         90,100,000
   27.            A319-100                 Feb-05              IAE                            28,710,000
   28.            A319-100                 Feb-05              IAE                            28,710,000
   29.            A320-200                 Mar-05             CFMI           Aer Lingus       34,750,000
   30.            A319-100                 Mar-05              IAE             British        28,710,000
                                                                               Midland
</TABLE>

(1)   ILFC may at its discretion, change the identity of the initial lessees and
      the engine type

(2)   Aircraft No. and other information may be changed in accordance with the
      definition of Eligible Aircraft

(3)   Scheduled Delivery months may be changed

(4)   Assumed Finance Amount for each Aircraft is for indicative purposes only
      and is subject to adjustment

                                     -178-
<PAGE>

<TABLE>
<CAPTION>
                                         SCHEDULED                                             ASSUMED
AIRCRAFT                                  DELIVERY                            PROPOSED         FINANCED
 NUMBER        AIRCRAFT TYPE    MSN        MONTH          ENGINE TYPE      INITIAL LESSEE       AMOUNT
--------------------------------------------------------------------------------------------------------
<S>            <C>              <C>      <C>              <C>              <C>                <C>
   31.            A319-100                 Mar-05              IAE              China         28,710,000
                                                                              Northern
   32.            A319-100                 Mar-05              IAE              China         28,710,000
                                                                              Northern
   33.           A330-30003      654       Mar-05              RR             Dragonair       74,600,000
   34.            A319-100                 Mar-05             CFMI            Frontier        28,710,000
   35.            A340-600       619       Mar-05              RR              Iberia         90,100,000
   36.            A319-100                 Mar-05              IAE                            28,710,000
   37.            A319-100                 Mar-05              IAE                            28,710,000
   38.            A320-200                 Mar-05             CFMI              Sata          34,750,000
                                                                            International
   39.            A320-200                 Apr-05             CFMI           Aer Lingus       34,750,000
   40.            A319-100                 Apr-05              IAE              China         28,710,000
                                                                              Northern
   41.            A330-200                 Apr-05              PW              Eurofly        74,600,000
   42.            A319-100                 Apr-05             CFMI                            28,710,000
   43.            A319-100                 Apr-05              IAE                            28,710,000
   44.            A319-100                 Apr-05              IAE                            28,710,000
   45.            A321-200                 Apr-05             OPEN             Novair         41,630,000
   46.            A320-200                 Apr-05             CFMI              Sata          34,750,000
                                                                            International
   47.            A340-600       626       Apr-05              RR           South African     90,100,000
                                                                              Airlines
   48.            A319-100                 Apr-05              IAE                            28,710,000
   49.            A319-100                 Apr-05              IAE                            28,710,000
   50.            A321-200                 Apr-05              IAE                            41,630,000
   51.            A320-200                 Apr-05             OPEN                            34,750,000
   52.            A320-200                 Apr-05             OPEN                            34,750,000
   53.            A320-200                 May-05             CFMI           Aer Lingus       34,750,000
   54.            A319-100                 May-05              IAE             British        28,710,000
                                                                               Midland
   55.            A319-100                 May-05              IAE              China         28,710,000
                                                                              Northern
   56.            A330-300                 May-05              RR             Dragonair       74,600,000
   57.            A319-100                 May-05              IAE                            28,710,000
   58.            A319-100                 May-05              IAE                            28,710,000
   59.            A340-600       630       May-05              RR           South African     90,100,000
                                                                              Airlines
   60.            A319-100                 May-05              IAE                            28,710,000
   61.            A319-100                 May-05              IAE                            28,710,000
   62.            A319-100                 May-05              IAE                            28,710,000
</TABLE>

                                     -179-
<PAGE>

<TABLE>
<CAPTION>
                                         SCHEDULED                                                         ASSUMED
AIRCRAFT                                  DELIVERY                            PROPOSED                    FINANCED
 NUMBER        AIRCRAFT TYPE    MSN        MONTH          ENGINE TYPE      INITIAL LESSEE                  AMOUNT
-----------------------------------------------------------------------------------------------------------------------
<S>            <C>              <C>     <C>               <C>              <C>              <C>
63.            A319-100                 May-05             OPEN                                              28,710,000
64.            A320-200                 May-05             OPEN                                              34,750,000

                                                                                            Total: US$ 2,643,660,000.00
</TABLE>

                                     -180-
<PAGE>

                                     PART B

          INTERNATIONAL LEASE FINANCE CORPORATION SAMPLE LOAN PROFILES

                        AS A PERCENTAGE OF AIRCRAFT COST
               FOR AIRBUS A318/A319/A320/A321/A330/A340 DELIVERIES

                    AIRCRAFT PURCHASE PRICE US$ 13,894,475.60

<TABLE>
<CAPTION>
          (1)                               (2)
 REPAYMENT DATE NUMBER              PRINCIPAL REPAYMENT                           (3)
(SEMI-ANNUAL REPAYMENTS)                   (IN US$)                      ADVANCE OUTSTANDING (%)
     DELIVERY DATE:                    1ST APRIL 2004                       US$ 13,894,475.60
<S>                                 <C>                                  <C>
           1                                694,723.78                           95.00%
           2                                694,723.78                           90.00%
           3                                694,723.78                           85.00%
           4                                694,723.78                           80.00%
           5                                694,723.78                           75.00%
           6                                694,723.78                           70.00%
           7                                694,723.78                           65.00%
           8                                694,723.78                           60.00%
           9                                694,723.78                           55.00%
          10                                694,723.78                           50.00%
          11                                694,723.78                           45.00%
          12                                694,723.78                           40.00%
          13                                694,723.78                           35.00%
          14                                694,723.78                           30.00%
          15                                694,723.78                           25.00%
          16                                694,723.78                           20.00%
          17                                694,723.78                           15.00%
          18                                694,723.78                           10.00%
          19                                694,723.78                            5.00%
          20                                694,723.78                            0.00%

                                     US$ 13,894,475.60
</TABLE>

                                     -181-
<PAGE>

                                   SCHEDULE 6

                               GUARANTOR COVENANTS

1.    In this Schedule 6 each of the following words shall have the following
      meanings:

      "CONSOLIDATED TANGIBLE NET WORTH" means, as of the date of any
      determination, the total of shareholders' equity (including capital stock,
      additional paid-in capital and retained earnings after deducting treasury
      stock), less the sum of the total amount of goodwill, organisation
      expenses, unamortised debt issue costs (determined on an after-tax basis),
      deferred assets other than prepaid insurance and prepaid taxes, the excess
      of cost of shares acquired over book value of related assets, surplus
      resulting from any revaluation write-up of assets subsequent to 31
      December 2002 and such other assets as are properly classified as
      intangible assets, all determined in accordance with generally accepted
      accounting principles in the United States of America consolidating the
      Guarantor and its Subsidiaries.

      "FINANCIAL INDEBTEDNESS" of any Person means, and includes all obligations
      of such Person which in accordance with generally accepted accounting
      principles in the United States of America shall be classified upon a
      balance sheet of such Person as liabilities of such Person, and in any
      event shall include all:

      (a)   obligations of such Person for borrowed money or which have been
            incurred in connection with the acquisition of property or assets
            (other than security and other deposits on flight equipment);

      (b)   obligations secured by any Lien or other charge upon property or
            assets owned by such Person, even though such Person has not assumed
            or become liable for the payment of such obligations;

      (c)   obligations created or arising under any conditional sale, or other
            title retention agreement with respect to property acquired by such
            Person, notwithstanding the fact that the rights and remedies of the
            seller, lender or lessor under such agreement in the event of
            default are limited to repossession or sale of property;

      (d)   obligations evidenced by bonds, debentures, notes or other similar
            instruments; and

      (e)   Guarantees by such Person to the extent required pursuant to the
            definition thereof,

      but

      (i)   shall not include amounts which would otherwise be taken into
            account which are owed by the Guarantor to any of its Subsidiaries
            or by any Subsidiary of the Guarantor to the Guarantor or another
            Subsidiary of the Guarantor;

      (ii)  no amount shall be taken into account more than once in the same
            calculation;

                                     -182-
<PAGE>

      (iii) shall not include any aircraft lease rentals, modification or
            maintenance contribution obligations, security deposits or similar
            obligations owed by a lessor of an aircraft received in advance;

      (iv)  shall not include any concessions received in advance from
            manufacturers;

      (v)   shall not include any amounts in respect of current or deferred Tax;

      "GUARANTEES" by any person means all obligations (other than endorsements
      in the ordinary course of business of negotiable instruments for deposit
      or collection) of such Person guaranteeing or in effect guaranteeing any
      Financial Indebtedness, dividend or other obligation of any other Person
      (the "PRIMARY OBLIGOR") in any manner, whether directly or indirectly,
      including, without limitation, all obligations incurred through an
      agreement, contingent or otherwise, by such Person, (a) to purchase such
      Indebtedness or obligation or any property or assets constituting security
      therefor, (b) to advance or supply funds (i) for the purchase or payment
      of such Indebtedness or obligation or (ii) to maintain working capital or
      other balance sheet condition or otherwise to advance or make available
      funds for the purchase or payment of such Indebtedness or obligation, (c)
      to lease property or to purchase securities or other property or services
      primarily for the purpose of assuring the manner of such Indebtedness or
      obligation of the primary obligor against loss in respect thereof
      provided, however, that the obligation described in clause (c) shall not
      include (i) obligations of a buyer under an agreement with a seller to
      purchase goods or services entered into in the ordinary course of such
      buyer's and seller's business unless such agreement required that such
      buyer make payment whether or not delivery is ever made of such goods or
      services and (ii) agreements where the remaining debt on an aircraft does
      not exceed the aircraft's net book value, determined in accordance with
      industry standards, except that clause (c) shall apply to the amount of
      remaining debt that exceeds the net book value of the aircraft. For the
      purposes of all computations made under this Guarantee, a Guarantee in
      respect of any Financial Indebtedness for borrowed money shall be deemed
      to be Financial Indebtedness equal to the principal amount of such
      Financial Indebtedness for borrowed money which has been guaranteed, and a
      Guarantee in respect of any other obligation or liability or any dividend
      shall be deemed to be Financial Indebtedness equal to the maximum
      aggregate amount of such obligation, liability or dividend.

      "PERSON" means an individual or a corporation, partnership, trust,
      incorporated or unincorporated association, joint venture, company,
      limited liability company, government (or an agency or political
      subdivision thereof) or other entity of any kind;

      "RELATED PARTY" means any Person (other than a Subsidiary):

      (i)   which directly or indirectly through one or more intermediaries
            controls, or is controlled by, or is under common control with, the
            Guarantor;

      (ii)  which beneficially owns or holds five per cent. (5%) or more of the
            equity interest of the Guarantor; or

                                     -183-
<PAGE>

      (iii) twenty per cent. (20%) or more of the equity interest of which is
            beneficially owned or held by the Guarantor or a Subsidiary.

      The term "CONTROL" means, for the purposes of the above definition, the
      possession, directly or indirectly, of the power to direct or cause the
      direction of the management and policies of a Person, whether through the
      ownership of voting securities, by contract or otherwise;

2.    The Guarantor hereby undertakes and covenants with the Agent, the Security
      Trustee, and each of the Lenders separately and severally that from the
      date of this Agreement and until all Guaranteed Obligations then payable
      have been paid in full:

2.1   the Guarantor shall furnish to the Security Trustee in sufficient copies
      for each Lender (which the Security Trustee shall promptly furnish to each
      Lender):

      (a)   soon as available, and in any event within ninety-five (95) days
            after the end of each fiscal year of the Guarantor, a copy of the
            audited financial statements and annual audit report of the
            Guarantor and its Subsidiaries for such fiscal year beginning with
            the year ending 31 December 2003 prepared on a consolidated basis
            and in conformity with generally accepted accounting principles in
            the United States of America and certified by PriceWaterhouseCoopers
            LLP or by another independent United States of America certified
            public accountant of recognised national standing in the United
            States of America selected by the Guarantor;

      (b)   as soon as available, and in any event within fifty (50) days after
            the end of each quarter (except the last quarter) of each fiscal
            year of the Guarantor, a copy of the unaudited financial statements
            of the Guarantor and its Subsidiaries for such quarter prepared in a
            manner consistent with the audited financial statements referred to
            in Paragraph 2.l(a) signed by the Guarantor's chief financial
            officer and consisting of at least a balance sheet as at the close
            of such quarter and statements of earnings and cash flows for such
            quarter and for the period from the beginning of such fiscal year to
            the close of such quarter;

      (c)   contemporaneously with the furnishing of a copy of each annual audit
            report and of each set of quarterly statements provided for in this
            Paragraph 2.1, a certificate of the Guarantor dated the date of such
            annual report or such quarterly statements and signed by the
            Guarantor's chief financial officer or treasurer, to the effect that
            no Termination Event has occurred and is continuing, or, if there is
            any such event, describing it and the steps, if any, being taken to
            cure it and as to the long term debt rating of the Guarantor as
            rated by Standard & Poor's Corporation and by Moody's Investor
            Service, Inc. or by an alternative service of equivalent recognition
            (if neither Standard & Poor's Corporation nor Moody's Investor
            Service, Inc. has assigned any rating);

                                     -184-
<PAGE>

      (d)   promptly after the filing or making thereof, copies of all 8-K's
            (other than 8-K's relating solely to the issuance by the Guarantor
            of securities pursuant to an effective registration statement),
            10-Q's, 10-K's, and other material reports or registration
            statements filed by the Guarantor with or to any securities exchange
            or the Securities and Exchange Commission;

      (e)   from time to time such other information as the Agent or the
            Security Trustee may reasonably request concerning (i) the
            Guarantor, the Borrower, the Borrower Parent, any Sub-Borrower or
            any Intermediate Lessee and (ii) any Aircraft to the extent that the
            Guarantor, the Borrower, the Borrower Parent, any Sub-Borrower or
            any Intermediate Lessee is in possession of such information and
            that disclosure of such information to the Agent or the Security
            Trustee would not result in any of the aforementioned entities being
            in breach of any confidentiality restrictions by which it may be
            bound (provided that on the reasonable request of the Agent or the
            Security Trustee such entity shall use its reasonable endeavours to
            obtain a waiver of any such confidentiality restrictions);

2.2   promptly after learning of the occurrence of any Termination Event or a
      First Trigger Event or Second Trigger Event, the Guarantor shall furnish
      to the Security Trustee written notice thereof, describing the same and
      the steps being taken by the Guarantor affected with respect thereto;

2.3   subject to Paragraph 2.8 the Guarantor will maintain and preserve its
      existence as a corporation or other form of business organisation;

2.4   the Guarantor will engage in substantially the same fields of business as
      it is engaged in on the date hereof;

2.5   the Guarantor will maintain complete and accurate books and records in
      which full and correct entries in conformity with generally accepted
      accounting principles in the United States of America shall be made of all
      dealings and transactions in relation to its respective business and
      activities;

2.6   the Guarantor will not declare or pay any dividends whatsoever or make any
      distribution on any capital stock of the Guarantor (except in shares of,
      or warrants or rights to subscribe for or purchase shares of, capital
      stock of the Guarantor), and not, and not permit any Subsidiary to, make
      any payment to acquire or retire shares of capital stock of the Guarantor,
      at any time when a Termination Event has occurred and is continuing
      provided, however, that notwithstanding the foregoing, this Paragraph 2.6
      shall not prohibit the payment of dividends on any of the Guarantor's
      money market preferred stock that was sold to "qualified institutional
      buyers" within the meaning of Rule 144A under the Securities Act of 1933,
      as amended ("RULE 144A"), pursuant to Rule 144A, or to the public pursuant
      to an effective registration statement under the United States of America
      Securities Act of 1933 or the payment of dividends within 30 days of the
      declaration thereof if such declaration was not prohibited by this Section
      2.6;

                                     -185-
<PAGE>

2.7   the Guarantor will not enter into or be a party to any transaction or
      arrangement, including, without limitation, the purchase, sale, lease or
      exchange of property or the rendering of any service, with any Related
      Party, except in the ordinary course of and pursuant to the reasonable
      requirements of the Guarantor's business and upon fair and reasonable
      terms no less favourable to the Guarantor than would be obtained in a
      comparable arm's length transaction with a Person not a Related Party;

2.8   in the event that the Guarantor is a party to any merger or consolidation
      then the successor person, if other than the Guarantor, shall assume all
      of the Guaranteed Obligations; and

2.9   as of the end of each fiscal quarter, the Guarantor will not permit its
      Consolidated Tangible Net Worth to be less than $3,500,000,000 minus, to
      the extent included in the calculation of Consolidated Tangible Net Worth,
      other comprehensive income of the Guarantor and its Subsidiaries (or, in
      the case of a comprehensive income deficit, plus the amount of such
      deficit) plus 50% of (a) the cumulative net income (but without deduction
      for cumulative net losses) of the Guarantor and its Subsidiaries since 31
      December 2002 determined on a consolidated basis in accordance with United
      States of America generally accepted accounting principles, (b) the
      cumulative equity capital contributions from AIG or any of its direct or
      indirect subsidiaries since 31 December 2002 and (c) the net proceeds from
      the sale of preferred stock, in each case for the period from 31 December
      2002 to and including the date of any determination hereunder.

                                     -186-
<PAGE>

                                   SCHEDULE 7

              CONDITIONS PRECEDENT AND SUBSEQUENT TO A UTILISATION

                                     PART A

                    CONDITIONS PRECEDENT TO EACH UTILISATION

CONDITIONS PRECEDENT TO EACH UTILISATION

The obligations of each of the Lenders and the Representatives, under this
Agreement with respect to each Utilisation shall be subject to the following
conditions precedent having been fulfilled to the satisfaction of, or waived in
writing by, the Agent:

1.

      (A)   no Cancellation Notice shall have been served and still be in effect
            and no Relevant Event or Termination Event shall have occurred which
            is continuing on the relevant Utilisation Date;

      (B)   all representations and warranties made (or deemed repeated) by or
            on behalf of the Borrower and each other Obligor in Clause 6
            (Representations and Warranties) and paragraph 2 of the relevant
            Accession Deed on the Utilisation Date shall be true and accurate in
            the light of the circumstances and with reference to the facts
            existing on the Utilisation Date (except to the extent that the
            representation in Clause 6.1.9 specifically relates to an earlier
            date);

      (C)   on the relevant Utilisation Date, the credit rating for long-term
            debt issued by the Guarantor shall not have been placed on negative
            credit watch to fall below BBB+ (as rated by Standard & Poor's) or
            below Baa1 (as rated by Moody's) nor shall the credit rating of the
            Guarantor's long-term debt be below such ratings or rating.

2.    Three (3) Business Days prior to the Utilisation Date, or such lesser
      period as the Agent shall have agreed in writing, the Agent shall have
      received:

      (A)   duly executed originals of all previously undelivered Aircraft
            Operative Documents (or forms thereof) to which the Agent and the
            applicable Obligor is to be a party (other than those referred to in
            Part A of this Schedule 7) comprising the following documents for
            the relevant Aircraft:

            (a)   the Partial Purchase Agreement Assignment;

            (b)   the BFE Bill of Sale (if available);

            (c)   a certified copy of the Lease (if available);

            (d)   a certified copy of the assignment of the Lease to the
                  Borrower or the Relevant Sub-Borrower (as the case may be);

            (e)   the relevant Assignment Re Engine Warranties or, as the case
                  may be, the RR Engine Warranty Agreement;

                                     -187-
<PAGE>

            (f)   if applicable, Assignment of Warranty and Support Rights
                  (Airframe) between the Guarantor and the Lessee;

            (g)   if applicable, Assignment Agreement (Assignment of Rights
                  (Engines)) between the Guarantor, the Lessee and the relevant
                  Engine Manufacturer;

            (h)   the Loan Supplement;

            (i)   the Mortgage (or alternative security satisfactory to the
                  Security Trustee acting upon the instructions of the
                  Instructing Group);

            (j)   the Sub-Borrower Debenture (if applicable);

            (k)   Charge Over Shares of Sub-Borrower (if applicable);

            (l)   Sub-Borrower Guarantee (if applicable);

            (m)   Lease Security Assignment (if a Second Trigger Event shall
                  have occurred and be continuing);

            (n)   Accession Deed (if applicable);

            (o)   Intermediate Lessee Debenture (if applicable);

            (p)   Charge Over Shares of Intermediate Lessee (if applicable);

            (q)   Intermediate Lease Security Assignment (if a Second Trigger
                  Event shall have occurred and be continuing) (if applicable);

            (r)   Intermediate Lease (if applicable);

            (s)   Bill of Sale (if available);

            (t)   Notice of Charge;

            (u)   the definitive drafts of legal opinions referred to in Clause
                  3.1.4(c) and (d) (Utilisation Notices) if applicable;

      (B)   payment instructions relating to payments to be made on the Delivery
            Date under the Aircraft Operative Documents;

3.    on or before the first Utilisation the Agent shall have received:

      (a)   a legal opinion from Appleby, Spurling & Hunter, Bermudan counsel to
            the Lenders;

      (b)   a legal opinion from Buchalter, Nemer, Fields & Younger, Californian
            counsel to the Lenders;

      (c)   a legal opinion from Paul, Hastings, Janofsky & Walker LLP regarding
            the Guarantor's corporate authority to enter into the Facility
            Agreement and its

                                     -188-
<PAGE>

            due authorisation thereof, and to other matters applicable to the
            Guarantor, from in-house counsel to the Guarantor;

      (d)   a legal opinion from Clifford Chance LLP, English counsel to the
            Lenders,

      it being understood that after the occurrence and continuation of a Second
      Trigger Event, the Agent shall be entitled to request receipt of such
      other legal opinions as it in its good faith considers appropriate and the
      reissue of any other Master Opinion in addition to the Master Opinions and
      any "bring-down" opinions referred to in Clause 7.1 (General Covenants of
      Borrower, Sub-Borrower and Intermediate Lessee) and from counsel in the
      state of registration of the Aircraft;

      (e)   certified copies of the audited consolidated financial statements of
            the Guarantor for the period ending on 31 December 2003;

4.    on or before each Utilisation in respect of which a Sub-Borrower and/or
      Intermediate Lessee is incorporated in the structure and in either or both
      cases has not previously acceded to the Agreement the Agent shall have
      received an opinion from legal counsel to the Lenders in the jurisdiction
      of organisation of such Sub-Borrower and/or Intermediate Lessee (being a
      legal opinion from Maples & Calder, if the Cayman Islands is the relevant
      jurisdiction, a legal opinion from A&L Goodbody, if Ireland is the
      relevant jurisdiction and Zul Rafique & Partners, if the Federal Territory
      of Labuan, Malaysia is the relevant jurisdiction) regarding the due
      execution and validity of the Accession Deed, of the relevant Aircraft
      Security Documents and of other documents as the Representatives may have
      required pursuant to Clause 3.3.3(b) (Sub-Borrowers / Intermediate
      Lessees).

                                     -189-
<PAGE>

              CONDITIONS PRECEDENT AND SUBSEQUENT TO A UTILISATION

                                     PART B

                          FURTHER CONDITIONS PRECEDENT

In addition, the Agent shall have received on or before the Utilisation Date all
of the following:

1.    if applicable, evidence of registration of the Aircraft with the
      applicable Aviation Authority;

2.    a certificate of the insurance broker in respect of the Insurances
      together with a broker's letter of undertaking (if any) and any
      certificate of reinsurance and reinsurance broker's letter of undertaking
      (if any) in form and substance acceptable to the Security Trustee;

3.    evidence satisfactory to the Agent that the bills of sale/confirmation of
      transfer by delivery of possession relating to the transfer of title to
      the Aircraft and the installed Buyer Furnished Equipment will be delivered
      by the Seller to the Borrower;

4.    a commercial invoice for the Aircraft (including the installed Buyer
      Furnished Equipment) issued by the Seller specifying the net final
      contract price as described in the relevant Purchase Agreement in relation
      to the Aircraft;

5.    duly executed originals or executed copies of all of the notices to the
      Partial Purchase Agreement Assignment, the relevant Assignment Re Engine
      Warranties, the Mortgage, and duly executed originals or executed copies
      of the control agreements to the relevant Sub-Borrower Debenture or the
      Borrower Debenture;

6.    duly executed originals or, as the case may be, certified copies of the
      documents ancillary to any Charge Over Shares entered into in connection
      with the delivery of the Aircraft being certified copies of the memorandum
      of association and by-laws and the share register (if any) of the relevant
      Sub-Borrower or Intermediate Lessee and the originals of the letters of
      resignation, irrevocable proxy and undated Share Transfer forms referred
      to in such Charge over Shares;

7.    in form and substance satisfactory to the Agent, certified copies of all
      consents, authorisations, approvals, filings and registrations (if any) of
      or with any governmental or other competent agency or authority (including
      in relation to exchange control) which any of the legal opinions referred
      to in paragraph 2 of Part A of this Schedule 7 provide are required to be
      obtained or made by any party to the Aircraft Operative Documents in
      connection with the execution, delivery and performance of the Aircraft
      Operative Documents or any documents contemplated thereby but subject to
      the parenthetical proviso in Clause 7.1.6 (General Covenants of Borrower,
      Sub-Borrower and Intermediate Lessee) and except for those which it is not
      customary practice in the applicable jurisdiction to make or obtain at
      such time;

                                     -190-
<PAGE>

8.    copies of all documents (not otherwise required under this Part B) as are
      conditions precedent to such Utilisation under any Aircraft Operative
      Document;

9.    evidence of the Consent and Agreement of the Seller and the Engine
      Manufacturer to the provisions of the warranty assignments pursuant to the
      Partial Purchase Agreement Assignment, the relevant Assignment Re Engine
      Warranties and the Mortgage and (where appropriate) the service of such
      documents upon the Seller by huissiers de justice in accordance with the
      provisions of Article 1690 of the French Civil Code;

10.   a certified copy of the bill of sale issued by the Guarantor in favour of
      the Seller and relating to the Buyer Furnished Equipment and having
      attached thereto a Schedule describing the nature, the quantity, the
      vendor and the part number of the individual items which comprise the
      Buyer Furnished Equipment;

11.   written confirmation from the Guarantor addressed to the Agent that the
      Buyer Furnished Equipment (excluding that relating to any Post-Delivery
      Modifications or to be installed during the relevant Post-Delivery
      Modification Period) has been installed on the Aircraft;

12.   a certificate from the Manufacturer addressed to the Agent confirming that
      (i) the Buyer Furnished Equipment (excluding that relating to any
      Post-Delivery Modifications or to be installed during the relevant
      Post-Delivery Modification Period) has been installed on the Aircraft as
      at the Delivery Date in form and substance satisfactory to the Export
      Credit Agencies and (ii) the relevant Purchase Agreement remains in full
      force and effect;

13.   an undertaking from the Guarantor addressed to the Agent that (i) the
      Buyer Furnished Equipment and/or the Post-Delivery Modifications which are
      scheduled for installation and/or completion, as the case may be, within
      180 days of the delivery Date will be installed and/or completed, as the
      case may be, by the end of the Post-Delivery Modification Period or that
      the applicable portion of the relevant Loan will be prepaid as required
      under the Facility Agreement, and (ii) it will provide to the Agent a list
      of the Buyer Furnished Equipment and/or Post-Delivery Modifications
      installed and/or completed on the Aircraft during the Post-Delivery
      Modification Period specifying each item's stated country of origin as
      soon as practicable after the Post-Delivery Modification Period;

14.   in the circumstances where the provisions of Clause 3.6.4 (Repayment
      Schedules) apply, substitute schedules to replace schedule 2 to the Loan
      Supplement duly signed for and on behalf of the Borrower and the Relevant
      Lenders;

15.   if a Sub-Borrower or an Intermediate Lessee, which has not previously
      acceded to the Transaction Documents, has been incorporated into the
      structure, evidence that the Sub-Borrower Accounts and/or the Intermediate
      Lessee Accounts have been opened and that ten Dollars has been deposited
      in each such Sub-Borrower Account or each such Intermediate Lessee Account
      (as the case may be);

                                     -191-
<PAGE>

16.   evidence satisfactory to it that no proceedings for insolvency of, and no
      petition for winding up or liquidating, the Borrower, the relevant
      Sub-Borrower or the relevant Intermediate Lessee (as the case may be) has
      been instituted or filed as at the Utilisation Date in a corporate or
      similar register against the Borrower, the relevant Sub-Borrower or the
      relevant Intermediate Lessee (as the case may be) as at the Utilisation
      Date;

17.   with respect to any previous Utilisation (having an analogous structure
      and/or the same jurisdiction as the proposed Utilisation) as to which the
      provisions of Clause 14.3.2 (Illegality) have applied, evidence that all
      mitigating action has been completed or the affected Loan has been prepaid
      pursuant to Clause 14.3 (Illegality);

18.   with respect to such Utilisation, the ECA Guarantees of each of ECGD and
      COFACE (and the same are in full force and effect) and with respect to
      EULER-HERMES either its ECA Guarantee (in full force and effect) or
      evidence satisfactory to the Agent and the Relevant Lenders that such
      Guarantee will be issued promptly after disbursement of the relevant Loan.

                                     -192-
<PAGE>

              CONDITIONS PRECEDENT AND SUBSEQUENT TO A UTILISATION

                                     PART C

                     CONDITIONS SUBSEQUENT TO A UTILISATION

It shall be a condition subsequent to each Advance that:

      (A)

            (a)   the Borrower shall within sixty (60) days after delivery and
                  title transfer of the relevant Aircraft from the Seller to the
                  Borrower or the relevant Sub-Borrower (or following the
                  occurrence and continuation of a Second Trigger Event within
                  seven (7) days after such delivery and title transfer) locate
                  the Aircraft (including the Engines) at the time the Mortgage
                  is to come into effect, (i) in England and Wales or Hong Kong
                  or (ii) in United Kingdom or Hong Kong airspace or (iii) in
                  such other location in respect of which the Agent is able to
                  obtain a satisfactory legal opinion of counsel to the Lenders
                  in the jurisdiction of such other location of the Aircraft
                  (including the Engines) that, under the relevant conflicts of
                  laws rules, the Mortgage will be recognised as a valid and
                  binding Mortgage governed by English law, and shall provide
                  within such sixty (60) day period or, as the case may be,
                  seven (7) day period, evidence satisfactory to the Agent that
                  the Aircraft (including the Engines) has been located in one
                  of the three applicable locations; and

            (b)   with respect to a substitution of a Replacement Aircraft, the
                  Borrower or any Sub-Borrower (as the case may be) shall within
                  sixty (60) days after title to the Replacement Aircraft has
                  transferred to the Borrower or the relevant Sub-Borrower (as
                  the case may be) pursuant to Clause 4.7 (Substitution of
                  Aircraft) (or following the occurrence and continuation of a
                  Second Trigger Event within seven (7) days after such delivery
                  and title transfer) locate the Replacement Aircraft (including
                  the Engines) at the time the Mortgage is to come into effect,
                  (i) in England and Wales or Hong Kong or (ii) in United
                  Kingdom or Hong Kong airspace or (iii) in such other location
                  in respect of which the Agent is able to obtain a satisfactory
                  legal opinion of counsel to the Lenders in the jurisdiction of
                  such other location of the Replacement Aircraft (including the
                  Engines) that, under the relevant conflicts of laws rules, the
                  Mortgage will be recognised as a valid and binding Mortgage
                  governed by English law, and shall provide within such sixty
                  (60) day period or, as the case may be, seven (7) day period,
                  evidence satisfactory to the Agent that the Replacement
                  Aircraft (including the Engines) has been located in one of
                  the three applicable locations,

            it being understood, insofar as the Borrower is concerned, that
            failure to fulfil the condition subsequent in sub-paragraph (a) or
            (b) above in respect of a

                                     -193-
<PAGE>

            particular Loan shall constitute a mandatory prepayment event in
            accordance with Clause 4.10.1 (Mandatory Prepayment Event); and

            it being understood, insofar as the Relevant Lenders and the Agent
            are concerned, that:

            (i)   the Agent shall inform the Lead Managers if and when each (if
                  applicable) condition subsequent is fulfilled; and

            (ii)  within such sixty (60) day period, the Agent shall seek, if
                  applicable, the legal opinion of counsel to the Lenders
                  referred to in sub-paragraph (a)(iii) above or sub-paragraph
                  (b) above within such sixty (60) day period and, at the
                  Expense of the Borrower, shall seek a confirmation from its
                  legal counsel in the jurisdiction in which the Borrower or the
                  relevant Sub-Borrower (as the case may be) is organised as to
                  the recording, filing, registration and perfection of the
                  Mortgage (to the extent permitted under applicable law) in
                  that jurisdiction of the Mortgage;

      (B)   the Borrower shall use all reasonable endeavours to cause the Seller
            to provide to the Security Trustee within thirty (30) days after
            delivery and title transfer of the relevant Aircraft from the Seller
            to the Borrower or the relevant Sub-Borrower (as the case may be):

            (a)   legal opinion from in-house counsel to the Seller (in relation
                  to its consent and agreement to the Partial Purchase Agreement
                  Assignment and to Mortgage respectively) in form and content
                  satisfactory to the Agent; and

            (b)   a legal opinion from in-house counsel to the relevant Engine
                  Manufacturer (in relation to its consent and agreement to the
                  relevant Assignment Re Engine Warranties (or to its execution
                  of the RR Engine Warranty Agreement as applicable) and to
                  Mortgage respectively) in form and content satisfactory to the
                  Agent,

            and the Agent shall inform the Lead Managers of the receipt of such
            legal opinions promptly after its receipt.

                                     -194-
<PAGE>

                                   SCHEDULE 8

                             ENGLISH PROCESS AGENTS

Borrower:                   Paul Hastings Administrative Services Limited
                            88 Wood Street
                            London, EC2V 7AJ

Borrower Parent:            Paul Hastings Administrative Services Limited
                            88 Wood Street
                            London, EC2V 7AJ

Guarantor:                  Paul Hastings Administrative Services Limited
                            88 Wood Street
                            London, EC2V 7AJ

Subordinated Lender:        Paul Hastings Administrative Services Limited
                            88 Wood Street
                            London, EC2V 7AJ

                                     -195-
<PAGE>

                                   SCHEDULE 9

                                    INSURANCE

1.    OBLIGATION TO INSURE

      Throughout the Security Period the Borrower or Sub-Borrower will ensure
      that there is effected and maintained appropriate insurances in respect of
      each Aircraft and its operation including insurance for:

      (a)   loss or damage to each part of the Aircraft; and

      (b)   any liability for injury to or death of persons and damage to or the
            destruction of public or private property arising out of or in
            connection with the operation, storage, maintenance or use of (in
            each case to the extent available) the Aircraft and of any other
            part thereof not belonging to the Borrower or Sub-Borrower but from
            time to time installed on the airframe.

2.    SPECIFIC INSURANCES

      The Borrower or Sub-Borrower will maintain or will cause to be maintained
      the following specific insurances with respect to each Aircraft (subject
      to paragraph 3):

      (a)   All Risks Hull Insurance - All risks hull insurance policy on the
            Aircraft in an amount at least equal to 110% of the outstanding
            principal under the Loan for such Aircraft (the "REQUIRED INSURED
            VALUE") on an agreed value basis and naming the Security Trustee
            (for and on behalf of itself, the Agent and each Relevant Lender) as
            a loss payee for the Required Insured Value (provided, however,
            that, if, the TO Lessee's insurance program uses AVN67B or a
            successor London market endorsement similar thereto, the Borrower
            and the Guarantor shall use their reasonable commercial efforts to
            procure that the Agent and each Relevant Lender are also named as
            "CONTRACT PARTIES" and shall ensure that during a Second Trigger
            Event the Agent and each Relevant Lender are also named as "CONTRACT
            PARTIES" in respect of any new Lease entered into thereafter for a
            previously delivered Aircraft);

      (b)   Hull War Risk Insurance - Hull war risk and allied perils insurance,
            including hijacking, (excluding, however, confiscation by government
            of registry or country of domicile to the extent coverage of such
            risk is not generally available to the applicable TO Lessee in the
            relevant insurance market at a commercially reasonable cost or is
            not customarily obtained by operators in such jurisdiction at such
            time) on the Aircraft where the custom in the industry is to carry
            war risk for aircraft operating on routes or kept in locations
            similar to the Aircraft in an amount not less than the Required
            Insured Value on an agreed value basis and naming the Security
            Trustee (for and on behalf of itself, the Agent and each Relevant
            Lender) as a loss payee for the Required Insured Value (provided,
            however, that, if the TO Lessee's insurance program uses AVN67B or a
            successor London market endorsement similar thereto, the

                                     -196-
<PAGE>

            Borrower and the Guarantor shall use their reasonable commercial
            efforts to procure that the Agent and the Relevant Lender are also
            named as "CONTRACT PARTIES" and shall ensure that during a Second
            Trigger Event the Agent and each Relevant Lender are also named as
            "CONTRACT PARTIES" in respect of any new Lease entered into
            thereafter for a previously delivered Aircraft);

      (c)   Legal Liability Insurance - Third party legal liability insurance
            (including war and allied perils) for a combined single limit
            (bodily injured and property damage) of not less than $500,000,000
            for a narrow-bodied aircraft, and not less than $750,000,000 for
            wide-bodied aircraft. The Security Trustee (on behalf of itself, the
            Agent and each Relevant Lender) shall be named as additional insured
            on such policies PROVIDED, HOWEVER, that the Borrower and the
            Guarantor shall use their reasonable commercial efforts to procure
            that the Agent and each Relevant Lender are also named as additional
            insureds and shall ensure that during a Second Trigger Event the
            Agent and each Relevant Lender are also named as additional insureds
            in respect of any new Lease entered into thereafter for a previously
            delivered Aircraft.

      (d)   Aircraft Spares Insurance - Insurance for the engines and the parts
            while not installed on the Airframe for their replacement cost or an
            agreed value basis.

3.    VARIATIONS ON SPECIFIC INSURANCE REQUIREMENTS

      In certain circumstances, it is customary that not all of the insurances
      described in paragraph 2 be carried for the Aircraft. For example, when an
      Aircraft is not on lease to a passenger air carrier or is in storage or is
      being repaired or maintained, ferry or ground rather than passenger flight
      coverage for the Aircraft are applicable. Similarly indemnities may be
      provided by a Government Entity in lieu of particular insurances. Prior to
      the occurrence of a Second Trigger Event, which is continuing, the
      Borrower or the Sub-Borrower, as the case may be, shall be entitled to
      accept any such governmental indemnities in lieu of particular insurances
      in their absolute discretion, subject to Clause 7.4.1. Following the
      occurrence of a Second Trigger Event and for so long as the same is
      continuing, the Borrower or Sub-Borrower, as the case may be, shall not,
      without the prior written consent of the Agent (acting on the instructions
      of the Instructing Group), be entitled to accept any new such governmental
      indemnities other than when such indemnities are granted by a Government
      Entity of a Relevant Jurisdiction (but in any case subject to Clause
      7.4.1). The Borrower or Sub-Borrower will determine the necessary coverage
      for the Aircraft in such situations consistent with the manner in which
      the Borrower or Sub-Borrower or the Guarantor or the Guarantor's
      Subsidiaries or affiliates does so with respect to its other aircraft.

4.    HULL INSURANCES IN EXCESS OF REQUIRED INSURANCE VALUE

      For the avoidance of doubt, the Borrower or Sub-Borrower and/or Lessee may
      carry hull risks and hull war and allied perils insurance on the Aircraft
      in excess of the Required Insured Value which (subject in the case of the
      Borrower and any Sub-Borrower to no Termination Event having occurred and
      continuing) will not be

                                     -197-
<PAGE>

      payable to the Security Trustee. Such excess insurances will be payable to
      (i) if payable to the Borrower or Sub-Borrower, to the Borrower or
      Sub-Borrower as the case may be unless a Termination Event has occurred
      and is continuing in which case the excess shall be payable to the
      Security Trustee or (ii) if payable to the Lessee to the Lessee in all
      circumstances.

5.    CURRENCY

      All insurance and reinsurances effected pursuant to this Schedule 9 shall
      be payable in Dollars, save that in the case of the insurances referred to
      in paragraph 2(c) (if such denomination is (a) required by the law of the
      state of registration of the Aircraft; or (b) the normal practice of
      airlines in the relevant country that operate aircraft leased from lessors
      located outside such country; or (c) otherwise agreed by the Security
      Trustee) or paragraph 2(d).

6.    SPECIFIC TERMS OF INSURANCES

      Insurance policies which are underwritten in the London and/or other
      non-US insurance market and which pertain to financed or leased aircraft
      equipment contain the coverage and endorsements described in AVN67B. Each
      of the Borrower and the Sub-Borrower agrees that, throughout the Security
      Period, the Aircraft will be insured and the applicable insurance policies
      endorsed either (i) in a manner consistent with AVN67B, as it may be
      amended or revised or its equivalent or (ii) as may then be customary in
      the airline industry for aircraft of the same type as the Aircraft
      utilised by operators in the same country and whose operational network
      for such Aircraft and credit status is similar to the type of business as
      the Lessee (if any) and at the time commonly available in the insurance
      market. In all cases, the Borrower or Sub-Borrower will set the standards,
      review and manage the insurances on the Aircraft consistent with the
      manner in which the Borrower or Sub-Borrower or its affiliates does so
      with respect to its other aircraft.

7.    INSURANCE BROKERS AND INSURERS

      In reviewing and accepting the insurance brokers (if any) and reinsurance
      brokers (if any) and insurers and reinsurers (if any) providing coverage
      with respect to the Aircraft, the Borrower or Sub-Borrower will utilise
      standards consistent with those applied by it or its affiliates with
      respect to its other aircraft. It is recognised that airlines in certain
      countries are required to utilise brokers (and sometimes even no brokers)
      or carry insurance with local insurance brokers and insurers. If at any
      time the Aircraft is not subject to a Lease or an Intermediate Lease the
      Borrower or Sub-Borrower will cause its insurance brokers to provide the
      Security Trustee with evidence that the insurances described in this
      Schedule 9 are in full force and effect.

8.    DEDUCTIBLE AMOUNTS, SELF-INSURANCE AND REINSURANCE

      With respect to the type of aircraft concerned, the nationality and
      creditworthiness of the airline operator, the airline operator's use and
      operation thereof and to the scope of and the amount covered by the
      insurances carried by the Lessee, the Borrower or

                                     -198-
<PAGE>

      Sub-Borrower will apply standards consistent with those of its affiliates
      in reviewing and accepting the amount of any insurance deductibles,
      whether the Lessee may self-insure any of the risks covered by the
      insurances and the scope and terms of reinsurance, if any, including a
      cut-through and assignment clause.

9.    RENEWALS

      The Borrower or Sub-Borrower will monitor the insurances on the Aircraft
      and their expiration dates. The Borrower or the Sub-Borrower shall, when
      requested by the Security Trustee, promptly inform the Security Trustee as
      to whether or not, the Guarantor has been advised that renewal
      instructions for any of the insurances have been given by the airline
      operator or its broker prior to or on the scheduled expiry date of the
      relevant insurance. The Borrower or the Sub-Borrower shall promptly notify
      the Security Trustee in writing if it receives notice that any of the
      insurances have in fact expired without renewal. Promptly after receipt,
      the Borrower or Sub-Borrower will provide to the Security Trustee evidence
      of renewal of the insurances and reinsurance (if any).

10.   INFORMATION

      The Borrower or Sub-Borrower shall provide the Security Trustee or shall
      ensure that the Security Trustee is provided with any information
      reasonably requested by the Security Trustee from time to time concerning
      the insurances maintained with respect to the Aircraft or, if reasonably
      available to the Borrower or Sub-Borrower, in connection with any claim
      being made or proposed to be made thereunder.

                                     -199-
<PAGE>

                                   SCHEDULE 10

              FORM OF CERTIFICATE TO BE GIVEN ON EACH QUARTER DATE

                            QUARTER DATE CERTIFICATE

To:   The Governor and Company of the Bank of Scotland as Agent

From: International Lease Finance Corporation (ILFC) as Guarantor

                                            Date: [Insert relevant Quarter Date]

AIRCRAFT FACILITY AGREEMENT DATED [-] MAY 2004 RELATING TO A TERM FACILITY IN
RESPECT OF THE FINANCING OF APPROXIMATELY THIRTY ONE (31) AIRBUS AIRCRAFT AND
MADE BETWEEN (1) THE BANKS AND FINANCIAL INSTITUTIONS NAMED THEREIN (AS
LENDERS), (2) THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND (AS AGENT), (3)
THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND (AS SECURITY TRUSTEE), (4)
WHITNEY LEASING LIMITED (AS BORROWER), (5) AIRCRAFT SPC-12, INC. (AS BORROWER
PARENT), (6) INTERNATIONAL LEASE FINANCE CORPORATION (AS GUARANTOR) AND (7)
INTERNATIONAL LEASE FINANCE CORPORATION (AS SUBORDINATED LENDER) AS AMENDED,
SUPPLEMENTED OR ACCEDED TO FROM TIME TO TIME (THE " AGREEMENT").

I, a duly authorised representative of ILFC, hereby certify that as of the date
hereof to the best of my knowledge, after due enquiry:

(i)   [the long term debt rating of ILFC as rated by Standard & Poor's
      Corporation is [-] and is [-] as rated by Moody's Investor Service
      Inc.] [The long term debt rating by (a service of equivalent recognition]
      is [-];(1)

(ii)  the Consolidated Tangible Net Worth of ILFC as at [-] is US$[-];

(iii) [no Termination Event (as defined in the Agreement) that has occurred and
      is continuing] [a Termination Event has occurred and is continuing and in
      accordance with the provisions of paragraph 2.1 (c) of Schedule 6 we give
      you notice that the following steps are being taken to cure me same:
      [complete details]](2);

(iv)  there [are] [are not] as of the date of this certificate any bank or
      export credit agency credit facilities to which ILFC is a party which
      provide that it shall be an [Event of Default] [Termination Event]
      thereunder if AIG no longer owns, directly or indirectly, more than 50% of
      the voting capital stock of ILFC [(provided that any such provision may
      terminate or expire or be amended or waived without further notice)].

(1)   Only use this option if no rating by Standard & Poor's and Moody's is
      available. Delete as appropriate.

(2)   Delete as appropriate.

                                     -200-
<PAGE>

Yours faithfully

[       ]
FOR AND ON BEHALF OF ILFC

                                     -201-
<PAGE>

                                 EXECUTION PAGES

THE BRITISH LEAD MANAGER

THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND,
LONDON BRANCH

By:    /s/ ROBERT BUCK
       ------------------------------------

Name:  Robert Buck
       ------------------------------------

Title: Director Aircraft Finance
       ------------------------------------

THE FRENCH LEAD MANAGER

THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND,
PARIS BRANCH

By:    /s/ P.R. BARKER
       ------------------------------------

Name:  P.R. Barker
       ------------------------------------

Title: Head of Aircraft Finance
       ------------------------------------

THE GERMAN LEAD MANAGER

THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND,
FRANKFURT BRANCH

By:    /s/ P.R. BARKER
       ------------------------------------

Name:  P.R. Barker
       ------------------------------------

Title: Head of Aircraft Finance
       ------------------------------------

                                     -202-
<PAGE>

THE ORIGINAL LENDER

THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND,
LONDON BRANCH

By:    /s/ ROBERT BUCK
       ------------------------------------

Name:  Robert Buck
       ------------------------------------

Title: Director Aircraft Finance
       ------------------------------------

THE AGENT

THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND,
LONDON BRANCH

By:    /s/ ROBERT BUCK
       ------------------------------------

Name:  Robert Buck
       ------------------------------------

Title: Director Aircraft Finance
       ------------------------------------

THE SECURITY TRUSTEE

THE GOVERNOR AND COMPANY OF THE BANK OF SCOTLAND,
LONDON BRANCH

By:    /s/ ROBERT BUCK
       ------------------------------------

Name:  Robert Buck
       ------------------------------------

Title: Director Aircraft Finance
       ------------------------------------

                                     -203-
<PAGE>

THE BORROWER

WHITNEY LEASING LIMITED

By:    /s/ ALAN H. LUND                   /s/ PAMELA S. HENDRY
       ---------------------------------  --------------------------------------

Name:  Alan H. Lund                       Pamela S. Hendry
       ---------------------------------  --------------------------------------

Title: Director                           Director
       ---------------------------------  --------------------------------------

THE BORROWER PARENT

AIRCRAFT SPC-12, INC.

By:    /s/ ALAN H. LUND                   /s/ PAMELA S. HENDRY
       ---------------------------------  --------------------------------------

Name:  Alan H. Lund                       Pamela S. Hendry
       ---------------------------------  --------------------------------------

Title: Director                           Treasurer
       ---------------------------------  --------------------------------------

THE GUARANTOR                             /s/ ALAN H. LUND
                                          --------------------------------------
EXECUTED as a DEED and            )       Alan H. Lund
SIGNED and DELIVERED by           )       --------------------------------------
INTERNATIONAL LEASE               )       Vice Chairman, Chief Financial Officer
FINANCE CORPORATION               )       --------------------------------------
as Guarantor acting through       )
its duly authorised               )       /s/ PAMELA S. HENDRY
officer:                          )       --------------------------------------
in the presence of:               )       Pamela S. Hendry
                                          --------------------------------------
/s/ SIGNATURE ILLEGIBLE                   Vice President and Treasurer
----------------------------------        --------------------------------------

THE SUBORDINATED LENDER

INTERNATIONAL LEASE FINANCE CORPORATION

By:    /s/ ALAN H. LUND                   /s/ PAMELA S. HENDRY
       --------------------------------   --------------------------------------

Name:  Alan H. Lund                       Pamela S. Hendry
       --------------------------------   --------------------------------------

Title: Vice Chairman,                     Vice President and Treasurer
       Chief Financial Officer            --------------------------------------
       --------------------------------
                                     -204-