Document:

Exhibit 10.3

 

 

SECURITY TRUST AGREEMENT

 

 

Dated as of April 26, 2006

 

among

 

 

AERFUNDING 1 LIMITED

 

 

and

 

 

THE ADDITIONAL GRANTORS REFERRED TO HEREIN

as the Grantors

 

 

and

 

 

UBS SECURITIES LLC

as the Administrative Agent

 

 

and

 

 

DEUTSCHE BANK TRUST COMPANY AMERICAS

as Collateral Agent and Account Bank

 

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
  ARTICLE I
  DEFINITIONS

  	
   

  	
   

  	
  2

  	
   

  
	
   

  	
  Section 1.01

  	
  Definitions

  	
   

  	
  2

  	
   

  
	
   

  	
  Section 1.02

  	
  Construction
  and Usage

  	
   

  	
  8

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II
  SECURITY

  	
   

  	
   

  	
  8

  	
   

  
	
   

  	
  Section 2.01

  	
  Grant of
  Security

  	
   

  	
  8

  	
   

  
	
   

  	
  Section 2.02

  	
  Security for
  Obligations

  	
   

  	
  12

  	
   

  
	
   

  	
  Section 2.03

  	
  Representations
  and Warranties of the Grantors

  	
   

  	
  12

  	
   

  
	
   

  	
  Section 2.04

  	
  Grantors
  Remain Liable

  	
   

  	
  15

  	
   

  
	
   

  	
  Section 2.05

  	
  Delivery of
  Collateral

  	
   

  	
  15

  	
   

  
	
   

  	
  Section 2.06

  	
  Maintenance
  of Bank Accounts

  	
   

  	
  15

  	
   

  
	
   

  	
  Section 2.07

  	
  Non-Trustee
  Accounts

  	
   

  	
  17

  	
   

  
	
   

  	
  Section 2.08

  	
  Covenants
  Regarding Assigned Documents

  	
   

  	
  17

  	
   

  
	
   

  	
  Section 2.09

  	
  Covenants
  Regarding Security Collateral, Beneficial Interest Collateral, Membership
  Interest Collateral and Investment Collateral

  	
   

  	
  19

  	
   

  
	
   

  	
  Section 2.10

  	
  Covenants
  Regarding Commercial Tort Claims

  	
   

  	
  20

  	
   

  
	
   

  	
  Section 2.11

  	
  Further
  Assurances

  	
   

  	
  20

  	
   

  
	
   

  	
  Section 2.12

  	
  Place of
  Perfection; Records

  	
   

  	
  21

  	
   

  
	
   

  	
  Section 2.13

  	
  Voting
  Rights; Dividends; Etc

  	
   

  	
  21

  	
   

  
	
   

  	
  Section 2.14

  	
  Transfers
  and Other Encumbrances; Additional Shares or Interests

  	
   

  	
  23

  	
   

  
	
   

  	
  Section 2.15

  	
  Collateral
  Agent Appointed Attorney-in-Fact

  	
   

  	
  23

  	
   

  
	
   

  	
  Section 2.16

  	
  Collateral
  Agent May Perform

  	
   

  	
  24

  	
   

  
	
   

  	
  Section 2.17

  	
  Covenant to
  Pay

  	
   

  	
  24

  	
   

  
	
   

  	
  Section 2.18

  	
  Delivery of
  Collateral Supplements

  	
   

  	
  24

  	
   

  
	
   

  	
  Section 2.19

  	
  Annual
  Opinion

  	
   

  	
  24

  	
   

  
	
   

  	
  Section 2.20

  	
  Covenants
  Regarding Control

  	
   

  	
  25

  	
   

  
	
   

  	
  Section 2.21

  	
  Share
  Mortgage; etc

  	
   

  	
  25

  	
   

  
	
   

  	
  Section 2.22

  	
  Subordination
  of Intercompany Obligations

  	
   

  	
  25

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III
  REMEDIES

  	
   

  	
   

  	
  26

  	
   

  
	
   

  	
  Section 3.01

  	
  Remedies

  	
   

  	
  26

  	
   

  
	
   

  	
  Section 3.02

  	
  Irish
  Conveyancing Acts

  	
   

  	
  27

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV
  SECURITY INTEREST ABSOLUTE

  	
   

  	
  27

  	
   

  
	
   

  	
  Section 4.01

  	
  Security
  Interest Absolute

  	
   

  	
  27

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V
  THE COLLATERAL AGENT

  	
   

  	
  28

  	
   

  
	
   

  	
  Section 5.01

  	
  Authorization
  and Action

  	
   

  	
  28

  	
   

  
	
   

  	
  Section 5.02

  	
  Limitation
  of Duties

  	
   

  	
  29

  	
   

  
	
   

  	
  Section 5.03

  	
  Representations
  or Warranties

  	
   

  	
  29

  	
   

  
	
   

  	
  Section 5.04

  	
  Reliance;
  Agents; Advice of Counsel

  	
   

  	
  29

  	
   

  

 

i

 

	
   

  	
   

  	
   

  	
   

  	
  Page

  	
   

  
	
   

  	
  Section 5.05

  	
  No
  Individual Liability

  	
   

  	
  31

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI
  SUCCESSOR COLLATERAL AGENTS

  	
   

  	
  31

  	
   

  
	
   

  	
  Section 6.01

  	
  Resignation
  and Removal of Collateral Agent

  	
   

  	
  31

  	
   

  
	
   

  	
  Section 6.02

  	
  Appointment
  of Successor

  	
   

  	
  31

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII
  EXPENSES

  	
   

  	
  32

  	
   

  
	
   

  	
  Section 7.01

  	
  In General

  	
   

  	
  32

  	
   

  
	
   

  	
  Section 7.02

  	
  Reserved

  	
   

  	
  33

  	
   

  
	
   

  	
  Section 7.03

  	
  No
  Compensation from Secured Parties

  	
   

  	
  33

  	
   

  
	
   

  	
  Section 7.04

  	
  Collateral
  Agent and Account Bank Fees

  	
   

  	
  33

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII
  MISCELLANEOUS

  	
   

  	
  33

  	
   

  
	
   

  	
  Section 8.01

  	
  Amendments;
  Waivers; Etc

  	
   

  	
  33

  	
   

  
	
   

  	
  Section 8.02

  	
  Addresses
  for Notices

  	
   

  	
  34

  	
   

  
	
   

  	
  Section 8.03

  	
  No Waiver;
  Remedies

  	
   

  	
  35

  	
   

  
	
   

  	
  Section 8.04

  	
  Severability;
  Enforcement

  	
   

  	
  35

  	
   

  
	
   

  	
  Section 8.05

  	
  Continuing
  Security Interest; Assignments

  	
   

  	
  35

  	
   

  
	
   

  	
  Section 8.06

  	
  Release and
  Termination

  	
   

  	
  36

  	
   

  
	
   

  	
  Section 8.07

  	
  Limited
  Recourse

  	
   

  	
  36

  	
   

  
	
   

  	
  Section 8.08

  	
  Governing
  Law

  	
   

  	
  36

  	
   

  
	
   

  	
  Section 8.09

  	
  Jurisdiction

  	
   

  	
  37

  	
   

  
	
   

  	
  Section 8.10

  	
  Counterparts

  	
   

  	
  37

  	
   

  
	
   

  	
  Section 8.11

  	
  Table of
  Contents, Headings, Etc

  	
   

  	
  37

  	
   

  
	
   

  	
  Section 8.12

  	
  Effectiveness;
  Date of this Agreement

  	
   

  	
  37

  	
   

  
	
   

  	
  Section 8.13

  	
  Administrative
  Agent Approvals

  	
   

  	
  37

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  SCHEDULES

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Schedule I

  	
   

  	
  Pledged
  Stock, Pledged Beneficial Interest, Pledged Membership Interest and Pledged
  Debt

  	
   

  	
   

  	
   

  
	
  Schedule II

  	
   

  	
  Non-Trustee
  Account Information

  	
   

  	
   

  	
   

  
	
  Schedule III

  	
   

  	
  Trade Names

  	
   

  	
   

  	
   

  
	
  Schedule IV

  	
   

  	
  Jurisdiction
  of Organization, Chief Place of Business and Chief Executive or Registered
  Office

  	
   

  	
   

  	
   

  
	
  Schedule V

  	
   

  	
  Trust
  Agreements

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
   

  	
  RESERVED

  	
   

  	
   

  	
   

  
	
  Exhibit B-1

  	
   

  	
  Form of
  Collateral Supplement

  	
   

  	
   

  	
   

  
	
  Exhibit B-2

  	
   

  	
  Form of
  Grantor Supplement

  	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  RESERVED

  	
   

  	
   

  	
   

  
	
  Exhibit D

  	
   

  	
  Form of
  Notice and Acknowledgment

  	
   

  	
   

  	
   

  
	
  Exhibit E

  	
   

  	
  Form of
  Irish Share Mortgage

  	
   

  	
   

  	
   

  
							

 

ii

 

SECURITY TRUST AGREEMENT

 

This SECURITY
TRUST AGREEMENT (this “Agreement”), dated as of April 26, 2006, is made among
AERFUNDING 1 LIMITED, a company incorporated under the laws of Bermuda (the “Borrower”),
the Aircraft Owning Entities, the Owner Trusts, the Applicable Intermediaries
and other direct or indirect Subsidiaries of the Borrower listed on the
signature pages of, or who otherwise become grantors under, this Agreement
(each, a “Borrower Subsidiary”), the Owner Trustees listed on the signature
pages of, or who otherwise become grantors under, this Agreement (such Owner
Trustees, together with the Borrower Subsidiaries and the Borrower, each a “Grantor”
and collectively the “Grantors”), UBS SECURITIES LLC (“UBSS”), as
Administrative Agent (the “Administrative Agent”), and DEUTSCHE BANK TRUST
COMPANY AMERICAS, a national banking association (“DBTCA”), as Collateral Agent
(as defined below).

 

PRELIMINARY STATEMENTS:

 

(1)           The
Borrower, Administrative Agent and Collateral Agent have entered into that
certain Credit Agreement (the “Credit Agreement”), made and entered into as of
April 26, 2006 among the Borrower, AerCap Ireland Limited and each other
servicer named therein, individually and as servicer (or any successor servicer
appointed pursuant to Section 12.3 of the Credit Agreement, each, a “Service
Provider”), UBS Real Estate Securities Inc. and the other financial
institutions that become parties thereto as Class A Lenders, (together with any
permitted successors and assigns, “Class A Lenders”), UBS Real Estate
Securities Inc. and the other financial institutions that become parties
thereto as Class B Lenders, (together with any permitted successors and
assigns, “Class B Lenders”) and UBS Real Estate Securities Inc. and the other
financial institutions that become parties thereto as Class C Lenders (together
with any permitted successors and assigns, “Class C Lenders” and, together with
Class A Lenders and the Class B Lenders, the “Lenders”), the Administrative
Agent, as agent for the Lenders, UBS Securities LLC as funding agent (the “UBS
Funding Agent”), the Other Funding Agents, and the Collateral Agent as the same
may be amended, modified, supplemented and/or restated from time to time.

 

(2)           Pursuant
to the Credit Agreement, the Borrower may from time to time borrow one or more
Advances from the Lenders.

 

(3)           The
Borrower is the owner, directly or indirectly, of all of the beneficial
interest in certain Borrower Subsidiaries, all of the membership interest in
certain Borrower Subsidiaries and all of the outstanding shares of capital
stock of the other Borrower Subsidiaries, all as described in the attached Schedule
I.

 

(4)           The
Borrower Subsidiaries are, or may from time to time be, parties to lease and
sub-lease contracts and servicing agreements with respect to the Initial
Financed Aircraft, and the Additionally Financed Aircraft.

 

(5)           The
Borrower and the Borrower Subsidiaries may from time to time grant additional
security for the benefit of the Secured Parties.

 

 

(6)           It
is a condition precedent to the borrowing of any Advance by the Borrower that
each Grantor grant the security interests required by this Agreement.

 

(7)           Each
Grantor will derive substantial direct and indirect benefit and value from the
Borrower’s borrowing of the Advances and from the Transaction Documents.

 

(8)           DBTCA
is willing to act as the Collateral Agent and Account Bank under the Credit
Agreement and as Collateral Agent, Account Bank.

 

(9)           UBSS
is willing to act as the Administrative Agent under the Credit Agreement and
under this Agreement.

 

NOW,
THEREFORE, in consideration of the premises, each Grantor hereby agrees with
the Collateral Agent for its benefit and the benefit of the Secured Parties as
follows:

 

ARTICLE I

DEFINITIONS

 

Section 1.01 Definitions. (a)  Certain Defined Terms. For the
purposes of this Agreement, the following terms have the meanings indicated
below:

 

“Account Bank”
has the meaning assigned such term in the Credit Agreement.

 

“Accounts
Receivable” means all of the Grantor’s now owned or hereafter acquired or
arising accounts, as defined in the UCC, including any rights to payment for
the sale or lease of goods or rendition of services, whether or not they have
been earned by performance.

 

“Additional
Grantor” has the meaning specified in Section 8.01(b).

 

“Administrative
Agent” has the meaning specified in the recital of parties to this Agreement.

 

“Agreement”
has the meaning specified in the recital of parties to this Agreement.

 

“Annual
Opinion Jurisdiction” means each of (i) New York, (ii) Ireland, (iii) Bermuda,
and (iv) with respect only to the perfection of security interests that may be
perfected by filing a financing statement in such jurisdiction, the District of
Columbia.

 

“Applicable
Aviation Authority” means any Government Entity that has responsibility for the
supervision of civil aviation and/or the registration and operations of civil
aircraft.

 

“Applicable
Law” means, with respect to any Person, all laws, rules, regulations and orders
of governmental or regulatory authorities applicable to such Person, including,
without limitation, the regulations of each Applicable Aviation Authority
applicable to such Person or, with respect to a lessee under a Lease, to the
Financed Aircraft operated by it.

 

“Assigned Agreement
Collateral” has the meaning specified in Section 2.01(f).

 

2

 

“Assigned
Agreements” has the meaning specified in Section 2.01(f).

 

“Assigned
Documents” means, collectively, the Assigned Agreements, the Assigned Leases,
the Service Provider Documents, the Purchase Agreement, and the Hedge
Agreements.

 

“Assigned
Leases” has the meaning specified in Section 2.01(g).

 

“Bank Account”
means any of the Collection Account (including without limitation the Collection
Trust Account and the Collection DDA Account), the Maintenance Reserve Account,
the Security Deposit Account, the Liquidity Reserve Account, the Class C
Reserve Account, the Borrower Funding Account, and all other bank and similar
accounts established with DBTCA relating to Collections with respect to the
Aircraft and the Leases (whether now existing or hereafter established).

 

“Bank Account
Collateral” has the meaning specified in Section 2.01(d).

 

“Beneficial
Interest Collateral” has the meaning specified in Section 2.01(b).

 

“Borrower” has
the meaning specified in the recital of parties to this Agreement.

 

“Borrower
Group Member” means the Borrower or a Borrower Subsidiary.

 

“Borrower
Subsidiary” has the meaning specified in the recital of parties to this
Agreement.

 

“Certificated
Security” means a certificated security as defined in Section 8-102(a)(4) of
the UCC other than a Government Security.

 

“Closing Date”
means April 26, 2006.

 

“Collateral”
has the meaning specified in Section 2.01.

 

“Collateral
Agent” means, for purposes of this Agreement and the other Transaction
Documents and any related agreements or instruments, DBTCA in its capacity as
collateral agent and account bank, together with any of its permitted
successors and assigns.

 

“Collateral
Supplement” means a supplement to this Agreement in substantially the form
attached as Exhibit B-1 executed and delivered by a Grantor.

 

“Commercial
Tort Claim” means any “commercial tort claim” as defined in Section
9-102(a)(13) of the UCC.

 

“Control” has
the meaning specified in Section 2.20.

 

“Control
Agreement” has the meaning specified in Section 2.07(i).

 

“Credit
Agreement” has the meaning set forth in the Preliminary Statements.

 

3

 

“DBTCA” means
Deutsche Bank Trust Company Americas, in its respective capacities as expressly
provided herein.

 

“Eligible
Institution” means (a) Deutsche Bank Trust Companies Americas in its capacity
as Collateral Agent, so long as it (i) has either (A) a long-term unsecured
debt rating of AA- (or the equivalent) or better by each Rating Agency or (B) a
short-term unsecured debt rating of A-1 by Standard & Poor’s and P-1 by
Moody’s and (ii) can act as a securities intermediary under the New York
Uniform Commercial Code; (b) any bank organized under the laws of the United
States of America or any state thereof, or the District of Columbia (or any
branch of a foreign bank licensed under any such laws), so long as it (i) has
either (A) a long-term unsecured debt rating of AA (or the equivalent) or
better by each Rating Agency or (B) a short-term unsecured debt rating of A-1+
by Standard & Poor’s and P-1 by Moody’s and (ii) can act as a securities
intermediary under the New York Uniform Commercial Code; and (c) any other foreign
bank or financial institution reasonably acceptable to the Administrative
Agent.

 

“Excluded
Payments” means, with respect to any Aircraft, its related Lease and the
Related Security, (i) indemnity or similar payments (whether or not payable as
supplemental rent) paid or payable by the Lessee under such Lease to the
indemnitee or other payee entitled thereto pursuant to such Lease or any
related agreements (unless such indemnitee or other payee is a Borrower Group
Member or had previously been reimbursed pursuant to Section 8.1(e) of the
Credit Agreement for any expense or loss related to such indemnity or similar
payments), (ii) proceeds of public liability insurance in respect of the
Aircraft payable as a result of insurance claims made, or losses suffered, by
the indemnitee or payee entitled thereto (unless the recipient of such proceeds
is a Borrower Group Member or had previously been reimbursed pursuant to
Section 8.1(e) of the Credit Agreement for any expense or loss related to the
payment of such proceeds), (iii) proceeds of hull insurance maintained with
respect to any Aircraft by the relevant Aircraft Owning Entity or any Affiliate
of such Aircraft Owning Entity (including a Service Provider) and not required
under the then-current Lease or under this Agreement or any other Transaction
Documents for the Aircraft (it being agreed that only liability related
insurance proceeds under the Contingent Policy shall be Excluded Payments),
(iv) any interest paid or payable on any amounts described in clauses (i)
through (iii) of this definition, and (v) the proceeds from the enforcement by
the relevant Aircraft Owning Entity or other indemnitee or payee of the payment
of any amount described in clauses (i) through (iv) of this definition.

 

“Financed
Aircraft” means any Initial Financed Aircraft and any Additionally Financed
Aircraft.

 

“Government
Security” means any security that is issued or guaranteed by the United States
of America or an agency or instrumentality thereof and that is maintained in
book-entry on the records of the Federal Reserve Bank of Chicago (or any other
Federal Reserve Bank Branch) and is subject to the Revised Book-Entry Rules.

 

“Grantor” has
the meaning specified in the recital of parties to this Agreement.

 

“Grantor
Supplement” means a supplement to this Agreement in substantially the form
attached as Exhibit B-2 executed and delivered by a Grantor.

 

4

 

“Hedge
Agreement Collateral” has the meaning specified in Section 2.01(l).

 

“Instrument”
means any “instrument” as defined in Section 9-102(a)(47) of the UCC.

 

“Intercompany
Obligations” means the obligations of any Borrower Subsidiary to the Borrower
including without limitation under the Loan, Expenses Apportionment and
Guarantee Agreement dated on or about the date hereof.

 

“Interim
Charters” has the meaning assigned such term in the Purchase Agreement.

 

“Investment
Collateral” has the meaning specified in Section 2.01(e).

 

“Irish Share
Mortgage” means an Irish-law-governed mortgage of Shares in substantially the
form of Exhibit E.

 

“Lease” means
(a) any lease agreement between an Aircraft Owning Entity or an Applicable
Intermediary, as lessor of an Aircraft, and an airline, air freight company or
similar entity, as lessee of such Aircraft, in each case together with all
schedules, supplements and amendments thereto, as such may be amended, restated
and/or otherwise modified from time to time, or (b) any lease agreement between
an Aircraft Owning Entity, as lessor of an Aircraft, and an Applicable
Intermediary, as lessee of an Aircraft, in each case together with all
schedules, supplements and amendments thereto, as such may be amended, restated
and/or otherwise modified from time to time.

 

“Lease
Assignment Documents” means, in respect of any Assigned Lease, (a) any
agreement providing for the novation thereof to substitute, or the assignment
thereof to, a Borrower Subsidiary as the lessor, (b) any agreement or
instrument supplemental to this Agreement for the purpose of effecting and/or perfecting
the assignment of, and the grant of a lien upon, such Assigned Lease in favor
the Collateral Agent under any Applicable Law, (c) any notice provided to the
lessee thereof of the assignment thereof pursuant to this Agreement and/or such
supplement, (d) any acknowledgment of such assignment by such lessee and (e)
any undertaking of quiet enjoyment given by the Collateral Agent in respect
thereof, in each case as such may be amended, restated and/or otherwise
modified from time to time.

 

“Lease Collateral”
has the meaning specified in Section 2.01(g).

 

“Lenders” has
the meaning set forth in the Preliminary Statements.

 

“Letter of
Credit” means any “letter of credit” as defined in Section 5-102 of the UCC.

 

“Letter of
Credit Right” means any “letter of credit right” as defined in Section
9-102(a)(51) of the UCC.

 

“Membership
Interest Collateral” has the meaning specified in Section 2.01(c).

 

5

 

“Non-Trustee
Account Banks” has the meaning specified in Section 2.07.

 

“Non-Trustee
Account Collateral” has the meaning specified in Section 2.01(r).

 

“Notice and
Acknowledgement” has the meaning assigned such term in the Credit Agreement.

 

“Officer’s
Certificate” means a certificate signed by, with respect to any Person, any
authorized officer, director, trustee or equivalent representative of such
Person.

 

“Opinion of
Counsel” means a written opinion of counsel, who may be counsel for the
Borrower, and who shall be reasonably acceptable to the Collateral Agent and Administrative
Agent.

 

“Pledged
Beneficial Interests” means the beneficial interests identified in any of Schedule
I, any Collateral Supplement or any Grantor Supplement.

 

“Pledged Debt”
means the Intercompany Obligations and the indebtedness identified in any of Schedule
I, any Collateral Supplement or any Grantor Supplement.

 

“Pledged
Membership Interests” means the membership interests identified in any of Schedule
I, any Collateral Supplement or any Grantor Supplement.

 

“Pledged Stock”
means the capital stock identified in any of Schedule I, any Collateral
Supplement or any Grantor Supplement.

 

“Purchase
Agreement” has the meaning assigned the term “AerCap-Borrower Purchase
Agreement” in the Credit Agreement and shall include all other agreements,
assignments, documents, bills of sale or other instruments forming a part of
the transaction documents with respect thereto, including without limitation
the Deed of Tax Indemnity (as defined in the Purchase Agreement).

 

“Relevant
Collateral” has the meaning specified in Section 2.09(a).

 

“Rental
Payments” means all rental and lease payments and other amounts equivalent to a
rental or lease payment payable by or on behalf of an Obligor (including, for
the purposes hereof, an Applicable Intermediary) under a Lease, including any
payments pursuant to a contractual option granted by the lessor or owner
(including pursuant to a conditional sale agreement) as to the purchase of the
applicable Aircraft.

 

“Responsible
Officer” means, with respect to the Collateral Agent, Gary Severyn, or such
other individual as may be appointed by the Collateral Agent from time to time.

 

“Revised
Book-Entry Rules” means 31 C.F.R. § 357 (Treasury bills, notes and bonds); 12
C.F.R. § 615 (book-entry securities of the Farm Credit Administration); 12
C.F.R. §§ 910 and 912 (book-entry securities of the Federal Home Loan Banks);
24 C.F.R. § 81 (book-entry securities of the Federal National Mortgage
Association and the Federal Home Loan Mortgage Corporation); 12 C.F.R. § 1511
(book-entry securities of the Resolution Funding

 

6

 

Corporation or
any successor thereto); 31 C.F.R. § 354 (book-entry securities of the Student
Loan Marketing Association); and any substantially comparable book-entry rules
of any other Federal agency or instrumentality of the United States.

 

“Secured
Obligations” means the Obligations under, and as defined in, the Credit
Agreement.

 

“Secured Party”
means any of or, in the plural form, all of the Collateral Agent, the Administrative
Agent, each Funding Agent and each Lender.

 

“Securities
Account” means a securities account as defined in Section 8-501(a) of the UCC
maintained in the name of the Collateral Agent as “entitlement holder” (as
defined in Section 8-102(a)(7) of the UCC) on the books and records of any
Securities Intermediary who has agreed that its securities intermediary
jurisdiction (within the meaning of Section 8-116 of the UCC) is the State of
New York; provided, that, such securities account is governed by documentation
(if required by the Administrative Agent) reasonably satisfactory to the
Administrative Agent and is otherwise reasonably satisfactory to the
Administrative Agent.

 

“Securities
Intermediary” means any “securities intermediary” of the Collateral Agent as
defined in 31 C.F.R. Section 357.2 or Section 8-102(a)(14) of the UCC;
provided, that, such securities intermediary is reasonably satisfactory to the
Administrative Agent.

 

“Security
Collateral” has the meaning specified in Section 2.01(a).

 

“Service Provider”
means the service providers with respect to any Service Provider Document
described in clause (a) or (b) of the definition thereof.

 

“Service
Provider Documents” means (a) each Service Provider Agreement, (b) the
Guaranty, and (c) any other service agreement with respect to the Aircraft
entered into by a Borrower Group Member in accordance with the Credit
Agreement.

 

“Servicing
Collateral” has the meaning specified in Section 2.01(h).

 

“Supporting
Obligation” means any “supporting obligation” as defined in Section
9-102(a)(77) of the UCC.

 

“UBSS” has the
meaning specified in the recital of parties to this Agreement.

 

“UCC” means,
as of any date, the Uniform Commercial Code as in effect on such date in the
State of New York; provided that if by reason of mandatory provisions of law,
the perfection or the effect of perfection or non-perfection of the security
interest in any Collateral is governed by the Uniform Commercial Code as in
effect in a jurisdiction other than New York, “UCC” means the Uniform
Commercial Code as in effect in such other jurisdiction for purposes of the
provisions of this Agreement relating to such perfection or effect of
perfection or non-perfection.

 

“Uncertificated
Security” means an uncertificated security as defined in Section 8-102(a)(18)
of the UCC other than a Government Security.

 

7

 

(b)           Terms
Defined in the Credit Agreement. For all purposes of this Agreement, all
capitalized terms used, but not defined, in this Agreement shall have the
respective meanings assigned to such terms in the Credit Agreement.

 

Section
1.02  Construction and Usage.
The conventions of construction and usage set forth in Section 1.2 of the
Credit Agreement are hereby incorporated by reference in this Agreement.

 

ARTICLE II

SECURITY

 

Section
2.01  Grant of Security. To
secure the Secured Obligations, each Grantor hereby assigns and pledges to the
Collateral Agent for its benefit and the benefit of the Secured Parties, and
hereby grants to the Collateral Agent for its benefit and the benefit of the
Secured Parties, a security interest (which with respect to the Bank Account
Collateral and Non-Trustee Account Collateral is intended to be a fixed charge)
in, all of such Grantor’s right, title and interest in, to and under (the
following being referred to herein as, collectively, the “Collateral”):

 

(a)           all
of the following (the “Security Collateral”):

 

(i)            the Pledged Stock and
the certificates representing such Pledged Stock, and all dividends, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Stock;

 

(ii)           the Pledged Debt and
all instruments evidencing the Pledged Debt, and all interest, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged Debt;

 

(iii)          all additional shares of
the capital stock of any Borrower Subsidiary (whether now existing or hereafter
created) from time to time acquired by such Grantor in any manner, including
the capital stock of any Borrower Subsidiary that may be formed from time to
time, and all certificates, if any, representing such additional shares of the
capital stock and all dividends, cash, instruments and other property from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all such additional shares; and

 

(iv)          all additional
indebtedness from time to time owed to such Grantor by any Person and the
instruments evidencing such indebtedness, and all interest, cash, instruments
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such indebtedness;

 

8

 

(b)           all
of the following (the “Beneficial Interest Collateral”):

 

(i)            the Pledged Beneficial
Interests, all certificates, if any, from time to time representing all of such
Grantor’s right, title and interest in the Pledged Beneficial Interests, any
contracts and instruments pursuant to which any such Pledged Beneficial
Interests are created or issued and all distributions, cash, instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the Pledged Beneficial
Interests; and

 

(ii)           all of such Grantor’s
right, title and interest in all additional beneficial interests in any
Borrower Subsidiary (whether now existing or hereafter created), from time to
time acquired by such Grantor in any manner, including the beneficial interests
in any Borrower Group Member that may be formed from time to time, and all
certificates, if any, from time to time representing such additional beneficial
interests and all distributions, cash, instruments and other property from time
to time received, receivable or otherwise distributed in respect of or in
exchange for any or all such additional beneficial interests;

 

(c)           all
of the following (the “Membership Interest Collateral”):

 

(i)            the Pledged Membership
Interests, all certificates, if any, from time to time representing any of such
Grantor’s right, title and interest in the Pledged Membership Interests, any
contracts and instruments pursuant to which any such Pledged Membership
Interests are created or issued and all distributions, cash, instruments and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the Pledged Membership Interest;
and

 

(ii)           all of such Grantor’s
right, title and interest in all additional membership interests in any
Borrower Subsidiary (whether now existing or hereafter created) from time to
time acquired by such Grantor in any manner, all certificates, if any, from
time to time representing such additional membership interests and all
distributions, cash, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
such additional membership interests;

 

(d)           all
of the following (collectively, the “Bank Account Collateral”):

 

(i)            each Bank Account at
any time or from time to time established; and

 

(ii)           all cash, investment
property, Eligible Investments, other investments, securities, instruments or
other property (including all “financial assets” within the meaning of Section
8-102(a)(9) of the UCC) at any time or from time to time credited to any such
Bank Account;

 

9

 

(e)           all
other “investment property” as defined in Section 9-102(a)(49) of the UCC of
such Grantor (the “Investment Collateral”) including any interest, dividends,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the then
existing Investment Collateral provided that such investment property is
related to the Investment Collateral;

 

(f)            all
of the following (the “Assigned Agreement Collateral”):

 

(i)            all of such Grantor’s
right, title and interest in and to all security assignments, cash deposit
agreements and other security agreements executed in its favor, with respect to
the Aircraft or any of the Leases in each case as such agreements may be
amended, restated and/or otherwise modified from time to time (collectively,
the “Assigned Agreements”); and

 

(ii)           all of such Grantor’s
right, title and interest in and to all deposit accounts, all funds or other
property held in such deposit accounts, all certificates and instruments, if
any, from time to time representing or evidencing such deposit accounts and all
other property of whatever nature, in each case pledged, assigned or
transferred to it or mortgaged or charged in its favor pursuant to any Assigned
Document and all Supporting Obligations relating to any Assigned Agreement;

 

(g)           all
of such Grantor’s right, title and interest in, to and under all Leases to
which such Grantor is or may from time to time be party and any leasing
arrangements among Borrower Group Members (whether now existing or hereafter
created) with respect to such Leases together with all Related Security with
respect thereto (all such Leases and Related Security, the “Assigned Leases”),
including, without limitation, (i) all rights of such Grantor to receive Rental
Payments and other moneys due and to become due under or pursuant to such
Assigned Leases, (ii) all rights of such Grantor to receive proceeds of any
insurance, indemnity, warranty or guaranty pursuant to, or with respect to,
such Assigned Leases, (iii) claims of such Grantor for damages arising out of
or for breach or default under such Assigned Leases, (iv) all rights under any
such Assigned Lease with respect to any subleases of the Aircraft subject to
such Assigned Lease and (v) the right of such Grantor to terminate such
Assigned Leases and to compel performance of, and otherwise to exercise all
remedies under, any Assigned Lease, whether arising under such Assigned Leases
or by statute, at law or in equity (the “Lease Collateral”);

 

(h)           all
of such Grantor’s right, title and interest in, to and under each Service
Provider Document, including, without limitation, (i) all rights of such
Grantor to receive any moneys due or payable under or pursuant to such Service
Provider Document, (ii) any claims of such Grantor for damages arising out of,
or for breach or default under, such Service Provider Document and (iii) all
rights to compel performance under such Service Provider Document, and
otherwise to exercise any and all remedies under such Service Provider
Document, in each case, whether arising under such Service Provider Document by
statute, at law or in equity (the “Servicing Collateral”);

 

(i)            [Reserved];

 

10

 

(j)            all
of such Grantor’s right, title and interest in, to and under the Purchase
Agreement and the Purchase Agreement Guaranty, including, without limitation,
(i) all rights of such Grantor to receive moneys due or to become due under or
pursuant to the Purchase Agreement or the Purchase Agreement Guaranty, (ii) any
claims of such Grantor for damages arising out of, or for breach or default
under, the Purchase Agreement or the Purchase Agreement Guaranty and (iii) all
right to compel performance of the Vendors (as defined in the Purchase Agreement)
under the Purchase Agreement or AerCap Holdings C.V. under the Purchase
Agreement Guaranty, and otherwise to exercise any and all remedies under the
Purchase Agreement and Purchase Agreement Guaranty, in each case, whether
arising under the Purchase Agreement or Purchase Agreement Guaranty by statute,
at law or in equity;

 

(k)           [Reserved];

 

(l)            with
respect to the Borrower, all of the Borrower’s right, title and interest in, to
and under each Hedge Agreement, including, without limitation, (i) all rights
of the Borrower to receive moneys due or to become due under or pursuant to
such Hedge Agreement, (ii) any claims of the Borrower for damages arising out
of, or for breach or default under, such Hedge Agreement and (iii) all rights
to compel performance of the counterparty under such Hedge Agreement, and
otherwise to exercise any and all remedies under such Hedge Agreement, in each
case, whether arising under such Hedge Agreement by statute, at law or in
equity (the “Hedge Agreement Collateral”).

 

(m)          with
respect to each Grantor, all of such Grantor’s right, title and interest in and
to the personal property identified in a Grantor Supplement or a Collateral
Supplement executed and delivered by such Grantor to the Collateral Agent;

 

(n)           with
respect to each Grantor, all of such Grantor’s Accounts Receivable;

 

(o)           all
Commercial Tort Claims;

 

(p)           all
of such Grantor’s Letters of Credit and Letter-of-Credit Rights;

 

(q)           all
books, records and other property related to or referring to any of the
foregoing, including books, records, account ledgers, data processing records,
computer software and other property and general intangibles at any time
evidencing or relating to any of the foregoing; and

 

(r)            all
of the following (collectively, the “Non-Trustee Account Collateral”):

 

(i)            all of the Non-Trustee
Accounts (including without limitation any Hong Kong Holding Account or London
Holding Account not maintained at DBTCA) in such Grantor’s name, all funds or
any other interest held or required by the terms of the Credit Agreement to be
held in, and all certificates and instruments, if any, from time to time
representing or evidencing, such Non-Trustee Accounts;

 

(ii)           all notes, certificates
of deposit, deposit accounts, checks and other instruments from time to time
hereafter delivered to or otherwise possessed by

 

11

 

such Grantor
or by the Collateral Agent for or on behalf of such Grantor in substitution for
or in addition to any or all of the then existing Non-Trustee Account
Collateral; and

 

(iii)          all interest, dividends,
cash, instruments and other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the then
existing Non-Trustee Account Collateral; and

 

(s)           all
proceeds of any and all of the foregoing Collateral (including proceeds that
constitute property of the types described above);

 

provided,
however, that in all cases Excluded Payments shall be excluded from the
Collateral and all distributions and dividends or other payments that are
received as a result of a distribution in accordance with Section 8.1(e) of the
Credit Agreement shall be excluded from the Collateral.

 

Section
2.02  Security for Obligations.
This Agreement secures the payment and performance by the Grantors of all
Secured Obligations and the security interests and other rights and benefits
granted hereunder shall be held by the Collateral Agent in trust for the
Secured Parties. Without limiting the generality of the foregoing, this
Agreement secures the payment of all amounts that constitute part of the
Secured Obligations and would be owed by any Grantor to any Secured Parties but
for the fact that such Secured Obligations are unenforceable or not allowed due
to the existence of a bankruptcy, reorganization or similar proceeding
involving such Grantor.

 

Section
2.03  Representations and
Warranties of the Grantors. Each Grantor represents and warrants as of the
date of this Agreement, as of the Initial Advance Date, as of the date of each
Additional Advance and as of each Payment Date, as follows:

 

(a)           The
Grantors are the legal and beneficial owners of the Collateral and the Aircraft
free and clear of any Adverse Claims. No effective financing statement or other
instrument similar in effect covering all or any part of the Collateral or the
Aircraft is on file in any recording office, except such as may have been filed
with respect to the Collateral in favor of the Collateral Agent.

 

(b)           This
Agreement creates a valid and (upon the taking of the actions described in
clauses (iii)(1), (iii)(2), (iii)(3), (iii)(4), (iii)(5), and (iii)(6) of
Section 2.03(d), each of which has been duly taken or, in the case of the
actions described in clause (iii)(5) shall be taken within the period specified
in such clause) perfected security interest in the Collateral as security for
the Secured Obligations, and such security interest is subject in priority to
no other Liens, and all filings and other actions necessary or desirable to
perfect and protect such security interest have been (or in the case of (i)
actions described in such clause (iii)(5) and (ii) actions in respect of future
Collateral, shall be) duly taken. The Borrower has on the date of this
Agreement delivered to the Administrative Agent on behalf of the Collateral
Agent an original counterpart of this Agreement and the Irish Share Mortgage
for the Pledged Stock specified on Schedule I, duly executed by the Borrower,
and no other action is required to be taken by it or by any Borrower Subsidiary
in order for the filings described in such clause (iii)(v) to be duly made by
the Collateral Agent or the Administrative Agent on its behalf. Other than (i)
the security interest granted to the Collateral Agent pursuant to this
Agreement or any security interest

 

12

 

previously
granted that shall be terminated as of the date hereof, (ii) as expressly
permitted by the Credit Agreement, the Grantors have not pledged, assigned,
sold, granted a security interest in, or otherwise conveyed any of the
Collateral. The Grantors have not authorized the filing of, and are not aware
of, any financing statements or other instrument similar in effect against any
Grantor or any Aircraft that include a description of collateral covering the
Collateral or any Aircraft other than any financing statement relating to the
security interest ranted o the Collateral Agent hereunder or that has been
terminated. The Grantors are not aware of any judgment or tax lien filings
against any Grantor or with respect to any Collateral or any Aircraft.

 

(c)           No
Grantor has any trade names except as set forth on Schedule III hereto.

 

(d)           No
consent of any other Person and no authorization, approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
or other third party is required for (i) the grant by such Grantor of the
assignment and security interest granted hereby, (ii) the execution, delivery
or performance of this Agreement by such Grantor or (iii) the perfection,
priority or maintenance of the pledge, assignment and security interest created
hereby, except for (1) the filing of financing and continuation statements
under the UCC, (2) the filing of this Security Trust Agreement (and any Grantor
Supplement or Collateral Supplement) with the FAA with respect to each Aircraft
registered in the United States, (3) any filing of this Agreement (and any
Grantor Supplement or Collateral Supplement) or Notice of Acknowledgement or
other documents relating thereto required with respect to a foreign
jurisdiction, (4) filings where appropriate with the International Registry
created pursuant to the Convention on International Interests in Mobile
Equipment and the Protocol thereto relating to Aircraft Equipment, (5) the
filing by a Grantor incorporated in Ireland or a Grantor with a place of
business or assets (including without limitation shares in a company organized
under the law of Ireland) located in Ireland of this Agreement (and any Grantor
Supplement or Collateral Supplement) and the filing by any Grantor of an Irish
Share Mortgage, with the Irish Registrar of Companies and the Irish Revenue
Commissioners within 21 days following the execution and delivery by such
Grantor of this Agreement (and any Grantor Supplement or Collateral Supplement)
or of such Irish Share Mortgage, respectively and (6) the filing by the
Borrower and any other Grantor organized under the law of Bermuda of this
Agreement (and any Grantor Supplement or Collateral Supplement executed by it)
with the appropriate register of Bermuda.

 

(e)           The
jurisdiction of organization, organizational ID Number (for a non-U.S. entity,
to the extent a Government Entity in the jurisdiction of domicile of such
entity issues such ID Numbers), the chief place of business and chief executive
or registered office of such Grantor and the office where such Grantor keeps
records of the Collateral are located at the address specified opposite the
name of such Grantor on the attached Schedule IV.

 

(f)            The
Pledged Stock constitutes the percentage of the issued and outstanding shares
of capital stock of the issuers thereof indicated on the attached Schedule I
hereto. The Pledged Membership Interest constitutes the percentage of the
membership interest of the issuer thereof indicated on Schedule I hereto.
The Pledged Beneficial Interest constitutes the percentage of the beneficial
interest of the issuer thereof indicated on Schedule I hereto.

 

(g)           The
Pledged Stock, the Pledged Membership Interests and the Pledged Beneficial
Interests have been duly authorized and validly issued and are fully paid and

 

13

 

nonassessable
(or, in the case of Pledged Membership Interests and Pledged Beneficial
Interests, not subject to any capital call or other additional capital
requirement) and not subject to any preemptive rights, warrants, options or
similar rights or restrictions in favor of third parties or any contractual or
other restrictions upon transfer other than as may be permitted or required
under the Credit Agreement. The Pledged Debt has been duly authorized,
authenticated or issued and delivered, is the legal, valid and binding
obligation of each obligor thereunder and is not in default.

 

(h)           All
certificates or instruments evidencing the Pledged Stock, the Pledged
Beneficial Interests and the Pledged Membership Interests have been delivered
to the Collateral Agent. The Pledged Stock, the Pledged Beneficial Interests
and the Pledged Membership Interests either (i) are in bearer form, (ii) have
been endorsed, by an effective endorsement, to the Collateral Agent or in blank
or (iii) have been registered in the name of the Collateral Agent. None of the
certificates or instruments evidencing Pledged Stock, the Pledged Beneficial
Interests and the Pledged Membership Interests have any marks or notations
indicating that they have been pledged, assigned or otherwise conveyed to any
Person other than the Collateral Agent.

 

(i)            A
true and complete copy of each Assigned Document has been delivered to the
Collateral Agent. Each Assigned Document has been duly authorized, executed and
delivered by all parties thereto and is in full force and effect and is binding
upon and enforceable against the respective Borrower Group Member in accordance
with its terms, except as such enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization or other similar, and (ii) general
principles of equity.

 

(j)            Except
as provided in Section 7.1(h)(vi) or 7.2(f) of the Credit Agreement, a true and
complete original copy of each Lease to which a Borrower Subsidiary is a party
has been delivered to the Collateral Agent. Each such Lease has been duly
authorized, executed and delivered by all parties thereto, is in full force and
effect and is binding upon and enforceable against each Borrower Group Member
which is a party thereto in accordance with its terms. Each Lease constitutes “tangible
chattel paper” within the meaning of Section 9-102(a)(78) of the UCC. No such
Lease has any marks or notations indicating that it has been pledged, assigned
or otherwise conveyed to any Person other than the Collateral Agent.

 

(k)           Each
Bank Account located in the United States constitutes a “deposit account”
within the meaning of Section 9-102(a)(29) of the UCC or a Securities Account.

 

(l)            Each
of the Hedge Agreements and the Purchase Agreement constitutes “general
intangibles” within the meaning of Section 9-102(a)(42) of the UCC.

 

(m)          Each
direct or indirect Subsidiary of the Borrower as of the date hereof is a
signatory of this Agreement.

 

(n)           The
Pledged Stock, the Pledged Beneficial Interests and the Pledged Membership
Interests listed on Schedule I hereto constitute all of the outstanding
shares of capital stock, all of the beneficial interests and all of the
membership interests in all of the direct and indirect Subsidiaries of the
Borrower as of the date hereof.

 

14

 

Section
2.04  Grantors Remain Liable.
Anything contained herein to the contrary notwithstanding, (a) each Grantor
shall remain liable under the contracts and agreements included in the
Collateral to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Collateral Agent of any of its rights
hereunder shall not release any Grantor from any of its duties or obligations
under the contracts and agreements included in the Collateral and (c) no
Secured Party shall have any obligation or liability under the contracts and
agreements included in the Collateral by reason of this Agreement, nor shall
any Secured Party be obligated to perform any of the obligations or duties of
any Grantor under the contracts and agreements included in the Collateral or to
take any action to collect or enforce any claim for payment assigned under this
Agreement.

 

Section
2.05  Delivery of Collateral.
All certificates, instruments, documents or tangible chattel paper representing
or evidencing any Collateral shall be delivered to and held by the Collateral
Agent in the State of New York and shall be in suitable form for transfer by
delivery, or shall be accompanied by duly executed instruments of transfer or
assignment in blank, all in form and substance satisfactory to evidence the
security interests granted hereby. Upon the occurrence and during the
continuance of an Event of Default or if the Facility Termination Date has
occurred or been declared under the terms of the Credit Agreement, the Collateral
Agent shall have the right at any time and without notice to any Grantor to
transfer to or to register in the name of the Collateral Agent or any of its
nominees any or all of the Pledged Stock, Pledged Membership Interest and
Pledged Beneficial Interest, in each case, in accordance with the direction of
the Administrative Agent. In addition, the Collateral Agent shall have the
right at any time upon the occurrence and during the continuance of an Event of
Default or if the Facility Termination Date has occurred or been declared under
the terms of the Credit Agreement, to exchange certificates or instruments
representing or evidencing any Collateral for certificates or instruments of
smaller or larger denominations in each case, in accordance with the direction
of the Administrative Agent. To the extent provided in Section 7.01(h)(vi) or
7.02(f)(vi) of the Credit Agreement, each Grantor shall cause the true and
complete original copy or the chattel paper original of each Lease to which it
is a party from time to time to be delivered to the Collateral Agent in the
State of New York on or before the date hereof. With respect to each Future
Lease with a Lessor that is located within a State (or the District of
Columbia) within the United States (within the meaning of Article 9 of the
UCC),the Grantors, or a Service Provider on their behalf, shall cause the
lessor and the Lessee of such Lease to designate one executed copy thereof the
original by adding substantially the following language to the cover page
thereof:  “To the extent, if any, that
this Lease Agreement constitutes chattel paper (as such term is defined in the
Uniform Commercial Code as in effect in any applicable jurisdiction) this copy
shall constitute the sole original thereof and no security interest in this
Lease Agreement may be created through the transfer or possession of any
counterpart other than this counterpart,” cause the delivery of such original
copy and any related lease supplement to the Collateral Agent no later than 15
days after the execution and delivery of such Lease by all its parties, and
also cause the lessor and Lessee to mark each other executed counterpart of
such Lease with the words “DUPLICATE ORIGINAL”.

 

Section
2.06  Maintenance of Bank
Accounts. (a)  DBTCA, in its capacity
as Collateral Agent, hereby acknowledges its appointment as the initial Account
Bank. Upon the execution of this Agreement, the Account Bank shall establish
(or shall have established) the following

 

15

 

segregated
non-interest-bearing trust accounts:  the
Collection Trust Account, the Maintenance Reserve Account, the Security Deposit
Account, the Class C Reserve Account, the Borrower Funding Account, and the
Liquidity Reserve Account. Additionally, upon the execution of this Agreement,
the Account Bank shall establish (or shall have established) as demand deposit
accounts, the Collection DDA Account. The Account Bank hereby agrees to
establish and maintain each such account, together with any other Bank Accounts
established from time to time (in each case as a Securities Account), on the
books and records of its office specified in Section 8.02 in the name of the
Borrower. If, at any time, the Account Bank ceases to be an Eligible
Institution, the Account Bank agrees to cooperate with any replacement Account
Bank as to the transfer of any property in, and records relating to, any Bank
Account maintained by it to a new Bank Account having the same characteristics
as such other Bank Account and maintained by such replacement Account Bank, and
the Account Bank shall, in any event, use its best efforts to effect such
transfer within 10 Business Days. Except (i) as a Secured Party in accordance
with the provisions of this Agreement and (ii) in its capacity as Collateral
Agent for the benefit of the Secured Parties, DBTCA waives any claim or lien
against any Bank Account it may have, by operation of law or otherwise, for any
amount owed to it by any Grantor.

 

(b)           The
Account Bank hereby agrees that (i) it is a “bank” (as defined in Section
9-101(a)(8) of the UCC), (ii) each Bank Account is and will be maintained as a
Securities Account of which the Account Bank is the Securities Intermediary and
in respect of which the Borrower is the “entitlement holder” (as defined in
Section 8-102(a)(7) of the UCC) of the “security entitlement” (as defined in
Section 8-102(a)(17) of the UCC) with respect to each “financial asset” (as
defined in Section 8-102(a)(9) of the UCC) credited to such Bank Account, (iii)
the Account Bank shall comply with all entitlement orders (as defined in
Section 8-102 of the UCC) originated by the Administrative Agent without
further consent of the Borrower, as the entitlement holder, the other Grantors
or any of them, or any other person, (iv) all Collections and other cash
required to be deposited in any such Bank Account and Eligible Investments and
all other property acquired with cash credited to any such Bank Account will be
processed and credited to such Bank Account in accordance with the Account Bank’s
customary procedures, (v) all items of property (whether cash, investment
property, Eligible Investments, other investments, securities, instruments or
other property credited to each Bank Account will be treated as a “financial
asset” (as defined in Section 8-102(a)(9) of the UCC) under Article 8 of the
UCC, (vi) its “securities intermediary’s jurisdiction” (as defined in Section
8-110(e) of the UCC) and the “bank’s jurisdiction” (within the meaning of
Section 9-304 of the UCC) with respect to each Bank Account is the State of New
York and (vii) all securities, instruments and other property in order or
registered from and credited to any Bank Account shall be payable to or to the
order of, or registered in the name of, the Collateral Agent or shall be
endorsed to the Collateral Agent or in blank, and in no case whatsoever shall
any “financial asset” (as defined in Section 8-102(a)(9) of the UCC) credited
to any Bank Account be registered in the name of any Grantor, payable to or to
the order of any Grantor or specially indorsed to any Grantor except to the
extent the foregoing have been specially endorsed by the applicable Grantor to
the Collateral Agent or in blank.

 

(c)           The
Account Bank acknowledges that that unless and until it is notified by the
Administrative Agent, in writing, to the contrary, the Account Bank will follow
the written directions and instructions of the Cash Manager with respect to the
Bank Accounts.

 

16

 

(d)           The
Collateral Agent agrees that it will hold (and will indicate clearly in the
books and records that it holds) its “security entitlement” to the “financial
assets” credited to each Bank Account in trust for the benefit of the Secured
Parties.

 

Section
2.07  Non-Trustee Accounts. With respect to each Non-Trustee
Account to be established or established by any Grantor:

 

(i)            Such Grantor shall
maintain such Non-Trustee Account in its name only with an Eligible Institution
(each such institution, a “Non-Trustee Account Bank”) that has entered into a
control agreement in from and substance satisfactory to the Administrative
Agent (a “Control Agreement”).

 

(ii)           Each Grantor shall
immediately instruct each Obligor to make any payment not required to be made
to a Bank Account to a Non-Trustee Account meeting the requirements of Section
2.07(i).

 

(iii)          Upon any termination of
any Control Agreement or other agreement with respect to the maintenance of a
Non-Trustee Account by any Grantor or any Non-Trustee Account Bank, such
Grantor shall immediately notify all Obligors that were making payments to such
Non-Trustee Account to make all future payments to another Non-Trustee Account
meeting the requirements of Section 2.07(i). Subject to the terms of any Lease,
upon request by the Collateral Agent or the Administrative Agent, each Grantor
shall, and if prohibited from so doing by the terms of any Lease, shall use its
best efforts to, seek the consent of the relevant Lessee to, terminate any or
all of its Non-Trustee Accounts.

 

Section
2.08  Covenants Regarding
Assigned Documents. (a)  Upon the
inclusion of any Assigned Document (other than an Assigned Lease, an Assigned
Agreement, or the Purchase Agreement) in the Collateral, the relevant Grantor
will deliver to the Collateral Agent a consent, in substantially the form of
Exhibit D and executed by each party to such Assigned Document (other than any
Grantor) or (where the terms of such Assigned Document expressly provide for a
consent to its assignment for security purposes to substantially the same
effect as Exhibit D) will give due notice to each such other party to such
Assigned Document of its assignment pursuant to this Agreement.

 

(b)           Subject
to the provisions of Article VII of the Credit Agreement, upon the inclusion of
any Assigned Lease in the Collateral, the relevant Grantor will deliver to the
Collateral Agent a fully executed Notice and Acknowledgment and all other such
consents, acknowledgments and/or notices as are (i) necessary under the terms
of such Assigned Lease, (ii) necessary under any and all Applicable Law with
respect to the related lessor and lessee and the jurisdiction governing such
Assigned Lease in order to effect and perfect the assignment of, and grant of a
security interest in, such Assigned Lease pursuant to this Agreement or (iii)
necessary to assure the payment of all Rental Payments and other payments under
such Assigned Lease to the appropriate Bank Accounts or Non-Trustee Account in
accordance with the terms of the Credit Agreement.

 

(c)           [Reserved.]

 

17

 

(d)           [Reserved.]

 

(e)           Upon
(i) the inclusion of any Assigned Document in the Collateral (other than an
Assigned Lease) or (ii) the amendment or replacement of any Assigned Document
or (iii) the entering into of any new Assigned Document, the relevant Grantor
will deliver a copy thereof to the Collateral Agent and will take such other
action as may be necessary or desirable to perfect the lien created by this
Agreement as to such Assigned Document.

 

(f)            Each
Grantor shall, at its expense but subject to Section 2.08(g) hereof, the Credit
Agreement and (in the case of any Assigned Lease) the Service Provider
Agreements:

 

(i)            perform and observe
all the terms and provisions of the Assigned Documents to be performed or observed
by it, enforce the Assigned Documents in accordance with their terms and take
all such action to such end as may be from time to time reasonably requested by
the Collateral Agent or the Administrative Agent; and

 

(ii)           from time to time, (A)
furnish to the Collateral Agent and the Administrative Agent such information
and reports regarding the Collateral as the Collateral Agent and/or the
Administrative Agent may reasonably request and (B) upon request of the
Collateral Agent and/or the Administrative Agent, make to each other party to
any Assigned Document such demands and requests for information and reports or
for action as such Grantor is entitled to make thereunder.

 

(g)           So
long as no Event of Default shall have occurred and be continuing and the
Facility Termination Date has not occurred or been declared, and
notwithstanding any provision to the contrary in this Agreement, each Grantor
shall be entitled, to the exclusion of the Collateral Agent but subject always
to the terms of the Credit Agreement (x) to exercise and receive, directly or
indirectly through one or more agents, including a Service Provider, any of the
claims, rights, powers, privileges, remedies and other benefits under, pursuant
to, with respect to or arising out of the Assigned Documents and (y) to take
any action or to not take any action, directly or indirectly through one or
more agents, including a Service Provider, related to the Assigned Documents
and the lessees or counterparties thereunder, including entering into, amending,
supplementing, terminating, performing, enforcing, compelling performance of,
exercising all remedies (whether arising under any Assigned Document or by
statute or at law or in equity or otherwise) under, exercising rights,
elections or options or taking any other action under or in respect of,
granting or withholding notices, waivers, approvals and consents in respect of,
receiving all payments under, dealing with any credit support or collateral
security in respect of, or taking any other action in respect of, the Assigned
Documents and contacting or otherwise having any dealings with any lessee or
counterparty thereunder; provided, however, (i) whether or not an Event of
Default has occurred and/or is continuing or the Facility Termination Date has occurred
or been declared, all amounts payable under each Assigned Document (including
all Rental Payments under each Assigned Lease) shall be paid directly to the
appropriate Bank Account or Non-Trustee Account in accordance with the terms
hereof and of the Credit Agreement, (ii) so long as any Assigned Lease remains
in effect (and without limiting the authority of the Service Providers under
the express terms of the Service Provider

 

18

 

Agreements),
no Grantor will abrogate any right, power or privilege granted expressly in
favor of the Collateral Agent, the Administrative Agent or a Secured Party
under any Lease Assignment Document and (iii) upon or after the occurrence of
an Event of Default which is continuing or the occurrence or declaration of the
Facility Termination Date under the terms of the Credit Agreement and delivery
of a written direction to the Borrower from the Administrative Agent, all such
rights of each Grantor shall cease, and all such rights shall become vested in
the Collateral Agent and the Administrative Agent, which shall thereupon have
the sole right to exercise or refrain from exercising such rights. Neither the
Account Bank nor the Collateral Agent shall have any obligation to verify whether
an Event of Default has occurred and is continuing, but shall be entitled to
rely, and protected in relying on the Administrative Agent’s notice thereof
notwithstanding any contrary instructions of any Grantor.

 

Section
2.09  Covenants Regarding Security
Collateral, Beneficial Interest Collateral, Membership Interest Collateral and
Investment Collateral. (a)  All
Security Collateral, Beneficial Interest Collateral, Membership Interest
Collateral and Investment Collateral (the “Relevant Collateral”) shall be
delivered to the Collateral Agent as follows:

 

(i)            in the case of each
Certificated Security or Instrument, by causing the delivery of such
Certificated Security or Instrument to the Collateral Agent in the State of New
York, registered in the name of the Collateral Agent or duly endorsed by an
appropriate person to the Collateral Agent or in blank and, in each case, to be
held by the Collateral Agent in the State of New York;

 

(ii)           in the case of each
Uncertificated Security, by (A) causing such Uncertificated Security to be
continuously registered on the books of the issuer thereof in the name of the
Collateral Agent or (B) if such Uncertificated Security is registered in the
name of a Securities Intermediary on the books of the issuer thereof or on the
books of any securities intermediary of a Securities Intermediary, by causing
such Securities Intermediary to continuously credit by book entry such
Uncertificated Security to a Securities Account maintained by such Securities
Intermediary in the name of the Collateral Agent and confirming to the
Collateral Agent that it has been so credited;

 

(iii)          in the case of each
Government Security registered in the name of any Securities Intermediary on
the books of any applicable Federal Reserve Bank Branch) or on the books of any
securities intermediary of such Securities Intermediary, by causing such
Securities Intermediary to continuously credit by book entry such security to
the Securities Account maintained by such Securities Intermediary in the name of
the Collateral Agent and confirming to the Collateral Agent and the
Administrative Agent that it has been so credited; and

 

(iv)          in the case of any
Beneficial Interest Collateral or Membership Interest Collateral by (A) to the
extent that the grant of the security interest to the Collateral Agent in any
Beneficial Interest Collateral or Membership Interest Collateral or the
transfer of any Beneficial Interest Collateral or Membership Interest
Collateral upon exercise of remedies by the Collateral Agent is subject to any
restrictions on transfer or any consent requirements, by obtaining all

 

19

 

necessary
consents and approvals thereof and (B) complying with clause (i) or clause (ii)
above, as applicable.

 

(b)           Each Borrower Group
Member and the Collateral Agent hereby represents, with respect to the Relevant
Collateral, that it has not entered into, and hereby agrees that it will not
enter into, any agreement (i) with any of the other parties hereto or any Securities
Intermediary specifying any jurisdiction other than the State of New York as
any Securities Intermediary’s jurisdiction in connection with any Securities
Account with any Securities Intermediary referred to in Section 2.09(a) for
purposes of 31 C.F.R. Section 357.11(b), Section 8-110(e) of the UCC or any
similar state or Federal law, or (ii) with any other person relating to such
account pursuant to which it has agreed that any Securities Intermediary may
comply with entitlement orders made by such person. The Collateral Agent
represents that it will, by express agreement with each Securities
Intermediary, provide for each item of property constituting Relevant
Collateral held in and credited to the applicable Securities Account, including
cash, to be treated as a “financial asset” within the meaning of Section
8-102(a)(9) of the UCC for the purposes of Article 8 of the UCC.

 

(c)           Without limiting the
foregoing, each Borrower Group Member and the Collateral Agent agree, and the
Collateral Agent shall cause each Securities Intermediary to take such
different or additional action as may be required based upon any Opinion of
Counsel received pursuant to Section 2.19 or any request of the Administrative
Agent, in order to maintain the perfection and priority of the security
interest of the Collateral Agent in the Relevant Collateral in the event of any
change in applicable law or regulation, including Articles 8 and 9 of the UCC
and regulations of the U.S. Department of the Treasury governing transfers of
interests in Government Securities.

 

Section
2.10  Covenants Regarding
Commercial Tort Claims. If any Grantor shall at any time acquire a
Commercial Tort Claim, such Grantor shall immediately notify the Collateral
Agent and the Administrative Agent in writing signed by such Grantor of the
details thereof (including specific case captions or description per Official
Comment 5 to Section 9-108 of the UCC) and grant to the Collateral Agent in
such writing a security interest therein and in the proceeds thereof, all upon
the terms of this Agreement, with such writing to be in form and substance
reasonably satisfactory to the Administrative Agent.

 

Section
2.11  Further Assurances. (a)  Each Grantor agrees that, from time to time,
at the expense of such Grantor, such Grantor shall promptly execute and deliver
all further instruments and documents, and take all further action (including
under the laws of any foreign jurisdiction), that may be necessary, or that the
Collateral Agent or Administrative Agent may reasonably request, in order to
perfect and protect any pledge, assignment or security interest granted or
purported to be granted hereby or to enable the Collateral Agent to exercise
and enforce its rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the foregoing, each Grantor shall:  (i) if any Collateral shall be evidenced by a
promissory note or other instrument or “tangible chattel paper” (as defined in
Section 9-102(a)(78) of the UCC), deliver and pledge to the Collateral Agent
hereunder such note or instrument or tangible chattel paper, each such note or
instrument to be duly endorsed and accompanied by duly executed instruments of
transfer or assignment in blank; (ii) execute and file such financing or
continuation statements, or amendments thereto, and such other

 

20

 

instruments or
notices, as may be necessary or desirable, or as the Collateral Agent or
Administrative Agent may reasonably request, in order to perfect and preserve
the pledge, assignment and security interest granted or purported to be granted
hereby and (iii) execute, file, record, or register such additional documents
and supplements to this Agreement, including any further assignments, security
agreements, pledges, grants and transfers, as may be required by or desirable
under the laws of any foreign jurisdiction, or as the Collateral Agent or
Administrative Agent may reasonably request, to create, attach, perfect,
validate, render enforceable, protect or establish the priority of the security
interest and lien created by this Agreement.

 

(b)           Each
Grantor hereby authorizes the Collateral Agent to file one or more financing or
continuation statements, and amendments thereto, relating to all or any part of
the Collateral without the signature of such Grantor where permitted by law. A
photocopy or other reproduction of this Agreement or any financing statement
covering the Collateral or any part thereof shall be sufficient as a financing
statement where permitted by law.

 

(c)           Each
Grantor shall furnish or cause to be furnished to the Collateral Agent from
time to time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the Collateral
Agent or Administrative Agent may reasonably request, all in reasonable detail;
provided that, to the extent that (in the case of any Assigned Lease) such
statements, schedules or reports (or the data needed to prepare them) can be
obtained only from a Service Provider, no Grantor shall be required to obtain
any such statements, schedules, reports or data beyond those to which it is
entitled under the Service Provider Agreements.

 

(d)           Each
Grantor shall, immediately upon the organization or acquisition by such Grantor
of any Borrower Subsidiary, cause such Borrower Subsidiary to enter into a
Grantor Supplement. Such Grantor shall promptly take such actions as are
necessary to perfect the security interest granted under such Grantor
Supplement including without limitation, if such Borrower Subsidiary is
organized under the law of Ireland, or has a place of business or assets
(including without limitation shares in a company organized under the law of
Ireland) located in Ireland, by causing such Grantor Supplement to be duly
recorded with the Irish Registrar of Companies and the Irish Revenue
Commissioners within 21 days after the execution of such Grantor Supplement, or
such lesser period as may be applicable under Requirements of Law.

 

Section
2.12  Place of Perfection;
Records. Each Grantor shall keep its jurisdiction of organization, chief
place of business and chief executive office and the office where it keeps its
records concerning the Collateral at the location specified in Schedule IV
or, upon 30 days’ prior written notice to the Collateral Agent and
Administrative Agent, at such other locations in a jurisdiction where all
actions required by Section 10.2(a) of the Credit Agreement shall have been
taken with respect to the Collateral. Each Grantor shall hold and preserve such
records and shall permit representatives of the Collateral Agent and/or
Administrative Agent at any time during normal business hours to inspect and
make abstracts or copies from such records, all at the sole cost and expense of
such Grantor.

 

Section
2.13  Voting Rights; Dividends;
Etc. (a)  So long as no Event of
Default shall have occurred and be continuing and the Facility Termination Date
has not occurred or been declared under the terms of the Credit Agreement:

 

21

 

(i)            Each of the Grantors
shall be entitled to exercise any and all voting and other consensual rights
pertaining to all or any part of the Security Collateral, Membership Interest
Collateral and Beneficial Interest Collateral pledged by such Grantor for any
purpose not inconsistent with the terms of this Agreement, the charter
documents of such Grantor or the Credit Agreement; provided, however, that such
Grantor shall not exercise or shall refrain from exercising any such right if
in its judgment such action would have a material adverse effect on the value
of all or any part of the Security Collateral, Membership Interest Collateral
or the Beneficial Interest Collateral; and

 

(ii)           The Collateral Agent
shall execute and deliver (or cause to be executed and delivered) to such
Grantor all such proxies and other instruments as such Grantor may reasonably
request in writing and provide for the purpose of enabling such Grantor to
exercise the voting and other rights that it is entitled to exercise pursuant
to Section 2.13(a)(i).

 

(b)           Whether
or not any Event of Default shall have occurred and be continuing and whether
or not the Facility Termination Date has occurred or been declared under the
terms of the Credit Agreement, any and all distributions, dividends and
interest paid in respect of the Security Collateral, Membership Interest
Collateral and Beneficial Interest Collateral pledged by such Grantor,
including any and all (i) distributions, dividends and interest paid or payable
other than in cash in respect of, and instruments and other property received,
receivable or otherwise distributed in respect of, or in exchange for, such
Security Collateral, Membership Interest Collateral or Beneficial Interest
Collateral; (ii) distributions, dividends and other distributions paid or
payable in cash in respect of such Security Collateral, Membership Interest
Collateral or Beneficial Interest Collateral in connection with a partial or
total liquidation or dissolution or in connection with a reduction of capital,
capital surplus or paid-in surplus; and (iii) cash paid, payable or otherwise
distributed in respect of principal of, or in redemption of, or in exchange
for, such Security Collateral, Membership Interest Collateral or Beneficial
Interest Collateral shall be paid into the Collection Account and, if received
by such Grantor, shall be received in trust for the benefit of the Secured
Parties, be segregated from the other property or funds of such Grantor and be
forthwith paid to the Collection Account in the same form as so received (with
any necessary endorsement).

 

(c)           Upon
the occurrence of an Event of Default which is continuing or if the Facility
Termination Date has occurred or been declared, all rights of each Grantor to
exercise or refrain from exercising the voting and other consensual rights that
it would otherwise be entitled to exercise pursuant to Section 2.13(a)(i) and
2.13(a)(ii) shall cease, and all such rights shall thereupon become vested in
the Collateral Agent, who, subject to Section 5.04(d), shall thereupon have the
sole right to exercise or refrain from exercising such voting and other
consensual rights (including, but not limited to, the right, subject to the
restrictions set forth in the applicable organizational documents, to remove or
appoint any trustee, directors and officers of any direct or indirect
subsidiary of the Borrower), provided, however, that the Collateral Agent shall
exercise such voting or consensual right only upon receipt of instruction from
the Administrative Agent.

 

22

 

Section
2.14  Transfers and Other
Encumbrances; Additional Shares or Interests. (a) No Grantor shall (i)
sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant any option with respect to, any of the Collateral or (ii) create or
suffer to exist any Lien (other than Permitted Liens) upon or with respect to
any of the Collateral of such Grantor, other than the pledge, assignment, lien
and security interest created by this Agreement and as otherwise provided
herein or in the Credit Agreement.

 

(b)           Except
to the extent permitted by the Credit Agreement, the Borrower Subsidiaries
shall not, and the Borrower shall not permit the Borrower Subsidiaries to,
issue, substitute, deliver or sell any shares, interests, participations or
other equivalents in any Borrower Subsidiary. Any beneficial interest or
capital stock or other securities or interests issued in respect of, or in
substitution for, the Pledged Stock, Pledged Membership Interest or the Pledged
Beneficial Interest shall be issued or delivered (with any necessary
endorsement) to the Collateral Agent.

 

(c)           All
distributions, dividends and interest payments that are received by such
Grantor contrary to the provisions of this Agreement shall be received in trust
for the benefit of the Secured Parties, shall be segregated from other funds of
such Grantor and shall be forthwith paid over to the Collateral Agent as
Security Collateral or Beneficial Interest Collateral as the case may be, in
the same form as so received (with any necessary endorsement).

 

Section
2.15  Collateral Agent
Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints the
Collateral Agent such Grantor’s attorney-in-fact (in the case of any Grantor
incorporated in Ireland such appointment shall be by way of security), with
full authority in the place and stead of such Grantor and in the name of such
Grantor or otherwise, from time to time in the Collateral Agent’s discretion,
upon advice and instruction of the Administrative Agent (except for item (d)
below, upon the occurrence of an Event of Default which is continuing or if the
Facility Termination Date has occurred or been declared), to take any action
and to execute any instrument that the Administrative Agent may deem necessary
or advisable for the Collateral Agent to take to accomplish the purposes of
this Agreement or to take any action and to execute any instrument as directed
by the Administrative Agent in accordance with the terms of this Agreement and
the Credit Agreement, including, but not limited to:

 

(a)           to
ask for, demand, collect, sue for, recover, compromise, receive and give
aquittance and receipts for moneys due and to become due under or in respect of
any of the Collateral;

 

(b)           to
receive, endorse and collect any Accounts Receivable, drafts or other
instruments and documents in connection included in the Collateral;

 

(c)           to
file any claims or take any action or institute any proceedings that the
Collateral Agent may deem necessary or desirable for the collection of any of
the Collateral or otherwise to enforce the rights of the Collateral Agent with
respect to any of the Collateral;

 

(d)           to
execute and file any financing or continuation statements, or amendments
thereto, and such other instruments or notices, as may be necessary or
desirable, including as identified to the Collateral Agent pursuant to the
Opinion of Counsel described in

 

23

 

Section 2.19
hereof in order to perfect and preserve the pledge, assignment and security
interest granted hereby; provided that the Collateral Agent’s exercise of any
such power shall be subject to Section 2.08(d); and

 

(e)           upon
prior notice to the Borrower on behalf of the Grantors, notify account debtors
that the Accounts Receivable and the right, title and interest of any Grantor
in and under such Accounts Receivable have been assigned to Collateral Agent,
and that payments thereunder shall be made directly to the Collateral Agent,
for the benefit of the Secured Parties.

 

Section
2.16  Collateral Agent May
Perform. If any Grantor fails to perform any agreement contained in this
Agreement, the Administrative Agent or the Collateral Agent (at the direction
of the Administrative Agent) may (but shall not be obligated to) itself
perform, or cause performance of, such agreement, and the expenses of the
Collateral Agent or the Administrative Agent incurred in connection with doing
so shall be payable by the Grantors.

 

Section
2.17  Covenant to Pay. Each
Grantor covenants with the Collateral Agent (for the benefit of the Collateral
Agent and the Secured Parties) that it will pay or discharge any monies and
liabilities whatsoever that are now, or at any time hereafter may be, due, owing
or payable by such Grantor in any currency, actually or contingently, solely
and/or jointly, and/or severally with another or others, as principal or surety
on any account whatsoever pursuant to the Service Provider Documents, the
Credit Agreement, and the Hedge Agreements in accordance with their terms.

 

Section
2.18  Delivery of Collateral
Supplements. Upon the acquisition by any Grantor of any Relevant Collateral
or establishment of a Non-Trustee Account, the relevant Grantor shall
concurrently execute and deliver to the Collateral Agent a Collateral
Supplement duly completed with respect to such Collateral and shall take such
steps with respect to the perfection of such Collateral as are called for in
this section and otherwise in this Agreement for Collateral of the same type;
provided that the foregoing shall not be construed to impair or otherwise
derogate from any restriction on any such action in any Transaction Document
and provided, further that the failure of any Grantor to deliver any Collateral
Supplement as to any such Collateral shall not impair the lien of this
Agreement as to such Collateral. If such Grantor is organized under the law of
Ireland, or has a place of business or assets (including without limitation
shares in a company organized under the law of Ireland) located in Ireland, the
relevant Grantor shall cause such Grantor Supplement to be duly recorded with
the Irish Registrar of Companies and the Irish Revenue Commissioners within 21
days after the execution of such Grantor Supplement, or such lesser period as
may be applicable under Requirements of Law. Without limitation of the
requirements of the immediately preceding sentence, if such Grantor is the
Borrower or any other Borrower Group Member organized under the law of Bermuda,
such Grantor shall cause such Grantor Supplement to be duly recorded with the
appropriate register of Bermuda.

 

Section
2.19  Annual Opinion. Upon
each anniversary of the Closing Date, the Borrower shall cause to be delivered
to the Collateral Agent and the Administrative Agent an Opinion of Counsel in
each Annual Opinion Jurisdiction to the effect that (i) during the preceding
year there has not occurred any change of the law of such jurisdiction that
would require the taking of any action in order to maintain the perfection or
priority of the lien of this Agreement on the Collateral or, if there has been
such a change, setting forth the actions so to be

 

24

 

taken and (ii)
no additional financing statement, continuation statement or amendment thereof,
or other document or instrument, is required to be filed, and no other action
is required to be taken, under the law in existence on the date of such
opinion, during the next twelve months to maintain the perfected security
interest of the Collateral Agent in any part of the Collateral granted
hereunder or under any other Transaction Document, or identifying any such
required financing statement, continuation statement, amendment, instrument,
document or other action. The Borrower agrees to take all such actions as may
be indicated in any such opinion, except that, as provided in Section 2.09, the
Collateral Agent shall take any such actions as may be required with respect to
any Securities Intermediary.

 

Section
2.20  Covenants Regarding
Control. No Grantor shall cause or permit any Person other than the
Collateral Agent to have “control” as defined in Section 9-104, 9-105, 9-106,
or 9-107 of the UCC (“Control”) of any Supporting Obligations or Letter of
Credit Rights, or any “deposit account,” “securities account,” “electronic
chattel paper” or “investment property” (as such terms are defined in Article 9
or Article 8 of the UCC as applicable), in each case, included in the
Collateral or any Bank Account or Non-Trustee Account.

 

Section
2.21  Share Mortgage; etc. In
the case of any Borrower Subsidiary that is incorporated under the law of
Ireland, the Borrower shall, and shall cause each other Borrower Group Member
(as applicable) to, enter into an Irish Share Mortgage in respect of the issued
share capital (if any) held by it in such Borrower Subsidiary. Such Irish Share
Mortgage shall be entered into at the time contemplated by the terms of Section
2.11(d). The Borrower shall cause such Irish Share Mortgage to be filed with
the Irish Registrar of Companies and the Irish Revenue Commissioners within 21
days following the execution and delivery by such Grantor of such Irish Share
Mortgage, or such lesser period as may be applicable under Requirements of Law,
and shall take any other actions as may be required or as the Administrative
Agent or the Collateral Agent (at the direction of the Administrative Agent)
may reasonably request, in order to cause such Irish Share Mortgage to
constitute a perfected and (to the extent recognized under Applicable Law)
first-priority security interest in the share capital covered thereby. In the
case of any Borrower Subsidiary that is not incorporated under the law of
Ireland, the Borrower shall, and shall cause each other Borrower Group Member
(as applicable) to, enter into an appropriate share mortgage, beneficial
interest security agreement, or other security agreement or instrument as may
be reasonably requested by the Administrative Agent or Collateral Agent (at the
direction of the Administrative Agent), in respect of the issued share capital
or other ownership or beneficial interest held by it in such Borrower
Subsidiary. Such share mortgage or other agreement or instrument shall be
entered into at the time contemplated by the terms of Section 2.11(d). The
Borrower shall cause such share mortgage or other agreement or instrument to be
filed with any appropriate register and shall take such other actions as may be
necessary or as the Administrative Agent or the Collateral Agent (at the
direction of the Administrative Agent) may reasonably request in order to cause
such mortgage, agreement or instrument to constitute a first-priority security
interest in the share capital or other ownership or beneficial interest covered
thereby.

 

Section
2.22  Subordination of
Intercompany Obligations. The Borrower agrees that all Intercompany
Obligations shall be subject and subordinate and junior in right of payment and
performance to all obligations of the Borrower Subsidiaries to the Collateral
Agent and Administrative Agent hereunder and to the security interests in the
Collateral granted to the

 

25

 

Collateral
Agent for the benefit of the Secured Parties to secure the payment and
performance of the Secured Obligations. Upon the occurrence and during the
continuance of an Event of Default or if the Facility Termination Date has
occurred or been declared under the terms of the Credit Agreement, then unless
and until all Secured Obligations shall have been paid and performed in full,
(x) no payment on account of the principal of, or interest on, or any other
amount in respect of, the Intercompany Obligations or any judgment with respect
thereto shall be made by or on behalf of any Borrower Subsidiary to the
Borrower and (y) the Borrower shall not (A) ask, demand, sue for, take or
receive from any Borrower Subsidiary, by set-off or in any other manner any
payment on account of the principal of, or interest on, or any other amount in
respect of, the Intercompany Obligations or (B) seek any other remedy allowed
at law or in equity against any Borrower Subsidiary for a breach of
Intercompany Obligations. If any payment or distribution of any character,
whether in cash, securities or other property, in respect of Intercompany
Obligations shall be received by the Borrower in violation of the terms of this
section, such payment or distribution shall be held in trust for the benefit
of, and shall be paid over or delivered to, the Administrative Agent for the benefit
of the Secured Parties to the extent necessary to pay all Secured Obligations
in full.

 

ARTICLE III

REMEDIES

 

Section
3.01  Remedies. Upon the
occurrence of an Event of Default which is continuing or if the Facility
Termination Date has occurred or been declared:

 

(a)           The
Collateral Agent shall, at the direction of the Administrative Agent (which, in
turn, shall have received direction from the Class A Majority Lenders),
exercise in respect of the Collateral, in addition to other rights and remedies
provided for herein, all the rights and remedies of a secured party upon
default under the UCC (whether or not the UCC applies to the affected
Collateral) and (i) require any Grantor to, and such Grantor hereby agrees that
it shall at its expense and upon request of the Collateral Agent forthwith,
assemble all or part of the Collateral as directed by the Collateral Agent and
make it available to the Collateral Agent at a place to be designated by the
Collateral Agent that is reasonably convenient to both parties and (ii) without
notice except as specified below, sell or cause the sale of the Collateral or
any part thereof in one or more parcels at public or, with notice to the Class
B Lenders and Class C Lenders, private sale, at any of the Collateral Agent’s offices
or elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Collateral Agent (upon advice and instruction from the
Administrative Agent) may deem commercially reasonable. Each Grantor agrees
that, to the extent notice of sale shall be required by law, at least ten days’
notice to such Grantor of the time and place of any public sale or the time
after which any private sale is to be made shall constitute reasonable
notification. The Collateral Agent (upon advice and instruction from the
Administrative Agent) shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. The Collateral Agent may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. Notwithstanding any
provision in this Agreement to the contrary, any aforementioned sale of
Collateral (i) shall be subject to the provisions of Section 13.3(c) of the
Credit Agreement and (ii) shall not be subject to the restrictions described in
Section 10.8 of the Credit Agreement.

 

26

 

(b)           Subject
to the provisions hereof, any Secured Party shall be allowed to bid on any such
foreclosure sale in debt (together with payment in cash, if necessary).

 

(c)           All
cash proceeds received by the Collateral Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
shall be deposited into the Collection Account for distribution pursuant to
Section 8.1(e)(ii) of the Credit Agreement. Any surplus of such cash or cash
proceeds held by the Collateral Agent and remaining after payment in full of
all the Obligations (as defined in the Credit Agreement) shall be paid over to
the relevant Grantors or whomsoever may be lawfully entitled to receive such
surplus. Any amount received for any sale or sales conducted in accordance with
the terms of this Section 3.01 shall be deemed conclusive and binding on the
Borrower, each Grantor and the Secured Parties.

 

(d)           Until
the occurrence of an Event of Default which is continuing or if the Facility
Termination Date has occurred or been declared under the terms of the Credit
Agreement, so long as the Service Providers are acting in such capacity with
respect to any Lease pursuant to the provisions of the Service Provider
Agreements, each of the Collateral Agent as assignee of the Grantors and the
Administrative Agent agrees not to take any action constituting Services (as
defined in any Service Provider Agreement) and is otherwise subject to the
terms of the Service Provider Agreements when acting thereunder in place of any
Grantor, except (subject to Section 2.08(g)) to the extent the Borrower would
then be entitled to take such action under the express terms of the Service
Provider Agreements.

 

Section
3.02  Iris Conveyancing Acts.
Notwithstanding anything to the contrary contained in this Agreement and in
addition to and without prejudice to any other rights or power of the
Collateral Agent under this Agreement or under general law in any relevant
jurisdiction, at any time that the Collateral shall become enforceable, the
Collateral Agent shall be entitled to appoint a receiver under this Agreement
or under the Conveyancing and Law of Property Act 1881 (as amended and as the
same may be amended, modified or replaced from time to time, the “1881 Act”)
and such receiver shall have all such powers, rights and authority conferred
under the 1881 Act, this Agreement and otherwise under the laws of Ireland
without any limitation or restriction imposed by the 1881 Act or otherwise
under the laws of Ireland which may be excluded or removed. Sections 17 and 20
of the 1881 Act shall not apply to the Collateral or any receiver appointed
under this Agreement or under the 1881 Act and section 24(b) of the Act shall
not apply to the Collateral or to any receiver appointed under this Agreement.

 

ARTICLE IV

SECURITY INTEREST ABSOLUTE

 

Section
4.01  Security Interest
Absolute. A separate action or actions may be brought and prosecuted
against each Grantor to enforce this Agreement, irrespective of whether any
action is brought against any other Grantor or whether any other Grantor is
joined in any such action or actions. All rights of the Collateral Agent and
the Administrative Agent and the security interest and lien granted under, and
all obligations of each Grantor under, this Agreement shall be absolute and
unconditional, irrespective of:

 

27

 

(a)           any
lack of validity or enforceability of any Transaction Document, Assigned
Document, the Loan Expenses Apportionment and Guarantee Agreement, or Hedge
Agreement or any other agreement or instrument relating thereto;

 

(b)           any
change in the time, manner or place of payment of, the security for, or in any
other term of, all or any of the Secured Obligations, or any other amendment or
waiver of or any consent to any departure from any Transaction Document,
Assigned Document, or Hedge Agreement or any other agreement or instrument
relating thereto;

 

(c)           any
taking, exchange, release or non-perfection of the Collateral or any other
collateral or taking, release or amendment or waiver of or consent to departure
from any guaranty, for all or any of the Secured Obligations;

 

(d)           any
manner of application of collateral, or proceeds thereof, to all or any of the
Secured Obligations, or any manner of sale or other disposition of any
collateral for all or any of the Secured Obligations or any other assets of
such Grantor;

 

(e)           any
change, restructuring or termination of the corporate structure, partnership or
trust or existence as applicable of any Grantor; or

 

(f)            any
other circumstance that might otherwise constitute a defense available to, or a
discharge of, any Grantor or a third-party grantor of a security interest or a
Person deemed to be a surety.

 

ARTICLE V

THE COLLATERAL AGENT

 

Section
5.01  Authorization and Action.
(a)  Each Secured Party by its acceptance
of the benefits of this Agreement hereby appoints and authorizes DBTCA as the
initial Collateral Agent to take such action as trustee on behalf of the
Secured Parties and to exercise such powers and discretion under this Agreement
and the other Transaction Documents as are specifically delegated to the
Collateral Agent by the terms of this Agreement and of the Transaction
Documents, and no implied duties and covenants shall be deemed to arise against
the Collateral Agent. Each Grantor and the Administrative Agent acknowledge and
agree that the Collateral Agent shall comply with all written instructions and
directions of the Administrative Agent given in accordance with this Agreement
and the Credit Agreement without further consent of any Grantor and notwithstanding
any contrary instructions or directions of any Grantor.

 

(b)           The
Collateral Agent accepts such appointment and agrees to perform the same but
only upon the terms of this Agreement and the Credit Agreement and agrees to
receive and disburse all moneys received by it in accordance with the terms of
this Agreement and the Credit Agreement. The Collateral Agent in its individual
capacity shall not be answerable or accountable under any circumstances, except
for its own willful misconduct or gross negligence (or simple negligence in the
handling of funds) or breach of any of its representations or warranties set
forth in this Agreement, and the Collateral Agent shall not be liable for any
action or inaction of any Grantor or any other parties to any of the
Transaction Documents.

 

28

 

(c)           The
Collateral Agent shall take all actions permitted hereunder and exercise all
powers granted to it hereunder upon, and at the direction of, the
Administrative Agent. The Collateral Agent shall have a reasonable period in
which to act upon any instruction, direction or notice received hereunder.

 

(d)           The
Collateral Agent agrees to promptly deliver to the Administrative Agent copies
of all items delivered to the Collateral Agent hereunder.

 

(e)           Whenever
the Collateral Agent is required to provide its consent or direction or
otherwise make a determination under this Credit Agreement or any other
Transaction Document, the Collateral Agent shall act only upon the written
instructions of the Administrative Agent. The Collateral Agent may conclusively
rely on such instructions, and shall be entitled to refrain from providing such
consent or direction or making such determination in the absence of such
instructions.

 

Section
5.02 Limitation of Duties. The powers conferred on the
Collateral Agent under this Agreement with respect to the Collateral shall not
impose any duty upon it, except as explicitly set forth herein, to exercise any
such powers. Except for the safe custody of any Collateral in its possession
and the accounting for moneys actually received by it under this Agreement, the
Collateral Agent shall have no duty, unless directed by the Administrative
Agent, as to ascertaining or taking action with respect to calls, conversions,
exchanges, maturities, tenders or other matters relative to any Collateral,
whether or not any Secured Party has or is deemed to have knowledge of such
matters, or as to the taking of any necessary steps to preserve or perfect
rights against any parties or any other rights pertaining to any Collateral. The
Collateral Agent shall have no duty to ascertain or inquire as to the
performance or observance of any covenants, conditions or agreements on the
part of any Grantor or Lessee. In no event shall the Collateral Agent be liable
for any punitive or special damages nor for any damages arising or caused by an
act of God, war or any other matter beyond the reasonable control of the
Collateral Agent or the Account Bank.

 

Section
5.03 Representations or Warranties. The Collateral Agent
does not make, and shall not be deemed to have made, any representation or
warranty as to the validity, legality or enforceability of this Agreement, any
other Transaction Document or any other document or instrument or as to the
correctness of any statement contained in any thereof, or as to the validity or
sufficiency of any of the pledge and security interests granted hereby, except
that the Collateral Agent in its individual capacity hereby represents and
warrants (a) that each such specified document to which it is a party has been
or will be duly executed and delivered by two of its officers who is and will
be duly authorized to execute and deliver such document on its behalf, and (b)
this Agreement is the legal, valid and binding obligation of DBTCA, enforceable
against DBTCA in accordance with its terms, subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors’ rights generally.

 

Section
5.04 Reliance; Agents; Advice of Counsel. (a)  The Collateral Agent shall incur no liability
to anyone as a result of acting upon any signature, instrument, notice,
resolution, request, consent, order, certificate, report, opinion, bond or
other document believed by it to be genuine and believed by it to be signed by
the proper party or parties. The Collateral Agent may accept a copy of a
resolution of the board or other governing body of any party to this

 

29

 

Agreement or
any other Transaction Document, certified by the Secretary or an Assistant Secretary
thereof or other duly authorized Person of such party as duly adopted and in
full force and effect, as conclusive evidence that such resolution has been
duly adopted by said board or other governing body and that the same is in full
force and effect. As to any fact or matter the manner of ascertainment of which
is not specifically described in this Agreement, the Collateral Agent shall be
entitled to receive and may for all purposes hereof conclusively rely on a
certificate, signed by an officer of any Person, as to such fact or matter, and
such certificate shall constitute full protection to the Collateral Agent for
any action taken or omitted to be taken by it in good faith in reliance thereon.
The Collateral Agent shall furnish to each Service Provider upon request such
information and copies of such documents as the Collateral Agent may have and
as are necessary for such Service Provider to perform its duties under the
applicable Transaction Documents. The Collateral Agent shall assume, and shall
be fully protected in assuming, that each other party to this Agreement is
authorized by its constitutional documents to enter into this Agreement and to
take all action permitted to be taken by it pursuant to the provisions of this
Agreement, and shall not inquire into the authorization of such party with
respect thereto.

 

(b)           The
Collateral Agent may execute any of the powers hereunder or perform any duties
under this Agreement either directly or by or through agents, or attorneys or a
custodian or nominee, provided that the Collateral Agent shall be responsible
for any actions or inactions of any such agent, attorney, custodian or nominee.

 

(c)           The
Collateral Agent may consult with counsel, and any opinion of counsel or any
advice of such counsel shall be full and complete authorization and protection
in respect of any action taken or suffered or omitted by it under this
Agreement in good faith and in accordance with such advice or opinion of
counsel.

 

(d)           The
Collateral Agent shall be under no obligation to exercise any of the rights or
powers vested in it by this Agreement, or to institute, conduct or defend any
litigation under this Agreement or in relation hereto, at the request, order or
direction of any of the Secured Parties, pursuant to the provisions of this
Agreement, unless the Collateral Agent shall have received written advice,
instruction or direction from the Administrative Agent with respect to such
matter, and if the funds provided in accordance with Section 8.1(e) of the
Credit Agreement are not available to pay for the costs and expenses incurred
by the Collateral Agent, such Secured Party shall have offered to the
Collateral Agent reasonable security or indemnity satisfactory to it against
the costs, expenses and liabilities which may be incurred therein or thereby.

 

(e)           The
Collateral Agent shall not be required to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if the funds
provided in accordance with Section 8.1(e) of the Credit Agreement are not
available to pay for the costs and expenses incurred by the Collateral Agent
and none of the provisions contained in this Agreement shall in any event
require the Collateral Agent to perform, or be responsible or liable for the
manner of performance of, any obligations of the Borrower or any Service
Provider under any of the Transaction Documents.

 

30

 

(f)            Reserved.

 

(g)           When
the Collateral Agent incurs expenses or renders services in connection with an
exercise of remedies specified in Section 3.01, such expenses (including the
fees and expenses of its counsel) and the compensation for such services is
intended to constitute expenses of administration under any bankruptcy law or
law relating to creditors’ rights generally.

 

(h)           The
Collateral Agent shall not be charged with knowledge of an Event of Default
unless a Responsible Officer of the Collateral Agent obtains actual knowledge
of such event or the Collateral Agent receives written notice of such event
from any of the Secured Parties or the Administrative Agent.

 

(i)            The
Collateral Agent shall have no duty to monitor the effectiveness or perfection
of any security interest in any Collateral or the performance of the Borrower,
any Service Provider or any other party to the Transaction Documents, nor shall
it have any liability in connection with the appointment of any Service
Provider, or the malfeasance or nonfeasance by such parties. The Collateral
Agent shall have no liability in connection with non-compliance by the
Borrower, any Service Provider or any lessee under a Lease with statutory or
regulatory requirements related to the Collateral, any Aircraft or any Lease. The
Collateral Agent shall not make or be deemed to have made any representations
or warranties with respect to the Collateral, any Aircraft or any Lease or the
validity or sufficiency of any assignment or other disposition of the
Collateral, any Aircraft, or any Lease.

 

Section
5.05 No Individual Liability. The Collateral Agent shall
have no individual liability in respect of all or any part of the Secured
Obligations, and all shall look, subject to the Lien and priorities of payment
provided in the Credit Agreement, only to the property of the Grantors for
payment or satisfaction of the Secured Obligations.

 

ARTICLE VI

SUCCESSOR COLLATERAL AGENTS

 

Section
6.01 Resignation and Removal of Collateral Agent. The
Collateral Agent may resign at any time without cause by giving at least 30
days’ prior written notice to the Borrower and the Administrative Agent. The
Administrative Agent may at any time remove the Collateral Agent without cause
by an instrument in writing delivered to the Secured Parties, the Borrower and
the Collateral Agent. No resignation or removal of the Collateral Agent
pursuant to this Section 6.01 shall become effective prior to the date of
appointment by the Administrative Agent of a successor Collateral Agent and the
acceptance of such appointment by such successor Collateral Agent.

 

Section
6.02 Appointment of Successor. (a)  In the case of the resignation or removal of
the Collateral Agent, the Administrative Agent, on behalf of the Secured
Parties, shall promptly appoint a successor Collateral Agent; provided, that,
prior to the occurrence of an Event of Default which is continuing or the
occurrence or declaration of the Facility Termination Date, such successor
shall be reasonably acceptable to the Borrower. If a successor Collateral Agent
shall not have been appointed and accepted its appointment hereunder within
such 30 day

 

31

 

period after
the Collateral Agent gives notice of resignation as to such class or subclass,
the retiring Collateral Agent or the Secured Parties (or Administrative Agent
on behalf of the Secured Parties) may petition any court of competent
jurisdiction for the appointment of a successor Collateral Agent. Any successor
Collateral Agent so appointed by such court shall immediately and without
further act be superseded by any successor Collateral Agent appointed as
provided in the first sentence of this paragraph within one year from the date
of the appointment by such court.

 

(b)           Any
successor Collateral Agent shall execute and deliver to the Secured Parties an
instrument accepting such appointment. Upon the acceptance of any appointment
as Collateral Agent hereunder, a successor Collateral Agent, upon the execution
and filing or recording of such financing statements, or amendments thereto,
and such amendments or supplements to this Agreement, and such other
instruments or notices, as may be necessary or desirable, or as the
Administrative Agent may request, in order to continue the perfection (if any)
of the liens granted or purported to be granted hereby, shall succeed to and
become vested with all the rights, powers, discretion, privileges and duties of
the retiring Collateral Agent, and the retiring Collateral Agent shall be
discharged from its duties and obligations under this Agreement and the other
Transaction Documents. The retiring Collateral Agent shall take all steps
necessary to transfer all Collateral in its possession and all its control over
the Collateral to the successor Collateral Agent. After any retiring Collateral
Agent’s resignation or removal hereunder as to any actions taken or omitted to
be taken by it while it was Collateral Agent, the provisions of all of Article
VII shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Collateral Agent under this Agreement.

 

(c)           Each
Collateral Agent shall be an Eligible Institution acceptable to the Secured
Parties.

 

(d)           Any
corporation into which the Collateral Agent may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Collateral Agent shall be a party, or
any corporation to which substantially all the business of the Collateral Agent
may be transferred, shall be the Collateral Agent under this Agreement without
further act.

 

(e)           Following
the resignation or removal of the Collateral Agent, and the appointment and
acceptance of such appointment by a successor Collateral Agent, all references
to “Illinois” in Sections 2.05 and 2.09 herein shall be deemed to refer to the
state in which the Collateral Agent is physically located.

 

ARTICLE VII

EXPENSES

 

Section
7.01 In General. The Borrower shall, upon demand and
pursuant to Section 8.01(e) of the Credit Agreement, pay to the Collateral
Agent and the Account Bank the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any experts
and agents, that each such party may incur in connection with (i) the
administration of this Agreement, (ii) the custody, preservation, use or
operation of, or the sale of, collection from or other realization upon, any of
the Collateral, (iii) the exercise or

 

32

 

enforcement of
any of the rights of the Collateral Agent, the Account Bank or any other
Secured Party against any Grantor hereunder, or (iv) the failure by any Grantor
to perform or observe any of the provisions hereof.

 

Section
7.02 Reserved.

 

Section
7.03 No Compensation from Secured Parties. The Collateral
Agent and the Account Bank each agree that it shall have no right against the
Secured Parties for any fee as compensation for its services in such capacity.

 

Section
7.04 Collateral Agent and Account Bank Fees. In
consideration of the Collateral Agent’s and the Account Bank’s performance of
the services provided for under this Agreement, the Borrower shall pay to the
Collateral Agent and the Account Bank, a fee, payable monthly on each Payment
Date together with all expenses and charges as set forth under a separate
agreement among the Borrower, the Collateral Agent and the Account Bank.

 

ARTICLE VIII

MISCELLANEOUS

 

Section
8.01 Amendments; Waivers; Etc. (a)  No amendment or waiver of any provision of
this Agreement, and no consent to any departure by any party from the
provisions of this Agreement, shall in any event be effective unless the same
shall be in writing and signed by the parties hereto, and then such waiver or
consent shall be effective only in the specific instance and for the specific purpose
for which given. In executing and delivering any amendment or modification to
this Agreement, unless the terms of Section 5.04(d) shall have been satisfied
with respect to such amendment or modification, the Collateral Agent shall be
entitled to (i) an Opnion ofCounsel delivered by counsel satisfactory to the
Collatiral Age t stating that such amendment is authorized and permitted
pursuant to the Credit Agreement and this Agreement and complies with the terms
thereof and hereof or (ii) an Officer’s Certificate of the Borrower stating
that such amendment is authorized and permitted pursuant to the Credit
Agreement and all conditions precedent to the execution, delivery and
performance of such amendment have been satisfied in full. The Collateral Agent
may, but shall have no obligation to, execute and deliver any amendment or
modification which would affect its duties, powers, rights, immunities or
indemnities hereunder.

 

(b)           Upon
the execution and delivery by any Person of a Grantor Supplement, (i) such
Person shall be referred to as an “Additional Grantor” and shall be and become
a Grantor hereunder, and each reference in this Agreement to “Grantor” shall
also mean and be a reference to such Additional Grantor, (ii) Annexes I, III
and IV attached to each Grantor Supplement shall be incorporated into, become a
part of and supplement Schedules I, III and IV,
respectively, and the Collateral Agent may attach such Annexes as supplements
to such Schedules; and each reference to such Schedules shall be a reference to
such Schedules as so supplemented and (iii) such Additional Grantor shall be a
Grantor for all purposes under this Agreement and shall be bound by the
obligations of the Grantors hereunder.

 

(c)           Upon
the execution and delivery by a Grantor of a Collateral Supplement, Annex I to
each Collateral Supplement shall be incorporated into, become a part of and

 

33

 

supplement Schedule
I, and the Collateral Agent may attach such Annex as supplements to such Schedule;
and each reference to such Schedule shall be a reference to such Schedule as so
supplemented.

 

Section
8.02 Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including
telecopier) and mailed, telecopied or delivered to the intended recipient at
its address specified, as follows:

 

If to Borrower
or any other Borrower Group Member:

 

AerFunding 1
Limited

Clarendon
House

2 Church Street

Hamilton, HM 11

Bermuda

Attention:  Company Secretary

Fax:  +1 (441) 295-1861

 

With a copy
to:

 

AerCap
Administrative Services Limited

AerCap House

Shannon

Ireland

Attention:  Company Secretary

Fax:  +353- 61-723850

 

For the
Collateral Agent and the Account Bank:

 

Deutsche Bank
Trust Company Americas

60 Wall Street, 26th Floor

New York, NY  10005

Attention:  Trust and Securities Services/Structured
Finance Services

Fax:  +1 (906) 608-3215

 

For the
Administrative Agent:

 

1285 Avenue of
the Americas - 11th Floor

New York, NY 10019

Attention:  Prakash Wadhwani

Fax: No.: +1 (212) 713-7999

 

With a copy
to:

 

1285 Avenue of
the Americas - 11th Floor

New York, NY 10019

Attention:  Kathy Pringle

 

34

 

Fax: +1 (212)
713-7999

 

With a further
copy to:

 

677 Washington
Blvd., 6th floor tower

Stamford, CT  06901

Attention:  Marc Ferrante

Fax:  +1 (203) 719-3888

 

With a further
copy to:

 

Kaye Scholer
LLP

425 Park Avenue

New York, New York  10022

Attention:  Henry G. Morriello, Esq.

Fax:  +1 (212) 836-8689

email:  hmorriello@kayescholer.com

 

or, as to each
party, at such other address as shall be designated by such party in a written
notice to each other party complying as to delivery with the terms of this
Section 8.02. Each such notice shall be effective (a) upon receipt when sent
through the mails, registered or certified mail, return receipt requested,
postage prepaid, with such receipt to be effective the date of delivery
indicated on the return receipt, or (b) one Business Day after delivery to an
overnight courier, or (c) on the date personally delivered to an authorized
officer of the party to which sent, or (d) on the date transmitted by legible
telecopier transmission with a confirmation of receipt.

 

Section
8.03 No Waiver; Remedies. No failure on the part of the
Collateral Agent to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law.

 

Section
8.04 Severability; Enforcement. (a)  If any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof shall not in any way be affected or impaired.

 

(b)           Each
Borrower Subsidiary’s grant of a security interest shall be limited so as to
secure the Secured Obligations in an amount equal to the largest amount that
would not render such grant avoidable, invalid or unenforceable on account of
Section 548 of the United States Bankruptcy Code, any applicable provision of
comparable state law or any other state or federal bankruptcy, insolvency,
reorganization or other law affecting the rights of creditors generally.

 

Section
8.05 Continuing Security Interest; Assignments. Subject to
Section 8.06(b), this Agreement shall create a continuing security interest in
the Collateral and shall (a) remain in full force and effect until the earlier
of the payment in full in cash of the Secured Obligations and the circumstances
specified in Section 8.06(b), (b) be binding upon each Grantor, its successors

 

35

 

and assigns
and (c) inure, together with the rights and remedies of the Administrative
Agent and the Collateral Agent hereunder, to the benefit of the Secured Parties
and their respective successors, transferees and assigns. Without limiting the
generality of the foregoing clause (c), any Secured Party may assign or
otherwise transfer all or any portion of its rights and obligations under any
Transaction Document to which it is a party in accordance with the terms
thereof to any other Person or entity, and such other Person or entity shall
thereupon become vested with all the rights in respect thereof granted to such
Secured Party herein or otherwise. No Borrower Group Member may assign or
otherwise transfer all or any portion of its obligations hereunder.

 

Section
8.06 Release and Termination. (a)  Upon any sale, lease, transfer or other
disposition of any item of Collateral in accordance with the terms of this
Agreement and the Credit Agreement, the Collateral Agent (at the Administrative
Agent’s direction) will, at the Borrower’s expense, execute and deliver to the
Grantor of such item of Collateral such documents as such Grantor shall
reasonably request to evidence the release of such item of Collateral from the
assignment and security interest granted hereby, including the release of any
and all security deposits, maintenance reserves, letters of credit, insurance
or other proceeds and all other items related to the released Collateral.

 

(b)           Upon
the payment in full in cash of the Secured Obligations (and the expiration or
termination of all commitments of the Lenders under the Credit Agreement), the
pledge, assignment and security interest granted hereby shall terminate and all
rights to the Collateral shall revert to the applicable Grantors. Upon receipt
of a written notice from the Administrative Agent specifying any such
termination, the Collateral Agent (at the Administrative Agent’s direction)
will, at the Borrower’s expense, execute and deliver to each relevant Grantor
such documents as such Grantor shall prepare and reasonably request to evidence
such termination (and, as appropriate, redeliver certificates or other
instruments representing or evidencing any of the Collateral).

 

Section
8.07 Limited Recourse. All amounts payable by the Borrower
in respect of its obligations hereunder shall be recoverable only from and to
the extent of the assets of the Borrower and any proceeds thereof. No recourse
under any obligation of the borrower evidenced by this Agreement shall be had
against any shareholder, officer or director of the Borrower, by the enforcement
of any assessment or by any proceeding by virtue of any statute or otherwise;
it being expressly agreed and understood that this Agreement evidences a
corporate obligation of the Borrower and no personal liability shall attach to
or be incurred by the shareholders, officers, agents or directors of the
Borrower as such, or any of them under or by reason of any of the obligations
evidenced by this Agreement, and that any and all personal liability for
braches by the Borrower of any of such obligations, covenants or agreements,
either at law or by statute or constitution, of every such shareholder,
officer, agent or director is hereby expressly waived by the Collateral Agent
and the Administrative Agent.

 

Section
8.08 Governing Law. THIS AGREEMENT, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE HEREOF, SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL SUBSTANTIVE LAWS OF
THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO CONFLICTS OF LAW PRINCIPLES
THEREOF (OTHER THAN § 5-1401 OF THE GENERAL OBLIGATIONS LAW).

 

36

 

Section
8.09 Jurisdiction. (a) 
Each of the parties hereto irrevocably agrees that the courts sitting in
the borough of Manhattan in the City of New York 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 and, for such
purposes, irrevocably submits to the jurisdiction of such courts. Each of the
parties hereto irrevocably waives any objection which it might now or hereafter
have to the federal U.S. or New York State courts located in New York, New York
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 and agrees not to claim that any such court is not a
convenient or appropriate forum. Each Non-U.S. Borrower Group Member agrees
that the process by which any suit, action or proceeding is begun may be served
on it by being delivered in connection with any suit, action or proceeding in
the City of New York to National Registered Agents, Inc., with an office on the
date hereof at 875 Third Avenue, Suite 501, New York, New York 10001, and each
of them hereby appoints National Registered Agents, Inc. its designee,
appointee and agent to receive, accept and acknowledge for and on its behalf
such service of legal process.

 

(b)           Each
Grantor hereby consents generally in respect of any legal action or proceeding
arising out of or in connection with this Agreement to the giving of any relief
or the issue of any process in connection with such action or proceeding,
including the making, enforcement or execution against any property whatsoever
(irrespective of its use or intended use) of any order or judgment which may be
made or given in such action or proceeding.

 

Section
8.10 Counterparts. This Agreement may be executed in two or
more counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument. Delivery of an executed counterpart of a signature page to
this Agreement by facsimile or electronic mail shall be effective as delivery
of a manually executed counterpart of this Agreement.

 

Section
8.11 Table of Contents, Headings, Etc. The Table of Contents
and headings of the Articles and Sections of this Agreement have been inserted
for convenience of reference only, are not to be considered a part hereof and
shall in no way modify or restrict any of the terms and provisions hereof.

 

Section
8.12 Effectiveness; Date of this Agreement. This Agreement
shall be effective when executed and delivered by each party hereto.

 

Section
8.13 Administrative Agent Approvals. Whenever the
Administrative Agent is permitted hereunder to exercise an approval right (or
whenever it is stated that a certain matter must be satisfactory to the
Administrative Agent), the Administrative Agent may exercise grant such approval
(or find such matter satisfactory) without the consent of the Lenders.

 

37

 

IN WITNESS
WHEREOF, the
parties hereto have caused this Agreement to be duly executed and delivered by
its representative or officer thereunto duly authorized as of the date first
above written.

 

	
   

  	
  AERFUNDING 1LIMITED

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Liam J. Meabe

  	
   

  
	
   

  	
   

  	
  Name:

  	
  LIAM J. MEABE

  
	
   

  	
   

  	
  Title:

  	
  DIRECTOR

  
	
   

  	
   

  
	
   

  	
  DEUTSCHE BANK TRUST COMPANY

  
	
   

  	
  AMERICAS, as Collateral Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Eileen M. Hughes

  	
   

  
	
   

  	
   

  	
  Name:

  	
  EILEEN M. HUGHES

  
	
   

  	
   

  	
  Title:

  	
  VICE
  PRESIDENT

  
	
   

  	
   

  
	
   

  	
  By:

  	
  [ILLEGIBLE]

  	
   

  
	
   

  	
   

  	
  Name:

  	
  [ILLEGIBLE]

  
	
   

  	
   

  	
  Title:

  	
  VICE
  PRESIDENT

  
	
   

  	
   

  
	
   

  	
  UBS
  SECURTTIES LLC, as
  Administrative Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Prakash Wadhwani

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Prakash Wadhwani

  
	
   

  	
   

  	
  Title:

  	
  Director

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mostafiz Shahmohammed

  	
   

  
	
   

  	
   

  	
  Name:

  	
  MOSTAFIZ SHAHMOHAMMED

  
	
   

  	
   

  	
  Title:

  	
  EXECUTIVE
  DIRECTOR

  
					

 

[Security
Trust Agreement]

 

38

 

SCHEDULE
I

Security Trust
Agreement

 

PLEDGED
STOCK

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Percentage of

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Number of

  	
   

  	
  Shares Issued

  	
   

  
	
  Stock Issuer

  	
   

  	
  Par Value

  	
   

  	
  Certificate No(s).

  	
   

  	
  Shares Pledged

  	
   

  	
  and Outstanding

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

PLEDGED MEMBERSHIP INTERESTS

 

	
   

  	
   

  	
   

  	
   

  	
  Percentage of

  	
   

  
	
  Borrower

  	
   

  	
  Certificate No.

  	
   

  	
  Membership Interests

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

PLEDGED BENEFICIAL INTERESTS

 

All of the
beneficial interests created in the trusts pursuant to each Trust Agreement
listed on Schedule V attached hereto.

 

 

SCHEDULE II

Security Trust
Agreement

 

NON-TRUSTEE ACCOUNT INFORMATION

 

	
   

  	
   

  	
  NAME AND ADDRESS OF

  	
   

  	
   

  	
   

  
	
  NAME AND ADDRESS

  	
   

  	
  NON-TRUSTEE

  	
   

  	
   

  	
   

  
	
  OF BANK

  	
   

  	
  ACCOUNT HOLDER

  	
   

  	
  ACCOUNT NUMBER

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

SCHEDULE III

Security Trust
Agreement

 

TRADE NAMES

 

None

 

 

SCHEDULE IV

Security Trust Agreement

 

JURISDICTION OF ORGANIZATION, CHIEF PLACE OF
BUSINESS

AND CHIEF EXECUTIVE OR REGISTERED OFFICE

 

	
   

  	
   

  	
  Chief Executive Office, Chief Place of

  	
   

  
	
  Name of Grantor

  	
   

  	
  Business and Registered Office, Jurisdiction

  	
   

  
	
  AerFunding 1 Limited

  	
   

  	
  AerFunding 1
  Limited

  	
   

  
	
   

  	
   

  	
  Clarendon House

  	
   

  
	
   

  	
   

  	
  2 Church Street

  	
   

  
	
   

  	
   

  	
  Hamilton, HM 11

  	
   

  
	
   

  	
   

  	
  Bermuda

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [Other Grantors]

  	
   

  	
   

  	
   

  

 

 

SCHEDULE V

Security Trust Agreement

 

TRUST AGREEMENTS

 

None

 

 

EXHIBIT A

Security Trust Agreement

 

RESERVED

 

 

EXHIBIT B-1

Security Trust Agreement

 

[FORM OF COLLATERAL SUPPLEMENT]

 

Deutsche Bank
Trust Company Americas

60 Wall Street, 26th Floor

New York, NY  10005

Attention:  Trust and Securities Services/Structured
Finance Services

 

[Date]

 

Attention:

 

Re:  Security Trust Agreement,
dated as of April 26, 2006

 

Ladies and
Gentlemen:

 

Reference is
made to the Security Trust Agreement (the “Security Trust Agreement”), dated as
of April 26, 2006 among AerFunding 1 Limited, a Bermuda company (the “Borrower”),
the Borrower Subsidiaries listed on the signature pages of, or who otherwise
become grantors under, the Security Trust Agreement (together with the
Borrower, the “Grantors”), Deutsche Bank Trust Company Americas (“DBTCA”) as
Collateral Agent, and UBS Securities LLC, as Administrative Agent. Capitalized
terms used herein and not otherwise defined herein shall have the meanings
assigned to them in the Security Trust Agreement.

 

The
undersigned hereby delivers, as of the date first above written, the attached
Annexes I and II pursuant to Section 2.18 of the Security Trust Agreement.

 

The
undersigned Grantor hereby confirms that the property included in the attached
Annexes constitutes part of the Collateral and hereby makes each representation
and warranty set forth in Section 2.03 of the Security Trust Agreement (as
supplemented by the attached Annexes) with respect to such property.

 

Attached are
(i) a Control Agreement in substantially in the form approved in writing by
each of the Transaction Agents from each Non-Trustee Account Bank at which each
Non-Trustee Account included in the foregoing Collateral is maintained, (ii)
where required with respect to any Assigned Document (other than an Assigned
Lease) included in the foregoing Collateral, a Consent and Agreement in
substantially the form of Exhibit D to the Security Trust Agreement from the
counterparty thereto or, with respect to any Assigned Lease included in the
foregoing Collateral, such consents, acknowledgements and/or notices as are
called for under

 

 

Section
2.08(a) of the Security Trust Agreement and (iii) duly completed copies of
Annexes I and II hereto.

 

2

 

This
Collateral Supplement shall in all respects be governed by, and construed in accordance
with, the internal substantive laws of the State of New York (without giving
effect to conflicts of law principles thereof), including all matters of
construction, validity and performance.

 

	
   

  	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [NAME OF
  GRANTOR](1)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  

 

Acknowledged
and agreed to as of the date first above written:

 

DEUTSCHE BANK TRUST COMPANY AMERICAS,

not in its individual capacity, but

solely as Collateral Agent

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

	
  (1)

  	
  If any Irish
  incorporated company is a party to this Agreement, use the following

  
	
   

  	
  execution
  block:

  
	
   

  	
   

  
	
   

  	
   

  	
  “Signed
  Sealed and Delivered

  
	
   

  	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  the duly
  appointed attorney of

  
	
   

  	
   

  	
  [                                              ]

  
	
   

  	
   

  	
  in the
  presence of:”

  

 

3

 

ANNEX I

Collateral Supplement

 

PLEDGED STOCK

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Percentage of

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Number of

  	
   

  	
  Shares Issued

  	
   

  
	
  Stock Issuer

  	
   

  	
  Par Value

  	
   

  	
  Certificate No(s).

  	
   

  	
  Shares Pledged

  	
   

  	
  and Outstanding

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100%

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

PLEDGED BENEFICIAL INTERESTS

 

	
   

  	
   

  	
   

  	
   

  	
  Percentage of

  	
   

  
	
  Issuer

  	
   

  	
  Certificate No.

  	
   

  	
  Beneficial Interests

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

PLEDGED MEMBERSHIP INTERESTS(1)

 

	
   

  	
   

  	
   

  	
   

  	
  Percentage of

  	
   

  
	
  Issuer

  	
   

  	
  Certificate No.

  	
   

  	
  Membership Interests

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

PLEDGED DEBT

 

	
  Debt Issuer

  	
   

  	
  Description of Debt

  	
   

  	
  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

ANNEX II

Collateral Supplement

 

NON-TRUSTEE ACCOUNT INFORMATION

 

	
   

  	
   

  	
  NAME AND ADDRESS OF

  	
   

  	
   

  	
   

  
	
  NAME AND ADDRESS

  	
   

  	
  NON-TRUSTEE

  	
   

  	
   

  	
   

  
	
  OF BANK

  	
   

  	
  ACCOUNT HOLDER

  	
   

  	
  ACCOUNT NUMBER

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

EXHIBIT B-2

Security Trust Agreement

 

[FORM OF GRANTOR SUPPLEMENT]

 

Deutsche Bank
Trust Company Americas, as Collateral Agent

60 Wall Street, 26th Floor

New York, NY  10005

Attention:  Trust and Securities
Services/Structured Finance Services

 

[Date]

 

Attention:

 

Re:  Security Trust Agreement,
dated as of April 26, 2006

 

Ladies and
Gentlemen:

 

Reference is
made to the Security Trust Agreement (the “Security Trust Agreement”), dated as
of April 26, 2006 among AerFunding 1 Limited, a Delaware statutory trust (the “Borrower”),
the Borrower Subsidiaries listed on the signature pages of, or who otherwise
become grantors under, the Security Trust Agreement (together with the
Borrower, the “Grantors”), Deutsche Bank Trust Company Americas, a national
banking association (“DBTCA”) as Collateral Agent, and UBS Securities LLC, as
Administrative Agent. Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to them in the Security Trust
Agreement.

 

The
undersigned hereby agrees, as of the date first above written, to become a
Grantor under the Security Trust Agreement as if it were an original party
thereto and agrees that each reference in the Security Trust Agreement to “Grantor”
shall also mean and be a reference to the undersigned.

 

To secure the
Secured Obligations, the undersigned Grantor hereby assigns and pledges to the
Collateral Agent for its benefit and the benefit of the Secured Parties, and
hereby grants to the Collateral Agent for its benefit and the benefit of the
Secured Parties, a security interest in, all of its right, title and interest
in and to:

 

[To be completed
as appropriate]

 

 

The
undersigned Grantor hereby makes each representation and warranty set forth in
Section 2.03 of the Security Trust Agreement (as supplemented by the attached
Annexes) and hereby agrees to be bound as a Grantor by all of the terms and
provisions of the Security Trust Agreement. Each reference in the Security
Trust Agreement to the Pledged Stock, the Pledged Debt, the Pledged Beneficial
Interests, the Pledged Membership Interests, the Security Collateral, the
Beneficial Interest Collateral, the Membership Interest Collateral, the Bank
Account Collateral, the Investment Collateral, the Assigned Agreement, the
Assigned Agreement Collateral, the Aircraft Purchase Collateral, the Assigned
Leases, the Service Provider Documents, the Servicing Collateral, the Lease
Collateral, and the Assigned Documents shall be construed to include a
reference to the corresponding Collateral hereunder.

 

Attached are
(i) a Control Agreement in substantially in the form approved in writing by
each of the Transaction Agents from each Non-Trustee Account Bank at which each
Non-Trustee Account included in the foregoing Collateral is maintained, (ii)
where required with respect to any Assigned Document (other than an Assigned
Lease) included in the foregoing Collateral, a Consent and Agreement in
substantially the form of Exhibit D to the Security Trust Agreement from the
counterparty thereto or, with respect to any Assigned Lease included in the
foregoing Collateral, such consents, acknowledgements and/or notices as are
called for under Section 2.08(a) of the Security Trust Agreement, (iii) duly
completed copies of Annexes I, II, III and IV hereto [and (iv) an Irish Share
Mortgage] [insert if applicable].

 

2

 

This Grantor
Supplement shall in all respects be governed by, and construed in accordance
with, the laws of the State of New York, including all matters of construction,
validity and performance.

 

	
   

  	
   

  	
  Very truly
  yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [NAME OF
  GRANTOR](1)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  

 

Acknowledged
and agreed to as of the date first above written:

 

DEUTSCHE BANK TRUST COMPANY AMERICAS,

not in its individual capacity, but

solely as Collateral Agent

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

	
  (1)

  	
  If any Irish
  incorporated company is a party to this Agreement, use the following

  
	
   

  	
  execution
  block:

  
	
   

  	
   

  
	
   

  	
   

  	
  “Signed
  Sealed and Delivered

  
	
   

  	
   

  	
  by

  	
   

  	
   

  
	
   

  	
   

  	
  the duly
  appointed attorney of

  
	
   

  	
   

  	
  [                                              ]

  
	
   

  	
   

  	
  in the
  presence of:”

  

 

3

 

ANNEX I

Grantor Supplement

 

PLEDGED STOCK

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Percentage of

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Number of

  	
   

  	
  Outstanding

  	
   

  
	
  Stock Issuer

  	
   

  	
  Par Value

  	
   

  	
  Certificate No(s).

  	
   

  	
  Shares

  	
   

  	
  Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100%

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

PLEDGED BENEFICIAL INTERESTS

 

	
   

  	
   

  	
   

  	
   

  	
  Percentage of

  	
   

  
	
  Issuer

  	
   

  	
  Certificate No.

  	
   

  	
  Beneficial Interests

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

PLEDGED MEMBERSHIP INTERESTS

 

	
   

  	
   

  	
   

  	
   

  	
  Percentage of

  	
   

  
	
  Issuer

  	
   

  	
  Certificate No.

  	
   

  	
  Membership Interests

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

PLEDGED DEBT

 

	
  Debt Issuer

  	
   

  	
  Description of Debt

  	
   

  	
  Date

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

ANNEX II

Grantor Supplement

 

NON-TRUSTEE ACCOUNT INFORMATION

 

	
   

  	
   

  	
  NAME AND ADDRESS OF

  	
   

  	
   

  	
   

  
	
  NAME AND ADDRESS

  	
   

  	
  NON-TRUSTEE

  	
   

  	
   

  	
   

  
	
  OF BANK

  	
   

  	
  ACCOUNT HOLDER

  	
   

  	
  ACCOUNT NUMBER

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

ANNEX III

Grantor Supplement

 

TRADE NAMES

 

 

ANNEX IV

Grantor Supplement

 

	
   

  	
   

  	
  CHIEF EXECUTIVE

  	
   

  	
  CHIEF PLACE OF

  	
   

  	
  REGISTERED

  	
   

  
	
  NAME OF GRANTOR

  	
   

  	
  OFFICE

  	
   

  	
  BUSINESS

  	
   

  	
  OFFICE

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

 

EXHIBIT C

Security Trust Agreement

 

RESERVED

 

 

EXHIBIT D

Security Trust Agreement

 

FORM OF NOTICE AND ACKNOWLEDGMENT

 

 

EXHIBIT E

Security Trust Agreement

 

FORM OF IRISH SHARE MORTGAGEExhibit 10.4

 

[Execution
Copy]

 

 

GUARANTEE
AND COLLATERAL

AGREEMENT

 

 

dated as of April 26, 2006

 

 

among

 

 

AEROTURBINE, INC., as Borrower

 

 

THE SUBSIDIARY GUARANTORS OF AEROTURBINE,
INC.

PARTY HERETO, as Subsidiary Guarantors

 

 

and

 

 

CALYON New York Branch,

as Collateral Agent

 

 

 

CALYON, Head Office,

as Lead Arranger and Bookrunner

 

 

Table of Contents

 

	
   

  	
   

  	
  Page

  
	
  SECTION 1.

  	
  DEFINITIONS

  	
  1

  
	
   

  	
   

  	
   

  
	
  SECTION 2.

  	
  GUARANTEES BY LIEN GRANTORS

  	
  4

  
	
   

  	
   

  	
   

  
	
  SECTION 3.

  	
  GRANT OF LIENS

  	
  6

  
	
   

  	
   

  	
   

  
	
  SECTION 4.

  	
  GENERAL REPRESENTATIONS AND
  WARRANTIES

  	
  7

  
	
   

  	
   

  	
   

  
	
  SECTION 5.

  	
  FURTHER ASSURANCES, GENERAL
  COVENANTS

  	
  8

  
	
   

  	
   

  	
   

  
	
  SECTION 6.

  	
  ACCOUNTS

  	
  9

  
	
   

  	
   

  	
   

  
	
  SECTION 7.

  	
  PLEDGED SUBSIDIARY STOCK

  	
  11

  
	
   

  	
   

  	
   

  
	
  SECTION 8.

  	
  REMEDIES UPON EVENT OF DEFAULT

  	
  12

  
	
   

  	
   

  	
   

  
	
  SECTION 9.

  	
  APPLICATION OF PROCEEDS

  	
  15

  
	
   

  	
   

  	
   

  
	
  SECTION 10.

  	
  FEES AND EXPENSES;
  INDEMNIFICATION

  	
  16

  
	
   

  	
   

  	
   

  
	
  SECTION 11.

  	
  AUTHORITY TO ADMINISTER
  COLLATERAL

  	
  16

  
	
   

  	
   

  	
   

  
	
  SECTION 12.

  	
  LIMITATION ON DUTY IN RESPECT OF
  COLLATERAL

  	
  17

  
	
   

  	
   

  	
   

  
	
  SECTION 13.

  	
  GENERAL PROVISIONS CONCERNING
  THE COLLATERAL AGENT

  	
  17

  
	
   

  	
   

  	
   

  
	
  SECTION 14.

  	
  TERMINATION OF LIENS; RELEASE OF
  COLLATERAL

  	
  20

  
	
   

  	
   

  	
   

  
	
  SECTION 15.

  	
  THE BORROWER AND SUBSIDIARY
  GUARANTORS

  	
  20

  
	
   

  	
   

  	
   

  
	
  SECTION 16.

  	
  NOTICES

  	
  20

  
	
   

  	
   

  	
   

  
	
  SECTION 17.

  	
  NO IMPLIED WAIVERS; REMEDIES NOT
  EXCLUSIVE

  	
  21

  
	
   

  	
   

  	
   

  
	
  SECTION 18.

  	
  SUCCESSORS AND ASSIGNS

  	
  21

  
	
   

  	
   

  	
   

  
	
  SECTION 19.

  	
  AMENDMENTS AND WAIVERS

  	
  21

  
	
   

  	
   

  	
   

  
	
  SECTION 20.

  	
  CHOICE OF LAW

  	
  21

  
	
   

  	
   

  	
   

  
	
  SECTION 21.

  	
  WAIVER OF JURY TRIAL

  	
  21

  
	
   

  	
   

  	
   

  
	
  SECTION 22.

  	
  SEVERABILITY

  	
  22

  
	
   

  	
   

  	
   

  
	
  SECTION 23.

  	
  COLLATERAL AGENT SUBJECT TO
  DIRECTION OF AGENTS

  	
  22

  

 

	
  EXHIBITS:

  	
   

  
	
   

  	
   

  
	
   

  	
  Exhibit A

  	
  Guarantee and Collateral Agreement Supplement

  	
   

  
	
   

  	
  Exhibit B

  	
  Perfection Certificate

  	
   

  

 

i

 

GUARANTEE AND COLLATERAL
AGREEMENT

 

THIS GUARANTEE AND COLLATERAL AGREEMENT
(this “Agreement”), dated as of
April 26, 2006, among AeroTurbine, Inc., a Delaware corporation, each
Subsidiary Guarantor of AeroTurbine, Inc., a party hereto (the “Subsidiary Guarantors”) and CALYON New York
Branch, as Collateral Agent (the “Collateral
Agent”).

 

WHEREAS, AeroTurbine, Inc. is the successor
in interest by merger to AerCap AT, Inc. (AeroTurbine, Inc., as such successor,
the “Borrower”);

 

WHEREAS, the Borrower, the Senior Lenders
(as defined therein) and CALYON New York Branch, as administrative agent for
the Senior Lenders (the “Senior Agent”),
are parties to a Senior Credit Agreement dated as of the date hereof (the “Senior Credit Agreement”) providing for the
making of certain Senior Loans to the Borrower;

 

WHEREAS, the Borrower, the Junior Lenders
(as defined therein) and CALYON, Head Office, as agent for the Junior Lenders
(the “Junior Agent”), are parties
to a Junior Credit Agreement dated as of the date hereof (the “Junior Credit Agreement”; and, collectively
with the Senior Credit Agreement, the “Credit
Agreements”) providing for the making of certain Junior Loans to the
Borrower;

 

WHEREAS, the Borrower is willing to secure
its obligations under the Credit Agreements and certain other obligations
described herein by granting Liens on certain of its assets to the Collateral
Agent as provided in the Security Documents;

 

WHEREAS, the Borrower is willing to cause
each of the Subsidiary Guarantors to guarantee the foregoing obligations of the
Borrower and to secure its guarantee thereof by granting Liens on certain of
its assets to the Collateral Agent as provided in the Security Documents; and

 

WHEREAS, the Senior Lenders and the Junior
Lenders are not willing to make financial accommodation available under the
Credit Agreements unless (i) the foregoing obligations of the Borrower are
secured and guaranteed as described above and (ii) each guarantee thereof is
secured by Liens on assets of the Subsidiary Guarantors as provided in the
Security Documents.

 

NOW, THEREFORE, for good and valuable
consideration, receipt whereof has been duly received, the parties hereto agree
as follows:

 

Section 1.                                          Definitions.

 

(a)                                  Capitalized
terms used herein shall have the meanings assigned thereto in Appendix I of
each Credit Agreement. In addition, the following terms shall have the
following meanings:

 

“Cash Collateral
Account” has the meaning set forth in Section 6 of this
Agreement.

 

 

“Collateral”
or “General Collateral”
means all property, whether now owned or hereafter acquired, on which a Lien is
granted or purports to be granted to the Collateral Agent pursuant to this
Agreement. The Collateral or General Collateral excludes the Aircraft Asset
Collateral on which a Lien is granted or purports to be granted to the
Collateral Agent pursuant to Aircraft Asset Security Agreement.

 

“Collateral Agent”
means CALYON New York Branch, in its capacity as Collateral Agent for the
Senior Loan Agent, the Junior Loan Agent, the Senior Lenders and the Junior
Lenders under the Security Documents, and its successors in such capacity.

 

“Contracts”
means all contracts for the sale, lease, exchange or other disposition of
Inventory, whether or not performed and whether or not subject to termination
upon a contingency or at the option of any party thereto.

 

“Closing Date”
means the Closing Date as defined in the Credit Agreement; provided that with
respect to any Lien Grantor which becomes a party hereto subsequent to such
Closing Date, “Closing Date” means the date this Agreement becomes effective
with respect to such Lien Grantor.

 

“Guarantee and
Collateral Agreement Supplement” means a Guarantee and Collateral
Agreement Supplement, substantially in the form of Exhibit A, signed and
delivered to the Collateral Agent for the purpose of adding a Subsidiary of the
Borrower as a party hereto pursuant to Section 15(b) and/or adding
additional property to the Collateral.

 

“Lien Grantors”
means, collectively, (i) the Borrower and each Subsidiary listed on the
signature pages hereof under the caption “Subsidiary Guarantors”, and their
respective successors, and (ii) each Subsidiary that shall, at any time
after the date hereof, become a Lien Grantor pursuant to Section 15(b),
and “Lien Grantor” means any of the foregoing.

 

“Liquid
Investment” means (i) direct obligations of the United
States or any agency thereof, (ii) obligations guaranteed by the United
States or any agency thereof, (iii) time deposits and money market deposit
accounts issued by or guaranteed by or placed with a Deposit Bank, and
(iv) fully collateralized repurchase agreements for securities described
in clause (i) or (ii) above entered into with a United States office of a
financial institution having a credit rating of at least AA/Aa, provided in
each case that such Liquid Investment (x) matures within 30 days
after it is first included in the Collateral and (y) is in a form, and is
issued and held in a manner, that in the reasonable judgment of the Collateral
Agent permits appropriate measures to have been taken to perfect security
interests therein.

 

“Opinion of
Counsel” means a written opinion of legal counsel in form and
substance reasonably satisfactory to the Collateral Agent, which is addressed
and delivered to the Collateral Agent.

 

“Perfection
Certificate” means, with respect to any Lien Grantor, a
certificate substantially in the form of Exhibit B, completed and
supplemented with the schedules contemplated thereby to the reasonable
satisfaction of the Collateral Agent, and signed by an officer of such Lien
Grantor.

 

2

 

“Permitted Liens”
means any other Liens on the Collateral permitted to be created by or
contemplated in the Credit Agreements or hereunder.

 

“Pledged”,
when used in conjunction with any type of asset, means at any time an asset of
such type that is included (or that creates rights that are included) in the
Collateral at such time.

 

“Pledged Subsidiary Stock”
means the Capital Stock of each Subsidiary Guarantor.

 

“Post-Petition
Interest” means any interest that accrues after the commencement
of any case, proceeding or other action relating to the bankruptcy, insolvency
or reorganization of a Lien Grantor (or would accrue but for the operation of
applicable bankruptcy or insolvency laws), whether or not such interest is
allowed or allowable as a claim in any such proceeding.

 

“Proceeds”
means all proceeds of, and all other profits, products, rents or receipts, in
whatever form, arising from the collection, sale, lease, exchange, assignment,
licensing or other disposition of, or other realization upon, any Collateral,
including all claims of the relevant Lien Grantor against third parties for
loss of, damage to or destruction of, or for proceeds payable under, or
unearned premiums with respect to, policies of insurance in respect of, any
Collateral, and any condemnation or requisition payments with respect to any
Collateral.

 

“Receivables”
means, with respect to any Lien Grantor, all Accounts owned by it and all other
rights, titles or interests which, in accordance with GAAP, would be included
in receivables on its balance sheet (including any such Accounts and/or rights,
titles or interests that might be characterized as Chattel Paper, Instruments
or General Intangibles under the Uniform Commercial Code in effect in any
jurisdiction), in each case arising from the sale, lease, exchange or other
disposition of Inventory, and all of such Lien Grantor’s rights to any goods,
services or other property related to any of the foregoing (including returned
or repossessed goods and unpaid seller’s rights of rescission, replevin,
reclamation and rights to stoppage in transit), and all collateral security and
supporting obligations of any kind given by any Person with respect to any of
the foregoing.

 

“Secured
Guarantee” means, with respect to each Subsidiary Guarantor, its
guarantee of the Obligations under Section 2 hereof or Section (a) of
a Guarantee and Collateral Agreement Supplement.

 

“UCC”
means the Uniform Commercial Code as in effect from time to time in the State
of New York; provided that, if
perfection or the effect of perfection or non-perfection or the priority of any
Lien on any Collateral is governed by the Uniform Commercial Code as in effect
in a jurisdiction other than New York, “UCC”
means the Uniform Commercial Code as in effect from time to time in such other
jurisdiction for purposes of the provisions hereof relating to such perfection,
effect of perfection or non-perfection or priority.

 

(b)                                 Terms
Defined in UCC. As used herein, each of the following terms has the meaning
specified in Article 9 of UCC: “Account”, “Authenticate”, “Chattel Paper”,
“Commercial Tort Claims”, “Deposit Account”, “Documents”, “General Intangibles”,
“Goods”,

 

3

 

“Instruments”, “Inventory”, “Investment Property”, “Letter
of Credit Rights” and “Supporting Obligations”.

 

(c)                                  Other
Definitional Provisions. Section 1.2 of the Credit Agreements shall apply
as if set out fully herein.

 

Section 2.                                          Guarantees by Lien Grantors.

 

(a)                                  Secured
Guarantees. Each Subsidiary Guarantor unconditionally guarantees to the
Collateral Agent for the benefit of the Lenders the full and punctual
satisfaction of each Obligation of the Borrower under the Loan Documents when
due (whether at stated maturity, upon acceleration or otherwise). If the
Borrower fails to satisfy any Obligation punctually when due, each Subsidiary
Guarantor jointly and severally agrees that it will forthwith on demand pay the
amount not so paid at the place and in the manner specified herein or in any
other relevant Loan Document.

 

(b)                                 Secured
Guarantees Unconditional. The obligations of each Subsidiary Guarantor
under its Secured Guarantee shall be unconditional and absolute and, without
limiting the generality of the foregoing, shall not be released, discharged or
otherwise affected by:

 

(i)                                     any
extension, renewal, settlement, compromise, waiver or release in respect of any
obligation of the Borrower, any Subsidiary Guarantor or any other Person under
any Security Document, by operation of law or otherwise;

 

(ii)                                  any
modification or amendment of or supplement to any Security Document;

 

(iii)                               any release, impairment,
non-perfection or invalidity of any direct or indirect security for any
obligation of the Borrower, any Subsidiary Guarantor or any other Person under
any Security Document;

 

(iv)                              any
change in the corporate existence, structure or ownership of the Borrower, any
Subsidiary Guarantor or any other Person or any of their respective
subsidiaries, or any insolvency, bankruptcy, reorganization or other similar
proceeding affecting the Borrower, any Subsidiary Guarantor or any other Person
or any of their assets or any resulting release or discharge of any obligation
of the Borrower, any Subsidiary Guarantor or any other Person under any
Security Document;

 

(v)                                 the
existence of any claim, set-off or other right that such Subsidiary Guarantor
may have at any time against the Borrower, any Subsidiary Guarantor, the
Collateral Agent, the Agents, any Lender or any other Person, whether in
connection with the Loan Documents or any unrelated transactions, provided that
nothing herein shall prevent the assertion of any such claim by separate suit
or compulsory counterclaim;

 

(vi)                              any
invalidity or unenforceability relating to or against the Borrower, any
Subsidiary Guarantor or any other Person for any reason of any Security
Document, or any provision of applicable law or regulation purporting to
prohibit the

 

4

 

payment
of any amount in satisfaction of any Obligation by the Borrower, any Subsidiary
Guarantor or any other Person; or

 

(vii)                           any other act or omission to
act or delay of any kind by the Borrower, any Subsidiary Guarantor, any other
party to any Security Document, the Collateral Agent, the Agents, any Lender or
any other Person, or any other circumstance whatsoever that might, but for the
provisions of this Section 2(b)(vii), constitute a legal or equitable discharge
of or defense to any obligation of the Borrower or any Subsidiary Guarantor
hereunder.

 

(c)                                  Release
of Secured Guarantees. (i)  All the
Secured Guarantees will be released when all Obligations of the Borrower under
the Loan Documents have been satisfied. If at any time any payment in
satisfaction of an Obligation is rescinded or must be otherwise restored or
returned upon the insolvency or receivership of the Borrower or otherwise, the
Secured Guarantees shall be reinstated with respect thereto as though such
payment had been due but not made at such time.

 

(ii)                                  If
all the capital stock of a Subsidiary Guarantor or all the assets of a
Subsidiary Guarantor are sold to a Person other than a Borrower or a Subsidiary
of a Borrower in a transaction not prohibited by the Credit Agreements (any
such sale, a “Sale of Subsidiary Guarantor”),
the Collateral Agent shall release such Subsidiary Guarantor from its Secured
Guarantee. Such release shall not require the consent of the Agents or any
Lender, and the Collateral Agent and any third party shall be fully protected
in relying on a certificate of the Borrower as to whether any particular sale
constitutes a Sale of Subsidiary Guarantor.

 

(d)                                 Waiver
by Subsidiary Guarantors. Each Subsidiary Guarantor irrevocably waives
acceptance hereof, presentment, demand, protest and any notice not provided for
herein, as well as any requirement that at any time any action be taken by any
Person against the Borrower, any Subsidiary Guarantor or any other Person.

 

(e)                                  Subrogation.
Each Subsidiary Guarantor irrevocably waives any and all rights to which it may
be entitled, by operation of law or otherwise, upon making any payment
hereunder to be subrogated to the rights of the payee with respect to such
payment or against any direct or indirect security therefor, or otherwise to be
reimbursed, indemnified or exonerated in respect thereof.

 

(f)                                    Contribution;
Subordination. All rights of the Subsidiary Guarantors of contribution and
any other rights of indemnity, contribution or subrogation under applicable law
or otherwise shall be fully subordinated to the indefeasible payment in full in
cash in satisfaction of the Obligations.

 

(g)                                 Stay
of Acceleration. If acceleration of the time for payment of any Obligation
by the Borrower is stayed by reason of the insolvency or receivership of the
Borrower or otherwise, all Obligations otherwise subject to acceleration under
the terms of any Security Document shall nonetheless be payable by the
Subsidiary Guarantors hereunder forthwith on demand by the Collateral Agent.

 

5

 

(h)                                 Right
of Set-Off. If any Obligation is not paid promptly when due, each of the
Lenders and each of their Affiliates which is a Deposit Bank is authorized, to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other obligations at any time owing by such Lender or Affiliate to or for the
credit or the account of any Subsidiary Guarantor against the obligations of
such Subsidiary Guarantor under its Secured Guarantee, irrespective of whether
such Lender shall have made any demand thereunder and although such obligations
may be unmatured. The rights of each Lender under this subsection are in
addition to all other rights and remedies (including other rights of setoff)
that such Lender may have and are subject to the provisions of Section 10.7 of
the applicable Credit Agreement.

 

(i)                                     Continuing
Guarantee. Each Secured Guarantee is a continuing guarantee, shall be
binding on the relevant Subsidiary Guarantor and its successors and assigns,
and shall be enforceable by the Collateral Agent. If all or part of any Lender’s
interest in any Obligation is assigned or otherwise transferred, the transferor’s
rights in respect of each Secured Guarantee, to the extent applicable to the
obligation so transferred, shall automatically be transferred with such
obligation.

 

(j)                                     Limitation
on Obligations of Subsidiary Guarantors. The obligations of each Subsidiary
Guarantor under its Secured Guarantee shall be limited to an aggregate amount
equal to the largest amount that would not render such Secured Guarantee
subject to avoidance under Section 548 of the United States Bankruptcy
Code or any comparable provisions of applicable law.

 

Section 3.                                          Grant of Liens.

 

(a)                                  The
Borrower, in order to secure its Obligations under the Loan Documents, and each
Subsidiary Guarantor listed on the signature pages hereof, in order to secure
its Secured Guarantee, grants to the Collateral Agent for the benefit of the
Agents and the Lenders a continuing security interest in all the following
property of such Borrower or such Subsidiary Guarantor, as the case may be,
whether now owned or existing or hereafter acquired or arising and regardless
of where located:

 

(i)                                     all
Accounts;

 

(ii)                                  all
Chattel Paper;

 

(iii)                               all Commercial Tort
Claims;

 

(iv)                              all
Deposit Accounts;

 

(v)                                 all
Documents;

 

(vi)                              all
General Intangibles;

 

(vii)                           all Goods;

 

6

 

(viii)                        all Instruments, including,
without limitation, the Capital Stock of each Subsidiary Guarantor;

 

(ix)                                all
Inventory;

 

(x)                                   all
Investment Property;

 

(xi)                                all
Letter of Credit Rights;

 

(xii)                             all Supporting
Obligations;

 

(xiii)                          all Receivables;

 

(xiv)                         all Contracts;

 

(xv)                            all
books and records (including customer lists, credit files, computer programs,
printouts and other computer materials and records) of such Original Lien
Grantor pertaining to any of its Collateral; and

 

(xvi)                         all Proceeds of the Collateral
described in the foregoing clauses (i) through (xv).

 

Aircraft
Asset Collateral is excluded from the above grant.

 

(b)                                 With
respect to each right to payment or performance included in the Collateral from
time to time, the Lien granted therein includes a continuing security interest
in all right, title and interest of the applicable Lien Grantor in and to
(i) any Supporting Obligation that supports such payment or performance
and (ii) any Lien that (x) secures such right to payment or
performance or (y) secures any such Supporting Obligation.

 

(c)                                  The
Liens are granted as security only and shall not subject the Collateral Agent
or any Lender to, or transfer or in any way affect or modify, any obligation or
liability of any Lien Grantor with respect to any of the Collateral or any
transaction in connection therewith.

 

Section 4.                                          General Representations and Warranties.
As of the Closing Date and as of the Borrowing Date each Lien Grantor
represents and warrants that:

 

(a)                                  such
Lien Grantor is a duly organized, validly existing and in good standing under
the laws of the jurisdiction identified as its jurisdiction of organization in
its Perfection Certificate;

 

(b)                                 such
Lien Grantor has good and marketable title to all its Collateral (subject to
exceptions that are, in the aggregate, not material), free and clear of any
Lien other than Permitted Liens;

 

(c)                                  no
financing statement, security agreement, mortgage or similar or equivalent
document or instrument covering all or part of the Collateral owned by such
Lien Grantor is on file or of record in any jurisdiction in which such filing
or recording would be

 

7

 

effective to perfect or record a Lien on such
Collateral, except financing statements, mortgages or other similar or
equivalent documents with respect to Permitted Liens; and

 

(d)                                 except
for the filing of such UCC financing statements, no other registration,
recordation or filing with any governmental body, agency or official is
required to establish and perfect the Collateral Agent’s security interest in
the General Collateral pursuant to the UCC.

 

Section 5.                                          Further Assurances, General Covenants.

 

Each
Lien Grantor covenants as follows:

 

(a)                                  Such
Lien Grantor will, from time to time, at the Borrower’s expense, execute,
deliver, file and record any statement, assignment, instrument, document,
agreement or other paper and take any other action (including any filing of
financing or continuation statements under the UCC) that from time to time may
be reasonably necessary or desirable, or that the Collateral Agent may
reasonably request, in order to:

 

(i)                                     create,
preserve, perfect, confirm or validate the Liens created by the Security
Documents on such Lien Grantor’s Collateral;

 

(ii)                                  enable
the Collateral Agent and the Lenders to obtain the full benefits of the
Security Documents; or

 

(iii)                               enable the Collateral
Agent to exercise and enforce any of its rights, powers and remedies with
respect to any of such Lien Grantor’s Collateral.

 

To the
extent permitted by applicable law, such Lien Grantor authorizes the Collateral
Agent to execute and file such financing statements or continuation statements
without such Lien Grantor’s signature appearing thereon. Such Lien Grantor
agrees that a copy or reproduction of this Agreement or of a financing
statement is sufficient as a financing statement to the extent permitted by law.
Each Lien Grantor constitutes the Collateral Agent its attorney-in-fact to execute
and file all filings required or so requested for the foregoing purposes, all
acts of such attorney being hereby ratified and confirmed; and such power,
being coupled with an interest, shall be irrevocable until all the Liens
granted by such Lien Grantor terminate pursuant to Section 13. The
Borrower will pay the costs of, or incidental to, any recording or filing of
any financing or continuation statements or other documents recorded or filed
pursuant hereto.

 

(b)                                 Such
Lien Grantor will not (i) change its name or corporate structure, (ii) change
its location (determined as provided in UCC Section 9-307) or (iii) except
with respect to a Permitted Lien, become bound, as provided in UCC
Section 9-203(d) or otherwise, by a security agreement entered into by
another Person, unless it shall have given the Collateral Agent prior notice
thereof and delivered an Opinion of Counsel with respect thereto in accordance
with Section 5(c).

 

(c)                                  Before
it takes any action contemplated by Section 5(b), such Lien Grantor, at
the Borrower’s expense, will cause to be delivered to the Collateral Agent an
Opinion of Counsel, in form and substance reasonably satisfactory to the
Collateral Agent, to the effect

 

8

 

that (i) all financing statements and amendments or
supplements thereto, continuation statements and other documents required to be
filed or recorded in order to perfect and protect (except with respect to
Permitted Liens) the Liens created by the Security Documents against all
creditors of and purchasers from such Lien Grantor after it takes such action
(except any applicable continuation statements that are to be filed more than
six months after the date thereof) have been filed or recorded in each office
necessary for such purpose, (ii) all fees and taxes, if any, payable in
connection with such filings or recordations have been paid in full, and (iii)
such action will not (except with respect to Permitted Liens) adversely affect
the perfection or priority of the Lien created by the Security Documents on any
Collateral to be owned by such Lien Grantor after it takes such action or the
accuracy of such Lien Grantor’s representations and warranties herein relating
to the grant and perfection of a security interest in such Collateral.

 

(d)                                 Except
in the ordinary course of business, such Lien Grantor will not sell, lease,
exchange, assign or otherwise dispose of, or grant any option with respect to,
any of its Collateral; provided
that such Lien Grantor may do any of the foregoing unless (i) doing so
would violate a covenant in the Credit Agreement, or (ii) the Loans shall
have been accelerated pursuant to Section 8 of the Senior Credit Agreement and
the Collateral Agent shall have notified such Lien Grantor that its right to do
so is terminated, suspended or otherwise limited. Concurrently with any sale or
other disposition (except a sale or disposition to another Lien Grantor or a
lease) permitted by the foregoing proviso,
the Liens created by the Security Documents on the assets sold or disposed of
(but not in any Proceeds arising from such sale or disposition) will cease
immediately without any action by the Collateral Agent or any Lender. The
Collateral Agent will, at the Borrower’s expense, promptly execute and deliver
to the relevant Lien Grantor such documents as such Lien Grantor shall
reasonably request to evidence the fact that any asset so sold, leased or
disposed of is no longer subject to a Lien under any Security Document.

 

(e)                                  Such
Lien Grantor will, promptly upon request, provide to the Collateral Agent all
information and evidence concerning such Lien Grantor’s Collateral that the
Collateral Agent may reasonably request from time to time to enable it to
enforce the provisions of the Security Documents.

 

Section 6.                                          Accounts.

 

(a)                                  As
of the Closing Date, the Collateral Agent shall have established an account
(the “Restricted Account”), in the
name and under the exclusive control of the Collateral Agent, the contents of
which are to be applied pursuant to this Section 6(a).

 

(i)                                     the
Borrower shall cause (and each other Lien Grantor shall take all actions
required on its part to cause) to be deposited in the Restricted Account,
promptly upon receipt thereof:

 

(A)                              the
amounts of any Revolving Loan whose borrowing date has been postponed pursuant
to Section 2.5 of the Senior Credit Agreement;

 

9

 

(B)                                all
proceeds collected with respect to the Key Man Insurance and the Key Man
Guarantee;

 

(C)                                all
Net Cash Proceeds from any Recovery Event;

 

(D)                               all
sale proceeds from the disposition of Eligible Equipment and Eligible Inventory
to the extent such proceeds are included in the Borrowing Base;

 

(E)                                 all
amounts related to engines in overhaul that comprise Eligible Equipment as
contemplated in Section 3.2(g)(ii) of the Senior Credit Agreement.

 

The
Borrower shall also deposit into the Restricted Account any cash collateral
required to be deposited in lieu of the Key Man Guarantee pursuant to Section
6.9 of the Senior Credit Agreement, provided that such cash collateral shall be
promptly released by the Collateral Agent to the Borrower upon the delivery of
the Key Man Guarantee as provided in Section 6.9 of the Senior Credit Agreement.
Such cash collateral shall be applied in the same amount and in the same manner
as proceeds under the Key Man Guarantee would have been applied and shall be
released when and to the extent the Key Man Guarantee would be terminated.

 

(ii)                                  Unless
the maturity of the Loans (or other Obligations) shall have been accelerated
pursuant to Section 8 of the Senior Credit Agreement:

 

(A)                              The
Collateral Agent shall apply the amounts referred to in clauses (A), (B) and
(C) of Section 6(a)(i) as specified in the Senior Credit Agreement; and

 

(B)                                Amounts
specified in clauses (D) and (E) of Section 6(a)(i) shall be paid to or as
directed by the Borrower promptly after the submission of the next Borrowing
Base Report indicating that such assets are no longer included within the
Borrowing Base.

 

After
the maturity of the Loans (or other Obligations) shall have been accelerated
pursuant to Section 8 of the Senior Credit Agreement, the Collateral Agent may
apply all sums held in the Restricted Account pursuant to Section 9.

 

(iii)                               Funds held in the
Restricted Account may, until withdrawn or required to be applied pursuant
hereto, be invested and reinvested in such Liquid Investments as the Borrower
shall request from time to time.

 

(b)                                 Except
for the Restricted Account or as permitted in clause (c) below, neither the
Borrower nor any Lien Grantor shall establish or maintain any Deposit Account
unless such Deposit Account is pledged to the Collateral Agent pursuant to an
Account Control Agreement, provided, that the Borrower’s existing Investment
Account 3091-9218 with

 

10

 

Wachovia Securities shall not be required to be
pledged so long as the sole holding in such account is 886 shares (or less) of
the common stock of Ace Aviation Holdings, Inc.

 

(c)                                  Neither
the Borrower nor any Lien Grantor shall be required to pledge any Deposit
Account established or maintained by it and exclusively used to fund:

 

(i)                                     current
payroll obligations;

 

(ii)                                  fiduciary
obligations (such as pension plans).

 

(d)                                 The
Collateral Agent shall not give the “Notice”, under and as defined in the
initial Account Control Agreement (or equivalent notice in any subsequent
Account Control Agreement) unless the Loans shall have been accelerated
pursuant to Section 8 of the Senior Credit Agreement.

 

Section 7.                                          Pledged
Subsidiary Stock.

 

(a)                                  Each
Lien Grantor shall concurrently with the execution and delivery hereof deliver
to the Collateral Agent all certificates representing the Capital Stock of each
of its Subsidiaries together with a stock power or powers with respect thereto
endorsed in blank and within ten Business Days of forming or acquiring any new
Subsidiary will execute and deliver to the Collateral Agent all certificates
representing the Capital Stock of such Subsidiary together with a stock power
or powers with respect thereto endorsed in blank. The Collateral Agent agrees
to hold the same subject to the terms and conditions of this Agreement.

 

(b)                                 So
long as the Loans have not been accelerated pursuant to Section 8 of the Senior
Credit Agreement:

 

(i)                                     Such
Lien Grantor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Subsidiary Stock, or any part
thereof, for any purpose not inconsistent with the terms of this Agreement or
the other Loan Documents; provided, however, (A) that such Lien Grantor shall
not exercise any voting or consensual rights with respect to the commencement
of a voluntary case or other proceeding seeking liquidation, reorganization or
other relief with respect to such Subsidiary or such Subsidiary’s debts under
any bankruptcy, insolvency or other similar law now or hereafter in effect or
consent to the entry of an order for relief in an involuntary case under any
such law or seeking the appointment of a trustee, receiver, liquidator,
sequestrator, assignee, custodian or other similar official of such Subsidiary
or any substantial part of such Subsidiary’s property without obtaining the
prior written consent of the Collateral Agent; (B) that such Lien Grantor shall
not amend or approve any amendment to or modification, alteration or repeal of
the Certificate of Incorporation of By-Laws or any other organizational
documents, as the case may be, of such Subsidiary without obtaining the prior
written consent of the Collateral Agent which consent shall not be unreasonably
withheld or delayed; (C) that such Lien Grantor shall not increase the number
of directors or modify in any way the composition of the board of directors of
the Borrower (other than by replacing any officers or employees of such Lien Grantor
or an Affiliate of such Lien Grantor who are directors with other officers or
employees of such Lien Grantor or an Affiliate of such Lien Grantor) as same
exists as of

 

11

 

the
date hereof without obtaining the prior written consent of the Collateral Agent
which consent shall not be unreasonably withheld or delayed; and (D) such Lien
Grantor shall not approve an increase in the authorized number of shares of
stock or stated capital of such Subsidiary or the issuance of any additional
shares of stock or the granting of any options or warrants of the without the
prior written consent of the Collateral Agent, which consent shall not be
unreasonably withheld or delayed provided that the Collateral Agent is granted
a first priority security interest in all such shares; and

 

(ii)                                  the
Collateral Agent shall execute and deliver (or cause to be executed and
delivered) to such Lien Grantor all such proxies and other instruments as such
Lien Grantor may reasonably request for the purpose of enabling such Lien
Grantor to exercise the voting and other rights which it is entitled to
exercise pursuant to paragraph (i) above.

 

(c)                                  If
the Loans have been accelerated pursuant to Section 8 of the Senior Credit
Agreement, all rights of such Lien Grantor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise pursuant to
Section 7(b)(i) shall cease and all such rights shall thereupon become vested
in the Collateral Agent, without further act who shall thereupon have the sole
right to exercise such voting and other consensual rights and remedies.

 

Section 8.                                          Remedies Upon Event of Default.

 

(a)                                  Remedies:

 

(i)                                     If
the Loans have been accelerated pursuant to Section 8 of the Senior Credit
Agreement, then in every such case, the Collateral Agent may do one or more of
the following, to the extent permitted by, and subject to compliance with any
mandatory requirements of, Applicable Law then in effect:

 

(A)                              cause
the Borrower or the relevant Lien Grantor upon the written demand of the
Collateral Agent and at the Borrower’s or the relevant Lien Grantor’s expense,
to deliver promptly, and the Borrower shall deliver promptly, the Collateral
(or any portion thereof) as the Collateral Agent may so demand to the
Collateral Agent, or the Collateral Agent, at its option, may enter upon the
premises where all or any part of the Collateral is located and take immediate
possession (to the exclusion of the Borrower or the relevant Lien Grantor and
all Persons claiming under or through the Borrower or the relevant Lien
Grantor) of and remove the same by summary proceedings;

 

(B)                                subject
to the notice required by Section 11, sell the Collateral (or any portion
thereof) at public or private sale, whether or not the Collateral Agent shall
at the time have possession thereof, as the Collateral Agent may determine, or
lease or otherwise dispose of, all or any part of any Airframe, any Engine or
any Inventory as the Collateral Agent, in its sole discretion, may determine,
all free and clear of any rights

 

12

 

of
the Borrower or the relevant Lien Grantor, except as hereinafter set forth in
this Section 7; provided, however, that the Borrower or the relevant Lien
Grantor shall be entitled at any time prior to any such disposition to redeem
the Collateral by paying in full all of the Obligations; or

 

(C)                                exercise
any or all of the rights and powers and pursue any and all remedies of a
secured party under the Uniform Commercial Code of the State of New York.

 

(ii)                                  Any
Lender shall be entitled, at any sale pursuant to this Section 7, to credit
against any purchase price bid at such sale by such holder all or any part of
the unpaid obligations owing to such Lender and secured by the Lien of this
Agreement. Any Lender shall, upon any purchase, acquire good title to the
property so purchased, to the extent permitted by applicable law, free of all
rights of redemption.

 

(iii)                               In the event of any sale
of the Collateral, or any part thereof, pursuant to any judgment or decree of
any court or otherwise in connection with the enforcement of any of the terms
of this Agreement, the unpaid principal amount of all Loans then outstanding,
together with accrued interest thereon, and other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.

 

(iv)                              Any
sale of the Collateral or any part thereof or any interest therein, whether
pursuant to foreclosure or power of sale or otherwise hereunder, shall forever
be a bar against the Borrower or the relevant Lien Grantor, after the
expiration of the period, if any, during which the Borrower or the Lien Grantor
shall have the benefit of Section 7(a)(ii) hereof or any redemption laws which
may not be waived.

 

(v)                                 Any
sale or other conveyance of the Collateral by the Collateral Agent made
pursuant to the terms of this Agreement shall bind the Lenders and the Borrower
and the relevant Lien Grantors and shall be effective to transfer or convey all
right, title and interest of the Borrower and the relevant Lien Grantors. No
purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such sale or conveyance
or as to the application of any sale or other proceeds with respect thereto by
the Collateral Agent.

 

(b)                                 Return
of Collateral, etc.

 

(i)                                     If
the Loans have been accelerated pursuant to Section 8 of the Senior Credit
Agreement, at the request of the Collateral Agent, the Borrower and/or the
relevant Lien Grantors shall promptly execute and deliver to the Collateral
Agent such instruments of title and other documents as the Collateral Agent may
deem necessary or advisable to enable the Collateral Agent or an agent or
representative designated by the Collateral Agent, at such time or times and
place or places as the Collateral Agent may specify, to obtain possession of
all or any part of the Collateral to which the Collateral Agent shall at the
time be entitled hereunder. If the Borrower shall for any reason fail to

 

13

 

execute
and deliver such instruments and documents after such request by the Collateral
Agent, the Collateral Agent may (i) obtain a judgment conferring on the
Collateral Agent the right to immediate possession and requiring the Borrower
to execute and deliver such instruments and documents to the Collateral Agent,
to the entry of which judgment the Borrower hereby specifically consents to the
fullest extent permitted by applicable law, and (ii) pursue all or part of such
Collateral wherever it may be found and may enter any of the premises of the
Borrower wherever such Collateral may be or be supposed to be and search for
such Mortgaged Property and take possession of and remove such Mortgaged
Property. All expenses of obtaining such judgment or of pursuing, searching for
and taking such property shall, until paid, be secured by the Lien of this
Agreement.

 

(ii)                                  Upon
every such taking of possession, the Collateral Agent may, from time to time,
at the expense of the Collateral, make all such expenditures for maintenance,
use, operation, storage, insurance, leasing, control, management, disposition,
modifications or alterations to and of the Collateral, as it may deem proper. In
each such case, the Collateral Agent shall have the right to maintain, use,
operate, store, insure, lease, control, manage, dispose of, modify or alter the
Collateral and to carry on the business and to exercise all rights and powers of
the Borrower and/or the relevant Lien Grantors relating to the Collateral, as
the Collateral Agent shall deem best, including the right to enter into any and
all such agreements with respect to the maintenance, use, operation, storage,
insurance, leasing, control, management, disposition, modification or
alteration of the Mortgaged Property or any part thereof as the Collateral
Agent may determine, and the Collateral Agent shall be entitled to collect and
receive directly all tolls, rents, revenues, issues, income, products and
profits of the Collateral and every part thereof, without prejudice, however,
to the right of the Collateral Agent under any provision of this Agreement to
collect and receive all cash held by, or required to be deposited with, the Collateral
Agent hereunder. Such tolls, rents, revenues, issues, income, products and
profits shall be applied to pay the expenses of the maintenance, use,
operation, storage, insurance, leasing, control, management, disposition,
improvement, modification or alteration of the Collateral and of conducting the
business thereof, and to make all payments which the Collateral Agent may be
required or may elect to make, if any, for taxes, assessments, insurance or
other proper charges upon the Mortgaged Property or any part thereof (including
the employment of engineers and accountants to examine, inspect and make
reports upon the properties and books and records of the Borrower), and all
other payments which the Collateral Agent may be required or authorized to make
under any provision of this Agreement, as well as just and reasonable
compensation for the services of the Collateral Agent, and of all persons
properly engaged and employed by the Collateral Agent with respect hereto.

 

(c)                                  Discontinuance
of Proceedings. In case the Collateral Agent shall have instituted any
proceeding to enforce any right, power or remedy under this Agreement by
foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely to the Collateral Agent, then and in every such case the Borrower,
the Lien Grantors and the Collateral Agent shall, subject to any determination
in such proceedings, be restored to their former positions and rights hereunder
with respect to the Collateral, and all rights, remedies and powers of the
Borrower, the Lien Grantors or the Collateral Agent shall continue as if no
such proceedings had been instituted.

 

14

 

(d)                                 Appointment
of Receiver. The Collateral Agent shall, as a matter of right, be entitled
to the appointment of a receiver (who may be the Collateral Agent or any
successor or nominee thereof) for all or any part of the Collateral, whether
such receivership be incidental to a proposed sale of the Collateral or the
taking of possession thereof or otherwise, and the Borrower hereby consents to
the appointment of such a receiver and will not oppose any such appointment. Any
receiver appointed for all or any part of the Collateral shall be entitled to
exercise all the rights and powers of the Collateral Agent with respect to the
Collateral.

 

Section 9.                                          Application of Proceeds.

 

(a)                                  If
the Loans have been accelerated pursuant to Section 8 of the Senior Credit
Agreement, the Collateral Agent may apply the proceeds of any sale or other
disposition of all or any part of the Collateral, in the order of priorities:

 

first, to pay the expenses of such sale or
other disposition, including reasonable compensation to agents of and counsel for
the Collateral Agent, and all expenses, liabilities and advances incurred or
made by the Collateral Agent in connection with the Security Documents, and any
other amounts then due and payable to the Collateral Agent in connection with
the Security Documents;

 

second, to pay ratably all interest (including
Post-Petition Interest) and all facility and other fees and indemnity amounts
payable in connection with the Senior Loans, until payment in full of all such
interest and other fees and indemnity amounts shall have been made;

 

third, to pay the unpaid principal on the
Senior Loans and all other Obligations (including in connection with Specified
Hedge Agreements) in connection with the Senior Loans;

 

fourth, to pay ratably all interest (including
Post-Petition Interest) and all facility and other fees and indemnity amounts
payable in connection with the Junior Loans, until payment in full of all such
interest and other fees and indemnity amounts shall have been made;

 

fifth, to pay the unpaid principal on the
Junior Loans and pay all other Obligations in connection with the Junior Loans;
and

 

finally, to pay to the relevant Lien Grantor,
or as a court of competent jurisdiction may direct, any surplus then remaining
from the proceeds of the Collateral owned by it;

 

provided
that Collateral owned by a Lien Grantor and any proceeds thereof shall be
applied pursuant to the foregoing clauses first, second, third, fourth and
fifth only to the extent permitted by the limitation in Section 2(j). The
Collateral Agent may make such distributions hereunder in cash or in kind or,
on a ratable basis, in any combination thereof.

 

(b)                                 In
making the payments and allocations required by this Section 8, the Collateral
Agent may rely upon information supplied to it pursuant to Section 12(g). All
distributions made by the Collateral Agent pursuant to this Section 8
shall be final (except in the

 

15

 

event of manifest error) and the Collateral Agent
shall have no duty to inquire as to the application by either Agent or any
Lender of any amount distributed to it.

 

Section 10.                                   Fees and Expenses; Indemnification. The Borrower will forthwith upon
demand pay to the Collateral Agent:

 

(i)                                     the
amount of any Taxes that the Collateral Agent may have been required to pay by
reason of the Liens created by the Security Documents or to free any Collateral
from any other Lien thereon (other than Permitted Liens);

 

(ii)                                  the
amount of any and all reasonable out-of-pocket expenses, including transfer Taxes
and reasonable fees and expenses of counsel and other experts, that the
Collateral Agent may incur in connection with (x) the administration or
enforcement of the Security Documents, including such expenses as are incurred
to preserve the value of the Collateral or the validity, perfection, rank or
value of any Lien created by the Security Documents, (y) the collection, sale
or other disposition of any Collateral, or (z) the exercise by the Collateral
Agent of any of its rights or powers under the Security Documents;

 

(iii)                               the amount of any fees
that the Borrower shall have agreed in writing to pay to the Collateral Agent
and that shall have become due and payable in accordance with such written
agreement; and

 

(iv)                              the
amount required to indemnify the Collateral Agent for, or hold it harmless and
defend it against, any loss, liability or expense (including the reasonable
fees and expenses of its counsel and any experts or sub-agents appointed by it
hereunder) incurred or suffered by the Collateral Agent in connection with the
Security Documents, except to the extent that such loss, liability or expense
arises from the Collateral Agent’s gross negligence or willful misconduct or a
breach of any duty of the Collateral Agent under this Agreement (after giving
effect to Sections 11 and 12).

 

Any such amount not paid to the Collateral Agent on
demand will bear interest for each day thereafter until paid at the highest
rate of interest payable in connection with the Obligations under the Credit
Agreements.

 

Section 11.                                   Authority to Administer Collateral.
Each Lien Grantor irrevocably appoints the Collateral Agent its true and lawful
attorney, with full power of substitution, in the name of such Lien Grantor,
any Lender or otherwise, for the sole use and benefit of the Lender, but at the
Borrower’s expense, to the extent permitted by law to exercise, at any time and
from time to time if the Loans have been accelerated pursuant to Section 8
of the Senior Credit Agreement, all or any of the following powers with respect
to all or any of such Lien Grantor’s Collateral (to the extent necessary to pay
the Obligations in full):

 

(a)                                  to
demand, sue for, collect, receive and give acquaintance for any and all monies
due or to become due upon or by virtue thereof;

 

(b)                                 to
settle, compromise, compound, prosecute or defend any action or proceeding with
respect thereto;

 

16

 

(c)                                  to
sell, lease, license or otherwise dispose of the same or the proceeds or avails
thereof, as fully and effectually as if the Collateral Agent were the absolute
owner thereof; and

 

(d)                                 to
extend the time of payment of any or all thereof and to make any allowance or
other adjustment with reference thereto;

 

provided
that, except in the case of Collateral that is perishable or threatens to
decline speedily in value or is of a type customarily sold on a recognized
market, the Collateral Agent will give the relevant Lien Grantor at least
twenty days’ prior written notice of the time and place of any public sale
thereof or the time after which any private sale or other intended disposition
thereof will be made. The Collateral Agent and each Lien Grantor agree that
such notice shall be considered to have been “sent within a reasonable time”
pursuant to UCC Section 9-612. Such notice shall (i) contain the
information specified in UCC Section 9-613, (ii) be Authenticated and
(iii) be sent to the parties required to be notified pursuant to UCC
Section 9-611(c); provided that, if the Collateral Agent fails to comply with
this sentence in any respect, its liability for such failure shall be limited
to the liability (if any) imposed on it as a matter of law under the UCC.

 

Section 12.                                   Limitation on Duty in Respect of Collateral. Beyond the exercise of reasonable
care in the custody and preservation thereof, the Collateral Agent will have no
duty as to any Collateral in its possession or control or in the possession or
control of any sub-agent or bailee or any income therefrom or as to the
preservation of rights against prior parties or any other rights pertaining
thereto. The Collateral Agent will be deemed to have exercised reasonable care
in the custody and preservation of the Collateral in its possession or control
if such Collateral is accorded treatment substantially equal to that which it
accords its own property, and will not be liable or responsible for any loss or
damage to any Collateral, or for any diminution in the value thereof, by reason
of any act or omission of any sub-agent or bailee selected by the Collateral
Agent in good faith or by reason of any act or omission by the Collateral Agent
pursuant to instructions from the Agents or the Lenders, except to the extent
that such liability arises from the Collateral Agent’s gross negligence or
willful misconduct.

 

Section 13.                                   General Provisions Concerning the Collateral
Agent.

 

(a)                                  Authority.
The Collateral Agent is authorized to take such actions and to exercise such
powers as are delegated to the Collateral Agent by the terms of the Loan
Agreements, together with such actions and powers as are reasonably incidental
thereto.

 

(b)                                 Coordination
with Collateral Agent. The Collateral Agent will promptly notify each Agent
of each notice or other communication received by the Collateral Agent
hereunder and/or deliver a copy thereof to such Agent. As to any matters not
expressly provided for herein (including (i) the timing and methods of
realization upon the Collateral, and (ii) the exercise of any power that the
Collateral Agent may, but is not expressly required to, exercise under any
Security Document), the Collateral Agent shall act or refrain from acting other
than in accordance with written instructions from the Agents or, in the absence
of such instructions, in accordance with its discretion (subject to the following
provisions of this Section 12).

 

17

 

(c)                                  Rights
and Powers as a Lender. The Person serving as the Collateral Agent shall,
in its capacity as a Lender, have the same rights and powers as any other
Lender and may exercise the same as though it were not the Collateral Agent. Such
Person and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrower, any of its Subsidiaries or
their respective Affiliates as if it were not the Collateral Agent hereunder.

 

(d)                                 Limited
Duties and Responsibilities. The Collateral Agent shall not have any duties
or obligations under the Security Documents except those expressly set forth
therein. Without limiting the generality of the foregoing, (a) the Collateral
Agent shall not be subject to any fiduciary or other implied duties, regardless
of whether an Event of Default has occurred and is continuing, (b) the
Collateral Agent shall not have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated by the Security Documents that the Collateral Agent is
required in writing to exercise by the Agents, and (c) except as expressly set
forth in the Security Documents, the Collateral Agent shall not have any duty
to disclose, and shall not be liable for any failure to disclose, any
information relating to the Borrower or any of its Subsidiaries that is
communicated to or obtained by the bank serving as Collateral Agent or any of
its Affiliates in any capacity. The Collateral Agent shall not be liable for
any action taken or not taken by it with the consent or at the request of the
Agents or in the absence of its own gross negligence or willful misconduct. The
Collateral Agent shall not be responsible for the existence, genuineness or
value of any Collateral or for the validity, perfection, priority or
enforceability of any Lien, whether impaired by operation of law or by reason
of any action or omission to act on its part under the Security Documents. The
Collateral Agent shall be deemed not to have knowledge of any Event of Default
unless and until written notice thereof is given to the Collateral Agent by the
Borrower, any Subsidiary Guarantor, and Agent or a Lender, and the Collateral
Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection
with any Security Document, (ii) the contents of any certificate, report or
other document delivered thereunder or in connection therewith, (iii) the
performance or observance of any of the covenants, agreements or other terms or
conditions set forth in any Security Document, (iv) the validity,
enforceability, effectiveness or genuineness of any Security Document or any
other agreement, instrument or document, or (v) the satisfaction of any
condition set forth in any Security Document.

 

(e)                                  Authority
to Rely on Certain Writings, Statements and Advice. The Collateral Agent shall
be entitled to rely on, and shall not incur any liability for relying on, any
notice, request, certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed or sent by the
proper Person. The Collateral Agent also may rely on any statement made to it
orally or by telephone and believed by it to be made by the proper Person, and
shall not incur any liability for relying thereon. The Collateral Agent may
consult with legal counsel (who may be counsel for the Borrowers or any of
their Subsidiaries), independent accountants and other experts selected by it,
and shall not be liable for any action taken or not taken by it in accordance
with the advice of any such counsel, accountant or expert.

 

(f)                                    Sub-Agents
and Affiliates. The Collateral Agent may perform any of its duties and
exercise any of its rights and powers through one or more sub-agents appointed
by it. The Collateral Agent and any such sub-agent may perform any of its
duties and exercise any of

 

18

 

its rights and powers through its Affiliates. The
exculpatory provisions of Section 11 and this Section 12 shall apply
to any such sub-agent and to the Affiliates of the Collateral Agent and any such
sub-agent.

 

(g)                                 Information
as to Secured Guarantees and Actions by Lenders. For all purposes of the
Security Documents, including determining the amounts of the Secured Guarantees
or whether any action has been taken under any Security Document, the Collateral
Agent will be entitled to rely on information from (i) the Agents, and
actions taken by them, (ii) any Lender (or any trustee, agent or similar
representative designated pursuant to subsection (f) to supply such
information) for information as to its Secured Guarantees and actions taken by
it, to the extent that the Collateral Agent has not obtained such information
from the foregoing sources, and (iii) the Borrower or any Subsidiary
Guarantor, to the extent that the Collateral Agent has not obtained information
from the foregoing sources.

 

(h)                                 Distribution
of Notices. Within two Domestic Business Days after it receives or sends
any notice referred to in this subsection, the Collateral Agent shall send each
Agent copies of any notice given by the Collateral Agent to any Lien Grantor,
or received by it from any Lien Grantor, pursuant to Section 7, 8, 10,
13(j) or 14.

 

(i)                                     Refusal
to Act. The Collateral Agent may refuse to act on any notice, consent,
direction or instruction from either Agent or any agent, trustee or similar
representative thereof that, in the Collateral Agent’s opinion, (i) is
contrary to law or the provisions of any Security Document, (ii) may
expose the Collateral Agent to liability (unless the Collateral Agent shall
have been indemnified, to its reasonable satisfaction, for such liability by
the Lender), or (iii) is unduly prejudicial to the Agent or Lenders not
joining in such notice, consent, direction or instruction.

 

(j)                                     Resignation;
Successor Collateral Agent. Subject to the appointment and acceptance of a
successor Collateral Agent as provided in this subsection, the Collateral Agent
may resign at any time by notifying the Agents and the Borrower. Upon
acceptance of its appointment as Collateral Agent hereunder by a successor, such
successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Collateral Agent hereunder, and the
retiring Collateral Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Borrowers to a successor Collateral Agent
shall be the same as those payable to its predecessor unless otherwise agreed
by the Borrowers and such successor. After the Collateral Agent’s resignation
hereunder, the provisions of Section 11 and this Section 12 shall
continue in effect for the benefit of such retiring Collateral Agent, its
sub-agents and their respective Affiliates in respect of any actions taken or
omitted to be taken by any of them while the retiring Collateral Agent was
acting as Collateral Agent.

 

Subject
to Section 12(d), the Collateral Agent hereby agrees to be bound by the
terms and provisions of all Loan Documents applicable to it.

 

Section 14.                                   Termination of Liens; Release of Collateral.

 

(a)                                  The
Liens granted by the Borrower and the Lien Grantors under this Agreement shall
terminate upon the payment in full of the unpaid principal amount of all Loans,

 

19

 

all accrued and unpaid interest thereon, and any other
Obligations payable under the Loan Documents and the reduction of all
outstanding Commitments to zero.

 

(b)                                 The
Liens granted by a Subsidiary Guarantor under this Agreement shall terminate
when its Secured Guarantee is released pursuant to Section 2(c).

 

(c)                                  Upon
any termination of a Lien granted under this Agreement or release of
Collateral, the Collateral Agent will, at the expense of the Borrower or the
relevant Subsidiary Guarantor, promptly execute and deliver to such Borrower or
Subsidiary Guarantor such documents as such Borrower or Subsidiary Guarantor
shall reasonably request to evidence the termination of such Lien or the
release of such Collateral, as the case may be.

 

(d)                                 The
Borrower and any Subsidiary Guarantor may sell, exchange, assign or otherwise
dispose of any of its Equipment or Inventory in the ordinary course of business
unless (i) doing so would violate a covenant in the Credit Agreements or (ii)
the Loans shall have been accelerated pursuant to Section 8 of the Senior
Credit Agreement and the Collateral Agent shall have notified the Borrower or
such Subsidiary Guarantor that its right to do so is terminated, suspended or
otherwise limited. If such sale is to a Person which is not a Lien Grantor,
then concurrently with any sale or other disposition permitted by the foregoing
sentence, the Liens created by the Security Documents on the assets sold or
disposed of will cease immediately without any action by the Collateral Agent
or any Lender and the Collateral Agent will, at the expense of the Borrower or
the relevant Subsidiary Guarantor, promptly execute and deliver to such
Borrower or Subsidiary Guarantor such documents as such Borrower or Subsidiary
Guarantor shall reasonably request to evidence the termination of such Lien on
such assets.

 

Section 15.                                   The
Borrower and Subsidiary Guarantors.

 

(a)                                  The
Borrower hereby represents and warrants that the Subsidiary Guarantors listed
on the signatures pages hereof represent all the Subsidiaries of the Borrower
on the date hereof.

 

(b)                                 If
any additional Subsidiary (including, without limitation, any Special Purpose
Vehicle) is formed or acquired after the date hereof, the Borrower will, within
ten Business Days after such Subsidiary is formed or acquired, notify the
Collateral Agent thereof and cause such Subsidiary to become a party hereto by
signing and delivering to the Collateral Agent a Guarantee and Collateral
Agreement Supplement, whereupon such Subsidiary shall become a “Subsidiary
Guarantor” as defined herein.

 

Section 16.                                   Notices. All notices, requests and
demands to or upon the respective parties hereto to be effective shall be in
writing (including by telecopy), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered, or
three Business Days after being deposited in the mail, postage prepaid, or, in
the case of telecopy notice, when received, addressed as set forth in Schedule
10.2 of the relevant Credit Agreement in the case of the Borrower and the
Agents, as set forth in an administrative questionnaire delivered to the Agent
in the case of the Lenders, as set forth below in respect of the Collateral
Agent and as set forth next to the signature thereof or in the relevant
Guarantee and Collateral Agreement Supplement in the case of any Subsidiary
Guarantor, or such other address as may be

 

20

 

hereafter notified by the respective parties hereto;
provided that any notice, request or demand to or upon the Collateral Agent,
the Agents or the Lenders shall not be effective until received. The Collateral
Agent’s details are:

 

CALYON New
York Branch

1301 Ave of the Americas

New York, NY 10019-6022

Attention:  Brian Bolotin and Sandra Markovic

Facsimile:  (212)
459-3180

Telephone:  (212) 261-7669

E-mail:  brian.bolotin@us.calyon.com

 

Section 17.                                   No Implied Waivers; Remedies Not Exclusive.
No failure by the Collateral Agent or the Agents or any Lender to exercise, and
no delay in exercising and no course of dealing with respect to, any right or
remedy shall operate as a waiver thereof; nor shall any single or partial
exercise by the Collateral Agent or any Lender of any right or remedy preclude
any other or further exercise thereof or the exercise of any other right or
remedy. The rights and remedies specified herein and in each other are
cumulative and are not exclusive of any other rights or remedies provided by
law.

 

Section 18.                                   Successors and Assigns. This
Agreement is for the benefit of the Collateral Agent, the Agents and the
Lenders. If all or any part of any Lenders’ interest in any Obligation is
assigned or otherwise transferred, the transferor’s rights hereunder, to the
extent applicable to the obligation so transferred, shall be automatically
transferred with such obligation. This Agreement shall be binding on the Lien
Grantors and their successors and assigns.

 

Section 19.                                   Amendments and Waivers. Neither
this Agreement nor any provision hereof may be waived, amended, modified or
terminated except pursuant to an agreement or agreements in writing entered
into by the parties hereto.

 

Section 20.                                   Choice of Law. This Agreement
shall be construed in accordance with and governed by the laws of the State of
New York, except as otherwise required by mandatory provisions of law and
except to the extent that remedies provided by the laws of any jurisdiction
other than the State of New York are governed by the laws of such jurisdiction.

 

Section 21.                                   Waiver of Jury Trial. EACH PARTY
HERETO WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT
MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO ANY SECURITY DOCUMENT OR ANY TRANSACTION
CONTEMPLATED THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE

 

21

 

BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

Section 22.                                   Severability. If any provision of
any Security Document is invalid or unenforceable in any jurisdiction, then, to
the fullest extent permitted by law (i) the other provisions of the Security
Documents shall remain in full force and effect in such jurisdiction and shall
be liberally construed in favor of the Collateral Agent, the Agents and the
Lenders in order to carry out the intentions of the parties thereto as nearly
as may be possible, and (ii) the invalidity or unenforceability of such
provision in such jurisdiction shall not affect the validity or enforceability
thereof in any other jurisdiction.

 

Section 23.                                   Collateral
Agent Subject to Direction of Agents.

 

(a)                                  The
Collateral Agent hereby covenants and agrees to serve as the Collateral Agent
subject to the direction of the Agents in accordance herewith. Should the
Collateral Agent fail or refuse to take or cause to be taken any action
required or permitted to be taken or caused to be taken by it pursuant to this
Agreement or any other Security Document, one or more of the Agents may take or
cause to be taken such action consistently with the Loan Documents. At the
request of any Agent, the Collateral Agent shall refrain from taking or causing
to be taken any action permitted (but not required) to be taken or caused to be
taken by it hereunder or under any other Loan Document. The Agents shall be
entitled to all of the rights, remedies, benefits and protections granted to
the Collateral Agent pursuant to this Agreement and the other Loan Documents to
the same extent as granted herein or therein to the Collateral Agent. The
provisions hereof are for the benefit of the Agents and the Lenders and may not
be directly or indirectly modified without the prior written consent of each
Agent. The foregoing shall apply notwithstanding anything to the contrary
contained herein, in any other Security Document or otherwise.

 

(b)                                 The
Collateral Agent acknowledges that, for the purposes of the Loan Documents, it
shall act solely at the direction of the Senior Agent until all Obligations
related to the Senior Loans have been repaid and all Commitments have been
terminated, and shall thereafter act at the direction of the Junior Agent,
unless otherwise specifically provided for in the Loan Documents.

 

22

 

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.

 

	
   

  	
  AEROTURBINE,
  INC., as Borrower

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  AEROTURBINE
  CAPITAL CORP., as

  Subsidiary Guarantor

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  CALYON New
  York Branch, as Collateral

  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

EXHIBIT A

to Guarantee and Collateral Agreement

 

GUARANTEE AND COLLATERAL
AGREEMENT SUPPLEMENT

 

GUARANTEE
AND COLLATERAL AGREEMENT SUPPLEMENT dated as of
            ,
200  , between [NAME OF LIEN GRANTOR] (the “Lien Grantor”) and CALYON New York Branch,
as collateral agent (the “Collateral Agent”).

 

WHEREAS,
AeroTurbine, Inc. (the “Borrower”),
the Subsidiary Guarantors party thereto and the Collateral Agent are parties to
a Guarantee and Collateral Agreement dated as of April 26, 2006 (as heretofore
amended and/or supplemented, the “Collateral
Agreement”) under which the Borrower secures certain of its
obligations (the “Obligations”)
and the Subsidiary Guarantors guarantee the Obligations and secure their
respective guarantees thereof;

 

WHEREAS,
the Lien Grantor [desires to become] [is] a party to the Collateral Agreement
as a Lien Grantor thereunder(1

); and

 

WHEREAS,
terms defined in the Collateral Agreement (or whose definitions are
incorporated by reference in Section 1 of the Collateral Agreement) and
not otherwise defined herein have, as used herein, the respective meanings
provided for therein;

 

NOW,
THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:

 

(a)                                  Secured
Guarantee.(2)  The Lien Grantor
unconditionally guarantees the full and punctual payment of each Obligation
when due (whether at stated maturity, upon acceleration or otherwise). The Lien
Grantor acknowledges that, by signing this Guarantee and Collateral Agreement
Supplement and delivering it to the Collateral Agent, the Lien Grantor becomes
a “Lien Grantor” for all purposes of the Collateral Agreement and that its
obligations under the foregoing Secured Guarantee are subject to all the
provisions of the Collateral Agreement (including those set forth in
Section 2 thereof) applicable to the obligations of a Lien Grantor
thereunder.

 

(b)                                 Grant
of Liens.

 

(i)                                     Subject
to all of the terms and conditions of the Collateral Agreement, in order to
secure [its Secured Guarantee](3) [its Obligations under the Loan Documents](4),
the Lien Grantor grants to the Collateral Agent for the benefit of the Lenders
a continuing security interest in all the following property of the Lien
Grantor,

 

(1)  If the Lien Grantor is the
Borrower, delete this recital and paragraph (a) hereof.

(2)  Delete this paragraph if the Lien Grantor is
the Borrower or a Guarantor that is already a party to the Security Agreement.

(3)  Delete bracketed words if the Lien Grantor is
the Borrower.

(4) 
Delete bracketed words if the Lien Grantor is a Guarantor.

 

1

 

whether
now owned or existing or hereafter acquired or arising and regardless of where
located (the “New Collateral”):

 

[describe property being added to the Collateral]

 

(ii)                                  With
respect to each right to payment or performance included in the Collateral from
time to time, the Lien granted therein includes a continuing security interest
in all right, title and interest of the Lien Grantor in and to (A) any
Supporting Obligation that supports such payment or performance, and
(B) any Lien that (x) secures such right to payment or performance,
or (y) secures any such Supporting Obligation.

 

(iii)                               The foregoing Liens are
granted as security only and shall not subject the Collateral Agent, either
Agent or any Lender, or transfer or in any way affect or modify, any obligation
or liability of the Lien Grantor with respect to any of the New Collateral or
any transaction in connection therewith.

 

(c)                                  Party
to Collateral Agreement. Upon delivering this Guarantee and Collateral
Agreement Supplement to the Collateral Agent, the Lien Grantor will become a
party to the Collateral Agreement and will thereafter have all the rights and
obligations of a Lien Grantor and be bound by all the provisions thereof as
fully as if the Lien Grantor were one of the original parties thereto.(5)

 

(d)                                 Address
of Lien Grantor. The address, facsimile number and e-mail address of the
Lien Grantor for purposes of Section 15 of the Collateral Agreement are:

 

[address, facsimile number and e-mail address of Lien
Grantor]

 

(e)                                  Representations
and Warranties. The Lien Grantor represents and warrants as follows:

 

(i)                                     the
Lien Grantor is a [corporation] duly organized, validly existing and in good
standing under the laws of [jurisdiction of organization];

 

(ii)                                  the
Lien Grantor has delivered a Perfection Certificate to the Collateral Agent. The
information set forth therein is correct and complete as of the date hereof;

 

(iii)                               the execution and
delivery of this Guarantee and Collateral Agreement Supplement by the Lien
Grantor and the performance by it of its obligations under the Collateral
Agreement as supplemented hereby are within its corporate or other powers, have
been duly authorized by all necessary corporate or other action, require no
action by or in respect of, or filing with, any governmental body, agency or
official (other than the filing of UCC financing statements as contemplated by
the above Perfection Certificate) and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of its
organizational documents, or of any agreement,

 

(5)  Delete paragraphs (c) and (d) if the
Lien Grantor is already a party to the Security Agreement.

 

2

 

judgment,
injunction, order, decree or other instrument binding upon it or result in the
creation or imposition of any Lien on any of its assets;

 

(iv)                              the
Collateral Agreement as supplemented hereby constitutes a valid and binding
agreement of the Lien Grantor, enforceable in accordance with its terms, except
as limited by (A) applicable bankruptcy, insolvency, fraudulent conveyance
or other similar laws affecting creditors’ rights generally and
(B) general principles of equity; and

 

(v)                                 each
of the representations, warranties and covenants set forth in Sections 4
and 5 of the Collateral Agreement is true as applied to the Lien Grantor and
the New Collateral. For purposes of the foregoing sentence, references in said
Sections to an “Original Lien Grantor” or a “Lien Grantor” shall be deemed to
refer to the Lien Grantor, references to “Collateral” shall be deemed to refer
to the New Collateral, and references to the “Closing Date” shall be deemed to
refer to the date on which the Lien Grantor signs and delivers this Guarantee
and Collateral Agreement Supplement.

 

(f)                                    Governing
Law. This Guarantee and Collateral Agreement Supplement shall be construed
in accordance with and governed by the laws of the State of New York.

 

3

 

IN
WITNESS WHEREOF, the parties hereto have caused this Guarantee and Collateral
Agreement Supplement to be duly executed by their respective authorized
officers as of the day and year first above written.

 

 

	
   

  	
  [NAME OF
  LIEN GRANTOR]

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  CALYON New
  York Branch, as Collateral

  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

4

 

EXHIBIT B

to Guarantee and Collateral Agreement

 

PERFECTION CERTIFICATE

 

The
undersigned is a duly authorized officer of [NAME OF LIEN GRANTOR] (the “Lien
Grantor”). With reference to the Guarantee and Collateral Agreement dated as of
April 26, 2006 among AeroTurbine, Inc. (the “Borrower”), the Subsidiary Guarantors party thereto and CALYON
New York Branch (the “Collateral Agent”),
the undersigned certifies to the Collateral Agent on behalf of each Agent and
the Lenders as follows:

 

1.                                       Jurisdiction
of Organization. The Lien Grantor is a [corporation] organized under the
laws of                  .

 

2.                                       Name.
The exact [corporate] name of the Lien Grantor as it appears in its
[certificate of incorporation] is as follows:

 

3.                                       Prior
Names. (a)  Set forth below is each
other [corporate] name that the Lien Grantor has had within the past three
years, together with the date of the relevant change:

 

(b)                                 Except
as set forth in the attachments hereto, the Lien Grantor has not changed its
corporate structure in any way within the past three years.

 

(c)                                  None
of the Lien Grantor’s Collateral was acquired from another Person within the
past three years, except:

 

(i)                                     property
sold to the Lien Grantor by another Person in the ordinary course of such other
Person’s business;

 

(ii)                                  property
with respect to which the Liens are to be perfected by taking possession or
control thereof;

 

(iii)                               property
acquired in transactions described in the attachments hereto; and

 

(iv)                              other
property having an aggregate fair market value not exceeding $                    .

 

 

Attached
hereto is a true copy of a file search report provided by [name of search
company] from the central UCC filing office in each jurisdiction of
organization.

 

IN
WITNESS WHEREOF, I have hereunto set my hand this    day of                  ,
200[  ].

 

 

	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

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